-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EtNGdsmQfQZmOKCuFxLMvh7aSa81peubNlnJN2og9S7ONxbzE4KEq4d8WKI3h3uc xQHd6HCXy4ohcm6TNmE3iQ== 0001017062-96-000491.txt : 19961115 0001017062-96-000491.hdr.sgml : 19961115 ACCESSION NUMBER: 0001017062-96-000491 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEWPORT CORP CENTRAL INDEX KEY: 0000225263 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY APPARATUS & FURNITURE [3821] IRS NUMBER: 940849175 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01649 FILM NUMBER: 96660347 BUSINESS ADDRESS: STREET 1: 1791 DEERE AVE CITY: IRVINE STATE: CA ZIP: 92714 BUSINESS PHONE: 7148633144 FORMER COMPANY: FORMER CONFORMED NAME: DOLE JAMES CORP DATE OF NAME CHANGE: 19910905 10-Q 1 FORM 10-Q FOR THE PERIOD ENDING 9/30/96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 *** FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 -------------------------------------------------- OR [_] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to _________________________ Commission File Number 0-1649 ------- NEWPORT CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Nevada 94-0849175 - -------------------------------------------------------------------------------- (State or other Jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1791 Deere Avenue, Irvine, CA 92606 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (714) 863-3144 - -------------------------------------------------------------------------------- N/A - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _______ --- The number of shares outstanding of each of the issuer's classes of common stock as of September 30, 1996, was 8,839,582. Page 1 of 13 Pages Exhibit Index on Sequentially Numbered Page 12 NEWPORT CORPORATION INDEX ----- PART I. FINANCIAL INFORMATION Page Number Item 1: Financial Statements: Consolidated Statement of Income and Condensed Consolidated Statement of Stockholders' Equity for the Three and Nine Months ended September 30, 1996 and 1995. 3 Consolidated Balance Sheet at September 30, 1996 and December 31, 1995. 4 Consolidated Statement of Cash Flows for the Nine Months ended September 30, 1996 and 1995. 5 Notes to Condensed Consolidated Financial Statements. 6 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations. 8 PART II.OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K. 12 SIGNATURE 13 Exhibit Index 14 2 NEWPORT CORPORATION CONSOLIDATED STATEMENT OF INCOME AND CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
(In thousands, except Three Months Ended Nine Months Ended per share amounts) September 30, September 30, ------------ ------------ 1996 1995 1996 1995 ---- ---- ---- ---- Net sales $29,235 $24,253 $87,331 $74,094 Cost of sales 16,527 13,079 49,317 40,527 ------- ------- ------- ------- Gross profit 12,708 11,174 38,014 33,567 Selling, general and administrative expense 8,779 8,091 26,600 24,966 Research and development expense 1,896 1,491 5,866 4,940 ------- ------- ------- ------- Income from operations 2,033 1,592 5,548 3,661 Interest expense (504) (386) (1,417) (1,190) Other income (expense), net 113 (112) 332 1,095 ------- ------- ------- ------- Income before income taxes 1,642 1,094 4,463 3,566 Income tax provision 526 350 1,429 1,141 ------- ------- ------- ------ Net income $ 1,116 $ 744 $ 3,034 $ 2,425 ======= ======= ======= ======= Net income per share $0.12 $0.08 $0.34 $0.28 ======= ======= ======= ======= Number of shares used to calculate net income per share 9,028 8,808 8,990 8,665 ======= ======= ======= ======= Stockholders' equity, beginning of period $53,688 $49,589 $52,687 $46,651 Net income 1,116 744 3,034 2,425 Dividends -0- (171) (351) (312) Unrealized translation gain (loss) 353 (51) (803) 1,034 Reduction in unrealized gain on marketable securities -0- -0- -0- (343) Unamortized deferred compensation 89 28 (224) (217) Issuance of common shares 233 771 1,136 1,672 ------- ------- ------- ------- Stockholders' equity, end of period $55,479 $50,910 $55,479 $50,910 ======= ======= ======= =======
See accompanying notes 3 NEWPORT CORPORATION CONSOLIDATED BALANCE SHEET
(In thousands, except stated value per share) September 30, December 31, 1996 1995 ---- ---- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 3,708 $ 1,524 Customer receivables, net 20,362 19,767 Other receivables 3,130 780 Inventories 27,138 22,744 Deferred tax assets 2,558 2,570 Other current assets 1,614 1,518 ------- ------- Total current assets 58,510 48,903 Investments, notes receivable and other assets 5,116 4,557 Property, plant and equipment, at cost, net 24,281 22,327 Goodwill, net 11,093 8,161 ------- ------- $99,000 $83,948 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 6,482 $ 5,054 Accrued payroll and related expenses 4,193 5,143 Taxes based on income 1,270 1,261 Current portion of long-term debt 1,803 5,286 Other accrued liabilities 6,109 3,586 ------- ------- Total current liabilities 19,857 20,330 Deferred taxes 1,032 1,032 Long term debt 22,632 9,899 Commitments Stockholders' equity: Common stock, $0.35 stated value, 20,000 shares authorized; 8,840 shares issued and outstanding currently; 8,699 shares at December 31, 1995 3,094 3,045 Capital in excess of stated value 8,696 7,609 Unamortized deferred compensation (593) (369) Unrealized translation loss (2,576) (1,773) Retained earnings 46,858 44,175 ------- ------- Total stockholders' equity 55,479 52,687 ------- ------- $99,000 $83,948 ======= =======
See accompanying notes 4 NEWPORT CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, ------------- (In thousands) 1996 1995 ---- ---- OPERATING ACTIVITIES: Net income $ 3,034 $ 2,425 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,446 3,351 Net gain from sales of investments - (832) Increase in provision for losses on receivables and inventories 706 405 Other non-cash income (122) (141) Changes in operating assets and liabilities: Receivables 239 2,295 Inventories (4,257) (185) Other current assets (177) (97) Accounts payable and other accrued expenses (76) (2,686) Taxes based on income 7 465 Translation gain related to operating activities 337 803 -------- ------- Net cash provided by operating activities 3,137 5,803 -------- ------- INVESTING ACTIVITIES: Purchases of property, plant and equipment, net (5,035) (1,697) Acquisition of businesses, net of cash acquired (4,442) - Proceeds from sales of investments, net - 822 -------- ------- Net cash used in investing activities (9,477) (875) -------- ------- FINANCING ACTIVITIES: Repayment of long- and short-term borrowings (23,667) (6,079) Increase in long-term borrowings 11,749 - Proceeds from debt placement 20,000 - Cash dividends paid (351) (312) Issuance of common stock under employee agreements, including associated tax benefit 747 879 -------- ------- Net cash provided by (used in) financing activities 8,478 (5,512) -------- ------- Effect of foreign exchange rate changes on cash 46 (134) -- --- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,184 (718) Cash and cash equivalents at beginning of period 1,524 3,014 -------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,708 $ 2,296 ======== ======= CASH PAID IN THE PERIOD FOR: Interest 697 882 Taxes 1,353 587
See accompanying notes 5 NEWPORT CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1996 (UNAUDITED) 1. INTERIM REPORTING GENERAL The accompanying unaudited financial statements consolidate the accounts of the Company and its wholly owned subsidiaries and have been prepared in accordance with generally accepted accounting principles for interim financial information. The accounts of the Company's subsidiaries in Europe have been consolidated using a one-month lag. In the opinion of management, all adjustments necessary for a fair presentation of the information in the unaudited condensed consolidated financial statements have been made and consist of only normal recurring accruals. Operating results for the nine-month period ended September 30, 1996, are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. Although the Company believes that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnotes normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission, and consequently, these statements should be read in conjunction with the Company's consolidated financial statements and notes thereto, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. Certain reclassifications have been made to prior period amounts to conform to current year presentation. EARNINGS PER SHARE Earnings per share is based on the weighted average number of shares of common stock and the dilutive effects of common stock equivalents (stock options), determined using the treasury stock method. FOREIGN CURRENCY Balance sheet accounts denominated in foreign currencies are translated at exchange rates as of the date of the balance sheet and income statement accounts are translated at average exchange rates for the period. Translation gains and losses are accumulated as a separate component of stockholders' equity. The Company has adopted local currencies as the functional currencies for its foreign subsidiaries because their principal economic activities are most closely tied to the respective local currencies. The Company may enter into foreign exchange contracts as a hedge against foreign currency denominated receivables. It does not engage in currency speculation. Market value gains and losses on contracts are recognized currently, offsetting gains or losses on the associated receivables. Foreign currency transaction gains and losses are included in current earnings. Foreign exchange contracts totaled $2.3 million at September 30, 1996. There were no foreign exchange contracts outstanding at December 31, 1995. 2. ACQUISITIONS On January 2, 1996, the Company acquired, for cash plus additional cash consideration based upon future operating profit, substantially all the assets and selected liabilities of MikroPrecision Instruments, Inc. ("MikroPrecision"), a manufacturer of precision equipment for high technology industries such as semiconductor and disk drive markets. The company is located in a suburb of Minneapolis, Minnesota. The acquisition was accounted for as a purchase. 6 NEWPORT CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONT'D) SEPTEMBER 30, 1996 (UNAUDITED) 3. CUSTOMER RECEIVABLES Customer receivables consist of the following:
September 30, December 31, (In thousands) 1996 1995 ---- ---- Customer receivables $20,899 $20,304 Less allowance for doubtful accounts 537 537 --- --- $20,362 $19,767 ====== ======
The Company maintains adequate reserves for potential credit losses. Such losses have been minimal and within management's estimates. Receivables from customers are generally unsecured. 4. INVENTORIES Inventories are stated at cost, determined on either a first-in, first-out (FIFO) or average cost basis and do not exceed net realizable value. Inventories consist of the following:
September 30, December 31, (In thousands) 1996 1995 ---- ---- Raw materials and purchased parts $10,426 $ 7,832 Work in process 5,049 4,111 Finished goods 11,663 10,801 ------ ------ $27,138 $22,744 ====== ======
5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following:
September 30, December 31, (In thousands) 1996 1995 ---- ---- Land $ 2,170 $ 2,238 Buildings 12,938 13,366 Leasehold improvements 8,362 7,500 Machinery and equipment 22,348 19,510 Office equipment 9,522 8,865 ----- ----- 55,340 51,479 Less accumulated depreciation 31,059 29,152 ------ ------ $24,281 $22,327 ====== ======
7 NEWPORT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 INTRODUCTORY NOTE This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements include (i) the existence and development of the Company's technical and manufacturing capabilities, (ii) anticipated competition, (iii) potential future growth in revenues and income, (iv) potential future decreases in costs, and (v) the need for, and availability of, additional financing. The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties. These forward-looking statements are based on assumptions that the Company will not lose a significant customer or customers or experience increased fluctuations of demand or rescheduling of purchase orders, that the Company's markets will continue to grow, that the Company's products will remain accepted within their respective markets and will not be replaced by new technology, that competitive conditions within the Company's markets will not change materially or adversely, that the Company will be successful in integrating the operations of its RAM Optical Instrumentation, Inc. and MikroPrecision Instruments, Inc. ("MikroPrecision") subsidiaries with the rest of the Company's operations, that the Company will retain key technical and management personnel, that the Company's forecasts will accurately anticipate market demand, that there will be no material adverse change in the Company's operations or business and that the Company will not experience significant supply shortages with respect to purchased components, sub-systems or raw materials. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although, the Company believes that the assumptions underlying the forward-looking statements will be realized. In addition, the business and operations of the Company are subject to substantial risks which increase the uncertainty inherent in the forward-looking statements. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved. The following is management's discussion and analysis of certain significant factors which have affected the earnings and financial position of the Company during the periods included in the accompanying financial statements. This discussion compares the three- and nine-month periods ended September 30, 1996 with the three- and nine-month periods ended September 30, 1995. This discussion should be read in conjunction with the financial statements and associated notes. 8 NEWPORT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D) THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 RESULTS OF OPERATIONS FINANCIAL ANALYSIS:
Period-to-Period Increase (decrease) ------------------ Three Nine Percentage of Net Sales Months Months ----------------------- Three Months Ended Nine Months Ended Ended Ended September 30, September 30, September 30, 1996 1995 1996 1995 1996 1996 ----- ----- ----- ----- ------ ----- Net sales 100.0% 100.0% 100.0% 100.0% 20.5% 17.9% Cost of sales 56.5 53.9 56.5 54.7 26.4 21.7 ----- ----- ----- ----- Gross margin 43.5 46.1 43.5 45.3 13.7 13.2 Selling, general and administrative expense 30.1 33.4 30.5 33.7 8.5 6.5 Research and development expense 6.5 6.1 6.7 6.7 27.2 18.7 ----- ----- ----- ----- Income from operations 6.9 6.6 6.3 4.9 27.7 51.5 Interest expense (1.6) (1.6) (1.6) (1.6) 30.6 19.1 Other income, net 0.3 (0.5) 0.4 1.5 (200.9) (69.7) Income taxes (1.8) (1.4) (1.6) (1.5) 50.1 25.2 ----- ----- ----- ----- Net income 3.8% 3.1% 3.5% 3.3% 50.0 25.1 ===== ===== ===== =====
NET SALES: Sales for the three- and nine-month periods ended September 30, 1996, were $29.2 million and $87.3 million, respectively, compared with $24.3 million and $74.1 million for the three- and nine-month periods ended September 30, 1995, an increase of 20.5% and 17.9% for the respective periods. The increase for the three- and nine-month periods ended September 30, 1996 were principally attributable to sales growth in U.S. domestic market ($4.4 million and $11.4 million, respectively) and Pacific Rim market ($1.1 million and $3.3 million, respectively) offset in part by sales declines in Europe, primarily in France ($0.4 million and $2.1 million, respectively). The Company's domestic sales totaled $18.1 million and $51.6 million for the three- and nine-month periods ended September 30, 1996, compared with $13.7 million and $40.2 million for the three- and nine-month periods ended September 30, 1995, an increase of 32.5% and 28.5% for the respective periods. The current period increases from the year ago levels were principally attributable to the impact of the MikroPrecision acquisition ($2.3 million and $5.8 million, respectively) and the sales growth of other core product lines. International sales of the Company were $11.1 million and $35.7 million for the three- and nine-month periods ended September 30, 1996, compared with $10.6 million and $33.9 million for the three- and nine-month periods ended September 30, 1995, an increase of 4.6% and 5.1% for the respective periods. The increase for the three- and nine-month periods ended September 30, 1996 were principally attributable to a strengthening of sales in the Pacific Rim, offset in part by declines in France. The order rates in the U.S. and Pacific Rim show moderate strength, however, the order rates in Europe continue to be weak. Overall, management anticipates continued sales growth through the remainder of 1996 over the prior year from its MikroPrecision and RAM Optical Instrumentation, Inc. subsidiaries, the improving economic situation in the U.S. and Pacific Rim economies and increased sales of ultra-high precision positioning products. Management believes the weakness in sales in France continues to be principally attributable to budgetary constraints on certain French government agencies and that weakness in Europe is anticipated to continue at least for the remainder of 1996. 9 NEWPORT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D) THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 GROSS PROFIT: Gross profit increased 13.7% and 13.2% on a sales increase of 20.5% and 17.9% for the three- and nine-month periods ended September 30, 1996 compared with the three- and nine-month periods ended September 30, 1995, respectively. However, the margin (gross profit as a percentage of sales) decreased to 43.5% of sales in each of the three- and nine-month periods ended September 30, 1996, compared with 46.1% and 45.3% for the three- and nine-month periods ended September 30, 1995, respectively, principally attributable to lower gross profit margins on OEM sales at MikroPrecision and lower sales volume in Europe. The Company believes that consolidated gross margins will continue to be impacted by MikroPrecision gross profit margins, which are lower than the margins historically recorded by the Company, and by the weakness in European sales. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and administrative (SG&A) expenses for the three- and nine-month periods ended September 30, 1996, increased 8.5% and 6.5%, respectively, compared with the three- and nine-month periods ended September 30, 1995. SG&A expenses when stated as a percentage of sales were 30.1% and 30.5%, compared with 33.4% and 33.7% for the prior year periods. SG&A expenses increased during the three- and nine-month periods ended September 30, 1996, in large part because of SG&A expenses at MikroPrecision for which there were no comparable amounts in the corresponding 1995 periods. However, these expenses decreased as a percentage of sales because of the increased sales volume. RESEARCH AND DEVELOPMENT EXPENSES: Research and development (R&D) expenses for the three- and nine-month periods ended September 30, 1996, increased 27.2% and 18.7%, respectively, compared with the three- and nine-month periods ended September 30, 1995. This increase is principally attributable to costs associated with the continued development of new systems for the fiber optic communications and disk drive markets, including the ORION(TM) fiber alignment system and Polaris(TM) video inspection system, along with products aimed at motion control applications and wafer fabrication, and includes R&D expenses at MikroPrecision for which there were no comparable amounts in the corresponding 1995 periods. These R&D expenses when stated as a percentage of sales were 6.5% and 6.7%, compared with 6.1% and 6.7% for the prior year periods. Management is committed to continued product development and intends to increase R&D spending by approximately one million dollars in 1996 over 1995 for development of new products and product improvements. INTEREST EXPENSE AND OTHER INCOME: Interest expense for the three- and nine-month periods ended September 30, 1996, was $0.5 million and $1.4 million respectively, compared with $0.4 million and $1.2 million for the three- and nine-month periods ended September 30, 1995. The increase is principally attributable to increased debt primarily because of the acquisition of MikroPrecision. During May 1996 the Company obtained $20.0 million of long-term financing from an insurance company which was used to refinance a significant portion of its outstanding debt. The Company believes that this financing will reduce its after-tax cost of borrowing. Other income, consisting of interest, dividends and other income, was $0.1 million and $0.3 million for the three-and nine-month periods ended September 30, 1996, compared with $(0.1) million and $1.1 million for the three- and nine-month periods ended September 30, 1995. The nine-month period ended September 30, 1995 included non- recurring investment income totaling $499,000, net of taxes, or $0.06 per share. 10 NEWPORT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D) THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 PROVISION FOR TAXES: The effective annual tax rate for the three- and nine-month periods ended September 30, 1996 and 1995 was 32%. LIQUIDITY AND CAPITAL RESOURCES: Net cash provided by operating activities of $3.1 million for the nine-month period ended September 30, 1996, was principally attributable to the Company's net income ($3.0 million) and non-cash items (principally depreciation and amortization of $3.4 million), offset in part by changes in operating assets and liabilities, principally increased inventories of $4.3 million. Net cash used in investing activities of $9.5 million for the nine-month period ended September 30, 1996, was attributable to the Company's acquisition of businesses ($4.4 million) in the first quarter and purchases of property, plant and equipment ($5.0 million). Net cash provided by financing activities of $8.5 million for the nine-month period ended September 30, 1996, was principally attributable to the proceeds from a $20.0 million debt placement and other increases in long-term debt borrowings, partially offset by the repayment of $23.7 million of long- and short-term borrowings. In May 1996, the Company obtained $20.0 million of long-term financing from an insurance company which was used to refinance a significant portion of its outstanding debt. These senior notes, sold at par, are unsecured, carry an 8.25% annual coupon and mature in May 2004. Combined with its existing unsecured revolving credit line, this debt placement raised the Company's total available and outstanding credit to $37.0 million. The Company has a revolving credit agreement for a $15.0 million unsecured line of credit to support the Company's domestic operations and its international operations outside of Europe and a French franc 10 million unsecured line of credit to support the Company's European requirements, with interest at prime plus 0.5%, or LIBOR plus 2.0%. At September 30, 1996, no amounts were outstanding under on these lines of credit and standby letter of credit utilization under the lines totaled $0.3 million. Subsequent to the end of the third quarter of 1996, this unsecured line of credit was increased by by a $5.0 million. This amendment to its credit agreement also reduces the interest rate to prime, or LIBOR plus 1%. The unused line fee was also reduced, from 37.5 to 25.0 basis points. The maturity of the line was extended to December 31, 1999. This increase raises the Company's total available and outstanding credit to $42.0 million. The Company believes its current working capital position together with estimated cash flows from operations and its existing credit availability are adequate to support its operations in the ordinary course of business, including anticipated capital expenditures and debt repayment requirements, over the next year. Although the Company has no present agreements or commitments with respect to any material acquisitions of other businesses, products, product rights or technologies, the Company continues to evaluate acquisitions of products or companies that complement the Company's business and may make such acquisitions in the future, and there can be no assurance that the Company will not need to obtain additional sources of capital to finance any such acquisitions. 11 NEWPORT CORPORATION PART II. OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 10.1 First Amendment to Credit Agreement dated as of October 31, 1996 between Newport Corporation and ABN AMRO Bank N.V., Los Angeles International Branch Exhibit 10.2 Severance Compensation Agreement dated as of April 8, 1996, between Newport Corporation, a Nevada Corporation, and Robert J. Phillippy Exhibit 10.3 Severance Compensation Agreement dated as of May 1, 1996, between Newport Corporation, a Nevada Corporation, and Robert G. Deuster Exhibit 27 Financial Data Schedule (b) Reports on Form 8-K None 12 NEWPORT CORPORATION SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEWPORT CORPORATION (Registrant) Dated: November 13, 1996 By: /S/ROBERT C. HEWITT ------------------------------------- Robert C. Hewitt, Principal Financial Officer, duly authorized to sign on behalf of the Registrant 13 NEWPORT CORPORATION FORM 10Q EXHIBIT INDEX Sequential Page Number ----------- Exhibit 10.1 First Amendment to Credit Agreement dated as of October 31, 1996 between Newport Corporation and ABN AMRO Bank N.V., Los Angeles International Branch 15 Exhibit 10.2 Severance Compensation Agreement dated as of April 8, 1996, between Newport Corporation, a Nevada Corporation, and Robert J. Phillippy 27 Exhibit 10.3 Severance Compensation Agreement dated as of May 1, 1996, between Newport Corporation, a Nevada Corporation, and Robert G. Deuster 34 Exhibit 27 Financial Data Schedule 41 14 EX-10.12 2 1ST AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.12 NEWPORT CORPORATION FIRST AMENDMENT TO CREDIT AGREEMENT ABN AMRO Bank N.V., Los Angeles International Branch Los Angeles, California Ladies and Gentlemen: Reference is hereby made to that certain Credit Agreement dated as of December 20, 1995 (the "Credit Agreement") between the undersigned, Newport Corporation, a Nevada corporation (the "Company") and you (the "Bank"). All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement. The Company has requested that the Bank increase the amount of the Revolving Credit under the Credit Agreement from $15,000,000 to $20,000,000, extend the maturity date of the Revolving Credit under the Credit Agreement and make certain other amendments to the Credit Agreement, and the Bank is willing to do so under the terms and conditions set forth in this Amendment. 1. Amendments. Upon your acceptance hereof in the space provided for that purpose below, the Credit Agreement shall be and hereby is amended as follows: (a) Sections 1.1 and 1.2 of the Credit Agreement shall each be amended by deleting the amount "$15,000,000" appearing therein and by substituting therefor the amount "$20,000,000". (b) The first sentence of Section 2.1(b) of the Credit Agreement shall be amended in its entirety and as so amended shall read as follows: "The Domestic Rate Portion shall bear interest at the rate per annum equal to the Domestic Rate as in effect from time to time, provided that if the Domestic Rate Portion or any part thereof is not paid when due (whether by lapse of time, acceleration or otherwise) such Portion shall bear interest, whether before or after judgment, until payment in full thereof at the rate per annum determined by adding 2% to the interest rate which would otherwise be applicable thereto from time to time." (c) The first sentence of Section 2.1(c) of the Credit Agreement shall be amended in its entirety and as so amended shall read as follows: "Each LIBOR Portion shall bear interest for each Interest Period selected therefor at a rate per annum determined by adding 1% to the Adjusted LIBOR for such Interest Period, provided that if any LIBOR Portion is not paid when due (whether by lapse of time, acceleration or otherwise) such Portion shall bear interest, whether before or after judgment, until payment in full thereof through the end of the Interest Period then applicable thereto at the rate per annum determined by adding 2% to the interest rate which would otherwise be applicable thereto, and effective at the end of such Interest Period such LIBOR Portion shall automatically be converted into and added to the Domestic Rate Portion and shall thereafter bear interest at the interest rate applicable to the Domestic Rate Portion after default." (d) Section 3.1(b) of the Credit Agreement shall be amended by deleting "3/8 of 1%" appearing therein and by substituting therefor "1/4 of 1%" and shall be further amended by deleting the word "Commitment" contained in the fourth line thereof and by substituting "the lesser of (i) the Borrowing Base or (ii) the Commitment" therefor. (e) Section 3.1(c) of the Credit Agreement shall be amended by deleting "1.50%" appearing therein and by substituting therefor "1.00%". -2- (f) Section 6.4 of the Credit Agreement shall be amended by adding the phrase "or guarantee requirements in connection with Permitted Indebtedness of the Company or its Subsidiaries hereunder" after the word "requirements" appearing in the fifth line of such Section. (g) Section 8.15 of the Credit Agreement shall be amended by deleting subpart (iv) of subsection (g) thereof, by deleting the period appearing at the end of subsection (i) thereof and replacing such period with "; and", and by adding a new subsection (j) thereto which reads as follows: "(j) investments in addition to those otherwise permitted under this Section 8.15 of a type described on Exhibit G hereto which bear the equivalent of at least A-1 or AA by Standard & Poor's Corporation and mature within one year." (h) Section 8.16 of the Credit Agreement shall be amended by deleting the phrase "5% of its tangible assets" appearing therein and by substituting therefor "10% of the Company's tangible assets". (i) Section 8.17 shall be amended by adding the phrase "except to another Subsidiary" immediately preceding the semicolon appearing in the third line of such Section. (j) Section 8.23 shall be amended by deleting the phrase "form or" appearing in such Section. (k) Section 9.1(a) shall be amended in its entirety and as so amended shall read as follows: "(a) default in the payment of any principal of any Obligation or any principal of any other indebtedness or obligation (whether direct, contingent or otherwise) of the Company owing to the Bank when due, whether at the stated maturity thereof or at any time provided for in this Agreement or default for a period of ten (10) days in the payment when due of any interest or other Obligation payable -3- by the Company hereunder or under any other Loan Document (whether at the stated maturity thereof or at any other time provided for in this Agreement) or default for a period of ten (10) days in the payment when due of any interest or other amount payable in respect of any other indebtedness or obligation (whether direct, contingent or otherwise) of the Company owing to the Bank; or" (l) The introductory language in Section 9.1 of the Credit Agreement shall be amended in its entirety and as so amended shall read as follows: "Any one or more of the following (unless waived in writing by the Bank) shall constitute an "Event of Default" hereunder:" (m) Section 9.1(i) of the Credit Agreement shall be amended by deleting "Subsidiary" therein and by substituting therefor "Restricted Subsidiary". (n) Exhibit A to the Credit Agreement shall be amended in its entirety and as so amended shall read as set forth on Exhibit A attached hereto and made a part hereof. (o) The Credit Agreement shall be amended by adding a new Exhibit G thereto which reads as set forth on Exhibit G hereto. (p) All references in the Credit Agreement to "Note" shall be deemed references to the replacement Revolving Credit Note of the Company issued pursuant to Section 2(a) of this Amendment. 2. Conditions Precedent. The effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent: (a) The Company and the Bank shall have executed and delivered this Amendment and the Bank shall have received a duly executed replacement Revolving Credit Note in the form of Exhibit A to the Credit Agreement as amended hereby. -4- (b) The Bank shall have received copies (executed or certified, as may be appropriate) of all legal documents or proceedings taken in connection with the execution and delivery of this Amendment to the extent the Bank or its counsel may reasonably request. (c) Legal matters incident to the execution and delivery of this Amendment shall be satisfactory to the Bank and its counsel; and the Bank shall have received the favorable written opinion of counsel for the Company in form and substance satisfactory to the Bank and its counsel. 3. Representations. In order to induce the Bank to execute and deliver this Amendment, the Company hereby represents to the Bank that as of the date hereof, the representations and warranties set forth in Section 6 of the Credit Agreement are and shall be and remain true and correct (except that the representations contained in Section 6.5 shall be deemed to refer to the most recent financial statements of the Company delivered to the Bank) and the Company is in full compliance with all of the terms and conditions of the Credit Agreement and no Default or Event of Default has occurred and is continuing under the Credit Agreement or shall result after giving effect to this Amendment. 4. Miscellaneous. (a) Except as specifically amended herein, the Credit Agreement shall continue in full force and effect in accordance with its original terms. Reference to this specific Amendment need not be made in the Credit Agreement, the Note, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Credit Agreement, any reference in any of such items to the Credit Agreement being sufficient to refer to the Credit Agreement as amended hereby. (b) The Company agrees to pay on demand all costs and expenses of or incurred by the Bank in connection with the -5- negotiation, preparation, execution and delivery of this Amendment, including the fees and expenses of counsel for the Bank. (c) This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. This Amendment shall be governed by the internal laws of the State of California. Dated as of October 31, 1996. Newport Corporation By Its_______________________________ -6- Accepted and agreed to in Los Angeles, California as of the date and year last above written. ABN AMRO Bank N.V., Los Angeles International Branch By ABN AMRO North America, Inc., its Agent By Its__________________________ By Its__________________________ -7- EXHIBIT A NEWPORT CORPORATION REVOLVING CREDIT NOTE Chicago, Illinois $20,000,000 October 31, 1996 On the Termination Date, for value received, the undersigned, Newport Corporation, a Nevada corporation (the "Company"), hereby promises to pay to the order of ABN AMRO Bank N.V. (the "Bank") at its office at 300 South Grand Avenue, Los Angeles, California, the principal sum of (i) Twenty Million and no/100 Dollars ($20,000,000), or (ii) such lesser amount as may at the time of the maturity hereof, whether by acceleration or otherwise, be the aggregate unpaid principal amount of all Loans owing from the Company to the Bank under the Revolving Credit provided for in the Credit Agreement hereinafter mentioned. This Note evidences Loans made and to be made to the Company by the Bank under the Revolving Credit provided for under that certain Credit Agreement dated as of December 20, 1995 as amended between the Company and the Bank (said Credit Agreement, as the same may be amended, modified or restated from time to time, being referred to herein as the "Credit Agreement"), and the Company hereby promises to pay interest at the office described above on such Loans evidenced hereby at the rates and at the times and in the manner specified therefor in the Credit Agreement. Each Loan made under the Revolving Credit against this Note, any repayment of principal hereon, the status of each such Loan from time to time as part of the Domestic Rate Portion or a LIBOR Portion and, in the case of any Fixed Rate Portion, the interest rate and Interest Period applicable thereto shall be endorsed by the holder hereof on a schedule to this Note or recorded on the books and records of the holder hereof (provided that such entries shall be endorsed on a schedule to this Note -8- prior to any negotiation hereof). The Company agrees that in any action or proceeding instituted to collect or enforce collection of this Note, the entries endorsed on a schedule to this Note or recorded on the books and records of the holder hereof shall be prima facie evidence of the unpaid principal balance of this Note, the status of each Loan from time to time as part of the Domestic Rate Portion or a LIBOR Portion and, in the case of any Fixed Rate Portion, the interest rate and Interest Period applicable thereto. This Note is issued by the Company under the terms and provisions of the Credit Agreement and this Note and the holder hereof are entitled to all of the benefits and security provided for thereby or referred to therein, to which reference is hereby made for a statement thereof. This Note may be declared to be, or be and become, due prior to its expressed maturity, voluntary prepayments may be made hereon, and certain prepayments are required to be made hereon, all in the events, on the terms and with the effects provided in the Credit Agreement. All capitalized terms used herein without definition shall have the same meanings herein as such terms are defined in the Credit Agreement. This Note is issued in substitution and replacement for that certain Revolving Credit Note of the Company dated December 20, 1995 payable to the order of the Bank and heretofore issued by the Company pursuant to the Credit Agreement. The Company hereby promises to pay all costs and expenses (including attorneys' fees) suffered or incurred by the holder hereof in collecting this Note or enforcing any rights in any collateral therefor. The Company hereby waives presentment for payment and demand. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. Newport Corporation By:_________________________________ -9- Name:_______________________ Title:______________________ -10- EXHIBIT G U.S. TREASURY SECURITIES - Obligations of the U.S. government. Bills have a maturity of one year or less and are sold on a discount basis. Notes have maturities of one to seven years and bonds have longer maturities; both are interest-bearing. U.S. GOVERNMENT AGENCY SECURITIES - Obligations of the U.S. government agencies or departments - some owned by the federal government, some sponsored by it but privately held. DOMESTIC OR EURODOLLAR CERTIFICATES OR DEPOSITS - U.S. dollar deposits or certificates of deposit, held domestically or overseas from one day to five years. BANKERS ACCEPTANCES - Time drafts sold on a discount basis with a maturity of six months or less, with a bank accepting primary responsibility for paying the draft whether or not the customer has repaid the bank. MONEY MARKET FUNDS - Daily funds invested in a portfolio of short-term instruments, with special funds developed for corporate use. COMMERCIAL PAPER - Company short-term unsecured promissory notes with a fixed maturity, sold on a discount basis from one to 270 days. MUNICIPAL GOVERNMENT NOTES AND BONDS - Securities issued by a state or local government, usually tax-exempt. FLOATING RATE MUNICIPAL NOTES AND BONDS - Variable rate long term municipal bonds which may be "put back" to the issuer at par plus accrued interest at frequent intervals. -11- MUNICIPAL AUCTION RATE PREFERRED STOCK - Mutual funds based on a diversified portfolio of municipal bonds, by law backed by assets equal to at least 200% of face value, and bearing interest at auction set rates in frequent intervals. TAXABLE MUNICIPAL AUCTION RATE NOTES - Notes issued by non-profit corporations which have bear interest at auction set rates on a taxable basis. CORPORATE NOTES - Corporate unsecured promissory notes with a fixed maturity from nine months to 15 years. CORPORATE AUCTION RATE PREFERRED STOCK - Corporate perpetual preferred stock with a floating-rate dividend eligible for the 70% intercorporate dividend received deduction. The dividend pricing mechanism ensures that the stock will trade at par on auction dates. -12- EX-10.13 3 PHILLIPY SEVERENCE COMPENSATION AGMT. Exhibit 10.13 SEVERANCE COMPENSATION AGREEMENT dated as of April 8, 1996, between NEWPORT CORPORATION, a Nevada corporation (the "Company"), and Robert J. Phillippy (the "Executive"). The Company's Board of Directors has determined that it is appropriate to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction in potentially disturbing circumstances arising from the possibility of a change in control of the Company. This Agreement sets forth the severance compensation which the Company agrees it will pay to the Executive if the Executive's employment with the Company terminates under one of the circumstances described herein following a Change in Control of the Company (as defined in Section 2). 1. Term. The term of this Agreement shall commence on the date hereof and ---- shall end on the later of (i) the second anniversary of the date of this Agreement or (ii) two (2) years following the date on which notice of non- renewal or termination of this Agreement is given by either the Company or Executive to the other. Thus, this Agreement shall be renewable automatically on a daily basis so that the outstanding term is always two (2) years following any effective notice of non-renewal or of termination given by the Company or Executive. 2. Change in Control. Except as set-forth in Section 4 below, no ----------------- compensation shall be payable under this Agreement unless and until (a) there has been a Change in Control of the Company while the Executive is still an employee of the Company and (b) the Executive's employment by the Company terminates in the circumstances specified in Section 3. For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred if (i) there shall be consummated (x) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have the same proportionate ownership of at least 80% of common stock of the surviving corporation immediately after the merger, or (y) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (ii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company, or (iii) any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 20% or more of the Company's outstanding Common Stock (other than any such person who is the record owner of at least 15% of the Company's outstanding Common Stock on the date hereof, other than nominees), or (iv) during any period of two consecutive years during the term of this Agreement, individuals who at the beginning of the two year period constituted the entire Board of Directors do not for any reason constitute a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, or (v) an event constituting a "Business Combination" under the Company's Articles of Incorporation as amended to date. 3. Termination Following Change in Control. (a) If a Change in Control of --------------------------------------- the Company shall have occurred while the Executive is still an employee of the Company, the Executive shall be entitled to the compensation provided in Section 5 upon the subsequent termination of the Executive's employment with the Company by the Executive or by the Company unless such termination is as a result of (i) the Executive's death; (ii) the Executive's Disability (as defined in Section (3)(b) below); (iii) the Executive's Retirement (as defined in Section 3(c) below); (iv) the Executive's termination by the Company for Cause 1 (as defined in Section 3(d) below); or (v) the Executive's decision to terminate employment other than for Good Reason (as defined in Section 3(e) below). (b) Death or Disability. If, as a result of the Executive's ------------------- incapacity due to physical or mental illness, the Executive is absent from his duties with the Company on a full-time basis for six months and does not return to the full-time performance of duties within 30 days after written notice of termination, the Company may terminate this Agreement immediately for "Disability" without further notice. However, in addition to any applicable insurance payable as Executive has designated, in the event of death of Executive during the term hereof, the Company shall pay Executive's estate all salary due as of his death, together with a final payment equal to 12 months' of salary at the rate in effect at the time of his death. (c) Retirement. The term "Retirement" as used in this Agreement shall mean ---------- termination by the Company or the Executive of the Executive's employment based on the Executive's having reached age 65 or such other age as shall have been fixed in any arrangement established with the Executive's consent with respect to the Executive. (d) Cause. The Company may terminate the Executive's employment for ----- Cause. For purposes of this Agreement only, the Executive shall be deemed terminated for "cause" only if Executive has engaged in fraud, misappropriation or embezzlement on the part of the Executive. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Company's Board of Directors at a meeting of the Board called and held for that purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Executive was guilty of conduct set forth in the second sentence of this Section 3(d) and specifying the particulars thereof in detail. (e) Good Reason. The Executive may terminate the Executive's employment ----------- for Good Reason at any time during the term of this Agreement. For purposes of this Agreement "Good Reason" shall mean any of the following (without the Executive's express written consent): (i) the Company has materially changed the Executive's position, duties, responsibilities, status, or offices as in effect immediately prior to a Change in Control of the Company, or removed the Executive from or any failure to reelect the Executive to any of such positions, except in connection with the termination of his employment for Disability, Retirement or Cause or as a result of the Executive's death; (ii) a reduction by the Company in the Executive's base salary as in effect on the date hereof or as the same may be increased from time to time during the term of this Agreement or the Company's failure to increase (within 12 months of the Executive's last increase in base salary) the Executive's base salary after a Change in Control of the Company in an amount which at least equals, on a percentage basis, the average percentage increase in base salary for all officers of the Company effected in the preceding 12 months; (iii) any failure by the Company to continue in effect any benefit plan or arrangement (including, without limitation, the Company's life insurance, accident, disability and health insurance plans, 401(k) and bonus plans, stock options, monthly automobile allowance, and all other similar plans which are from time to time made generally available to senior executives of the Company) and in which the Executive is participating at the time of a Change in Control of the Company (or any other plan providing the Executive with substantially similar benefits) (hereinafter referred to as "Benefit Plans"), or the taking of any action by the Company which would adversely affect the Executive's participation in or materially reduce the Executive's 2 benefits under any such Benefit Plan or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of a Change in Control of the Company; (iv) any failure by the Company to continue in effect any incentive plan or arrangement (including, without limitation, the Company's plans enumerated in subparagraph (iii) above and similar incentive compensation benefits) in which the Executive is participating at the time of a Change in Control of the Company (or any other plans or arrangements providing him with substantially similar benefits) (hereinafter referred to as "Incentive Plans") or the taking of any action by the Company which would adversely affect the Executive's participation in any such Incentive Plan or reduce the Executive's potential benefits under any such Incentive Plan, expressed as a percentage of his base salary, by more than 10 percentage points in any fiscal year as compared to the immediately preceding fiscal year. (v) any failure by the Company to continue in effect any plan or arrangement to receive securities of the Company (including, without limitation, the Company's stock option and purchase plans and any other plan or arrangement to receive and exercise stock options, stock appreciation rights, restricted stock or grants thereof) in which the Executive is participating at the time of a Change in Control of the Company (or plans or arrangements providing him with substantially similar benefits) hereinafter referred to as "Securities Plans") or the taking of any action by the Company which would adversely affect the Executive's participation in or materially reduce the Executive's benefits under any such Securities Plan; (vi) a relocation of the Company's principal executive offices to a location outside of Orange County, California, or the Executive's relocation to any place other than the location at which the Executive performed the Executive's duties prior to a Change in Control of the Company, except for required travel by the Executive on the Company's business to an extent substantially consistent with the Executive's business travel obligations at the time of a Change of Control of the Company; (vii) any failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled at the time of a Change of Control of the Company; (viii) any material breach by the Company of any provision of this Agreement; (ix) any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company; or (x) any purported termination of the Executive's employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3(f), and for purposes of this Agreement, no such purported termination shall be effective. (f) Notice of Termination. Any termination by the Company pursuant to --------------------- Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate those specific termination provisions in this Agreement relied upon and which set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provisions so indicated. For purposes of this Agreement, no such purported termination by the Company shall be effective without such Notice of Termination. (g) Date of Termination. "Date of Termination" shall mean (i) if this ------------------- Agreement is terminated by the Company for Disability, 30 days after Notice of Termination is given to the Executive (provided that the Executive shall not have returned to the performance of the Executive's duties on a full-time basis during such 30-day period) or (ii) if the Executive's employment is terminated by the Company for any other reason, the date on which a Notice of Termination is given; provided that if within 30 days after any -------- 3 Notice of Termination is given to the Executive by the Company the Executive notifies the Company that a dispute exists concerning the termination, the Date of Termination shall be the date the dispute is finally determined, whether by mutual agreement by the parties or upon final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected). 4. Certain Terminations not Following a Change in Control. Regardless of ------------------------------------------------------ the occurrence or non-occurrence of a Change in Control, Executive shall be entitled to the compensation provided in Section 5(a) if the Executive's employment has been terminated by the Company other than for Cause. 5. Severance Compensation upon Termination of Employment. If the Company ----------------------------------------------------- shall terminate the Executive's employment other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive shall terminate his employment for Good Reason in all such cases only in the event of a Change in Control then: (a) The Company shall pay to the Executive as severance pay a lump sum, in cash, in full on the fifth day following the Date of Termination an amount equal to the Executive's highest biweekly base salary then in effect during the 12- month period immediately preceding the Date of Termination multiplied by 26. (b) A lump sum payment of the Executive's incentive compensation bonus paid under the Company's Bonus Plan then in effect during the year of the Date of Termination assuming one hundred percent (100%) satisfaction of all performance goals established under such Bonus Plan for the Executive, subject to United States income taxes, provided, however, that if the lump sum severance --------- ------- payment under this Section 5 either alone or together with other payments which the Executive has the right to receive from the Company, would constitute a "parachute payment" (as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")), such lump sum severance payment shall be increased to an amount as will result in the receipt by Executive of the full lump sum severance payment under this Section 4 net of any excise tax imposed by Section 4999 of the Code. The determination of any increase in the lump sum severance payment under this Section 5 pursuant to the foregoing provision shall be made by a nationally recognized public accounting firm chosen by the Company in good faith, and such determination shall be conclusive and binding on the Company and the Executive. (c) The Company shall pay in cash to the Executive an amount equal to the difference between the exercise price and the fair market price (based upon the average NASDAQ trading price of the Company's stock for the twenty business days preceding the Change in Control) of those shares of capital stock of the Company subject to all stock options held by the Executive as of the Date of Termination, and the Company shall withhold all appropriate taxes related to such payment. (d) All restrictions on restricted stock held by the Executive as of the Date of Termination shall be removed. (e) The Company shall continue for a period of two (2) years from the Date of Termination to provide the following benefits to the Executive on the same terms as provided to the Executive on the Date of Termination: (i) Participation in the Company's medical, dental and vision plans; and (ii) Long-term disability insurance. Provided however, that any benefits payable under this subsection 5(d) shall - ---------------- terminate at such time as the Executive becomes eligible for similar benefits from any subsequent employer. 4 6. No Obligation to Mitigate Damages; No Effect on Other Contractual ----------------------------------------------------------------- Rights. (a) The Executive shall not be required to mitigate damages or the - ------ amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor, except as set forth in subsection 5(d), shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by the Executive as the result of employment by another employer after the Date of Termination, or otherwise. (b) The provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way diminish the Executive's existing rights, or rights which would accrue solely as a result of the passage of time, under any Benefit Plan, Incentive Plan or Securities Plan, employment agreement or other contract, plan or arrangement. 7. Successor to the Company. (a) The Company will require any successor ------------------------ or assignee (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly, absolutely and unconditionally to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. Any failure of the Company to obtain such agreement prior to the effectiveness of any such succession or assignment shall be a material breach of this Agreement and shall entitle the Executive to terminate the Executive's employment for Good Reason. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor or assignee to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 7 or which otherwise becomes bound by all of the terms and provisions of this Agreement by operation of law. If at any time during the term of this Agreement the Executive is employed by any corporation a majority of the voting securities of which is then owned by the Company, "Company" as used in Sections 3, 5, 13 and 14 hereof shall in addition include such employer. In such event, the Company agrees that it shall pay or shall cause such employer to pay any amounts owed to the Executive pursuant to Section 5 hereof. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts are still payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate. 8. Release of Claims. The obligation of this Agreement shall constitute ----------------- the only obligations of the Company arising from the Company's termination of Executive's employment for any reason. Upon the Company's tender of payment hereunder the Company shall have no obligation to Executive by reason of the terms of employment other than those set forth herein, and the Executive agrees that receipt of such payment shall constitute a full and final settlement and release of all claims or rights against the Company, and Executive shall execute all appropriate agreements reflecting such settlement and release. 9. Notice. For purposes of this Agreement, notices and all other ------ communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, as follows: If to the Company: Chief Executive Officer Newport Corporation 1791 Deere Avenue Irvine, CA 92714 If to the Executive: 5 Robert J. Phillippy 1791 Deere Avenue Irvine, California 92714 or such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 10. Miscellaneous. No provisions of this Agreement may be modified, ------------- waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 11. Validity. The invalidity or unenforceability of any provisions of this -------- Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 12. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 13. Arbitration, Legal Fees and Expenses. In the event of any controversy, ------------------------------------ claim or dispute between the parties hereto arising out of or relating to this Agreement, the matter shall be determined by arbitration, which shall take place in Orange County, California, under the rules of the American Arbitration Association; and a judgment upon such award may be entered in any court having jurisdiction thereof. Any decision or award of such arbitrator shall be final and binding upon the parties and shall not be appealable. The parties hereby consent to the jurisdiction of such arbitrator and of any court having jurisdiction to enter judgment upon and enforce any action taken by such arbitrator. The Company shall pay all legal fees and expenses which the Executive may incur as a result of the Company's contesting the validity, enforceability or the Executive's interpretation of, or determinations under, this Agreement. 14. Confidentiality. The Executive shall retain in confidence any and all --------------- confidential information known to the Executive concerning the Company and its business so long as such information is not otherwise publicly disclosed. 15 Entire Agreement. This Agreement contains all of the terms agreed upon ---------------- between the Executive and the Company with respect to the subject matter hereof and replaces and supersedes all prior Severance Compensation Agreements between the Executive and the Company; and the Executive and the Company agree that no term, provision or condition of this Agreement shall be held to be altered, amended, changed or waived in any respect except by subsequent written agreement of the Executive and the Company. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. "COMPANY" "EXECUTIVE" NEWPORT CORPORATION By:____________________ By:______________________ 6 Richard E. Schmidt Robert J. Phillippy Chairman of the Board and Vice President Chief Executive Officer 7 EX-10.14 4 DEUSTER SEVERENCE COMPENSATION AGMT. Exhibit 10.14 SEVERANCE COMPENSATION AGREEMENT dated as of May 1, 1996, between NEWPORT CORPORATION, a Nevada corporation (the "Company"), and Robert G. Deuster (the "Executive"). The Company's Board of Directors has determined that it is appropriate to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction in potentially disturbing circumstances arising from the possibility of a change in control of the Company. This Agreement sets forth the severance compensation which the Company agrees it will pay to the Executive if the Executive's employment with the Company terminates under one of the circumstances described herein following a Change in Control of the Company (as defined in Section 2). 1. Term. The term of this Agreement shall commence on the date hereof and ---- shall end on the later of (i) the second anniversary of the date of this Agreement or (ii) two (2) years following the date on which notice of non- renewal or termination of this Agreement is given by either the Company or Executive to the other. Thus, this Agreement shall be renewable automatically on a daily basis so that the outstanding term is always two (2) years following any effective notice of non-renewal or of termination given by the Company or Executive. 2. Change in Control. Except as set forth in Section 4 below, no ----------------- compensation shall be payable under this Agreement unless and until (a) there has been a Change in Control of the Company while the Executive is still an employee of the Company and (b) the Executive's employment by the Company terminates in the circumstances specified in Section 3. For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred if (i) there shall be consummated (x) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have the same proportionate ownership of at least 80% of common stock of the surviving corporation immediately after the merger, or (y) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (ii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company, or (iii) any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 20% or more of the Company's outstanding Common Stock (other than any such person who is the record owner of at least 15% of the Company's outstanding Common Stock on the date hereof, other than nominees), or (iv) during any period of two consecutive years during the term of this Agreement, individuals who at the beginning of the two year period constituted the entire Board of Directors do not for any reason constitute a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, or (v) an event constituting a "Business Combination" under the Company's Articles of Incorporation as amended to date. 3. Termination Following Change in Control. (a) If a Change in Control of --------------------------------------- the Company shall have occurred while the Executive is still an employee of the Company, the Executive shall be entitled to the compensation provided in Section 5 upon the subsequent termination of the Executive's employment with the Company by the Executive or by the Company unless such termination is as a result of (i) the Executive's death; (ii) the Executive's Disability (as defined in Section (3)(b) below); (iii) the Executive's Retirement (as defined in Section 3(c) below); (iv) the Executive's termination by the Company for Cause 1 (as defined in Section 3(d) below); or (v) the Executive's decision to terminate employment other than for Good Reason (as defined in Section 3(e) below). (b) Death or Disability. If, as a result of the Executive's incapacity ------------------- due to physical or mental illness, the Executive is absent from his duties with the Company on a full-time basis for six months and does not return to the full- time performance of duties within 30 days after written notice of termination, the Company may terminate this Agreement immediately for "Disability" without further notice. However, in addition to any applicable insurance payable as Executive has designated, in the event of death of Executive during the term hereof, the Company shall pay Executive's estate all salary due as of his death, together with a final payment equal to 12 months' of salary at the rate in effect at the time of his death. (c) Retirement. The term "Retirement" as used in this Agreement shall ---------- mean termination by the Company or the Executive of the Executive's employment based on the Executive's having reached age 65 or such other age as shall have been fixed in any arrangement established with the Executive's consent with respect to the Executive. (d) Cause. The Company may terminate the Executive's employment for ----- Cause. For purposes of this Agreement only, the Executive shall be deemed terminated for "cause" only if Executive has engaged in fraud, misappropriation or embezzlement on the part of the Executive. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Company's Board of Directors at a meeting of the Board called and held for that purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Executive was guilty of conduct set forth in the second sentence of this Section 3(d) and specifying the particulars thereof in detail. (e) Good Reason. The Executive may terminate the Executive's employment ----------- for Good Reason at any time during the term of this Agreement. For purposes of this Agreement "Good Reason" shall mean any of the following (without the Executive's express written consent): (i) the Company has materially changed the Executive's position, duties, responsibilities, status, or offices as in effect immediately prior to a Change in Control of the Company, or removed the Executive from or any failure to reelect the Executive to any of such positions, except in connection with the termination of his employment for Disability, Retirement or Cause or as a result of the Executive's death; (ii) a reduction by the Company in the Executive's base salary as in effect on the date hereof or as the same may be increased from time to time during the term of this Agreement or the Company's failure to increase (within 12 months of the Executive's last increase in base salary) the Executive's base salary after a Change in Control of the Company in an amount which at least equals, on a percentage basis, the average percentage increase in base salary for all officers of the Company effected in the preceding 12 months; (iii) any failure by the Company to continue in effect any benefit plan or arrangement (including, without limitation, the Company's life insurance, accident, disability and health insurance plans, 401(k) and bonus plans, stock options, monthly automobile allowance, and all other similar plans which are from time to time made generally available to senior executives of the Company) and in which the Executive is participating at the time of a Change in Control of the Company (or any other plan providing the Executive with substantially similar benefits) (hereinafter referred to as "Benefit Plans"), or the taking of any action by the Company which would adversely affect the Executive's participation in or materially reduce the Executive's 2 benefits under any such Benefit Plan or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of a Change in Control of the Company; (iv) any failure by the Company to continue in effect any incentive plan or arrangement (including, without limitation, the Company's plans enumerated in subparagraph (iii) above and similar incentive compensation benefits) in which the Executive is participating at the time of a Change in Control of the Company (or any other plans or arrangements providing him with substantially similar benefits) (hereinafter referred to as "Incentive Plans") or the taking of any action by the Company which would adversely affect the Executive's participation in any such Incentive Plan or reduce the Executive's potential benefits under any such Incentive Plan, expressed as a percentage of his base salary, by more than 10 percentage points in any fiscal year as compared to the immediately preceding fiscal year. (v) any failure by the Company to continue in effect any plan or arrangement to receive securities of the Company (including, without limitation, the Company's stock option and purchase plans and any other plan or arrangement to receive and exercise stock options, stock appreciation rights, restricted stock or grants thereof) in which the Executive is participating at the time of a Change in Control of the Company (or plans or arrangements providing him with substantially similar benefits) hereinafter referred to as "Securities Plans") or the taking of any action by the Company which would adversely affect the Executive's participation in or materially reduce the Executive's benefits under any such Securities Plan; (vi) a relocation of the Company's principal executive offices to a location outside of Orange County, California, or the Executive's relocation to any place other than the location at which the Executive performed the Executive's duties prior to a Change in Control of the Company, except for required travel by the Executive on the Company's business to an extent substantially consistent with the Executive's business travel obligations at the time of a Change of Control of the Company; (vii) any failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled at the time of a Change of Control of the Company; (viii) any material breach by the Company of any provision of this Agreement; (ix) any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company; or (x) any purported termination of the Executive's employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3(f), and for purposes of this Agreement, no such purported termination shall be effective. (f) Notice of Termination. Any termination by the Company pursuant to --------------------- Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate those specific termination provisions in this Agreement relied upon and which set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provisions so indicated. For purposes of this Agreement, no such purported termination by the Company shall be effective without such Notice of Termination. (g) Date of Termination. "Date of Termination" shall mean (i) if this ------------------- Agreement is terminated by the Company for Disability, 30 days after Notice of Termination is given to the Executive (provided that the Executive shall not have returned to the performance of the Executive's duties on a full-time basis during such 30-day period) or (ii) if the Executive's employment is terminated by the Company for any other reason, the date on which a Notice of Termination is given; provided that if within 30 days after any -------- 3 Notice of Termination is given to the Executive by the Company the Executive notifies the Company that a dispute exists concerning the termination, the Date of Termination shall be the date the dispute is finally determined, whether by mutual agreement by the parties or upon final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected). 4. Certain Terminations not Following a Change in Control. Regardless of ------------------------------------------------------ the occurrence or non-occurrence of a Change in Control, Executive shall be entitled to one-half the compensation provided in Section 5(a) and the compensation provided in Section 5(b) if the the Executive's employment has been terminated by the company for reasons other than Cause. 5. Severance Compensation upon Termination of Employment. If the Company ----------------------------------------------------- shall terminate the Executive's employment other than pursuant to Section 3(b), 3(c) or 3(d) or if the Executive shall terminate his employment for Good Reason in all such cases only in the event of a Change in Control then: (a) The Company shall pay to the Executive as severance pay a lump sum, in cash, in full on the fifth day following the Date of Termination an amount equal to the Executive's highest biweekly base salary then in effect during the 12- month period immediately preceding the Date of Termination multiplied by 52. (b) A lump sum payment of the Executive's incentive compensation bonus paid under the Company's Bonus Plan then in effect during the year of the Date of Termination assuming one hundred percent (100%) satisfaction of all performance goals established under such Bonus Plan for the Executive, subject to United States income taxes, provided, however, that if the lump sum severance --------- ------- payment under this Section 5 either alone or together with other payments which the Executive has the right to receive from the Company, would constitute a "parachute payment" (as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")), such lump sum severance payment shall be increased to an amount as will result in the receipt by Executive of the full lump sum severance payment under this Section 4 net of any excise tax imposed by Section 4999 of the Code. The determination of any increase in the lump sum severance payment under this Section 5 pursuant to the foregoing provision shall be made by a nationally recognized public accounting firm chosen by the Company in good faith, and such determination shall be conclusive and binding on the Company and the Executive. (c) The Company shall pay in cash to the Executive an amount equal to the difference between the exercise price and the fair market price (based upon the average NASDAQ trading price of the Company's stock for the twenty business days preceding the Change in Control) of those shares of capital stock of the Company subject to all stock options held by the Executive as of the Date of Termination, and the Company shall withhold all appropriate taxes related to such payment. (d) All restrictions on restricted stock held by the Executive as of the Date of Termination shall be removed. (e) The Company shall continue for a period of two (2) years from the Date of Termination to provide the following benefits to the Executive on the same terms as provided to the Executive on the Date of Termination: (i) Participation in the Company's medical, dental and vision plans; and (ii) Long-term disability insurance. Provided however, that any benefits payable under this subsection 5(e) shall - ---------------- terminate at such time as the Executive becomes eligible for similar benefits from any subsequent employer. 4 6. No Obligation to Mitigate Damages; No Effect on Other Contractual ----------------------------------------------------------------- Rights. (a) The Executive shall not be required to mitigate damages or the - ------ amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor, except as set forth in subsection 5(e), shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by the Executive as the result of employment by another employer after the Date of Termination, or otherwise. (b) The provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way diminish the Executive's existing rights, or rights which would accrue solely as a result of the passage of time, under any Benefit Plan, Incentive Plan or Securities Plan, employment agreement or other contract, plan or arrangement. 7. Successor to the Company. (a) The Company will require any successor ------------------------ or assignee (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly, absolutely and unconditionally to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. Any failure of the Company to obtain such agreement prior to the effectiveness of any such succession or assignment shall be a material breach of this Agreement and shall entitle the Executive to terminate the Executive's employment for Good Reason. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor or assignee to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 7 or which otherwise becomes bound by all of the terms and provisions of this Agreement by operation of law. If at any time during the term of this Agreement the Executive is employed by any corporation a majority of the voting securities of which is then owned by the Company, "Company" as used in Sections 3, 5, 13 and 14 hereof shall in addition include such employer. In such event, the Company agrees that it shall pay or shall cause such employer to pay any amounts owed to the Executive pursuant to Section 5 hereof. (b) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts are still payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate. 8. Release of Claims. The obligation of this Agreement shall constitute ----------------- the only obligations of the Company arising from the Company's termination of Executive's employment for any reason. Upon the Company's tender of payment hereunder the Company shall have no obligation to Executive by reason of the terms of employment other than those set forth herein, and the Executive agrees that receipt of such payment shall constitute a full and final settlement and release of all claims or rights against the Company, and Executive shall execute all appropriate agreements reflecting such settlement and release. 9. Notice. For purposes of this Agreement, notices and all other ------ communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, as follows: If to the Company: Chief Executive Officer Newport Corporation 1791 Deere Avenue Irvine, CA 92714 If to the Executive: 5 Robert G. Deuster 1791 Deere Avenue Irvine, California 92714 or such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 10. Miscellaneous. No provisions of this Agreement may be modified, ------------- waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 11. Validity. The invalidity or unenforceability of any provisions of this -------- Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 12. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 13. Arbitration, Legal Fees and Expenses. In the event of any controversy, ------------------------------------ claim or dispute between the parties hereto arising out of or relating to this Agreement, the matter shall be determined by arbitration, which shall take place in Orange County, California, under the rules of the American Arbitration Association; and a judgment upon such award may be entered in any court having jurisdiction thereof. Any decision or award of such arbitrator shall be final and binding upon the parties and shall not be appealable. The parties hereby consent to the jurisdiction of such arbitrator and of any court having jurisdiction to enter judgment upon and enforce any action taken by such arbitrator. The Company shall pay all legal fees and expenses which the Executive may incur as a result of the Company's contesting the validity, enforceability or the Executive's interpretation of, or determinations under, this Agreement. 14. Confidentiality. The Executive shall retain in confidence any and all --------------- confidential information known to the Executive concerning the Company and its business so long as such information is not otherwise publicly disclosed. 15 Entire Agreement. This Agreement contains all of the terms agreed upon ---------------- between the Executive and the Company with respect to the subject matter hereof and replaces and supersedes all prior Severance Compensation Agreements between the Executive and the Company; and the Executive and the Company agree that no term, provision or condition of this Agreement shall be held to be altered, amended, changed or waived in any respect except by subsequent written agreement of the Executive and the Company. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. "COMPANY" "EXECUTIVE" NEWPORT CORPORATION By:___________________ By:______________________ 6 Richard E. Schmidt Robert G. Deuster Chairman of the Board President 7 EX-27 5 FINANCIAL DATA SCHEDULE - ARTICLE 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED STATEMENTS OF INCOME, CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS CONTAINED WITHIN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1996. U.S.DOLLARS 3-MOS DEC-31-1996 SEP-30-1996 1,000 3,708 0 20,899 537 27,138 58,510 55,340 31,059 99,000 19,857 22,632 0 0 3,094 52,385 99,000 87,331 87,331 49,317 49,317 5,866 32 1,417 4,463 1,429 3,034 0 0 0 3,034 $0.34 $0.34
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