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EXHIBIT 10.74
EMPLOYMENT AGREEMENT
Employment Agreement, dated as of July 6. 1998 ("Effective Date") between
DAVID ADAMS of 24871 Crown Royale, Laguna Niguel, CA 92677 ("the Employee") and
C.P. CLARE CORPORATION, a Massachusetts corporation with its principal office at
78 Cherry Hill Drive, Beverly, MA 01915-1048 (the "Company"). Unless the context
otherwise requires, the term "Company" shall include all subsidiary corporations
of the Company.
WHEREAS, on the Effective Date, the Company acquired all of the
outstanding stock of Micronix Integrated Systems, Inc. ("Micronix") pursuant to
a merger with a subsidiary of the Company pursuant to an Agreement and Plan of
Merger dated as of July 6, 1998 between the Company, a wholly owned subsidiary
of the Company, Micronix, Employee and the other principal shareholder of
Micronix (the "Transaction") and the Employee was previously an officer and
principal shareholder of Micronix; and
WHEREAS, as a condition to the Transaction, the parties hereto have agreed
to enter into this Employment Agreement.
NOW THEREFORE, in consideration of the terms and mutual covenants herein
contained, the Employee and the Company agree as follows:
1. TERM OF EMPLOYMENT.
(a) EMPLOYMENT. The Company hereby employs the Employee, and the Employee
hereby accepts employment by the Company, for a period of five years commencing
on the Effective Date and ending on the fifth anniversary of the Effective Date
(the "Initial Term"), subject to extension in accordance with the provisions of
subparagraph (b), below, unless terminated earlier in accordance with the terms
hereof (the "Employment Period").
(b) EXTENSION OF TIME. Unless either party shall have given notice of its
intention to terminate this Agreement 120 days prior to the end of the Initial
Term or any successive one year term or unless this Agreement is terminated
pursuant to Section 8, the term of the employment of the Employee under this
Agreement shall be automatically renewed for successive one year terms.
2. CAPACITY. The Employee shall serve as Executive Vice President, Sales
and Marketing of Clare Micronix Integrated Systems, Inc., a wholly owned
subsidiary of CP Clare Corporation or, in the event Clare Micronix Integrated
Systems, Inc. is later combined with the Company, Executive Vice President,
Sales and Marketing of Clare Micronix, a division of CP Clare Corporation (in
either case, the "Division"), shall report to the President of the Division and
shall perform such duties and functions with respect to such position as are
assigned from time to time by the President of the Division. During the
Employment Period and unless otherwise agreed to by the parties, the Division
will maintain a material business presence in Orange County, California and the
Employee shall not be required to relocate his personal residence in order to
perform his duties under this Agreement.
3. FULL-TIME EMPLOYMENT. The Employee shall devote his entire business
and professional time, attention and energies to the performance of his duties
to the Company and of any of its subsidiaries by which he may be employed and
shall not, directly or indirectly, actively engage
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in or concern himself with any other activities or commitments which interfere
with the performance of his duties hereunder or which, even if non-interfering,
may be inimical or contrary to the best interests of the Company.
Notwithstanding the foregoing, the Employee may at all times during the
Employment Period (i) subject in each case to the approval of the Chief
Executive Officer of the Company, serve as an officer, director, trustee, or
committee member of any religious, professional, civic, charitable or
educational organization, or as a director of any corporation whose business is
not competitive with that of the Company; and (ii) engage in, and devote time
and effort to, any and all personal investments or business ventures unrelated
to the business or affairs of the Company, in each case so long as such
activities do not materially interfere with his obligations set forth in this
Paragraph 3 and provided that such activities are permitted under Paragraph 13
of this Agreement.
4. COMPENSATION AND BENEFITS. For all services rendered by the
Employee to the Company, the Company shall pay to the Employee during the
Employment Period the following compensation:
(a) BASE SALARY. The Employee shall be entitled to an annual base salary
of One Hundred Fifty Thousand Dollars ($150,000) from the date of this Agreement
until the expiration of the Employment Period. The base salary may be increased
(but may not be reduced) by approval of the Board of Directors of the Company
for any fiscal year of the Company during the Employment Period. To that end,
the Employee shall receive a performance review at least once in each fiscal
year of the Company, in connection with which he shall be eligible for such
merit increases and other salary adjustments as the Board of Directors of the
Company shall approve.
(b) ANNUAL BONUS. In addition to his regular salary, the Employee shall be
eligible (subject to the provisions of Paragraph 8(e) hereof) to receive an
annual bonus each year of up to the greater of (i) 50% of his base salary or
(ii) $100,000 on terms consistent with the Company's annual bonus plan;
provided, however, that the bonus applicable to the first two fiscal years of
employment shall not be less than $100,000. For the first fiscal year of
employment by the Employee, the bonus shall be prorated for the period from the
Effective Date through the end of the fiscal year.
(c) MICRONIX ACCRUED BONUS. The Company agrees that prior to the effective
date of the Transaction, the Employee accrued and is due to receive a bonus in
the amount of $36,885.28 from Micronix. Such bonus shall be paid to the Employee
no later than 20 days following the Effective Date.
(d) STOCK OPTION GRANT. In addition to his regular salary, the Employee
shall be eligible (subject to the provisions of Paragraph 8(e) hereof) to
receive grants of options to purchase Common Stock in the Company in accordance
with the Company's policies in effect from time to time.
(e) PAYMENT OF SALARY AND BONUS. The Employee's base salary under
subparagraph (a) of this Paragraph 4 shall be payable in substantially equal
installments in accordance with the Company's existing payroll practices for its
executives. Any bonus payable under subparagraph (b) of this Paragraph 4 shall
be paid to the Employee within 90 days following the end of the fiscal year with
respect to which such bonus relates. Any stock option grants payable under
subparagraph (d) of this Paragraph 4 shall be made in a manner consistent with
the Company's policies.
(e) WITHHOLDING TAXES. The Employee agrees that the Company shall withhold
from any and all payments required to be made to the Employee pursuant to this
Agreement all federal, state,
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local and/or other taxes which the Company determines are required to be
withheld in accordance with applicable statutes and/or regulations from time to
time in effect.
5. INITIAL GRANT OF STOCK OPTIONS.
On the Effective Date, the Employee will be granted options to purchase
75,000 shares of Common Stock in the Company vesting in five equal amounts on
each anniversary of the Effective Date. Such options shall be (i) Incentive
Stock Options, as such term is defined pursuant to Internal Revenue Code Section
422, as it may be amended from time to time, and issued under the Company's 1995
Stock Option and Incentive Plan to the extent that such options qualify on the
date of grant as Incentive Stock Options and (ii) non-qualified stock options,
to the extent that balance of such option do not qualify as Incentive Stock
Options with substantially the same terms and conditions as options issued under
the Plan referenced in clause (i) (collectively, the "Initial Options"). All
Initial Options shall have been approved in advance by the Board of Directors of
the Company and will be issued at fair market value on the Effective Date. The
shares of stock underlying the Initial Options not already registered for resale
will be registered for resale on Form S-8 within 30 days after the Effective
Date. Any portion of the Initial Options which are unvested on the date of
termination of Employee's employment with the Company shall lapse upon the date
of termination, if such termination was the result of one of the following: (i)
Company's termination of Employee for Good Cause (as defined in Paragraph 8(b))
or (ii) Employee's resignation of employment, for any reason. Notwithstanding
anything to the contrary in this Agreement, the Employee shall retain the
Initial Options after the date of termination of employment and vesting shall
continue pursuant to the terms and conditions of the option agreement governing
such options over the initial five year period, except as provided in the
immediately preceding sentence.
6. FRINGE BENEFITS; VACATIONS.
(a) EMPLOYEE BENEFIT PLAN. The Employee shall be eligible to participate
during the Employment Period in such of the employee benefit and health plans
and other fringe benefit programs as the Company shall establish or maintain for
its employees from time to time (commensurate with the Employee's position and
compensation).
(b) LIFE AND DISABILITY INSURANCE. The Company shall provide to the
Employee at the expense of the Company and keep in force during the Employment
Period a policy of term life insurance with a death benefit in the amount of two
(2) times base salary, in accordance with the policy in effect from time to
time. Additionally, the Employee shall be entitled to participate in the
Company's group disability insurance program during the Employment Period.
(c) VACATIONS. The Employee shall be entitled to vacation time in each
year consistent with the Company's vacation policy for its senior executives as
in effect from time to time. For purposes of determining time of service, years
of service with Micronix shall be included. A copy of the Company's current
vacation policy has been provided to the Employee. The Employee shall also be
entitled to all paid holidays and personal days given by the Company to its
employees similarly situated.
(d) CAR ALLOWANCE. The Employee shall be entitled to a car allowance of
$250 per month during the Employment Period.
7. REIMBURSEMENT. The Company shall promptly reimburse the Employee for
all reasonable business expenses incurred by him in connection with his
performance of his duties to the
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Company, upon substantiation of such expenses in accordance with the policies of
the Company in effect from time to time during the Employment Period. The
Company will not reimburse the Employee for country club membership dues or
fees. The Company will reimburse the Employee for airline upgrades purchased by
the Employee and used for business travel by the Employee pursuant to airline
programs.
8. TERMINATION OF EMPLOYMENT.
(a) TERMINATION WITHOUT CAUSE. The Company expressly reserves the right to
terminate the employment of the Employee hereunder without cause, and other than
as provided in subparagraphs (c) and (d), of this Paragraph 8. In such event,
the Employee shall be entitled to receive (i) his base salary as provided in
Paragraph 4(a) hereof to the date of such termination and no other benefits,
including, without limitation, those provided for under Paragraphs 4(b), 4(c)
and 6 of this Agreement (except those that cannot be divested pursuant to the
Employee Retirement Income Security Act of 1974, as amended or other applicable
law), and (ii) for the period of one (1) year following such termination his
base salary as provided for in Paragraph 4(a) hereof at the rate in effect on
the date of such termination of employment, payable in equal installments in the
same amounts and in the same periodic intervals as his base salary was paid
immediately prior to such termination.
(b) VOLUNTARY TERMINATION AND TERMINATION FOR GOOD CAUSE. The Employee's
employment may be voluntarily terminated by him at any time by giving not less
than four weeks written notice thereof to the Company. Additionally, the
Employee's employment may be terminated at any time for Good Cause (as
hereinafter defined) effective upon the giving of written notice of such
termination for Good Cause by the Company to the Employee. If at any time during
the term of this Agreement (i) the Employee shall have voluntarily terminated
his employment with the Company or (ii) the Company shall have terminated the
employment of the Employee for Good Cause (as hereinafter defined) the Employee
shall be entitled to receive only his base salary as provided in Paragraph 4(a)
hereof to the date of such termination and no other benefits, including, without
limitation, those provided for under Paragraphs 4(b), 4(c) and 6 of this
Agreement (except those that cannot be divested pursuant to the Employee
Retirement Income Security Act of 1974, as amended or other applicable law).
For purposes of this Agreement, the term "Good Cause" shall mean (i)
conviction of the Employee of any criminal offense involving dishonesty or
breach of trust or any felony or crime of moral turpitude, (ii) willful
misconduct in the performance of his duties not cured within 15 days after
notice of such misconduct from the Company, (iii) the willful continuous neglect
of the duties and responsibilities of his office (other than failure to perform
his duties and fulfill his responsibilities resulting from the Employee's
incapacity due to a physical or mental illness) not cured within 15 days after
notice of such neglect from the Company, or (iv) the Employee's failure to
perform any term, covenant or condition required to be performed by the Employee
pursuant to this Agreement not cured within 15 days after notice of such failure
from the Company, all to be finally determined in the sole discretion of the
Board of Directors of the Company.
(c) DISABILITY. In the event that the Employee shall sustain a disability
and be unable to perform his duties and responsibilities during the term of this
Agreement, shall have been certified by at least two (2) duly licensed and
qualified physicians approved by the Board of Directors of the Company (the
"Examining Physicians"), the Company shall continue to pay to the Employee while
such disability continues the full amount of his base salary as set forth in
Paragraph 4(a) hereof for a
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period following the Date of Disability equal to the lesser of (i) six months or
(ii) the period ending upon the date of inception of the payment of benefits
under any disability insurance to which the Employee may become entitled
pursuant to Paragraph 6(b) hereof. Thereafter, if the Employee's disability
shall continue (as evidenced by the continued absence of the Employee from his
duties), the employment of the Employee under this Agreement shall terminate and
all obligations of the Employee shall cease and the Employee shall be entitled
to receive only the benefits, if any, as may be provided by any insurance to
which he may have become entitled pursuant to Paragraph 6(b) hereof, the payment
of any amounts of the Employee's base salary then remaining to be paid under
Paragraph 4(a) hereof through the date of the termination of the Employee's
employment. "Disability" means the inability to perform the essential functions
of the job, with or without reasonable accommodation as required by law; the
"Date of Disability" shall be deemed to be the date on which the Board of
Directors of the Company receives written notice from the Examining Physicians
stating that the Employee is suffering a Disability as defined herein.
(d) DEATH. In the event of the Employee's death during the term of this
Agreement, the Employee's employment hereunder shall immediately terminate and,
in such event, the Employee's estate shall be entitled to receive the Employee's
base salary as provided in Paragraph 4(a) hereof to the last day of the month
during which the Employee's death shall have occurred and such additional
benefits, if any, as may be provided by any insurance to which the Employee may
have become entitled pursuant to Paragraph 6(b) hereof.
(e) TREATMENT OF COMPENSATION ON TERMINATION.
(i) Current Year's Bonus and Option Grants. In the event of the
termination of the employment of the Employee for any reason, the Employee shall
not be entitled to receive any bonus payment or option awards pursuant to
Paragraphs 4(b) and 4(c) hereof in respect of the fiscal year of the Company in
which the termination shall take place. Notwithstanding anything to the contrary
in this Paragraph 8(e)(i), the Employee shall receive a prorated (to the date of
termination) portion of any bonus for the first two fiscal years of employment
referenced in Paragraph 4(b) in the event of termination during the first two
fiscal years of employment.
(ii) Previous Year' s Bonus and Option Grants. In the event that at
the time of his termination, the Employee is due, but has not yet received,
payment of an annual bonus in respect of the preceding fiscal year of the
Company pursuant to Paragraph 4(b) or 4(c), such bonus shall be paid to the
Employee at the time it is paid to the other employees of the Company except
that, notwithstanding the foregoing, if the Employee shall have been terminated
for Good Cause as provided in subparagraph (b) of this Paragraph 8, the Employee
shall forfeit and shall not be entitled to receive payment of any such annual
bonus or issuance of such stock options in respect of the preceding fiscal year
which the Employee shall not have received on or before the date of such
termination for Good Cause.
9. INVENTIONS AND PATENTS.
(a) DISCLOSURE OF DEVELOPMENTS. The Employee will promptly and fully
disclose to the Company any and all inventions, discoveries, trade secrets and
improvements, whether or not patentable and whether or not they are made,
conceived or reduced to practice during working hours or using the Company's
data or facilities, which the Employee develops, makes, conceives or reduces to
practice during his employment by the Company, either solely or jointly with
others or which Employee developed, made, conceived or reduced to practice
during his employment by
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Micronix, either solely or jointly with others (collectively, "Developments").
All such Developments shall be the sole property of the Company, and the
Employee hereby assigns to the Company, without further compensation, all his
right, title and interest in and to such Developments and any and all related
patents, patent applications, copyrights, copyright applications, trademarks and
trade names in the United States and elsewhere.
(b) MAINTENANCE OF RECORDS. The Employee will keep and maintain adequate
and current written records of all Developments (in the form of notes, sketches,
drawings and as may be specified by the Company), which records shall be
available to and remain the sole property of the Company at all times.
(c) ASSISTANCE IN OBTAINING PATENTS. The Employee will assist the Company
in obtaining and enforcing patent, copyright and other forms of legal protection
for the Developments in any country. Upon request, the Employee will sign all
applications, assignments, instruments and papers and perform all acts necessary
or reasonably desired by the Company to assign all such Developments fully and
completely to the Company and to enable the Company, its successors, assigns and
nominees, to secure and enjoy the full and exclusive benefits and advantages
thereof. During his employment, the Employee will perform his obligations under
this subparagraph (c) without further compensation, except for reimbursement of
expenses incurred at the request of the Company. If the Employee is not employed
by the Company as an the Employee at the time he is requested to perform any
obligations under this subparagraph, he shall receive for such performance a
reasonable per diem fee, as well as reimbursement of any expenses incurred at
the request of the Company.
10. PROPRIETARY INFORMATION.
(a) OBLIGATION TO KEEP CONFIDENTIAL. The Employee recognizes that his
relationship with the Company is one of high trust and confidence by reason of
his access to and contact with the trade secrets and confidential and
proprietary information of the Company. The Employee will not at any time,
either during his employment with the Company or thereafter, disclose to others,
or use for his own benefit or the benefit of others, any confidential or
proprietary information, and all other knowledge, information, documents or
materials, owned, developed or possessed by the Company, whether in tangible or
intangible form, the confidentiality of which the Company takes reasonable
measures to protect, and which pertains, in any manner, to subjects which
include, but are not limited to, the Company's research operations, inventions,
discoveries, trade secrets and improvements, whether or not patentable,
customers (including identities of customers and prospective customers,
identities of individual contacts at business entities which are customers or
prospective customers, preferences, businesses or habits), business
relationships, products (including prices, costs, sales or content), financial
information or measurements, business methods, future business plans, data
bases, computer programs, marketing plans, forecasts, licenses, pricing
information and other information owned, developed or possessed by the Company
("Proprietary Information") The term "Proprietary Information" shall also
include information described in the immediately preceding sentence which is
owned, developed or possessed by Micronix.
(b) EXCEPTIONS. The Employee's undertakings and obligations under this
Paragraph 10 will not apply to any Proprietary Information which: (a) is or
becomes generally known to the public through no action on the part of the
Employee, (b) is generally disclosed to third parties by the Company without
restriction on such third parties, (c) is approved for release by written
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authorization of the Board of Directors of the Company, or (d) is the subject
matter of a lawful request or subpoena by and within the authority of a court or
governmental agency or other body.
(c) RETURN OF PROPRIETARY INFORMATION. Upon termination of the employment
of the Employee with the Company or at any other time upon request, the Employee
will promptly deliver to the Company all notes, memoranda, notebooks, drawings,
records, reports, files and other documents (and all copies of reproductions of
such materials) in his possession or under his control, whether prepared by him
or others, which contain Proprietary Information. The Employee acknowledges that
the material is the sole property of the Company.
11. ABSENCE OF RESTRICTIONS UPON DISCLOSURE AND COMPETITION. The Employee
represents that his performance of all the terms of this Agreement does not and
will not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by him in confidence or in trust prior to the date of
this Agreement, and he will not disclose to the Company or induce the Company to
use any confidential or proprietary information or material belonging to any
previous company or others.
12. OTHER OBLIGATIONS REGARDING PROPRIETARY INFORMATION. The Employee
acknowledges that the Company from time to time may have agreements with other
persons or with the U S Government, or agencies thereof, which impose
obligations or restrictions on the Company regarding inventions made during the
course of work under such agreements or regarding the confidential nature of
such work. The Employee agrees to be bound by all such obligations and
restrictions which are made known to him and to take all action necessary to
discharge the obligations of the Company under such agreements.
13. NONCOMPETITION.
(a) During the Employment Period, the Employee agrees not to compete in
any manner, either directly or indirectly, with the Company, or to assist any
other person or entity to compete with the Company.
(b) During the Employment Period and for one (1) year following the
termination, for any reason, of his employment, the Employee agrees either on
his behalf or on behalf of any other person or entity, directly or indirectly,
not to hire, solicit, or encourage to leave the employ of the Company any person
who is then an employee of the Company. The restrictions described herein shall
apply to the activities of the Employee in any state or other jurisdiction in
which the Company engaged in business during the term of employment.
The restrictions against competition set forth in this Paragraph 13 are
considered by the parties to be reasonable for the purposes of protecting the
business of the Company. However, if any such restriction is found by any court
of competent jurisdiction to be unenforceable because it extends for too long a
period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
14. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Company and the Employee and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement
and the rights and obligations of the parties hereunder are personal to the
Company and the Employee and are not assignable or transferable to any other
person, firm or corporation without the consent of the other party, provided,
however, that
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the Company may assign its rights and obligations hereunder to any person or
entity who or which succeeds to all or substantially all of the Company's
business and assets.
15. NOTICES. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or upon deposit in
the United States mails, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address set forth in the introductory
paragraph of this Agreement, or at such other address or addresses as either
party shall designate to the other in accordance with this Paragraph 15. Any
notice to the Employee pursuant to this Section 15 shall be copied to The Busch
Firm, 2532 Dupont Drive, Irvine, CA 92715, Attn.: Tim Busch.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties, and supersedes all prior agreements and understandings,
relating to the subject matter of this Agreement.
17. AMENDMENT. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Employee.
18. HEADINGS. The Paragraph and subparagraph headings used in this
Agreement are for convenience only and shall not be deemed to be a party of this
Agreement.
19. SEVERABILITY. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
20. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the state of California applicable to
agreements made-to be performed entirely within such state, without giving
effect to the conflicts of laws principles thereof.
21. CONSTRUCTION OF AGREEMENT. The parties mutually acknowledge that they
and their attorneys have participated in the preparation and negotiation of this
Agreement. In cases of uncertainty this Agreement shall be construed without
regard to which of the parties caused the uncertainty to exist. Each party also
acknowledges that each has been represented by legal counsel in the preparation
and negotiation of this Agreement. The Company shall reimburse the Employee for
fees and expenses of Rutan & Tucker LLP incurred by the Employee in connection
with the Transaction, up to a maximum amount of $10,000.
22. DISPUTE RESOLUTION. If there is a dispute between the parties arising
out of or relating to this Agreement or their relationship, including but not
limited to its alleged breach or termination, the parties shall first attempt in
good faith to settle this dispute by mediation, either under the rules of the
American Arbitration Association, or with the assistance of another organization
established to provide mediation services. If mediation is unsuccessful, any
remaining unresolved controversy or claim arising out of or relating to this
contract, its alleged breach or termination, shall be resolved by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration shall occur in Los Angeles, California.
There shall be a single arbitrator agreed upon mutually by the parties. If
the parties cannot agree upon the selection of an arbitrator within 30 days
after the demand for arbitration given by one
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party to the other, the selection of the arbitrator shall be made by obtaining a
list of seven arbitrators from the Los Angeles office of the American
Arbitration Association. After obtaining this list, the parties shall
alternately strike names from the list, with the Employee to be the party
striking first. After each party has stricken three names from the list, the
remaining name shall be the single arbitrator for this proceeding.
Alternatively, the parties may agree, by written stipulation, to appoint a
single arbitrator whose name is not on a list supplied by the American
Arbitration Association.
Each party shall be responsible for paying one half of the arbitrator's
fees, and its own costs and attorneys fees, except that the arbitrator shall be
empowered to award costs and attorneys fees to the prevailing party, should he
or she find that the position of the other party is without substantial merit.
The arbitrator's award shall be in writing and shall be accompanied by a written
opinion explaining the reasons for the arbitrator's decision.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written
C.P. CLARE CORPORATION
/s/ __________________________________
its: Chief Executive Officer
EMPLOYEE:
/s/ __________________________________
David Adams