<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [ ] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
C.P. CLARE CORPORATION
(Name of Registrant as Specified In Its Charter)
C.P. CLARE CORPORATION
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[CP CLARE LOGO]
78 CHERRY HILL DRIVE
BEVERLY, MA 01915
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 24, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") of C.P. Clare Corporation (the "Company") will be held on
Thursday, September 24, 1998, at 10:00 a.m. at the Company's headquarters, at 78
Cherry Hill Drive, Beverly, Massachusetts for the following purposes:
1. To elect two Class III directors of the Company to serve until the
2001 Annual Meeting of Stockholders and until their successors are duly
elected and qualified;
2. To approve the amendments to the C.P. Clare Corporation 1995 Stock
Option and Incentive Plan to increase the number of shares issuable under
the Plan by 500,000 shares and to effect certain other modifications to the
Plan; and
3. To consider and act upon any other matters that may properly be
brought before the Annual Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on July 14, 1998, as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournments or postponements thereof.
Only stockholders of record of the Company's common stock, $.01 par value per
share, at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting and at any adjournments or postponements thereof.
You are requested to fill in and sign the enclosed proxy card, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.
By Order of the Board of Directors
[Signature of Lori M. Henderson]
LORI M. HENDERSON
Clerk
Beverly, Massachusetts
July 23, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 3
[CP CLARE LOGO]
78 CHERRY HILL DRIVE
BEVERLY, MASSACHUSETTS 01915
---------------
PROXY STATEMENT
---------------
FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 24, 1998
July 23, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of C.P. Clare Corporation (the "Company") for
use at the 1998 Annual Meeting of Stockholders of the Company to be held on
Thursday, September 24, 1998, and at any adjournments or postponements thereof
(the "Annual Meeting"). At the Annual Meeting, stockholders will be asked to
vote upon the election of two Class III directors of the Company, to approve the
amendments to the C.P. Clare Corporation 1995 Stock Option and Incentive Plan
(the "Stock Option Plan") and to act upon any other matters properly brought
before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and form
of proxy are first being sent to stockholders on or about July 31, 1998. The
Board of Directors has fixed the close of business on July 14, 1998, as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). Only stockholders of record of
the Company's common stock, par value $.01 per share (the "Common Stock"), at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were 9,388,036 shares
of Common Stock outstanding and entitled to vote at the Annual Meeting. Holders
of Common Stock outstanding as of the close of business on the Record Date will
be entitled to one vote for each share held by them.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. Both abstentions and broker "non-votes" (as defined below) will be
counted in determining the presence of a quorum. The affirmative vote of the
holders of a plurality of shares of Common Stock present and represented (and
entitled to vote) at the Annual Meeting is required for the election of
directors. The affirmative vote of the holders of a majority of the shares of
Common Stock present or represented (and entitled to vote) at a meeting at which
a quorum is present is sufficient for the approval of the amendments to the
Stock Option Plan. Broker "non-votes" are proxies from brokers or other nominees
indicating that such person has not received instructions from the beneficial
owner or other person entitled to vote the shares which are the subject of the
proxy on a particular matter with respect to which the broker or
<PAGE> 4
other nominee does not have discretionary voting power. Abstentions and broker
non-votes will have no effect on the outcome of the election of directors and
abstentions will have the effect of a vote against the amendments to the Stock
Option Plan, while broker non-votes will have no effect.
Stockholders of the Company are requested to complete, sign, date and
promptly return the accompanying Proxy Card in the enclosed postage-prepaid
envelope. Shares represented by a properly executed proxy received prior to the
vote at the Annual Meeting and not revoked will be voted at the Annual Meeting
as directed on the proxy. If a properly executed proxy is submitted prior to
such time and no instructions are given, the proxy will be voted FOR the
election of the nominees for the Board of Directors of the Company named in this
Proxy Statement and FOR the approval of the amendments to the Stock Option Plan.
It is not anticipated that any matters other than those set forth in this Proxy
Statement will be presented at the Annual Meeting. If other matters are
presented, proxies will be voted in accordance with the discretion of the proxy
holders.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Clerk of the Company at the
address of the Company set forth above; by filing a duly executed proxy bearing
a later date; or by appearing in person and voting by ballot at the Annual
Meeting. Any stockholder of record as of the Record Date attending the Annual
Meeting may vote in person whether or not a proxy has been previously given, but
the presence (without further action) of a stockholder at the Annual Meeting
will not constitute revocation of a previously given proxy.
The Company's 1998 Annual Report, including financial statements for the
fiscal year ended March 31, 1998, is being mailed to stockholders concurrently
with this Proxy Statement. The Annual Report, however, is not part of the proxy
solicitation material.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of five members and is
divided into three classes. Directors serve for three-year terms with one class
of Directors being elected by the Company's stockholders at each annual meeting.
At the Annual Meeting, two Class III directors will be elected to serve
until the 2001 annual meeting of stockholders and until their successors are
duly elected and qualified. The Board of Directors has nominated Arthur R.
Buckland and James K. Sims (the "Nominees") for election as a Class III
directors at the Annual Meeting. Messrs. Buckland and Sims are currently serving
as directors of the Company. The Board of Directors anticipates that each of the
Nominees will serve as a director, if elected. However, if any person nominated
by the Board of Directors is unable to accept election, the proxies will be
voted for the election of such other person as the Board of Directors may
recommend. The Board of Directors will consider a nominee for election to the
Board of Directors recommended by a stockholder of record if the stockholder
submits the nomination in compliance with the requirements of the Company's
Bylaws. See "Other Matters -- Stockholder Proposals" for a summary of these
requirements.
RECOMMENDATION
The Board of Directors recommends a vote FOR its Nominees, Arthur R.
Buckland and James K. Sims.
2
<PAGE> 5
INFORMATION REGARDING NOMINEES, OTHER DIRECTORS AND EXECUTIVE OFFICERS
The following table and biographical descriptions set forth certain
information with respect to the Nominees for election as Class III directors at
the Annual Meeting, the continuing directors whose terms expire at the annual
meetings of stockholders in 1999 and 2000 and the executive officers of the
Company who are not directors, based on information furnished to the Company by
such directors and executive officers. The following information is as of June
30, 1998, unless otherwise specified.
<TABLE>
<CAPTION>
DIRECTOR NUMBER OF SHARES PERCENT OF
NAME AGE SINCE BENEFICIALLY OWNED ALL SHARES(1)
- ---- --- -------- ------------------ -------------
<S> <C> <C> <C> <C>
Class III Nominees for Election
(Term to Expire in 2001)
Arthur R. Buckland........................... 50 1993 556,591(2) 5.9
James K. Sims................................ 51 1996 16,377(3) *
Class I Continuing Directors
(Term to Expire in 1999)
Winston R. Hindle, Jr........................ 68 1995 17,377(4) *
Clemente C. Tiampo........................... 69 1996 17,377(3) *
Class II Continuing Director
(Term to Expire in 2000)
John G. Turner............................... 58 1994 83,502(5) *
Executive Officers who are not Directors
Michael J. Ferrantino........................ 55 62,027(6) *
Harsh Koppula................................ 43 66,489(7) *
Richard E. Morgan............................ 41 17,000(8) *
William D. Reed.............................. 47 20,000(8) *
Thomas B. Sager.............................. 39 7,600(8) *
Executive Officers and Directors as a Group
(10 Total)..................................... 864,340(9) 9.2
</TABLE>
- ---------------
* Less than one percent
(1) As of June 30, 1998 there were 9,373,742 shares of Common Stock outstanding.
(2) Includes 192,421 shares subject to options that are exercisable within 60
days of June 30, 1998.
(3) Includes 15,000 shares subject to options that are immediately exercisable.
(4) Includes 10,000 shares subject to options that are immediately exercisable.
(5) Includes 15,000 shares subject to options that are immediately exercisable.
Also includes 68,002 shares held by Late Stage Fund 1990 Limited Partnership
("Late Stage"), of which MVP Capital L.P. is investment general partner and
holder of a 0.9% interest. Mr. Turner is a general partner of MVP and shares
voting control over Late Stage. Shares beneficially owned by Mr. Turner
include only 221 of the 68,002 shares owned by Late Stage. While Mr. Turner
may be an affiliate of Late Stage, he disclaims beneficial ownership of the
remainder of such shares.
(6) Includes 51,648 shares subject to options that are immediately exercisable.
(7) Includes 8,000 shares subject to options that are immediately exercisable.
(8) Represents options that are immediately exercisable.
(9) Includes 351,669 shares subject to options that are exercisable within 60
days of June 30, 1998.
3
<PAGE> 6
Nominees for Election as a Director
ARTHUR R. BUCKLAND. Mr. Buckland has been President, Chief Executive
Officer and a Director of the Company since September 1993. He was elected
Chairman of the Board in January 1996. Prior to assuming these responsibilities,
he served as a consultant to the Company from July 1993 to September 1993. Mr.
Buckland was President and Chief Executive Officer of Four Pi Systems, a process
control capital equipment company based in San Diego, California, from September
1992 until June 1993, and served as a consultant to that company from May 1992
to September 1992. From September 1990 until September 1991, Mr. Buckland was
President of Lex Electronics, a wholly-owned subsidiary of Lex plc, a
London-based automotive/distribution company, and from January 1982 until June
1990, he served as Vice President and General Manager for Schlumberger Ltd., a
diversified multinational company, in multiple locations. Mr. Buckland is also a
director of Helix Technologies Corporation and General Scanning, Inc.
JAMES K. SIMS. Mr. Sims has been a Director since March 1996. He is the
President and Chief Executive Officer of Cambridge Technology Partners, a
position he has held since the Company's inception in 1991. Prior to founding
Cambridge Technology Partners, Mr. Sims was Chairman and Chief Executive Officer
of Concurrent Computer Corporation. Mr. Sims is also a director of Security
Dynamics Corporation.
Incumbent Directors -- Term Expiring in 1999
WINSTON R. HINDLE, JR. Mr. Hindle has been a Director since July 1995. He
was a Senior Vice President of Digital Equipment Corporation and a member of the
Executive Committee prior to his retirement in 1994 after 32 years with the
company. Mr. Hindle also serves on the Board of Directors of Keane, Inc. and
Mestek, Inc.
CLEMENTE C. TIAMPO. Mr. Tiampo has been a Director since January 1996. He
is a private investor.
Incumbent Director -- Term Expiring in 2000
JOHN G. TURNER. Mr. Turner has been a Director of the Company since 1993.
Mr. Turner is a General Partner of MVP Ventures, a venture capital investment
firm based in Boston, Massachusetts, a position he has held since 1988. Mr.
Turner also serves a Director of Ampro Corporation and Micro Module Systems
Corporation.
Executive Officers Who Are Not Directors
MICHAEL J. FERRANTINO. Mr. Ferrantino has been Executive Vice President
and Chief Operating Officer of the Company since November 1997, and was Vice
President and General Manager, Components Group, since joining the Company in
April 1995. Prior to joining the Company, Mr. Ferrantino was President of
Trontech, a subsidiary of Dynatech Corporation and a solid state, Rf and
Microwave amplifier and subsystem design and manufacturing company, a position
he held since February 1994. From December 1989, until he joined Trontech, Mr.
Ferrantino was Vice President of Unitrode Corporation, responsible for the
design, manufacturing and marketing of all products within the discrete
semiconductor, data conversion and switching power supply businesses. Prior to
Unitrode, Mr. Ferrantino spent 25 years at M/A Com, a defense electronics
company, most recently in the position of Senior Vice President and Group
Executive.
HARSH KOPPULA. Mr. Koppula is currently President, C.P. Clare Remtech, a
division of C.P. Clare. Prior to that, he was Vice President and General Manager
of the Advanced Magnetic Products Group, a position he held since October 1993.
From January 1991 until October 1993, he held the position of Director,
Strategic Marketing. Mr. Koppula joined the Company in 1988, as Director of
Materials. Before joining the Company, Mr. Koppula was Director of Materials at
Schlumberger Technologies, a division of Schlumberger Ltd. which manufactures
and markets automatic test equipment. Prior to that Mr. Koppula was part of the
corporate staff of Schlumberger Ltd. as an Internal Consultant to Global
Operations.
RICHARD E. MORGAN. Mr. Morgan was named Vice President of Human Resources
in April 1996. From November 1994 until April 1996, Mr. Morgan served as an
Executive Director with Russell Reynolds Associates, an international executive
recruiting firm. Prior to that Mr. Morgan held the position of Vice President of
Human Resources at The Timberland Company, an international manufacturer of
footwear and casual apparel.
4
<PAGE> 7
WILLIAM D. REED. Mr. Reed was named Executive Vice President of Sales and
Marketing in November 1997. Prior to that, he held the position of Vice
President of Worldwide Sales and Corporate Marketing since joining the Company
in September 1996. Prior to joining CP Clare, Mr. Reed served as an Executive
Director of Russell Reynolds Associates, an international executive recruiting
firm from December 1994 to August 1996. From March 1989 to November 1994, Mr.
Reed held various positions with Praxis International Inc., a database software
vendor, most recently as its Executive Vice President and as President and Chief
Operating Officer of its principal operating subsidiary, Computer Corporation of
America.
THOMAS B. SAGER. Mr. Sager was named Vice President and Chief Financial
Officer of the Company in September 1997. Prior to that, Mr. Sager served as
Corporate Controller since joining the Company in February 1995. Mr. Sager held
the position of Vice President of Finance in the office products group at Avery
Dennison Corporation, a multinational office products manufacturer, from May
1989 to January 1995.
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
The business of the Company is managed under the direction of the Company's
Board of Directors. The Company's Amended and Restated Articles of Organization
provide that the Company's Board of Directors shall be divided into three
classes and that the members of each class of Directors will serve for staggered
three-year terms. The Board consists of two Class I Directors (Messrs. Hindle
and Tiampo), one Class II Director (Mr. Turner) and two Class III Directors
(Messrs. Buckland and Sims), whose initial terms will expire upon the election
and qualification of Directors at the annual meeting of stockholders held
following the fiscal years ending March 31, 1999, 2000 and 1998, respectively.
At each annual meeting of stockholders, Directors will be reelected or elected
for a full term of three years to succeed those Directors whose terms are
expiring.
The Company's Board of Directors has established an Audit Committee to
recommend the appointment of independent accountants to audit financial
statements and to perform services related to the audit, review the scope and
results of the audit with the independent accountants, review with management
and the independent accountants the Company's year-end operating results,
consider the adequacy of the internal accounting procedures and consider the
effect of such procedures on the accountants' independence. The Audit Committee
consists of Mr. Hindle, the Chairman, and Mr. Tiampo. During fiscal 1998 the
Audit Committee held two meetings.
The Company's Board of Directors has also established a Compensation
Committee which reviews and recommends the compensation arrangements for all
Directors and executive officers, approves such arrangements for other senior
level employees and administers certain compensation and incentive plans of the
Company and its subsidiaries. The Compensation Committee consists of Mr. Turner,
the Chairman, and Mr. Hindle. During fiscal 1998 the Compensation Committee held
two meetings.
Officers of the Company are elected annually at the first meeting of the
Board of Directors following the annual meeting of stockholders and serve at the
discretion of the Board of Directors. There are no family relationships between
any officers or Directors of the Company. The Company does not maintain a
nominating committee.
During the fiscal year ended March 31, 1998, the Board of Directors held
seven meetings. All directors attended at least 75% of the total number of
meetings of the Board of Directors and all committees of the Board on which they
served.
COMPENSATION OF DIRECTORS
Non-employee Directors ("Independent Directors") of the Company receive an
annual fee of $20,000 and are reimbursed for travel expenses incurred in
attending meetings of the Board of Directors and its committees. In addition,
under the Stock Option Plan, each Independent Director then serving was granted
a stock option to purchase 10,000 shares of Common Stock upon the effectiveness
of the Company's initial public offering in June 1995 and will receive an annual
stock option to purchase 10,000 shares of Common Stock. Each new Independent
Director will, upon initial election to the Board of Directors, be granted a
stock option to purchase 10,000 shares of the Company's Common Stock and will
also receive an annual stock option grant to purchase 10,000 shares of Common
Stock, beginning the year following such Director's initial election to the
Board. Proposal 2 in this Proxy Statement seeks approval of the amendment to the
Stock
5
<PAGE> 8
Option Plan adopted by the Board of Directors on June 17, 1998 that increased
the annual grant of options to the Independent Directors from 5,000 to 10,000
per year, subject to approval of such amendment by the Stockholders at the
Annual Meeting. All options granted to Independent Directors vest in full one
year after they are granted and the exercise price of each stock option is the
fair market value of the Common Stock on the date the option is granted.
Directors who are employees of the Company are not paid any separate fees for
serving as Directors.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth for the fiscal
years ended March 31, 1996, 1997 and 1998, the cash and non-cash compensation
awarded to the Chief Executive Officer and each of the other four most highly
compensated executive officers (the "Named Executive Officers") of the Company
whose compensation exceeded $100,000 during the fiscal year ended March 31,
1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
--------------------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
FISCAL SALARY BONUS(1) OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR $ $ # $
- --------------------------- ------ ------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Arthur R. Buckland......................... 1998 353,821 209,875 -- 50,797(2)
President & Chief Executive Officer 1997 315,000 -- 125,000 24,718(2)
1996 315,000 141,750 150,000 29,438(2)
Michael J. Ferrantino...................... 1998 220,600 76,762 -- 48,467(3)
Executive Vice President & 1997 200,000 -- 90,000 29,241(3)
Chief Operating Officer 1996 152,018 77,500 120,000 29,810(3)
William D. Reed............................ 1998 207,692 76,762 -- 22,101(4)
Executive Vice President 1997 107,917 46,250 160,000 4,200(4)
Sales & Marketing 1996 N/A N/A N/A N/A
Harsh Koppula.............................. 1998 147,115 50,062 -- 16,591(5)
President, CP Clare Remtech 1997 150,000 -- 95,000 12,412(5)
Division 1996 126,250 10,000 35,000 9,685(5)
Richard E. Morgan.......................... 1998 127,500 43,387 -- 12,283(6)
Vice President, Human Resources 1997 122,676 -- 80,000 5,725(6)
1996 N/A N/A N/A NA
</TABLE>
- ---------------
(1) Bonuses earned in fiscal 1996, 1997 and 1998 were awarded to the Named
Executive Officers and paid by the Company in the following fiscal year.
(2) Includes insurance premiums of $17,031, $12,418 and $32,537 paid by the
Company, matching contributions of $4,607, $4,500 and $10,910 made by the
Company on behalf of Mr. Buckland under the Company's 401(k) Savings Plan
for fiscal years 1996, 1997 and 1998, respectively and a car allowance of
$7,800 in fiscal years 1996 and 1997 and $7,350 in fiscal 1998.
(3) Includes insurance premiums of $19,331, $15,605 and $34,938, a car allowance
of $7,350, $7,800 and $7,050 and matching contributions of $3,129, $5,836
and $6,659 made by the Company on behalf of Mr. Ferrantino under the
Company's 401(k) Savings Plan in fiscal years 1996, 1997 and 1998
respectively.
(4) Represents a car allowance in fiscal year 1997 and a matching contribution
of $9,162, insurance premiums of $6,455 and a car allowance of $6,484 in
fiscal year 1998.
(5) Includes a car allowance of $6,400, $7,800 and $7,350 and matching
contributions of $3,285, $4,612 and $4,584 made by the Company on behalf of
Mr. Koppula under the Company's 401(k) Savings Plan in fiscal years, 1996,
1997 and 1998 respectively. Also includes insurance premiums of $4,657 in
fiscal year 1998.
(6) Includes a car allowance of $5,725 and $7,350 in fiscal years 1997 and 1998,
respectively, and matching contributions of $4,933 made by the Company on
behalf of Mr. Morgan under the Company's 401(k) Savings Plan in fiscal year
1998.
6
<PAGE> 9
Option Grants in Fiscal Year 1998. Neither the Chief Executive Officer nor
any of the Named Executive Officers was granted any stock options during the
fiscal year ended March 31, 1998.
Option Exercises and Year-End Holdings. The following table sets forth the
aggregate number of options exercised in fiscal 1998, and the value of options
held on March 31, 1998, by the Company's Chief Executive Officer and Named
Executive Officers.
OPTION EXERCISES AND YEAR-END HOLDINGS
<TABLE>
<CAPTION>
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)(1)
SHARES ----------------- -----------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Arthur R. Buckland............. -- -- 182,421/215,000 1,532,201/740,900
Michael J. Ferrantino.......... -- -- 27,648/162,000 135,613/780,660
William D. Reed................ -- -- 20,000/140,000 67,500/555,000
Harsh Koppula.................. 34,000 251,385 2,000/112,000 26,750/614,540
Richard E. Morgan.............. -- -- 10,000/ 70,000 --/228,750
</TABLE>
- ---------------
(1) Based on the fair market value at the fiscal year end less the option
exercise price.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company has entered into the following employment agreements:
Arthur R. Buckland. Under an agreement dated September 15, 1993, Mr.
Buckland shall serve as President, Chief Executive Officer and a Director of the
Company at an annual salary of at least $275,000. Mr. Buckland is also eligible
to participate in the Company's management bonus plan. Under the agreement, Mr.
Buckland received options to purchase 492,107 shares of Common Stock, one-fifth
of which vested upon grant and the rest of which vest in equal annual
installments over the following four years. In the event that Mr. Buckland
terminates his employment for Good Reason (as defined in his agreement,
including a Change in Control) or Mr. Buckland's employment is terminated by the
Company without Cause (as defined in the agreement) or because the Company
elects not to extend the term of the agreement, the Company shall pay Mr.
Buckland for a period of 12 months. Mr. Buckland has agreed not to compete with
the Company or solicit customers or employees of the Company for a period of two
years following the termination of employment with the Company. The initial term
of the agreement expired on September 15, 1995, but was extended and will
continue to be extended for one-year periods thereafter unless terminated by
either party on 60 days' notice.
Other Executive Officers. The Company has entered into Employment
Agreements (together, the "Management Employment Agreements") with Messrs.
Ferrantino, Koppula, Morgan, Reed and Sager (together, the "Contracting
Parties"). The Management Employment Agreements provide that each Contracting
Party shall receive a base salary and be entitled to participate in any bonus
program implemented by the Company. Each Contracting Party has also been granted
options to purchase shares of the Company's Common Stock, such options to vest
ratably over a five year period. If a Contracting Party is terminated by the
Company without Cause, by the Contracting Party for Good Reason or in the event
of a Change of Control (as all such terms are defined in the applicable
Management Employment Agreement), the Company is obligated to pay the
Contracting Party for 12 months.
7
<PAGE> 10
STOCK PERFORMANCE GRAPH
The following graph provides a comparison, from the Company's initial
public offering on June 21, 1995 through March 31, 1998, of the cumulative total
stockholder return (assuming reinvestment of any dividends) among the Company,
the Standard & Poor's 500 Index and the NASDAQ Electronic Components Index. Upon
written request, the Company will provide any stockholder with a list of the
companies included in the NASDAQ Electronic Components Index. The historical
information set forth below is not necessarily indicative of future performance.
STOCK PERFORMANCE GRAPH
[Line Chart Omitted]
6/21/95 3/31/96 3/31/97 3/31/98
C.P. Clare Corporation 100 122 66 87
S&P 500 100 121 145 214
NASDAQ Electronic Components 100 92 161 184
REPORT OF THE COMPENSATION COMMITTEE
Objective of the Company's Compensation Program. The Company's executive
compensation program is intended to attract, retain and reward executives who
are capable of and responsible for leading the Company effectively and
continuing its growth. The Company's objective is to utilize a combination of
cash and equity-based compensation to provide appropriate incentives for
executives while aligning their interests with those of the Company's
stockholders.
The Company uses a three-pronged approach to its compensation program.
First, the executive's base salary is intended to create a competitive level of
compensation for each executive for the following twelve months. Second, the
Company maintains an annual incentive bonus program for executive officers and
certain other members of management under which bonuses are payable based upon
the achievement of corporate and individual performance goals which are set each
fiscal year. Bonuses can be paid in cash or stock. The objective of the annual
incentive bonus program is to encourage effective performance relative to
current plans and objectives. Effective with the start of the 1999 fiscal year,
the Board of Directors adopted a Voluntary Deferred Compensation Plan for Key
Employees which allows designated Executive Officers to defer the payment of
their annual bonuses until their retirement. Finally, the Company utilizes stock
options granted under the 1995 Stock Option and Incentive Plan as a long-term
incentive for the executive officers. The Company believes that stock options
are an important way of aligning management and stockholder interests
8
<PAGE> 11
and retaining effective management. Accordingly, options generally provide for
incremental vesting over a five-year period.
Compensation Committee Procedures. The Company's executive compensation
program is administered under the direction of the Compensation Committee, which
is composed of two non-employee directors. At the Board of Director's meeting
which most closely coincides with the Company's fiscal year-end, the Chief
Executive Officer's bonus, if any, is determined for the past year's
performance, his base salary for the following fiscal year is set, and option
grants for the officers and other employees may be made. With respect to the
compensation of the Chief Executive Officer, the Committee exercises its
independent discretion in determining his compensation, subject to review by all
of the nonemployee directors. With respect to the compensation of the other
executive officers, the Compensation Committee relies to a significant extent on
Mr. Buckland's recommendations as the Company's Chief Executive Officer which
are given in the framework of the Company's overall compensation philosophy.
Compensation of the Chief Executive Officer. The Compensation Committee
considers the Company's financial performance to be a significant determinant in
Mr. Buckland's overall compensation package. The Committee considers the
Company's sales, earnings and return on capital and the growth thereof, to be
the most important performance factors in setting Mr. Buckland's compensation.
Along with these corporate performance factors, the directors also consider
subjective factors, including Mr. Buckland's leadership role and his efforts on
behalf of the Company in developing the Company's reputation among both its
customer and investor bases during the year. The Committee has set Mr.
Buckland's total annual compensation, including that derived from the Company's
bonus and option program, at a level it believes to be competitive with other
companies in its industry.
During the 1998 fiscal year Mr. Buckland's annual cash compensation was set
at $365,000. Based on the accomplishment of the Company's fiscal year financial
goals, including bookings, revenue and earnings per share, the Board awarded Mr.
Buckland a bonus of $209,875. Due to the grant of the performance stock options
discussed below, no options were granted to Mr. Buckland in fiscal 1998. In
March, 1997, the Compensation Committee considered and granted performance stock
option awards to the Chief Executive Officer and the other Named Executive
Officers. The performance stock options were given in order to (a) provide long
term incentive for senior executives, (b) balance short-term incentives and
focus management on long-term results, (c) reward executives for attaining high
performance levels and (d) retain key executives during the next critical period
of the Company's growth. The awards are designed to cover a three-year award
cycle and vesting of the options granted is contingent upon the achievement of
performance targets ratified by the full Board of Directors. The awards granted
during this fiscal year will vest 50% on March 31, 2000 and 100% on March 31,
2002, if the performance goals relating to the achievement of compounded growth
on earnings per share are achieved. The performance options vest in all cases on
March 4, 2004, subject to the continued employment of the executive officer.
Pursuant to this program, in March 1997 the Board awarded Mr. Buckland options
to purchase 125,000 shares.
Compensation of Other Executive Officers. The Company's executive
compensation program utilizes several different performance factors in
determining the compensation of the Company's other executive officers. Each
executive officer's compensation is based upon the achievement of specific
individual and Company performance goals. During fiscal 1998, each executive
officer's compensation was set at what the committee determined to be
competitive levels. During fiscal 1998, the Named Executive Officers were not
granted options based on their participation during fiscal 1997 in the
performance option program discussed above.
9
<PAGE> 12
Compliance with Internal Revenue Code Section 162(m). The Securities and
Exchange Commission requires that this report comment upon the Company's policy
with respect to Section 162(m) of the Internal Revenue Code of 1986, as amended.
This section generally limits the deductibility on the Company's tax return of
compensation over $1 million to the chief executive officer and any of the named
executive officers of the Company unless the compensation is paid pursuant to a
plan which is performance-related, non-discretionary and has been approved by
the Company's stockholders. The Committee's policy with respect to Section
162(m) is to make every reasonable effort to ensure that compensation is
deductible to the extent permitted and appropriate while simultaneously
providing executives with appropriate rewards for their performance.
Submitted by the Compensation Committee:
John G. Turner, Chairman
Winston R. Hindle, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is an officer or employee of the
Company, and no executive officer of the Company serves on the compensation
committee of an entity or serves as a director of an entity, one of whose
executive officers serves on the Compensation Committee of the Company or serves
as a Director of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who beneficially own
more than 10% of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers. Officers,
directors and greater than 10% beneficial owners are required by Securities and
Exchange Commission regulations to furnish the Company with copies of all forms
they file in compliance with Section 16(a). Mr. Koppula failed on one occasion
to report the exercise of options to purchase shares of common stock on a timely
basis. Such filing was made immediately upon discovering this oversight. To the
Company's knowledge, based solely on its review of the copies of such reports
furnished to the Company and written representations that no other reports were
required during the fiscal year ended March 31, 1998, other than as set forth
herein, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than 10% beneficial owners were satisfied.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
10
<PAGE> 13
PROPOSAL 2
APPROVAL OF AMENDMENTS TO THE
1995 STOCK OPTION AND INCENTIVE PLAN
1995 STOCK OPTION AND INCENTIVE PLAN
In March 1995, the Company's Board of Directors adopted and in April 1995
the stockholders approved the 1995 Stock Option and Incentive Plan (the "Stock
Option Plan"). The Stock Option Plan, as subsequently amended and restated by
the Board of Directors and approved by the Stockholders, is designed and
intended as a performance incentive for officers, employees, consultants and
Independent Directors of the Company to promote the financial success and
progress of the Company. The Board of Directors has adopted, subject to
stockholder approval, amendments to the Stock Option Plan (i) increasing the
total number of shares available for issuance under the Stock Option Plan by
500,000 shares, (ii) increasing the number of options received each year by
Independent Directors from 5,000 to 10,000, and (iii) adopting certain technical
and conforming amendments to the Plan. A copy of the Stock Option Plan which
reflects the proposed amendments is attached to this Proxy Statement as Exhibit
A. As of March 31, 1998, approximately 1700 employees and all the Independent
Directors were eligible to participate in the Stock Option Plan.
The Stock Option Plan amended and restated the C.P. Clare Corporation
Amended and Restated 1994 Employee, Director and Consultant Stock Option Plan
(the "1994 Plan"). The 1994 Plan amended and restated both the Theta-J
Corporation 1987 Employee Equity Incentive Plan (the "1987 Plan") and the
Theta-J Corporation 1988 Employee Stock Option Plan (the "1988 Plan"). An
aggregate of 3,680,000 shares of Common Stock have been previously reserved for
issuance under the Stock Option Plan, representing 2,000,000 shares authorized
under the 1994 Plan and 1,680,000 additional shares subsequently authorized. As
of June 30, 1998 options to purchase 1,770,509 shares of Common Stock were
outstanding under the Stock Option Plan (including options granted under the
1987 Plan, 1988 Plan and 1994 Plan) at an average exercise price of $6.67 with
expiration dates ranging from September 15, 2003 to March 9, 2008.
As of July 6, 1998, the Company issued options under the Stock Option Plan
to purchase over 315,000 shares in connection with its recently completed
acquisition of Micronix Integrated Systems, Inc. The issuance of these options
substantially depleted the number of shares available for issuance under the
Stock Option Plan. The Board of Directors believes that the additional 500,000
shares are necessary for the Company to continue to attract and retain the
highly qualified officers and employees necessary for future growth and to
support its continued acquisition strategy. The increased number of options
awarded each year to the Outside Directors was recommended by the Company in
recognition of the increased time and responsibility of the Outside Directors in
overseeing a larger, more diverse Company. In addition, the Company believes
that the proposed annual grant of options is competitive with the practices of
the companies of similar size and in the same industry as C.P. Clare.
RECOMMENDATION
The Board of Directors recommends a vote FOR the approval of the amendments
to the Stock Option Plan.
The following description of certain features of the Stock Option Plan is
intended to be a summary only.
Plan Administration; Eligibility. The Stock Option Plan is administered by
the Compensation Committee of the Board of Directors (the "Committee"). All
members of the Committee must be "non-employee directors" as that term is
defined under the rules promulgated by the Securities and Exchange Commission
and "outside directors" as defined in Section 162(m) Internal Revenue Code and
the regulations promulgated thereunder.
The Committee has full power to select, from among the persons eligible for
awards, the individuals to whom awards will be granted, to make any combination
of awards to participants, and to determine the specific terms and conditions of
each award, subject to the provisions of the Stock Option Plan. The Committee
has delegated authority to the President to grant stock options to certain
non-executive employees. The Committee may permit Common Stock, and other
amounts payable pursuant to an award, to be deferred.
11
<PAGE> 14
In such instances, the Committee may permit dividends or deemed dividends to be
credited to the amount of deferrals.
Persons eligible to participate in the Stock Option Plan are those officers
or other employees and consultants of the Company and its subsidiaries who are
responsible for or contribute to the management, growth or profitability of the
Company and its subsidiaries, as selected from time to time by the Committee.
Independent Directors are eligible for certain awards under the Stock Option
Plan.
Stock Options. The Stock Option Plan permits the granting of (i) options
to purchase Common Stock intended to qualify as incentive stock options under
Section 422 of the Code ("Incentive Options") and (ii) options that do not so
qualify ("Non-Qualified Options"). Only employees of the Company and its
subsidiaries may be granted Incentive Options. The option exercise price of each
option will be determined by the Committee but may not be less than 100% of the
fair market value of the Common Stock on the date of grant in the case of
Incentive Options, and may not be less than 85% of the fair market value of the
Common Stock on the date of grant in the case of Non-Qualified Options. However,
employees participating in the Stock Option Plan may be granted, in the
discretion of the Committee, discounted Non-Qualified Options in lieu of cash
bonuses. In the case of such grants, the option exercise price must be at least
50% of the fair market value of the Common Stock on the date of grant. Stock
options and stock appreciation rights with respect to not more than 1,000,000
shares of Common Stock may be granted to any individual participant in a
calendar year.
The term of each option will be fixed by the Committee and may not exceed
ten years from date of grant in the case of an Incentive Option. The Committee
will determine at what time or times each option may be exercised and, subject
to the provisions of the Stock Option Plan, the period of time, if any, after
retirement, death, disability or termination of employment during which options
may be exercised. Options may be made exercisable in installments, and the
exercisability of options (including options granted under predecessor plans)
may be accelerated by the Committee.
Upon exercise of options, the option exercise price must be paid in full
either in cash or by certified or bank check or other instrument acceptable to
the Committee or, if the Committee so permits, by delivery of shares of Common
Stock already owned by the optionee. The exercise price may also be delivered to
the Company by a broker pursuant to irrevocable instructions to the broker from
the optionee.
At the discretion of the Committee, stock options granted under the Stock
Option Plan may include a "reload" feature pursuant to which an optionee
exercising an option by the delivery of shares of Common Stock would
automatically be granted an additional stock option (with an exercise price
equal to the fair market value of the Common Stock on the date the additional
stock option is granted) to purchase that number of shares of Common Stock equal
to the number delivered to exercise the original stock option.
To qualify as Incentive Options, options must meet additional federal tax
requirements, including limits on the value of shares subject to Incentive
Options which first become exercisable in any one calendar year, and a shorter
term and higher minimum exercise price in the case of certain large
stockholders.
Stock Options Granted to Independent Directors. The Stock Option Plan
provides for the automatic grant of Non-Qualified Options to Independent
Directors. In addition, under the Stock Option Plan, each Independent Director
then serving was granted a stock option to purchase 10,000 shares of Common
Stock upon the effectiveness of the Company's initial public offering in June
1995 and will receive an annual stock option to purchase 10,000 shares of Common
Stock. Each new Independent Director will, upon initial election to the Board of
Directors, be granted a stock option to purchase 10,000 shares of the Company's
Common Stock and will also receive an annual stock option grant to purchase
10,000 shares of Common Stock, beginning the year following such Director's
initial election to the Board. Proposal 2 in this Proxy Statement seeks approval
of the amendment to the Stock Option Plan adopted by the Board of Directors on
June 17, 1998, that increased the annual grant of options to the Independent
Directors from 5,000 to 10,000 per year, subject to approval of such amendment
by the Stockholders at the Annual Meeting. All options granted to Independent
Directors vest in full one year after they are granted and the exercise price of
each stock option is the fair market value of the Common Stock on the date the
option is granted.
12
<PAGE> 15
Stock Appreciation Rights. The Committee may award a stock appreciation
right ("SAR") either as a freestanding award or in tandem with a stock option.
Upon exercise of the SAR, the holder will be entitled to receive an amount equal
to the excess of the fair market value on the date of exercise of one share of
Common Stock over the exercise price per share specified in the related stock
option (or, in the case of freestanding SAR, the price per share specified in
such right, which price may not be less than 85% of the fair market value of the
Common Stock on the date of grant) times the number of shares of Common Stock
with respect to which the SAR is exercised. This amount may be paid in cash,
Common Stock, or a combination thereof, as determined by the Committee. If the
SAR is granted in tandem with a stock option, exercise of the SAR cancels the
related option to the extent of such exercise.
Restricted Stock. The Committee may award shares of Common Stock subject
to such conditions and restrictions as the Committee may determine ("Restricted
Stock"). These conditions and restrictions may include the achievement of
certain performance goals and/or continued employment with the Company through a
specified restricted period. The purchase price, if any, of shares of Restricted
Stock will be determined by the Committee. If the performance goals and other
restrictions are not attained, the recipients will forfeit their awards of
Restricted Stock. Restricted Stock may be issued in recognition of past services
or other valid consideration, and may be issued in lieu of cash compensation due
to the recipient.
Unrestricted Stock. The Committee may also grant shares (at no cost or for
a purchase price determined by the Committee) which are free from any
restrictions ("Unrestricted Stock"). Unrestricted Stock may be issued in
recognition of past services or other valid consideration, and may be issued in
lieu of cash compensation due to the recipient.
An employee, subject to consent of the Committee, may, pursuant to an
irrevocable election, receive a portion of his compensation in Unrestricted
Stock (valued at fair market value on the date the cash compensation would
otherwise be paid).
An Independent Director may, pursuant to an irrevocable written election at
least six months before directors' fees would otherwise be paid, receive all or
a portion of such fees in Unrestricted Stock, valued at fair market value on the
date the Directors' fees would otherwise be paid. In certain instances, an
Independent Director may, pursuant to an irrevocable written election, also
elect to defer a portion of his directors' fees payable in the form of
Unrestricted Stock, in accordance with such rules and procedures as may from
time to time be established by the Company. During the period of deferral, the
deferred Unrestricted Stock would receive dividend equivalent rights.
Performance Share Awards. The Committee may also grant performance share
awards entitling the recipient to receive shares of Common Stock upon the
achievement of individual or Company performance goals and such other conditions
as the Committee shall determine ("Performance Share Award").
Dividend Equivalent Rights. The Committee may grant dividend equivalent
rights, which give the recipient the right to receive credits for dividends that
would be paid if the grantee had held specified shares of Common Stock. Dividend
equivalent rights may be granted as a component of another award or as a
freestanding award. Dividend equivalents credited under the Stock Option Plan
may be paid currently or be deemed to be reinvested in additional shares of
Common Stock, which may thereafter accrue additional dividend equivalents at
fair market value at the time of deemed reinvestment or on the terms then
governing the reinvestment of dividends under the Company's dividend
reinvestment plan, if any. Dividend equivalent rights may be settled in cash,
shares, or a combination thereof, in a single installment or installments, as
specified in the award. Awards payable in cash on a deferred basis may provide
for crediting and payment of interest equivalents.
Adjustments for Stock Dividends, Mergers, Etc. The Committee will make
appropriate adjustments in outstanding awards to reflect stock dividends, stock
splits and similar events. In the event of a merger, liquidation, sale of the
Company or similar event, the Committee, in its discretion, may provide for
substitution or adjustments of outstanding options and SARs, or may terminate
all unexercised options and SARs with or without payment of cash consideration.
13
<PAGE> 16
Amendments and Termination. The Board of Directors may at any time amend
or discontinue the Stock Option Plan and the Committee may at any time amend or
cancel outstanding awards for the purpose of satisfying changes in the law or
for any other lawful purpose. However, no such action may be taken which
adversely affects any rights under outstanding awards without the holder's
consent. Further, amendments to the Stock Option Plan shall be subject to
approval by the Company's stockholders if and to the extent required by the
Securities Exchange Act of 1934, as amended (the "1934 Act"), to ensure that
awards granted under the Stock Option Plan are exempt under Rule 16b-3
promulgated under the 1934 Act, or required by the Code to preserve the
qualified status of Incentive Options.
Change of Control Provisions. The Stock Option Plan provides that in the
event of a "Change of Control" (as defined in the Stock Option Plan) of the
Company, all stock options and stock appreciation rights granted under the Stock
Option Plan shall automatically become fully exercisable. In addition, at any
time prior to or after a Change of Control, the Committee may accelerate awards
and waive conditions and restrictions on any awards to the extent it may
determine appropriate.
STOCK OPTION PLAN BENEFITS
The following table sets forth the number of stock options that will be
granted to the Independent Directors in fiscal 1999, based on the Plan as it
currently exists and as it is proposed to be amended. Other officers and
employees of the Company may receive stock options or other awards under the
Stock Option Plan, however, no such awards have been approved at this time.
Therefore, it is not possible to state the total number of employees who may be
selected to receive awards or the number of shares that may be subject to such
awards.
<TABLE>
<CAPTION>
CURRENT PROPOSED
NAME AND POSITION NUMBER OF OPTIONS(1) NUMBER OF OPTIONS(1)
- ----------------- --------------------- ---------------------
<S> <C> <C>
Winston R. Hindle Jr., Director...................... 5,000 10,000
James K. Sims, Director.............................. 5,000 10,000
Clemente C. Tiampo, Director......................... 5,000 10,000
John G. Turner, Director............................. 5,000 10,000
Executive Group (6 persons).......................... 0 0
Non-Executive Director Group (4 persons)............. 20,000 40,000
Non-Executive Officer Employee Group (1700
persons)........................................... 0 0
</TABLE>
- ---------------
(1) Options granted to Independent Directors will be granted with an exercise
price equal to the fair market value of the Common Stock on the date of
grant and are exercisable in full on year from the date of grant.
14
<PAGE> 17
OTHER MATTERS
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of Common Stock for
each person who the Company believes to be the beneficial owner of more than a
5% of the Company's Common Stock on June 30, 1998. All such information was
provided by the stockholders as specified in the footnotes to the table.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME AND BUSINESS ADDRESS SHARES ALL
OF BENEFICIAL OWNERS BENEFICIALLY OWNED SHARES(*)
- ------------------------- ------------------ ----------
<S> <C> <C>
Wellington Management Company, LLP.......................... 1,196,600(1) 12.7%
75 State Street
Boston, MA 02109
The TCW Group, Inc.......................................... 1,021,700(1) 10.9%
865 South Figueroa Street
Los Angeles, CA 90017
Princeton Services, Inc..................................... 1,011,750(2) 10.8%
800 Scudders Mill Road
Plainsboro, NJ 08536
Wisconsin Investment Board.................................. 656,000(1) 7.0%
121 East Wilson Street
Madison, Wisconsin 53702
The Hartford Financial Services Group, Inc.................. 550,000(3) 5.9%
Hartford Plaza
Hartford, CT 06115
Pilgrim Baxter & Associates, Ltd............................ 486,100(1) 5.2%
825 Duportail Road
Wayne, PA 19087
</TABLE>
- ---------------
*As of June 30, 1998, there were 9,373,742 shares of Common Stock outstanding.
(1) Information received from stockholder as filed on Schedule 13G with the
Securities and Exchange Commission.
(2) Information received from the consolidated stockholder group consisting of
Princeton Services, Inc., Fund Asset Management, L.P. and Merrill Lynch
Special Value Fund, Inc. as filed on Schedule 13G with the Securities and
Exchange Commissions on February 12, 1998.
(3) Information received from the consolidated stockholder group consisting of
HL Investment Advisors, Inc., Hartford Investment Financial Services Co.,
Hartford Capital Appreciation Fund, Inc., The Hartford Capital Appreciation
Fund, as filed on Schedule 13G with the Securities and Exchange Commissions
in February 1998.
INDEPENDENT AUDITORS
The accounting firm of Arthur Andersen LLP serves as the Company's
independent public accountants. A representative of Arthur Andersen LLP will be
present at the Annual Meeting, will be given the opportunity to make a statement
if he so desires and will be available to respond to appropriate questions.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company may engage a proxy solicitation firm to assist in the solicitation
of proxies. The Company expects to pay less than $10,000 if it does hire such
firm.
15
<PAGE> 18
The Company will also request persons, firms and corporations holding
shares in their names or in the names of their nominees, which are beneficially
owned by others, to send proxy materials to and obtain proxies from such
beneficial owners. The Company will reimburse such holders for their reasonable
expenses.
STOCKHOLDER PROPOSALS
Stockholder proposals submitted pursuant to 1934 Act Rule 14a-8 for
inclusion in the Company's proxy statement and form of proxy for the 1999 annual
meeting of stockholders must be received in writing by the Company before April
3, 1999. Such proposals must also comply with the requirements as to form and
substance established by the Securities and Exchange Commission if such
proposals are to be included in the proxy statement and form of proxy. Any such
proposals should be mailed to: C.P. Clare Corporation, 78 Cherry Hill Drive,
Beverly, MA 01915, Attn.: Clerk.
Stockholder proposals to be presented at the 1999 annual meeting of
stockholders, other than stockholder proposals submitted pursuant to 1934 Act
Rule 14a-8, must be received in writing by the Company not earlier than May 27,
1999 or later than July 11, 1999, unless the 1999 annual meeting of stockholders
is scheduled to take place before August 24, 1999 or after November 24, 1999.
The Company's Bylaws provide that any stockholder wishing to nominate a director
or have a stockholder proposal, other than a stockholder proposal submitted
pursuant to 1934 Act Rule 14a-8, considered at an annual meeting must provide
written notice of such nomination or proposal and appropriate supporting
documentation, as set forth in the Bylaws, to the Company not less than 75 days
nor more than 120 days prior to the anniversary of the immediately preceding
annual meeting of stockholders (the "Anniversary Date"); provided, however, that
in the event that the annual meeting is scheduled to be held more than 30
calendar days prior to or more than 60 calendar days after the Anniversary Date,
such nominations or proposals must be delivered to the Company not later than
the later of 75 calendar days prior to or 15 calendar days after the date on
which public announcement of the date of such meeting is first made. Any such
proposals should be mailed to: C.P. Clare Corporation, 78 Cherry Hill Drive,
Beverly, MA 01915, Attn: Clerk.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
TODAY.
16
<PAGE> 19
EXHIBIT A
CP CLARE CORPORATION
1995 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the CP CLARE CORPORATION 1995 Stock Option and
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
the officers, employees, consultants and Directors of CP CLARE CORPORATION (the
"Company") and its Subsidiaries upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.
This Plan supersedes, amends and restates the CP Clare Corporation
Amended and Restated 1994 Employee, Director and Consultant Stock Option Plan
(the "1994 Plan"), subject to Section 2(d) below.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Administrator" means the Board or the Committee.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Unrestricted Stock
Awards, Performance Share Awards and Dividend Equivalent Rights.
"Board" means the Board of Directors of the Company.
"Cause" means the occurrence of one or more of the following: (i)
employee or Independent Director is convicted of, pleads guilty to, or confesses
to any felony or any act of fraud, misappropriation or embezzlement which has an
immediate and materially adverse effect on the Company or any Subsidiary, as
determined by the Board in good faith in its sole discretion, (ii) employee or
Independent Director engages in a fraudulent act to the material damage or
prejudice of the Company or any Subsidiary or in conduct or activities
materially damaging to the property, business or reputation of the Company or
any Subsidiary, all as determined by the Board in good faith in its sole
discretion, (iii) any material act or omission by employee or Independent
Director involving malfeasance or negligence in the performance of employee's or
Independent Director's duties to the Company or any Subsidiary to the material
detriment of the Company or any Subsidiary, as determined by the Board in good
faith in its sole discretion, which has not been corrected by employee or
Independent Director within 30 days after written notice from the Company of any
such act or omission, (iv) failure by employee to comply in any material respect
with the terms of his employment agreement, if any, or any written policies or
directives of the Board as determined by the Board in good faith in its sole
discretion, which has not been corrected by employee within 30 days after
written notice from the Company of such failure, or (v) material breach by
employee of his noncompetition agreement with the Company, if any, as determined
by the Board in good faith in its sole discretion.
A-1
<PAGE> 20
"Change of Control" is defined in Section 15.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" means the Committee of two or more independent Directors
appointed by the Board to administer the Plan, all of which shall be "Outside
Directors" within the meaning of Section 162m of the Code and the rules
promulgated thereunder and of "Non-Employee Directors" within the meaning of
Rule 16b-3, promulgated under the Act, or any successor rule.
"Disability" means an employee's inability to perform his normal
required services for the Company and its Subsidiaries for a period of six
consecutive months by reason of the employee's mental or physical disability, as
determined by the Committee in good faith in its sole discretion.
"Dividend Equivalent Right" means Awards granted pursuant to Section
10.
"Effective Date" means the date on which the Plan is approved by
stockholders as set forth in Section 17.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the related rules, regulations and interpretations.
"Fair Market Value" on any given date means the last reported sale
price at which Stock is traded on such date or, if no Stock is traded on such
date, the most recent date on which Stock was traded, as reflected on the NASDAQ
National Market or, if applicable, any other national stock exchange on which
the Stock is traded or if the Stock is not traded on a national exchange, the
fair market value of the Stock as determined by the Board or the Committee in
good faith; provided, however, that "Fair Market Value" on the effective date of
the Company's initial public offering shall be the offering price to the public
on such date.
"Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.
"Independent Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
A-2
<PAGE> 21
"Performance Share Award" means Awards granted pursuant to Section 9.
"Restricted Stock Award" means Awards granted pursuant to Section 7.
"Retirement" means the employee's termination of employment with the
Company and its Subsidiaries after attainment of the age and/or service
requirements to qualify for early or normal retirement under the Company's
qualified retirement plan.
"Stock" means the Common Stock, par value $.01 per share, of the
Company, subject to adjustments pursuant to Section 3.
"Stock Appreciation Right" means Awards granted pursuant to Section 6.
"Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities, beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
"Unrestricted Stock Award" means Awards granted pursuant to Section 8.
SECTION 2. ADMINISTRATION OF PLAN; AUTHORITY TO SELECT PARTICIPANTS AND
DETERMINE AWARDS
(a) ADMINISTRATOR. The Plan shall be administered by the
Administrator.
(b) POWERS OF ADMINISTRATOR. The Administrator shall have the
power and authority to grant Awards consistent with the terms of the Plan,
including the power and authority:
(i) to select the officers, other employees and
consultants of the Company and its Subsidiaries to whom Awards may from
time to time be granted;
(ii) to determine the time or times of grant, and the
extent, if any, of Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards,
Unrestricted Stock Awards, Performance Share Awards and Dividend
Equivalent Rights, or any combination of the foregoing, granted to any
one or more participants;
(iii) to determine the number of shares of Stock to be
covered by any Award;
(iv) to determine and modify the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of
any Award, which terms and conditions may differ among individual
Awards and participants, and to approve the form of written instruments
evidencing the Awards;
A-3
<PAGE> 22
(v) to accelerate the exercisability or vesting of all or
any portion of any Award;
(vi) subject to the provisions of Section 5(a)(iii), to
extend the period in which Stock Options may be exercised;
(vii) to determine whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
participant and whether and to what extent the Company shall pay or
credit amounts constituting interest (at rates determined by the
Committee) or dividends or deemed dividends on such deferrals; and
(viii) to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in
connection with the Plan; and to otherwise supervise the administration
of the Plan.
All decisions and interpretations of the Administrator e shall be
binding on all persons, including the Company and Plan participants.
(c) DELEGATION OF AUTHORITY TO GRANT OPTIONS. The Administrator
may, in its sole discretion, delegate to the President and Chief Executive
Officer of the Company power and authority, under Section 2(b) (including
paragraphs (i) through (iv) thereof) and Section 5, to grant Options to
employees of the; provided, however, that no such grant shall be made to an
employee who is subject to the reporting requirements of Section 16 of the Act;
and provided further that the power and authority delegated hereunder shall not
include any power and authority conferred by paragraphs (v) through (viii) of
Section 2(b) or by Section 14 or any power and authority under Section 5 to
alter the rights of the employee or otherwise exercise discretion with respect
to the Option after the grant date. The power and authority delegated hereunder
shall be subject to such additional limitations as the Administrator may
specify.
(d) PRIOR GRANTS UNDER 1994 PLAN. Options granted to an optionee
under the 1994 Plan (or its predecessors) shall not be subject to any terms in
this Plan that would be deemed to modify, extend or renew such option within the
meaning of Section 424(h) of the Code.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) STOCK ISSUABLE. The maximum number of shares of Stock reserved
and available for issuance under the Plan shall be 4,180,000 shares which
represents the total of (i) 2,000,000 shares authorized under the 1994 Plan,
(ii) 680,000 additional shares authorized in connection with the approval of
this Plan, (iii) 1,000,000 additional shares authorized on March 28, 1996 and
(iv) 500,000 additional shares authorized on June 17, 1998. For purposes of
this limitation, the shares of Stock underlying any Awards which are forfeited,
canceled, reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added back to the shares
of Stock available for issuance under the Plan. Subject to such overall
limitation, shares of Stock may be issued up to such maximum number pursuant
A-4
<PAGE> 23
to any type or types of Award; provided, however, that Stock Options or Stock
Appreciation Rights with respect to not more than 1,000,000 shares of Stock may
be granted to any one individual participant during any calendar year period.
The shares available for issuance under the Plan may be authorized but unissued
shares of Stock or shares of Stock reacquired by the Company. Upon the exercise
of a Stock Appreciation Right settled in shares of Stock, the right to purchase
an equal number of shares of Stock covered by a related Stock Option, if any,
shall be deemed to have been surrendered and will no longer be exercisable, and
said number of shares of Stock shall no longer be available under the Plan.
(b) RECAPITALIZATIONS. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or kind
of shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, the
Committee shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options or Stock Appreciation Rights that can be granted to any one
individual participant, (iii) the number and kind of shares or other securities
subject to any then outstanding Awards under the Plan, and (iv) the price for
each share subject to any then outstanding Stock Options under the Plan, without
changing the aggregate exercise price as to which such Stock Options and Stock
Appreciation Rights remain exercisable. The adjustment by the Committee shall be
final, binding and conclusive. No fractional shares of Stock shall be issued
under the Plan resulting from any such adjustment, but the Committee in its
discretion may make a cash payment in lieu of fractional shares.
(c) MERGERS. In the event a consolidation or merger or sale of all
or substantially all of the assets of the Company in which outstanding shares of
Common Stock are exchanged for securities, cash or other property of any other
corporation or business entity or in the event of a liquidation of the Company,
the Board, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to outstanding Stock Options and Stock Appreciation Rights: (i)
provide that such Stock Options shall be assumed or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), (ii) upon written notice to the optionees, provide that all
unexercised Stock Options and Stock Appreciation Rights will terminate
immediately prior to the consummation of such transaction unless exercised by
the optionee within a specified period following the date of such notice, and/or
(iii) in the event of a business combination under the terms of which holders of
the Stock of the Company will receive upon consummation thereof a cash payment
for each share surrendered in the business combination, make or provide for a
cash payment to the optionees equal to the difference between (A) the value (as
determined by the Committee) of the consideration payable per share of Stock
pursuant to the business combination (the "Merger Price") times the number of
shares of Stock subject to such outstanding Stock Options and Stock Appreciation
Rights (to the extent then exercisable at prices not in excess of the Merger
Price) and (B) the aggregate exercise price of all such outstanding Stock
Options and Stock Appreciation Rights in exchange for the termination of such
Stock Options and Stock Appreciation Rights.
(d) SUBSTITUTE AWARDS. The Administrator may grant Awards under
the Plan in substitution for stock and stock based awards held by employees and
consultants of another corporation who concurrently become employees of the
Company or a Subsidiary as the result of
A-5
<PAGE> 24
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Committee may direct that the substitute
awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time officers and
other employees and consultants of the Company and its Subsidiaries who are
responsible for or contribute to the management, growth or profitability of the
Company and its Subsidiaries as are selected from time to time by the
Administrator, in its sole discretion, or by the President and Chief Executive
Officer of the Company pursuant to authority delegated under Section 2(c).
Independent Directors are also eligible to participate in the Plan but only to
the extent provided in Section 5(c) and Section 8 below.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the
Administrator (or, if granted pursuant to authority delegated under Section
2(c), the President and Chief Executive Officer) may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock
Options or Non- Qualified Stock Options. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary that is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code. To the extent
that any Option does not qualify as an Incentive Stock Option, it shall
constitute a Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after March
12, 2005.
(a) STOCK OPTIONS GRANTED TO EMPLOYEES. The Administrator in its
discretion may grant Stock Options to eligible employees of the Company or any
Subsidiary. Stock Options granted to employees pursuant to this Section 5(a)
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Administrator shall deem desirable:
(i) EXERCISE PRICE. The exercise price per share for the
Stock covered by a Stock Option granted pursuant to this Section 5(a)
shall be determined by the Administrator at the time of grant but shall
not be less than 100% of the Fair Market Value on the date of grant in
the case of Incentive Stock Options, or 85% of the Fair Market Value on
the date of grant, in the case of Non-Qualified Stock Options.
Notwithstanding the foregoing, with respect to Non-Qualified Stock
Options which are granted in lieu of cash bonus, the exercise price per
share shall not be less than 50% of the Fair Market Value on the date
of grant. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more
than 10% of the combined voting power of all classes of stock of the
Company or any parent or subsidiary corporation and an Incentive Stock
Option is granted to such employee, the option price of such Incentive
Stock Option shall be not less than 110% of the Fair Market Value on
the grant date.
A-6
<PAGE> 25
(ii) GRANT OF DISCOUNT OPTIONS IN LIEU OF CASH BONUS. In
the sole discretion of the Administrator, an employee may be granted a
Non-Qualified Stock Option in lieu of cash bonus, or any portion
thereof, to which he may become entitled pursuant to any other plan of
the Company. The exercise price per share shall be determined by the
Administrator but shall not be less than 50% of the Fair Market Value
of the Stock on the date the Stock Option is granted. The number of
shares of Stock subject to the Stock Option shall be determined by
dividing the amount of the bonus to be paid pursuant to this Section
5(a)(ii) by the difference between the Fair Market Value of the Stock
on the date the Stock Option is granted and the exercise price per
Stock Option. The Stock Option shall be granted for whole number of
shares so determined; the value of any fractional share shall be paid
in cash.
(iii) OPTION TERM. The term of each Stock Option shall be
fixed by the Administrator, but no Incentive Stock Option shall be
exercisable more than ten years after the date the option is granted.
If an employee owns or is deemed to own (by reason of the attribution
rules of Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any parent or
subsidiary corporation and an Incentive Stock Option is granted to such
employee, the term of such option shall be no more than five years from
the date of grant.
(iv) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock
Options shall become vested and exercisable at such time or times,
whether or not in installments, as shall be determined by the
Administrator at or after the grant date. The Committee may at any time
accelerate the exercisability of all or any portion of any Stock
Option. An optionee shall have the rights of a stockholder only as to
shares acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.
(v) METHOD OF EXERCISE. Stock Options may be exercised in
whole or in part, by giving written notice of exercise to the Company,
specifying the number of shares to be purchased. Payment of the
purchase price may be made by one or more of the following methods:
(A) In cash, by certified or bank check or other
instrument acceptable to the Administrator;
(B) In the form of shares of Stock that are not
then subject to restrictions under any Company plan and that
have been held by the optionee for at least six months, if
permitted by the Administrator in its discretion. Such
surrendered shares shall be valued at Fair Market Value on the
exercise date; or
(C) By the optionee delivering to the Company a
properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company
cash or a check payable and acceptable to the Company to pay
the purchase price; provided that in the event the optionee
chooses to pay the purchase price as so provided, the optionee
and the broker shall comply with such procedures and enter
into such agreements of indemnity and other agreements as the
Administrator shall prescribe as a condition of such payment
procedure.
A-7
<PAGE> 26
Payment instruments will be received subject to collection. The
delivery of certificates representing the shares of Stock to be
purchased pursuant to the exercise of a Stock Option will be contingent
upon receipt from the optionee (or a purchaser acting in his stead in
accordance with the provisions of the Stock Option) by the Company of
the full purchase price for such shares and the fulfillment of any
other requirements contained in the Stock Option or applicable
provisions of laws.
(vi) TERMINATION BY REASON OF DEATH. Any Stock Option held
by an optionee whose employment by the Company and its Subsidiaries is
terminated by reason of death shall become fully exercisable and may
thereafter be exercised by the legal representative or legatee of the
optionee, for a period of 12 months (or such longer period as the
Administrator shall specify at any time) from the date of death, or
until the expiration of the stated term of the Option, if earlier.
(vii) TERMINATION BY REASON OF DISABILITY.
(A) Any Stock Option held by an optionee whose
employment by the Company and its Subsidiaries is terminated
by reason of Disability shall become fully exercisable and may
thereafter be exercised, for a period of 12 months (or such
longer period as the Administrator shall specify at any time)
from the date of such termination of employment, or until the
expiration of the stated term of the Option, if earlier.
(B) The Administrator shall have sole authority
and discretion to determine whether a participant's employment
has been terminated by reason of Disability.
(C) The death of an optionee during the period
provided in this Section 5(a)(vii) for the exercise of a Stock
Option shall extend such period for six months (or for such
longer period as the Administrator shall specify at any time)
from the date of death, subject to termination on the
expiration of the stated term of the Option, if earlier.
(viii) TERMINATION BY REASON OF RETIREMENT.
(A) Any Stock Option held by an optionee whose
employment by the Company and its Subsidiaries is terminated
by reason of Retirement may thereafter be exercised, to the
extent it was exercisable at the time of such termination, for
a period of 12 months (or such other period as the
Administrator shall specify at any time) from the date of such
termination of employment, or until the expiration of the
stated term of the Option, if earlier.
(B) The death of an optionee during a period
provided in this Section 5(a)(viii) for the exercise of a
Stock Option shall extend such period for six months (or for
such longer period as the Administrator shall specify at any
time) from the date of death, subject to termination on the
expiration of the stated term of the Option, if earlier.
A-8
<PAGE> 27
(ix) TERMINATION FOR CAUSE. If any optionee's employment
by the Company and its Subsidiaries is terminated for Cause, any Stock
Option held by such optionee, including any Stock Option that is
immediately exercisable at the time of such termination, shall
immediately terminate and be of no further force and effect; provided,
however, that the Committee may, in its sole discretion, provide that
such Stock Option can be exercised for a period of up to 30 days from
the date of termination of employment or until the expiration of the
stated term of the Option, if earlier.
(x) OTHER TERMINATION. Unless otherwise determined by the
Administrator, if an optionee's employment by the Company and its
Subsidiaries terminates for any reason other than death, Disability,
Retirement, or for Cause, any Stock Option held by such optionee may
thereafter be exercised, to the extent it was exercisable on the date
of termination of employment, for three months (or such longer period
as the Committee shall specify at any time) from the date of
termination of employment or until the expiration of the stated term of
the Option, if earlier.
(xi) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the
extent required for "incentive stock option" treatment under Section
422 of the Code, the aggregate Fair Market Value (determined as of the
time of grant) of the shares of stock with respect to which Incentive
Stock Options granted under this Plan and any other plan of the Company
or its parent and subsidiary corporations become exercisable for the
first time by an optionee during any calendar year shall not exceed
$100,000. To the extent that any Stock Option exceeds this limit, it
shall constitute a Non-Qualified Stock Option.
(b) RELOAD OPTIONS. At the discretion of the Administrator,
Options granted under Section 5(a) may include a so-called "reload" feature
pursuant to which an optionee exercising an option by the delivery of a number
of shares of Stock in accordance with Section 5(a)(v)(B) hereof would
automatically be granted an additional Option (with an exercise price equal to
the Fair Market Value of the Stock on the date the additional Option is granted
and with the same expiration date as the original Option being exercised, and
with such other terms as the Committee may provide) to purchase that number of
shares of Stock equal to the number delivered to exercise the original Option.
(c) STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS.
(i) AUTOMATIC GRANT OF OPTIONS.
(A) Each Independent Director shall be granted
on the effective date of the Company's initial public offering
a Non-Qualified Stock Option to acquire 10,000 shares of
Stock.
(B) Each Independent Director who is first
elected to serve as a Director after the effective date of the
Company's initial public offering shall be granted, on the
fifth business day after his election, a Non-Qualified Stock
Option to acquire 10,000 shares of Stock.
(C) Each Independent Director who is serving as
Director of the Company on the fifth business day after each
annual meeting of shareholders, beginning with the annual
meeting following the grant of a Stock Option to the
A-9
<PAGE> 28
Independent Director pursuant to (A) or (B) above, shall
automatically be granted on such day a Non-Qualified Stock
Option to acquire 10,000 shares of Stock.
(D) The exercise price per share for the Stock
covered by any Stock Option granted under this Section 5(c)
shall be equal to the Fair Market Value of the Stock on the
date the Stock Option is granted.
(ii) EXERCISE; TERMINATION; NON-TRANSFERABILITY.
(A) Subject to the provisions of Section 15,
each Option granted under Section 5(c) shall become
exercisable one year after the date of grant or upon the death
of the Optionee, if sooner, provided that the Optionee has
been a Director throughout such period. An Option granted
under Section 5(c) shall not be exercisable after the
expiration of ten years from the date of grant.
(B) If an Independent Director ceases to be a
Director for any reason other than Cause or death, an Option
granted under this Section 5(c) may thereafter be exercised,
if it is exercisable in accordance with Section 5(c)(ii)(A)
above, for a period of six months from the date such optionee
ceases to be a Director of the Company or until the specified
expiration date, if earlier. If the optionee ceases to be a
Director for Cause, all rights in an Option granted under this
Section 5(c) shall terminate immediately on the date on which
he ceases to be a Director.
(C) No Stock Option granted under this Section
5(c) shall be transferable by the optionee otherwise than by
will or by the laws of descent and distribution, and such
Options shall be exercisable during the optionee's lifetime
only by the optionee. Any Option granted to an Independent
Director and exercisable on the date of his death in
accordance with Section 5(c)(ii)(A), may be exercised by the
legal representative or legatee of the optionee for a period
of six months from the date of death or until the expiration
of the stated term of the option, if earlier.
(D) Options granted under this Section 5(c) may
be exercised only by written notice to the Company specifying
the number of shares to be purchased. Payment of the full
purchase price of the shares to be purchased may be made by
one or more of the methods specified in Section 5(a)(v). An
optionee shall have the rights of a stockholder only as to
shares acquired upon the exercise of a Stock Option and not as
to unexercised Stock Options.
(iii) LIMITED TO INDEPENDENT DIRECTORS. The provisions of
this Section 5(c) shall apply only to Options granted or to be granted
to Independent Directors, and shall not be deemed to modify, limit or
otherwise apply to any other provision of this Plan or to any Option
issued under this Plan to a participant who is not an Independent
Director of the Company. To the extent inconsistent with the provisions
of any other Section of this Plan, the provisions of this Section 5(c)
shall govern the rights and obligations of the Company and Independent
Directors respecting Options granted or to be granted to Independent
Directors.
A-10
<PAGE> 29
(d) STOCK OPTIONS GRANTED TO CONSULTANTS. The Committee in its
discretion may grant Non-Qualified Stock Options to eligible consultants of the
Company or any Subsidiary, on such terms and conditions, not inconsistent with
the terms of the Plan, as the Committee shall deem desirable; provided, however,
that (i) the exercise price per share for the Stock covered by a Stock Option
granted pursuant to this Section 5(d) shall not be less than 85% of the Fair
Market Value on the date of grant, (ii) the method of exercise of such Stock
Option shall be limited to one or more of the methods described in Section
5(a)(v) hereof, and (iii) such Stock Option shall not include a "reload" feature
as described in Section 5(b) hereof or any similar feature.
(e) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee. Notwithstanding the foregoing, the
Committee may provide in an option agreement that the optionee may transfer,
without consideration for the transfer, his Stock Options to members of his
immediate family, to trusts for the benefit of such family members and to
partnerships in which such family members are the only partners.
(f) FORM OF SETTLEMENT. Shares of Stock issued upon exercise of a
Stock Option shall be free of all restrictions under the Plan, except as
otherwise provided in the Plan.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) NATURE OF STOCK APPRECIATION RIGHTS. A Stock Appreciation
Right is an Award entitling the recipient to receive an amount in cash or shares
of Stock or a combination thereof having a value equal to the excess of the Fair
Market Value of the Stock on the date of exercise over the exercise price per
Stock Appreciation Right set by the Administrator at the time of grant, which
price shall not be less than 85% of the Fair Market Value of the Stock on the
date of grant (or over the option exercise price per share, if the Stock
Appreciation Right was granted in tandem with a Stock Option) multiplied by the
number of shares of Stock with respect to which the Stock Appreciation Right
shall have been exercised, with the Administrator having the right to determine
the form of payment.
(b) GRANT AND EXERCISE OF STOCK APPRECIATION RIGHTS. Stock
Appreciation Rights may be granted to any eligible employee or consultant of the
Company or any Subsidiary by the Administrator in tandem with, or independently
of, any Stock Option granted pursuant to Section 5 of the Plan. In the case of a
Stock Appreciation Right granted in tandem with a Non-Qualified Stock Option,
such Stock Appreciation Right may be granted either at or after the time of the
grant of such Option. In the case of a Stock Appreciation Right granted in
tandem with an Incentive Stock Option, such Stock Appreciation Right may be
granted only at the time of the grant of the Option.
A Stock Appreciation Right or applicable portion thereof granted in
tandem with a Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Option.
(c) TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. Stock
Appreciation Rights shall be subject to such terms and conditions as shall be
determined from time to time by the Committee, subject to the following:
A-11
<PAGE> 30
(i) Stock Appreciation Rights granted in tandem with
Options shall be exercisable at such time or times and to the extent
that the related Stock Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the
applicable portion of any related Option shall be surrendered.
(iii) Stock Appreciation Rights granted in tandem with an
Option shall be transferable only when and to the extent that the
underlying Option would be transferable. Stock Appreciation Rights not
granted in tandem with a Option shall not be transferable otherwise
than by will or the laws of descent or distribution. All Stock
Appreciation Rights shall be exercisable during the participant's
lifetime only by the participant or the participant's legal
representative.
SECTION 7. RESTRICTED STOCK AWARDS
(a) NATURE OF RESTRICTED STOCK AWARDS. The Administrator may grant
Restricted Stock Awards to any eligible employee or consultant of the Company or
any Subsidiary. A Restricted Stock Award is an Award entitling the recipient to
acquire, at no cost or for a purchase price determined by the Committee, shares
of Stock subject to such restrictions and conditions as the Committee may
determine at the time of grant ("Restricted Stock"). Conditions may be based on
continuing employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives. Restricted Stock Awards may be
granted or sold as described in the preceding sentences in respect of past
services or other valid consideration, or in lieu of any cash compensation due
to the recipient.
(b) ACCEPTANCE OF AWARD. A participant who is granted a Restricted
Stock Award shall have no rights with respect to such Award unless the
participant shall have accepted the Award within 60 days (or such shorter date
as the Administrator may specify) following the award date by making payment to
the Company, if required, by certified or bank check or other instrument or form
of payment acceptable to the Administrator in an amount equal to the specified
purchase price, if any, of the shares covered by the Award and by executing and
delivering to the Company a written instrument that sets forth the terms and
conditions of the Restricted Stock Award in such form as the Administrator shall
determine.
(c) RIGHTS AS A STOCKHOLDER. Upon complying with Section 7(b)
above, a participant shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the
Administrator shall otherwise determine, certificates evidencing the Restricted
Stock shall remain in the possession of the Company until such Restricted Stock
is vested as provided in Section 7(e) below.
(d) RESTRICTIONS. Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the written instrument evidencing the
Restricted Stock Award. In the case of Restricted Stock granted to an employee,
if the participant's employment by the Company and its Subsidiaries terminates
for any reason other than death or Disability, the Company shall have the right,
at the discretion of the Administrator , to repurchase Restricted Stock with
respect to which conditions have not lapsed at their purchase price, or to
require forfeiture of such shares to the Company if acquired
A-12
<PAGE> 31
at no cost, from the participant or the participant's legal representative. The
Company must exercise such right of repurchase or forfeiture not later than the
90th day following such termination of employment (unless otherwise specified in
the written instrument evidencing the Restricted Stock Award). Restricted Stock
granted to a consultant shall be subject to such repurchase and forfeiture
provisions as the Administrator shall specify at the time of grant.
(e) VESTING OF RESTRICTED STOCK. The Administrator at the time of
grant shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed "vested." A participant whose employment is
terminated for reason of death or Disability shall become fully vested on his
termination date in any Restricted Stock he received as an employee to the
extent such vesting is otherwise contingent only on continued service with the
Company. Where vesting is contingent on attainment of pre-established
performance goals, the vesting of Restricted Stock in the case of death or
Disability shall remain dependent on the attainment of such goals and shall be
determined as of such date or dates specified by the Administrator.
(f) WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The written
instrument evidencing the Restricted Stock Award may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on the
Restricted Stock.
SECTION 8. UNRESTRICTED STOCK AWARDS
(a) GRANT OR SALE OF UNRESTRICTED STOCK. The Administrator may, in
its sole discretion, grant (or sell at a purchase price determined by the
Administrator) an Unrestricted Stock Award to any eligible employee or
consultant of the Company or any Subsidiary, pursuant to which the recipient may
receive shares of Stock free of any restrictions ("Unrestricted Stock") under
the Plan. Unrestricted Stock Awards may be granted or sold as described in the
preceding sentence in respect of past services or other valid consideration, or
in lieu of any cash compensation due to the recipient.
(b) ELECTIONS TO RECEIVE UNRESTRICTED STOCK IN LIEU OF
COMPENSATION. Upon the request of an eligible employee of the Company or any
Subsidiary and with the consent of the Administrator, such employee may,
pursuant to an irrevocable written election delivered to the Company no later
than the date or dates specified by the Administrator receive a portion of the
cash compensation otherwise due to such employee in the form of shares of
Unrestricted Stock (valued at Fair Market Value on the date or dates the cash
compensation would otherwise be paid).
(c) ELECTIONS TO RECEIVE UNRESTRICTED STOCK IN LIEU OF DIRECTOR
FEES. Each Independent Director may, pursuant to an irrevocable written election
delivered to the Company, receive all or a portion of such Independent
Director's director fees in shares of Unrestricted Stock (valued at Fair Market
Value on the date or dates that the director fees would otherwise be paid in
cash).
(d) DEFERRAL OF AWARDS. Each Independent Director who has made an
election to receive shares of Unrestricted Stock under Section 8(c) above will
have the right to defer receipt
A-13
<PAGE> 32
of up to 100% of such shares of Unrestricted Stock payable to such Independent
Director in accordance with such rules and procedures as may from time to time
be established by the Company for that purpose, and such election shall be at
the beginning of the next calendar year. The deferred Unrestricted Stock shall
be entitled to receive Dividend Equivalent Rights settled in shares of Stock.
(e) RESTRICTIONS ON TRANSFERS. The right to receive Unrestricted
Stock on a deferred basis may not be sold, assigned, transferred, pledged or
otherwise encumbered, other than by will or the laws of descent and
distribution.
SECTION 9. PERFORMANCE SHARE AWARDS
(a) NATURE OF PERFORMANCE SHARE AWARDS. A Performance Share Award
is an award entitling the recipient to acquire shares of Stock upon the
attainment of specified performance goals. The Administrator may make
Performance Share Awards independent of or in connection with the granting of
any other Award under the Plan. Performance Share Awards may be granted under
the Plan to any eligible employee or consultant of the Company or any
Subsidiary, including those who qualify for awards under other performance plans
of the Company. The Committee in its sole discretion shall determine whether and
to whom Performance Share Awards shall be made, the performance goals applicable
under each such Award, the periods during which performance is to be measured,
and all other limitations and conditions applicable to the awarded Performance
Shares; provided, however, that the Administrator may rely on the performance
goals and other standards applicable to other performance unit plans of the
Company in setting the standards for Performance Share Awards under the Plan.
(b) RESTRICTIONS ON TRANSFER. Performance Share Awards and all
rights with respect to such Awards may not be sold, assigned, transferred,
pledged or otherwise encumbered.
(c) RIGHTS AS A SHAREHOLDER. A participant receiving a Performance
Share Award shall have the rights of a shareholder only as to shares actually
received by the participant under the Plan and not with respect to shares
subject to the Award but not actually received by the participant. A participant
shall be entitled to receive a stock certificate evidencing the acquisition of
shares of Stock under a Performance Share Award only upon satisfaction of all
conditions specified in the written instrument evidencing the Performance Share
Award (or in a performance plan adopted by the Administrator).
(d) TERMINATION. Except as may otherwise be provided by the
Administrator at any time prior to termination of employment (or other business
relationship in respect of which the Awards were granted), a participant's
rights in all Performance Share Awards shall automatically terminate upon the
termination of the participant's employment by (or such other business
relationship with) the Company and its Subsidiaries for any reason.
(e) ACCELERATION, WAIVER, ETC. At any time prior to the
termination of the participant's employment by the Company and its Subsidiaries
(or other business relationship with the Company and its Subsidiaries in respect
of which the Award was granted), the Administrator may in its sole discretion
accelerate, waive or, subject to Section 13, amend any or all of the goals,
restrictions or conditions imposed under any Performance Share Award.
SECTION 10. DIVIDEND EQUIVALENT RIGHTS
A-14
<PAGE> 33
(a) DIVIDEND EQUIVALENT RIGHTS. A Dividend Equivalent Right is an
award entitling the recipient to receive credits based on cash dividends that
would be paid on the shares of Stock specified in the Dividend Equivalent Right
(or other award to which it relates) if such shares were held by the recipient.
A Dividend Equivalent Right may be granted hereunder to an eligible employee or
consultant, as a component of another award or as a freestanding award. A
Dividend Equivalent Right may also be granted to an Independent Director
pursuant to Section 8(d). The terms and conditions of Dividend Equivalent Rights
shall be specified in the grant. Dividend equivalents credited to the holder of
a Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at Fair Market Value on the date of
reinvestment or such other price as may then apply under a dividend reinvestment
plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled
in cash or shares of Stock or a combination thereof, in a single installment or
installments. A Dividend Equivalent Right granted as a component of another
award may provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on, such other
award, and that such Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A Dividend Equivalent
Right granted as a component of another award may also contain terms and
conditions different from such other award.
(b) INTEREST EQUIVALENTS. Any award under this Plan that is
settled in whole or in part in cash on a deferred basis may provide in the grant
for interest equivalents to be credited with respect to such cash payment.
Interest equivalents may be compounded and shall be paid upon such terms and
conditions as may be specified by the grant.
SECTION 11. TAX WITHHOLDING
(a) PAYMENT BY PARTICIPANT. Each participant shall, no later than
the date as of which the value of an Award or of any Stock or other amounts
received thereunder first becomes includible in the gross income of the
participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to such income. The Company and its Subsidiaries shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the participant.
(b) PAYMENT IN STOCK. Subject to approval by the Administrator,
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company shares
of Stock owned by the participant with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount due
filed all reports and statements required to be filed pursuant to that Section
for that year.
SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
A-15
<PAGE> 34
(a) a transfer to the employment of the Company from a Subsidiary
or from the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness,
or for any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the Committee
otherwise so provides in writing.
SECTION 13. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award (or
provide substitute Awards at the same or reduced exercise or purchase price or
with no exercise or purchase price, but such price, if any, must satisfy the
requirements which would apply to the substitute or amended Award if it were
then initially granted under this Plan) for the purpose of satisfying changes in
law or for any other lawful purpose, but no such action shall adversely affect
rights under any outstanding Award without the holder's consent.
SECTION 14. STATUS OF PLAN
With respect to the portion of any Award which has not been exercised
and any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Administrator shall otherwise expressly
determine in connection with any Award or Awards. In its sole discretion, the
Administrator may authorize the creation of trusts or other arrangements to meet
the Company's obligations to deliver Stock or make payments with respect to
Awards hereunder, provided that the existence of such trusts or other
arrangements is consistent with the foregoing sentence.
SECTION 15. CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as defined in this Section
15:
(a) Each outstanding Stock Option and Stock Appreciation Right
shall automatically become fully exercisable notwithstanding any provision to
the contrary herein.
(b) Each Restricted Stock Award and Performance Share Award shall
be subject to such terms, if any, with respect to a Change of Control as have
been provided by the Committee in connection with such Award.
(c) "Change of Control" shall mean the occurrence of any one of
the following events:
(i) any "person," as such term is used in Sections 13(d)
and 14(d) of the Act (other than the Company, any of its Subsidiaries,
or any trustee, fiduciary or other person or entity holding securities
under any employee benefit plan or trust of the Company or any of its
Subsidiaries), together with all "affiliates" and "associates" (as such
terms are
A-16
<PAGE> 35
defined in Rule 12b-2 under the Act) of such person, shall become the
"beneficial owner" (as such term is defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company representing
50% or more of either (A) the combined voting power of the Company's
then outstanding securities having the right to vote in an election of
the Company's Board of Directors ("Voting Securities") or (B) the then
outstanding shares of Stock of the Company (in either such case other
than as a result of an acquisition of securities directly from the
Company); or
(ii) persons who, as of the Effective Date, constitute the
Company's Board of Directors (the "Incumbent Directors") cease for any
reason, including, without limitation, as a result of a tender offer,
proxy contest, merger or similar transaction, to constitute at least a
majority of the Board, provided that any person becoming a director of
the Company subsequent to the Effective Date whose election or
nomination for election was approved by a vote of at least a majority
of the Incumbent Directors shall, for purposes of this Plan, be
considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the
shareholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, shares representing in the aggregate 60% or
more of the voting shares of the corporation issuing cash or securities
in the consolidation or merger (or of its ultimate parent corporation,
if any), (B) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of
the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company;
Notwithstanding the foregoing, a "Change of Control" shall not be
deemed to have occurred for purposes of the foregoing clause (i) solely as the
result of an acquisition of securities by the Company which, by reducing the
number of shares of Stock or other Voting Securities outstanding, increases (x)
the proportionate number of shares of Stock beneficially owned by any person to
50% or more of the shares of Stock then outstanding or (y) the proportionate
voting power represented by the Voting Securities beneficially owned by any
person to 50% or more of the combined voting power of all then outstanding
Voting Securities; PROVIDED, HOWEVER, that if any person referred to in clause
(x) or (y) of this sentence shall thereafter become the beneficial owner of any
additional shares of Stock or other Voting Securities (other than pursuant to a
stock split, stock dividend, or similar transaction), then a "Change of Control"
shall be deemed to have occurred for purposes of the foregoing clause (i).
SECTION 16. GENERAL PROVISIONS
(a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The
Committee may require each person acquiring Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Committee
A-17
<PAGE> 36
may require the placing of such stop-orders and restrictive legends on
certificates for Stock and Awards as it deems appropriate.
(b) DELIVERY OF STOCK CERTIFICATES. Delivery of stock certificates
to participants under this Plan shall be deemed effected for all purposes when
the Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
SECTION 17. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of a
majority of the shares of stock of the Company present or represented and
entitled to vote at a meeting of stockholders. Subject to such approval by the
stockholders and to the requirement that no Stock may be issued hereunder prior
to such approval, Stock Options and other Awards may be granted hereunder on and
after adoption of this Plan by the Board. The Plan was adopted by the Board of
Directors of the Corporation in March 1995 and approved by the stockholders in
April 1995. The Plan was amended and restated as of May 19, 1995 and October 2,
1995. The Plan was further amended as of March 28, 1996, which amendment was
approved by stockholders on September 17, 1996. The Plan was further amended as
of June 17, 1998 and July 14, 1998, which amendments were approved by
Stockholders on September 24, 1998.
SECTION 18. GOVERNING LAW
This Plan shall be governed by Massachusetts law except to the extent
such law is preempted by federal law.
A-18
<PAGE> 37
<TABLE>
<S> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- --------------------------------------------------
C.P. CLARE CORPORATION 1. To elect two Class III directors to serve FOR ALL WITH- FOR ALL
- -------------------------------------------------- until the 2001 Annual Meeting of Stockholders NOMINEES HOLD EXCEPT
and until their successors are duly elected [ ] [ ] [ ]
and qualified.
ARTHUR R. BUCKLAND
JAMES K. SIMS
Mark box at right if an address change or comment
has been noted on the reverse side of this card. [ ] NOTE: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name of the
nominee. Your shares will be voted for the remaining nominee.
RECORD DATE SHARES:
2. To approve the amendments to the C.P. Clare FOR AGAINST ABSTAIN
Corporation 1995 Stock Option and Incentive
Plan to increase the number of shares issuable [ ] [ ] [ ]
under the Plan by 500,000 shares and to
effect certain other modifications to the Plan.
3. In their discretion, such other matters as many FOR AGAINST ABSTAIN
properly come before the meeting or any
adjournment thereof. [ ] [ ] [ ]
----------
Please be sure to sign and date this Proxy |Date |
- ------------------------------------------------------
- ---Stockholder sign here------Co-owner sign here------
</TABLE>
DETACH CARD DETACH CARD
C.P. CLARE CORPORATION
Dear Stockholder,
Please take note of the important information enclosed with this Proxy
Ballot. Issues related to the management and operation of your Company are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will
be voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders,
September 24, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
C.P. Clare Corporation
<PAGE> 38
C.P. CLARE CORPORATION
78 CHERRY HILL DRIVE, BEVERLY, MASSACHUSETTS 01915
ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 24, 1998
The undersigned hereby appoints Arthur R. Buckland, Thomas B. Sager and Lori M.
Henderson, and all or any of them, with full power of substitution, as proxies
and attorneys in fact, to vote and act at the Annual Meeting of Stockholders
(the "Annual Meeting") of C.P. Clare Corporation (the "Company"), to be held
September 24, 1998 at the Company's headquarters, 78 Cherry Hill Drive,
Beverly, Massachusetts, and at any adjournment thereof, in respect of all shares
of Common Stock, par value $.01 per share, of the Company with respect to which
the undersigned would be entitled to vote and act if personally present.
The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting
and the accompanying Proxy Statement and hereby directs said proxies, or their
substitutes, to vote and act on the following matters set forth in such Notice
and Proxy Statement as specified by the undersigned. You may revoke this Proxy
by submitting a proxy bearing a later date or by voting in person if you attend
the Annual Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF C.P. CLARE CORPORATION AND
WILL BE VOTED AS DIRECTED. IF NO CHOICE IS INDICATED, IT WILL BE VOTED "FOR"
ALL ITEMS AND IN THE DISCRETION OF THE PROXIES AS TO ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign this Proxy exactly as your name(s) appear(s) on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If a corporation, this signature
should be that of an authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- -------------------------------------- ------------------------------------
- -------------------------------------- ------------------------------------
- -------------------------------------- ------------------------------------
