Employment Agreement/ Michael J. Ferrantino

AMENDED AND RESTATED EMPLOYMENT AGREEMENT


Amended and Restated Employment Agreement, dated as of January ___, 1997, between MICHAEL J. FERRANTINO of 14 Old Schoolhouse Road, Andover, Massachusetts 01810 ("the Employee") and C.P. CLARE CORPORATION, a Massachusetts Corporation with its principal office at 78 Cherry Hill Drive, Beverly, Massachusetts 01915 (the "Company"). Unless the context otherwise requires, the term "Company" shall include all subsidiary corporations of the Company.


WHEREAS, the Company and the Employee are party to an Employment Agreement dated as of April 11, 1995, and,


WHEREAS, the parties hereto have agreed to amend and restate such agreement, effective as of the date hereof.


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 the period commencing on April 11, 1995, the initial date of execution of this Agreement and ending on March 31, 1996 (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 TERM. In the event that on or before the date of expiration of the Initial Term, the employment of the Employee shall not have been terminated pursuant to the provisions of Paragraph 7 hereof, the term of the employment of the Employee under this Agreement shall be automatically renewed for successive one year terms thereafter until such time as the employment of the Employee shall be terminated pursuant to the provisions of Paragraph 7 hereof.


2. CAPACITY. The Employee shall serve as Vice President and General Manager of the Company's Solid State Products Division and shall perform such duties and functions with respect to such position as are assigned from time to time by the Board of Directors or by the Chief Executive Officer of the Company. The Employee shall report directly to the Chief Executive Officer of the Company.


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 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


2


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 12 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 Two Hundred Thousand Dollars ($200,000) 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 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 a year, 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, the first such review to take place in December, 1995.


(b) ANNUAL BONUS. In addition to his regular salary, the Employee shall be eligible (subject to the provisions of Paragraph 7(f) hereof) to receive a bonus of up to 50% of his base salary with respect to each fiscal year or portion thereof during the Employment Period, pursuant to the CP Clare Corporate Bonus Program, as such program shall be amended and in effect from time to time.


(c) 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 annual bonus payable under subparagraph (b) of this Paragraph 4 shall be paid to the Employee within 60 days following the end of the fiscal year with respect to which such bonus relates.


(d) EQUITY COMPENSATION ARRANGEMENTS. The Employee shall also be eligible to participate during the term of his employment under this Agreement in such equity compensation arrangements as are provided by the Company for its executives. In that regard, the Employee will be granted incentive stock options under the Company's Amended and Restated 1994 Employee, Director and Consultant Stock Option Plan which shall entitle the Employee to acquire up to 600,000 (120,000 post 1 for 5 split) shares of the Company's common stock for a purchase price equal to the fair market value of such shares on the date of grant of such options as determined by the Company's Board of Directors, such options to vest ratably over a period of five (5) years.


2 3


(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, 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. Fringe Benefits; Vacations.
--------------------------


(a) EMPLOYEE BENEFIT PLANS. 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 (and thereafter to the extent provided in Paragraph 7(a)(i) hereof) a split dollar policy of term life insurance with a death benefit in the amount of $500,000. Additionally, the Employee shall be entitled to participate in the Company's group disability insurance program during the Employment Period (and thereafter to the extent provided in Paragraph 7(a)(i) hereof).


(c) CAR ALLOWANCE. The Employee shall be entitled to a car allowance of $650 per month during the Employment Period (and thereafter to the extent provided in Paragraph 7(a)(i) hereof).


(d) 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. 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 executives.


6. 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 Company, upon substantiation of such expenses in accordance with the policies of the Company in effect from time to time during the Employment Period.


7. Termination of Employment.
-------------------------


(a) TERMINATION WITHOUT CAUSE. The Company expressly reserves the right to terminate the employment of the Employee hereunder other than for cause as provided in subparagraph (b), and other than as provided in subparagraphs (c) and (d), of this Paragraph 7. In the event that the Employee's employment shall have been so terminated by the Company other than for cause:


(i) SEVERANCE BENEFITS. The Employee shall be entitled to receive 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, plus the continuation of the fringe benefits, life and disability


3 4


insurance, and car allowance provided for in subparagraphs (a), (b) and (c) of paragraph 5 hereof for such one (1) year period.


(ii) OUTPLACEMENT. The Company shall reasonably assist the Employee in locating other suitable employment, including expending up to Ten Thousand Dollars ($10,000) to engage professional outplacement assistance, if the Employee shall request the Company to provide such outplacement assistance.


(b) VOLUNTARY TERMINATION AND TERMINATION FOR CAUSE. The Employee's employment may be voluntarily terminated by him at any time by giving not less than two (2) weeks' written notice thereof to the Company. Additionally, the Employee's employment may be terminated at any time for cause (as hereinafter defined) effective upon the giving of written notice of such termination for 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 (other than a contemplated by subparagraph (e) of this Paragraph 7), or (ii) the Company shall have terminated the employment of the Employee for 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) and 5 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), under this Agreement.


For purposes of this Agreement, the term "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, (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), or (iv) the Employee's failure to perform any ...