S-8

As filed with the Securities and Exchange Commission on July 10, 2002

Registration No. 333-_________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

IXYS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	77-0140882-5
(State of Incorporation)	(I.R.S. Employer Identification No.)

3540 BASSETT STREET
SANTA CLARA, CALIFORNIA 95054-2704
(408) 982-0700

(Address of principal executive offices)

C.P. Clare Corporation Non-Qualified Stock Option Plan
CP Clare Corporation 1995 Stock Option and Incentive Plan

(Full title of the plans)

ARNOLD P. AGBAYANI
SENIOR VICE PRESIDENT, FINANCE
AND CHIEF FINANCIAL OFFICER
IXYS CORPORATION
3540 BASSETT STREET
SANTA CLARA, CALIFORNIA 95054-2704
(408) 982-0700

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Suzanne Sawochka Hooper, Esq.
Luke J. Bergstrom, Esq.
Cooley Godward LLP
3175 Hanover Street
Palo Alto, CA 94301-1130
(650) 843-5000

CALCULATION OF REGISTRATION FEE

		Proposed Maximum	Proposed Maximum
Title of Securities		Offering	Aggregate	Amount of
to be Registered(1)	Amount to be Registered(2)	Price per Share(3)	Offering Price(3)	Registration Fee
Common Stock, par value $0.01 per share	992,293 shares	$14.24	$14,130,252	$1,299.98

(1)	Clare, Inc. (“Clare”) is a Massachusetts corporation and a wholly-owned subsidiary of IXYS Corporation (the “Registrant). In connection with the merger of Clare with a wholly-owned subsidiary of Registrant, the outstanding options issued under the C.P. Clare Corporation Non-Qualified Stock Option Plan and the CP Clare Corporation 1995 Stock Option and Incentive Plan (the “Clare Plans”) were assumed by Registrant and converted into options to acquire shares of Registrant’s Common Stock.
(2)	Pursuant to Rule 416(a), this Registration Statement shall also cover any additional shares of Registrant’s Common Stock that become issuable under the plans by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without receipt of consideration that increases the number of outstanding shares of Registrant’s Common Stock.
(3)	Estimated solely for the purpose of calculating the registration fee of this offering pursuant to Rule 457(h)(1) promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The offering price per share and aggregate offering price are based on the weighted average exercise price of the shares of Registrant’s Common Stock issuable pursuant to the Clare Plans in accordance with Rule 457(h)(1) of the Securities Act. The following chart illustrates the calculation of the registration fee:

	Number of Shares	Offering Price Per Share(3)	Aggregate Offering Price(3)
C.P. Clare Corporation Non-Qualified Stock Option Plan	90,838	$18.43	$1,674,144
CP Clare Corporation 1995 Stock Option and Incentive Plan	901,455	$1.02-$50.12	$12,456,108
	992,293

TABLE OF CONTENTS

EXHIBIT 5.1

EXHIBIT 23.1

EXHIBIT 99.1

EXHIBIT 99.2

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The following documents filed by IXYS Corporation (the “Registrant”) with the Securities and Exchange Commission (the “Commission”) are incorporated by reference into this Registration Statement:

     (a)  The Registrant’s Annual Report on Form 10-K for the fiscal year ended March 31, 2002, including all material incorporated by reference therein;

     (b)  The Registrant’s Current Reports on Forms 8-K filed with the Commission on April 25, 2002, May 20, 2002, June 7, 2002 and June 17, 2002;

     (c)  The description of the Registrant’s Common Stock contained in its Registration Statement on Form 8-A, as filed with the Commission, pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including any amendment or report filed for the purpose of updating such description; and

     (d)  All reports and other documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part of this Registration Statement from the date of the filing of such reports and documents.

DESCRIPTION OF SECURITIES

     Not applicable.

INTERESTS OF NAMED EXPERTS AND COUNSEL

     Not applicable.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits indemnification of a corporation’s officers and directors under certain conditions and subject to certain limitations. Section 145 of the Delaware General Corporation Law also provides that a corporation has the power to purchase and maintain insurance on behalf of its officers and directors against any liability asserted against such person and incurred by him or her in such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of Section 145 of the Delaware General Corporation Law.

Article XI, Section 43 of the Registrant’s amended and restated bylaws provides that the Registrant will indemnify its directors to the fullest extent not prohibited by the Delaware General Corporation Law or other applicable law. The Registrant’s bylaws provide that the Registrant has the power, but is not required, to indemnify its employees and other agents as set forth in the Delaware General Corporation Law or other applicable law. The rights to indemnity under the Registrant’s bylaws continue as to a person who has ceased to be a director and inure to the benefit of the heirs, executors and administrators of the person. Expenses incurred by a director in defending any threatened or current civil, criminal, administrative or investigative action, suit or proceeding brought or threatened to be brought against the director by reason of the fact that he or she is or was director of the Registrant (or was serving at the Registrant’s request as a director or executive officer of another corporation or entity) shall be paid by the Registrant in advance of the final disposition of such action, suit or proceeding upon request from the director and, if required by Delaware General Corporation Law, receipt of an undertaking by or on behalf of such director to

repay any advanced amounts if it shall ultimately be determined that he or she is not entitled under Section 43 of the Registrant’s bylaws to be indemnified by the Registrant. Unless otherwise provided for in contracts between the Registrant and its officers, the Registrant is prohibited from advancing funds to officers if the Registrant determines that the facts known to the Registrant at the time of determination clearly and convincingly demonstrate that the officer acted in bad faith or in a manner that the officer did not believe to be in or not opposed to the best interests of the Registrant.

As permitted by Section 102(b)(7) of the Delaware General Corporation Law, Article VII of the Registrant’s Amended and Restated certificate incorporation provides that its directors shall not be personally liable for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit.

The Registrant has entered into indemnification agreements with for the benefit of its directors and certain of its executive officers. Generally, the indemnification agreements attempt to provide the maximum protection permitted by Delaware law as it may be amended from time to time. Moreover, the indemnification agreements provide for certain additional indemnification. Under such additional indemnification provisions, however, an individual will not receive indemnification for: claims for an accounting of profits from the purchase or sale of securities of the Registrant pursuant to the provisions of Section 16(b) of the Exchange Act; conduct that the Registrant determines was knowingly fraudulent or deliberately dishonest or that constituted willful misconduct; conduct that is established by a final judgment as constituting a breach of the duty of loyalty to the Registrant or resulting in any personal profit or advantage to the director or officer to which the director or officer was not legally entitled; any expenses for which payment is actually made to the director or officer under an insurance policy or indemnity clause, bylaw or agreement; any expenses or actions for which indemnification is not lawful; or expenses in connection with any proceeding (or part thereof) initiated by the director or officer against the Registrant or its directors, officers, employees or other agents, unless indemnification is expressly required to be made by law, the proceeding was authorized by the Registrant’s board of directors, the indemnification is provided by the Registrant pursuant to the powers vested in the Registrant by Delaware law, or the proceeding is initiated to enforce the director’s or officer’s rights under the indemnification agreement. The indemnification agreements provide for the Registrant to advance to the individual any and all reasonable expenses (including legal fees and expenses) incurred in investigating or defending any such action, suit or proceeding. In order to receive an advance of expenses, the individual must submit to the Registrant a statement or statements that reasonably evidences such expenses. Also, the individual must repay such advances upon a final judicial decision that he or she is not entitled to indemnification. The Registrant’s obligations under the indemnification agreements continue for as long as the director or officer is a director, officer, employee or other agent of the Registrant (or is serving at the Registrant’s request as a director or executive officer of another corporation or entity) and, after termination of the director’s or officer’s relationship with the Registrant, for so long as the director or officer shall be subject to any possible claim or action, suit or proceeding by reason of the fact that Agent was serving in the capacity referred to herein.

The Registrant has purchased directors’ and officers’ liability insurance.

EXEMPTION FROM REGISTRATION CLAIMED

     Not applicable.

EXHIBITS

Exhibit
Number
5.1	Opinion of Cooley Godward LLP
23.1	Consent of PricewaterhouseCoopers LLP
23.2	Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this Registration Statement
24	Power of Attorney is contained on the signature page
99.1	CP Clare Corporation 1995 Stock Option and Incentive Plan
99.2	C.P. Clare Corporation Non-Qualified Stock Option Plan

UNDERTAKINGS

1. The undersigned registrant hereby undertakes:

     (a)  To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

               (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933 (the “Securities Act”);

               (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (§ 230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

               (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

     Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference herein.

     (b)  That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

     (c)  To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

2.

The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

3.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Santa Clara, State of California, on this 9th day of July, 2002.

IXYS CORPORATION
By:	/s/  Nathan Zommer Nathan Zommer President and Chief Executive Officer

POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Nathan Zommer and Arnold P. Agbayani, and each or any one of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Nathan Zommer Nathan Zommer	President, Chief Executive Officer and Director (Principal Executive Officer)	July 9, 2002
/s/  Arnold P. Agbayani Arnold P. Agbayani	Senior Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer)	July 9, 2002
/s/  Andreas Hartmann Andreas Hartmann	Director	July 9, 2002
/s/  Samuel Kory Samuel Kory	Director	July 9, 2002
/s/  S. Joon Lee S. Joon Lee	Director	July 9, 2002
/s/  Donald L. Feucht Donald L. Feucht	Director	July 9, 2002
/s/  Larry Mihalchik Larry Mihalchik	Director	July 9, 2002

EXHIBIT INDEX

Exhibit
Number	Description
5.1	Opinion of Cooley Godward LLP
23.1	Consent of PricewaterhouseCoopers LLP
23.2	Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this Registration Statement
24	Power of Attorney is contained on the signature page
99.1	CP Clare Corporation 1995 Stock Option and Incentive Plan
99.2	C.P. Clare Corporation Non-Qualified Stock Option Plan

EX-5.1 3 f82534exv5w1.txt EXHIBIT 5.1 Exhibit 5.1 July 10, 2002 IXYS Corporation 3540 Bassett St. Santa Clara, CA 95054-2704 Dear Ladies and Gentlemen: You have requested our opinion with respect to certain matters in connection with the filing by IXYS Corporation, a Delaware corporation (the "Company"), of a Registration Statement on Form S-8 (the "Registration Statement") with the Securities and Exchange Commission (the "Commission") covering the offering of up to 992,293 shares of the Company's Common Stock, $0.01 par value (the "Shares"), pursuant to the C.P. Clare Corporation Non-Qualified Stock Option Plan and the C.P. Clare Corporation 1995 Stock Option and Incentive Plan (collectively, the "Plans"). In connection with this opinion, we have examined and relied upon the Registration Statement and related Prospectus, the Company's Amended and Restated Certificate of Incorporation and By-laws, as amended, and such other documents, records, certificates, memoranda and other instruments as we deem necessary as a basis for this opinion. We have assumed the genuineness and authenticity of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as copies thereof and the due execution and delivery of all documents where due execution and delivery are a prerequisite to the effectiveness thereof. On the basis of the foregoing, and in reliance thereon, we are of the opinion that the Shares, when sold and issued in accordance with the Registration Statement, the Plans and the options granted thereunder, will be validly issued, fully paid and non-assessable (except as to shares issued pursuant to certain deferred payment arrangements, which will be fully paid and nonassessable when such deferred payments are made in full). We consent to the filing of this opinion as an exhibit to the Registration Statement. Sincerely, COOLEY GODWARD LLP /s/ SUZANNE SAWOCHKA HOOPER - --------------------------- Suzanne Sawochka Hooper EX-23.1 4 f82534exv23w1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated May 20, 2002, except for Note 14 as to which the date is June 12, 2002, relating to the financial statements of IXYS Corporation, which appears in IXYS Corporation's Annual Report on Form 10-K for the year ended March 31, 2002. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP San Jose, California July 9, 2002 EX-99.1 5 f82534exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 CP CLARE CORPORATION 1995 STOCK OPTION AND INCENTIVE PLAN SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS The name of the plan is the CP CLARE CORPORATION 1995 Stock Option and Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable the officers, employees, consultants and Directors of CP CLARE CORPORATION (the "Company") and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company's welfare will assure a closer identification of their interests with those of the Company, thereby stimulating their efforts on the Company's behalf and strengthening their desire to remain with the Company. This Plan supersedes, amends and restates the CP Clare Corporation Amended and Restated 1994 Employee, Director and Consultant Stock Option Plan (the "1994 Plan"), subject to Section 2(d) below. The following terms shall be defined as set forth below: "Act" means the Securities Exchange Act of 1934, as amended. "Administrator" means the Board or the Committee. "Award" or "Awards," except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Unrestricted Stock Awards, Performance Share Awards and Dividend Equivalent Rights. "Board" means the Board of Directors of the Company. "Cause" means the occurrence of one or more of the following: (i) employee or Independent Director is convicted of, pleads guilty to, or confesses to any felony or any act of fraud, misappropriation or embezzlement which has an immediate and materially adverse effect on the Company or any Subsidiary, as determined by the Board in good faith in its sole discretion, (ii) employee or Independent Director engages in a fraudulent act to the material damage or prejudice of the Company or any Subsidiary or in conduct or activities materially damaging to the property, business or reputation of the Company or any Subsidiary, all as determined by the Board in good faith in its sole discretion, (iii) any material act or omission by employee or Independent Director involving malfeasance or negligence in the performance of employee's or Independent Director's duties to the Company or any Subsidiary to the material detriment of the Company or any Subsidiary, as determined by the Board in good faith in its sole discretion, which has not been corrected by employee or Independent Director within 30 days after written notice from the Company of any such act or omission, (iv) failure by employee to comply in any material respect with the terms of his employment agreement, if any, or any 1 written policies or directives of the Board as determined by the Board in good faith in its sole discretion, which has not been corrected by employee within 30 days after written notice from the Company of such failure, or (v) material breach by employee of his noncompetition agreement with the Company, if any, as determined by the Board in good faith in its sole discretion. "Change of Control" is defined in Section 15. "Code" means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations. "Committee" means the Committee of two or more independent Directors appointed by the Board to administer the Plan, all of which shall be "Outside Directors" within the meaning of Section 162m of the Code and the rules promulgated thereunder and of "Non-Employee Directors" within the meaning of Rule 16b-3, promulgated under the Act, or any successor rule. "Disability" means an employee's inability to perform his normal required services for the Company and its Subsidiaries for a period of six consecutive months by reason of the employee's mental or physical disability, as determined by the Committee in good faith in its sole discretion. "Dividend Equivalent Right" means Awards granted pursuant to Section 10. "Effective Date" means the date on which the Plan is approved by stockholders as set forth in Section 17. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the related rules, regulations and interpretations. "Fair Market Value" on any given date means the last reported sale price at which Stock is traded on such date or, if no Stock is traded on such date, the most recent date on which Stock was traded, as reflected on the NASDAQ National Market or, if applicable, any other national stock exchange on which the Stock is traded or if the Stock is not traded on a national exchange, the fair market value of the Stock as determined by the Board or the Committee in good faith; provided, however, that "Fair Market Value" on the effective date of the Company's initial public offering shall be the offering price to the public on such date. "Incentive Stock Option" means any Stock Option designated and qualified as an "incentive stock option" as defined in Section 422 of the Code. "Independent Director" means a member of the Board who is not also an employee of the Company or any Subsidiary. "Non-Qualified Stock Option" means any Stock Option that is not an Incentive Stock Option. "Option" or "Stock Option" means any option to purchase shares of Stock granted pursuant to Section 5. 2 "Performance Share Award" means Awards granted pursuant to Section 9. "Restricted Stock Award" means Awards granted pursuant to Section 7. "Retirement" means the employee's termination of employment with the Company and its Subsidiaries after attainment of the age and/or service requirements to qualify for early or normal retirement under the Company's qualified retirement plan. "Stock" means the Common Stock, par value $.01 per share, of the Company, subject to adjustments pursuant to Section 3. "Stock Appreciation Right" means Awards granted pursuant to Section 6. "Subsidiary" means any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities, beginning with the Company if each of the corporations or entities (other than the last corporation or entity in the unbroken chain) owns stock or other interests possessing 50% or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain. "Unrestricted Stock Award" means Awards granted pursuant to Section 8. SECTION 2. ADMINISTRATION OF PLAN; AUTHORITY TO SELECT PARTICIPANTS AND DETERMINE AWARDS (a) ADMINISTRATOR. The Plan shall be administered by the Administrator. (b) POWERS OF ADMINISTRATOR. The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority: (i) to select the officers, other employees and consultants of the Company and its Subsidiaries to whom Awards may from time to time be granted; (ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Unrestricted Stock Awards, Performance Share Awards and Dividend Equivalent Rights, or any combination of the foregoing, granted to any one or more participants; (iii) to determine the number of shares of Stock to be covered by any Award; (iv) to determine and modify the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and participants, and to approve the form of written instruments evidencing the Awards; (v) to accelerate the exercisability or vesting of all or any portion of any Award; 3 (vi) subject to the provisions of Section 5(a)(iii), to extend the period in which Stock Options may be exercised; (vii) to determine whether, to what extent, and under what circumstances Stock and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the participant and whether and to what extent the Company shall pay or credit amounts constituting interest (at rates determined by the Committee) or dividends or deemed dividends on such deferrals; and (viii) to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan. All decisions and interpretations of the Administrator e shall be binding on all persons, including the Company and Plan participants. (c) DELEGATION OF AUTHORITY TO GRANT OPTIONS. The Administrator may, in its sole discretion, delegate to the President and Chief Executive Officer of the Company power and authority, under Section 2(b) (including paragraphs (i) through (iv) thereof) and Section 5, to grant Options to employees of the; provided, however, that no such grant shall be made to an employee who is subject to the reporting requirements of Section 16 of the Act; and provided further that the power and authority delegated hereunder shall not include any power and authority conferred by paragraphs (v) through (viii) of Section 2(b) or by Section 14 or any power and authority under Section 5 to alter the rights of the employee or otherwise exercise discretion with respect to the Option after the grant date. The power and authority delegated hereunder shall be subject to such additional limitations as the Administrator may specify. (d) PRIOR GRANTS UNDER 1994 PLAN. Options granted to an optionee under the 1994 Plan (or its predecessors) shall not be subject to any terms in this Plan that would be deemed to modify, extend or renew such option within the meaning of Section 424(h) of the Code. SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION (a) STOCK ISSUABLE. The maximum number of shares of Stock reserved and available for issuance under the Plan shall be 4,180,000 shares which represents the total of (i) 2,000,000 shares authorized under the 1994 Plan, (ii) 680,000 additional shares authorized in connection with the approval of this Plan, (iii) 1,000,000 additional shares authorized on March 28, 1996 and (iv) 500,000 additional shares authorized on June 17, 1998. For purposes of this limitation, the shares of Stock underlying any Awards which are forfeited, canceled, reacquired by the Company, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) shall be added back to the shares of Stock available for issuance under the Plan. Subject to such overall limitation, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award; provided, however, that Stock Options or Stock Appreciation Rights with respect to not more than 1,000,000 shares of Stock may be granted to 4 any one individual participant during any calendar year period. The shares available for issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company. Upon the exercise of a Stock Appreciation Right settled in shares of Stock, the right to purchase an equal number of shares of Stock covered by a related Stock Option, if any, shall be deemed to have been surrendered and will no longer be exercisable, and said number of shares of Stock shall no longer be available under the Plan. (b) RECAPITALIZATIONS. If, through or as a result of any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, the Committee shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance under the Plan, (ii) the number of Stock Options or Stock Appreciation Rights that can be granted to any one individual participant, (iii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, and (iv) the price for each share subject to any then outstanding Stock Options under the Plan, without changing the aggregate exercise price as to which such Stock Options and Stock Appreciation Rights remain exercisable. The adjustment by the Committee shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Committee in its discretion may make a cash payment in lieu of fractional shares. (c) MERGERS. In the event a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity or in the event of a liquidation of the Company, the Board, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to outstanding Stock Options and Stock Appreciation Rights: (i) provide that such Stock Options shall be assumed or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the optionees, provide that all unexercised Stock Options and Stock Appreciation Rights will terminate immediately prior to the consummation of such transaction unless exercised by the optionee within a specified period following the date of such notice, and/or (iii) in the event of a business combination under the terms of which holders of the Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the business combination, make or provide for a cash payment to the optionees equal to the difference between (A) the value (as determined by the Committee) of the consideration payable per share of Stock pursuant to the business combination (the "Merger Price") times the number of shares of Stock subject to such outstanding Stock Options and Stock Appreciation Rights (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such outstanding Stock Options and Stock Appreciation Rights in exchange for the termination of such Stock Options and Stock Appreciation Rights. (d) SUBSTITUTE AWARDS. The Administrator may grant Awards under the Plan in substitution for stock and stock based awards held by employees and consultants of another 5 corporation who concurrently become employees of the Company or a Subsidiary as the result of a merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation. The Committee may direct that the substitute awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances. SECTION 4. ELIGIBILITY Participants in the Plan will be such full or part-time officers and other employees and consultants of the Company and its Subsidiaries who are responsible for or contribute to the management, growth or profitability of the Company and its Subsidiaries as are selected from time to time by the Administrator, in its sole discretion, or by the President and Chief Executive Officer of the Company pursuant to authority delegated under Section 2(c). Independent Directors are also eligible to participate in the Plan but only to the extent provided in Section 5(c) and Section 8 below. SECTION 5. STOCK OPTIONS Any Stock Option granted under the Plan shall be in such form as the Administrator (or, if granted pursuant to authority delegated under Section 2(c), the President and Chief Executive Officer) may from time to time approve. Stock Options granted under the Plan may be either Incentive Stock Options or Non- Qualified Stock Options. Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a "subsidiary corporation" within the meaning of Section 424(f) of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option. No Incentive Stock Option shall be granted under the Plan after March 12, 2005. (a) STOCK OPTIONS GRANTED TO EMPLOYEES. The Administrator in its discretion may grant Stock Options to eligible employees of the Company or any Subsidiary. Stock Options granted to employees pursuant to this Section 5(a) shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable: (i) EXERCISE PRICE. The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5(a) shall be determined by the Administrator at the time of grant but shall not be less than 100% of the Fair Market Value on the date of grant in the case of Incentive Stock Options, or 85% of the Fair Market Value on the date of grant, in the case of Non-Qualified Stock Options. Notwithstanding the foregoing, with respect to Non-Qualified Stock Options which are granted in lieu of cash bonus, the exercise price per share shall not be less than 50% of the Fair Market Value on the date of grant. If an employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation and an Incentive Stock Option is granted to such employee, the option price of such Incentive Stock Option shall be not less than 110% of the Fair Market Value on the grant date. 6 (ii) GRANT OF DISCOUNT OPTIONS IN LIEU OF CASH BONUS. In the sole discretion of the Administrator, an employee may be granted a Non-Qualified Stock Option in lieu of cash bonus, or any portion thereof, to which he may become entitled pursuant to any other plan of the Company. The exercise price per share shall be determined by the Administrator but shall not be less than 50% of the Fair Market Value of the Stock on the date the Stock Option is granted. The number of shares of Stock subject to the Stock Option shall be determined by dividing the amount of the bonus to be paid pursuant to this Section 5(a)(ii) by the difference between the Fair Market Value of the Stock on the date the Stock Option is granted and the exercise price per Stock Option. The Stock Option shall be granted for whole number of shares so determined; the value of any fractional share shall be paid in cash. (iii) OPTION TERM. The term of each Stock Option shall be fixed by the Administrator, but no Incentive Stock Option shall be exercisable more than ten years after the date the option is granted. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation and an Incentive Stock Option is granted to such employee, the term of such option shall be no more than five years from the date of grant. (iv) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock Options shall become vested and exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date. The Committee may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options. (v) METHOD OF EXERCISE. Stock Options may be exercised in whole or in part, by giving written notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods: (A) In cash, by certified or bank check or other instrument acceptable to the Administrator; (B) In the form of shares of Stock that are not then subject to restrictions under any Company plan and that have been held by the optionee for at least six months, if permitted by the Administrator in its discretion. Such surrendered shares shall be valued at Fair Market Value on the exercise date; or (C) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure. 7 Payment instruments will be received subject to collection. The delivery of certificates representing the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Stock Option or applicable provisions of laws. (vi) TERMINATION BY REASON OF DEATH. Any Stock Option held by an optionee whose employment by the Company and its Subsidiaries is terminated by reason of death shall become fully exercisable and may thereafter be exercised by the legal representative or legatee of the optionee, for a period of 12 months (or such longer period as the Administrator shall specify at any time) from the date of death, or until the expiration of the stated term of the Option, if earlier. (vii) TERMINATION BY REASON OF DISABILITY. (A) Any Stock Option held by an optionee whose employment by the Company and its Subsidiaries is terminated by reason of Disability shall become fully exercisable and may thereafter be exercised, for a period of 12 months (or such longer period as the Administrator shall specify at any time) from the date of such termination of employment, or until the expiration of the stated term of the Option, if earlier. (B) The Administrator shall have sole authority and discretion to determine whether a participant's employment has been terminated by reason of Disability. (C) The death of an optionee during the period provided in this Section 5(a)(vii) for the exercise of a Stock Option shall extend such period for six months (or for such longer period as the Administrator shall specify at any time) from the date of death, subject to termination on the expiration of the stated term of the Option, if earlier. (viii) TERMINATION BY REASON OF RETIREMENT. (A) Any Stock Option held by an optionee whose employment by the Company and its Subsidiaries is terminated by reason of Retirement may thereafter be exercised, to the extent it was exercisable at the time of such termination, for a period of 12 months (or such other period as the Administrator shall specify at any time) from the date of such termination of employment, or until the expiration of the stated term of the Option, if earlier. (B) The death of an optionee during a period provided in this Section 5(a)(viii) for the exercise of a Stock Option shall extend such period for six months (or for such longer period as the Administrator shall specify at any time) from the date of death, subject to termination on the expiration of the stated term of the Option, if earlier. (ix) TERMINATION FOR CAUSE. If any optionee's employment by the Company and its Subsidiaries is terminated for Cause, any Stock Option held by such optionee, including any Stock Option that is immediately exercisable at the time of such termination, shall immediately terminate and be of no further force and effect; provided, however, that the Committee may, in its sole discretion, provide that such Stock Option can be exercised for a 8 period of up to 30 days from the date of termination of employment or until the expiration of the stated term of the Option, if earlier. (x) OTHER TERMINATION. Unless otherwise determined by the Administrator, if an optionee's employment by the Company and its Subsidiaries terminates for any reason other than death, Disability, Retirement, or for Cause, any Stock Option held by such optionee may thereafter be exercised, to the extent it was exercisable on the date of termination of employment, for three months (or such longer period as the Committee shall specify at any time) from the date of termination of employment or until the expiration of the stated term of the Option, if earlier. (xi) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent required for "incentive stock option" treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option. (b) RELOAD OPTIONS. At the discretion of the Administrator, Options granted under Section 5(a) may include a so-called "reload" feature pursuant to which an optionee exercising an option by the delivery of a number of shares of Stock in accordance with Section 5(a)(v)(B) hereof would automatically be granted an additional Option (with an exercise price equal to the Fair Market Value of the Stock on the date the additional Option is granted and with the same expiration date as the original Option being exercised, and with such other terms as the Committee may provide) to purchase that number of shares of Stock equal to the number delivered to exercise the original Option. (c) STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS. (i) AUTOMATIC GRANT OF OPTIONS. (A) Each Independent Director shall be granted on the effective date of the Company's initial public offering a Non-Qualified Stock Option to acquire 10,000 shares of Stock. (B) Each Independent Director who is first elected to serve as a Director after the effective date of the Company's initial public offering shall be granted, on the fifth business day after his election, a Non-Qualified Stock Option to acquire 10,000 shares of Stock. (C) Each Independent Director who is serving as Director of the Company on the fifth business day after each annual meeting of shareholders, beginning with the annual meeting following the grant of a Stock Option to the Independent Director pursuant to (A) or (B) above, shall automatically be granted on such day a Non-Qualified Stock Option to acquire 10,000 shares of Stock. 9 (D) The exercise price per share for the Stock covered by any Stock Option granted under this Section 5(c) shall be equal to the Fair Market Value of the Stock on the date the Stock Option is granted. (ii) EXERCISE; TERMINATION; NON-TRANSFERABILITY. (A) Subject to the provisions of Section 15, each Option granted under Section 5(c) shall become exercisable one year after the date of grant or upon the death of the Optionee, if sooner, provided that the Optionee has been a Director throughout such period. An Option granted under Section 5(c) shall not be exercisable after the expiration of ten years from the date of grant. (B) If an Independent Director ceases to be a Director for any reason other than Cause or death, an Option granted under this Section 5(c) may thereafter be exercised, if it is exercisable in accordance with Section 5(c)(ii)(A) above, for a period of six months from the date such optionee ceases to be a Director of the Company or until the specified expiration date, if earlier. If the optionee ceases to be a Director for Cause, all rights in an Option granted under this Section 5(c) shall terminate immediately on the date on which he ceases to be a Director. (C) No Stock Option granted under this Section 5(c) shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution, and such Options shall be exercisable during the optionee's lifetime only by the optionee. Any Option granted to an Independent Director and exercisable on the date of his death in accordance with Section 5(c)(ii)(A), may be exercised by the legal representative or legatee of the optionee for a period of six months from the date of death or until the expiration of the stated term of the option, if earlier. (D) Options granted under this Section 5(c) may be exercised only by written notice to the Company specifying the number of shares to be purchased. Payment of the full purchase price of the shares to be purchased may be made by one or more of the methods specified in Section 5(a)(v). An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options. (iii) LIMITED TO INDEPENDENT DIRECTORS. The provisions of this Section 5(c) shall apply only to Options granted or to be granted to Independent Directors, and shall not be deemed to modify, limit or otherwise apply to any other provision of this Plan or to any Option issued under this Plan to a participant who is not an Independent Director of the Company. To the extent inconsistent with the provisions of any other Section of this Plan, the provisions of this Section 5(c) shall govern the rights and obligations of the Company and Independent Directors respecting Options granted or to be granted to Independent Directors. (d) STOCK OPTIONS GRANTED TO CONSULTANTS. The Committee in its discretion may grant Non-Qualified Stock Options to eligible consultants of the Company or any Subsidiary, on such terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable; provided, however, that (i) the exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5(d) shall not be less than 85% of the Fair 10 Market Value on the date of grant, (ii) the method of exercise of such Stock Option shall be limited to one or more of the methods described in Section 5(a)(v) hereof, and (iii) such Stock Option shall not include a "reload" feature as described in Section 5(b) hereof or any similar feature. (e) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution and all Stock Options shall be exercisable, during the optionee's lifetime, only by the optionee. Notwithstanding the foregoing, the Committee may provide in an option agreement that the optionee may transfer, without consideration for the transfer, his Stock Options to members of his immediate family, to trusts for the benefit of such family members and to partnerships in which such family members are the only partners. (f) FORM OF SETTLEMENT. Shares of Stock issued upon exercise of a Stock Option shall be free of all restrictions under the Plan, except as otherwise provided in the Plan. SECTION 6. STOCK APPRECIATION RIGHTS. (a) NATURE OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is an Award entitling the recipient to receive an amount in cash or shares of Stock or a combination thereof having a value equal to the excess of the Fair Market Value of the Stock on the date of exercise over the exercise price per Stock Appreciation Right set by the Administrator at the time of grant, which price shall not be less than 85% of the Fair Market Value of the Stock on the date of grant (or over the option exercise price per share, if the Stock Appreciation Right was granted in tandem with a Stock Option) multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised, with the Administrator having the right to determine the form of payment. (b) GRANT AND EXERCISE OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted to any eligible employee or consultant of the Company or any Subsidiary by the Administrator in tandem with, or independently of, any Stock Option granted pursuant to Section 5 of the Plan. In the case of a Stock Appreciation Right granted in tandem with a Non-Qualified Stock Option, such Stock Appreciation Right may be granted either at or after the time of the grant of such Option. In the case of a Stock Appreciation Right granted in tandem with an Incentive Stock Option, such Stock Appreciation Right may be granted only at the time of the grant of the Option. A Stock Appreciation Right or applicable portion thereof granted in tandem with a Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the related Option. (c) TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined from time to time by the Committee, subject to the following: (i) Stock Appreciation Rights granted in tandem with Options shall be exercisable at such time or times and to the extent that the related Stock Options shall be exercisable. 11 (ii) Upon exercise of a Stock Appreciation Right, the applicable portion of any related Option shall be surrendered. (iii) Stock Appreciation Rights granted in tandem with an Option shall be transferable only when and to the extent that the underlying Option would be transferable. Stock Appreciation Rights not granted in tandem with a Option shall not be transferable otherwise than by will or the laws of descent or distribution. All Stock Appreciation Rights shall be exercisable during the participant's lifetime only by the participant or the participant's legal representative. SECTION 7. RESTRICTED STOCK AWARDS (a) NATURE OF RESTRICTED STOCK AWARDS. The Administrator may grant Restricted Stock Awards to any eligible employee or consultant of the Company or any Subsidiary. A Restricted Stock Award is an Award entitling the recipient to acquire, at no cost or for a purchase price determined by the Committee, shares of Stock subject to such restrictions and conditions as the Committee may determine at the time of grant ("Restricted Stock"). Conditions may be based on continuing employment (or other business relationship) and/or achievement of pre-established performance goals and objectives. Restricted Stock Awards may be granted or sold as described in the preceding sentences in respect of past services or other valid consideration, or in lieu of any cash compensation due to the recipient. (b) ACCEPTANCE OF AWARD. A participant who is granted a Restricted Stock Award shall have no rights with respect to such Award unless the participant shall have accepted the Award within 60 days (or such shorter date as the Administrator may specify) following the award date by making payment to the Company, if required, by certified or bank check or other instrument or form of payment acceptable to the Administrator in an amount equal to the specified purchase price, if any, of the shares covered by the Award and by executing and delivering to the Company a written instrument that sets forth the terms and conditions of the Restricted Stock Award in such form as the Administrator shall determine. (c) RIGHTS AS A STOCKHOLDER. Upon complying with Section 7(b) above, a participant shall have the rights of a stockholder with respect to the voting of the Restricted Stock, subject to such conditions contained in the written instrument evidencing the Restricted Stock Award. Unless the Administrator shall otherwise determine, certificates evidencing the Restricted Stock shall remain in the possession of the Company until such Restricted Stock is vested as provided in Section 7(e) below. (d) RESTRICTIONS. Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the written instrument evidencing the Restricted Stock Award. In the case of Restricted Stock granted to an employee, if the participant's employment by the Company and its Subsidiaries terminates for any reason other than death or Disability, the Company shall have the right, at the discretion of the Administrator , to repurchase Restricted Stock with respect to which conditions have not lapsed at their purchase price, or to require forfeiture of such shares to the Company if acquired at no cost, from the participant or the participant's legal representative. The Company must exercise such right of repurchase or forfeiture not later than the 90th day following such termination of employment (unless otherwise specified in the written instrument evidencing the 12 Restricted Stock Award). Restricted Stock granted to a consultant shall be subject to such repurchase and forfeiture provisions as the Administrator shall specify at the time of grant. (e) VESTING OF RESTRICTED STOCK. The Administrator at the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Restricted Stock and the Company's right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Stock and shall be deemed "vested." A participant whose employment is terminated for reason of death or Disability shall become fully vested on his termination date in any Restricted Stock he received as an employee to the extent such vesting is otherwise contingent only on continued service with the Company. Where vesting is contingent on attainment of pre-established performance goals, the vesting of Restricted Stock in the case of death or Disability shall remain dependent on the attainment of such goals and shall be determined as of such date or dates specified by the Administrator. (f) WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The written instrument evidencing the Restricted Stock Award may require or permit the immediate payment, waiver, deferral or investment of dividends paid on the Restricted Stock. SECTION 8. UNRESTRICTED STOCK AWARDS (a) GRANT OR SALE OF UNRESTRICTED STOCK. The Administrator may, in its sole discretion, grant (or sell at a purchase price determined by the Administrator) an Unrestricted Stock Award to any eligible employee or consultant of the Company or any Subsidiary, pursuant to which the recipient may receive shares of Stock free of any restrictions ("Unrestricted Stock") under the Plan. Unrestricted Stock Awards may be granted or sold as described in the preceding sentence in respect of past services or other valid consideration, or in lieu of any cash compensation due to the recipient. (b) ELECTIONS TO RECEIVE UNRESTRICTED STOCK IN LIEU OF COMPENSATION. Upon the request of an eligible employee of the Company or any Subsidiary and with the consent of the Administrator, such employee may, pursuant to an irrevocable written election delivered to the Company no later than the date or dates specified by the Administrator receive a portion of the cash compensation otherwise due to such employee in the form of shares of Unrestricted Stock (valued at Fair Market Value on the date or dates the cash compensation would otherwise be paid). (c) ELECTIONS TO RECEIVE UNRESTRICTED STOCK IN LIEU OF DIRECTOR FEES. Each Independent Director may, pursuant to an irrevocable written election delivered to the Company, receive all or a portion of such Independent Director's director fees in shares of Unrestricted Stock (valued at Fair Market Value on the date or dates that the director fees would otherwise be paid in cash). (d) DEFERRAL OF AWARDS. Each Independent Director who has made an election to receive shares of Unrestricted Stock under Section 8(c) above will have the right to defer receipt of up to 100% of such shares of Unrestricted Stock payable to such Independent Director in 13 accordance with such rules and procedures as may from time to time be established by the Company for that purpose, and such election shall be at the beginning of the next calendar year. The deferred Unrestricted Stock shall be entitled to receive Dividend Equivalent Rights settled in shares of Stock. (e) RESTRICTIONS ON TRANSFERS. The right to receive Unrestricted Stock on a deferred basis may not be sold, assigned, transferred, pledged or otherwise encumbered, other than by will or the laws of descent and distribution. SECTION 9. PERFORMANCE SHARE AWARDS (a) NATURE OF PERFORMANCE SHARE AWARDS. A Performance Share Award is an award entitling the recipient to acquire shares of Stock upon the attainment of specified performance goals. The Administrator may make Performance Share Awards independent of or in connection with the granting of any other Award under the Plan. Performance Share Awards may be granted under the Plan to any eligible employee or consultant of the Company or any Subsidiary, including those who qualify for awards under other performance plans of the Company. The Committee in its sole discretion shall determine whether and to whom Performance Share Awards shall be made, the performance goals applicable under each such Award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the awarded Performance Shares; provided, however, that the Administrator may rely on the performance goals and other standards applicable to other performance unit plans of the Company in setting the standards for Performance Share Awards under the Plan. (b) RESTRICTIONS ON TRANSFER. Performance Share Awards and all rights with respect to such Awards may not be sold, assigned, transferred, pledged or otherwise encumbered. (c) RIGHTS AS A SHAREHOLDER. A participant receiving a Performance Share Award shall have the rights of a shareholder only as to shares actually received by the participant under the Plan and not with respect to shares subject to the Award but not actually received by the participant. A participant shall be entitled to receive a stock certificate evidencing the acquisition of shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the written instrument evidencing the Performance Share Award (or in a performance plan adopted by the Administrator). (d) TERMINATION. Except as may otherwise be provided by the Administrator at any time prior to termination of employment (or other business relationship in respect of which the Awards were granted), a participant's rights in all Performance Share Awards shall automatically terminate upon the termination of the participant's employment by (or such other business relationship with) the Company and its Subsidiaries for any reason. (e) ACCELERATION, WAIVER, ETC. At any time prior to the termination of the participant's employment by the Company and its Subsidiaries (or other business relationship with the Company and its Subsidiaries in respect of which the Award was granted), the Administrator may in its sole discretion accelerate, waive or, subject to Section 13, amend any or all of the goals, restrictions or conditions imposed under any Performance Share Award. 14 SECTION 10. DIVIDEND EQUIVALENT RIGHTS (a) DIVIDEND EQUIVALENT RIGHTS. A Dividend Equivalent Right is an award entitling the recipient to receive credits based on cash dividends that would be paid on the shares of Stock specified in the Dividend Equivalent Right (or other award to which it relates) if such shares were held by the recipient. A Dividend Equivalent Right may be granted hereunder to an eligible employee or consultant, as a component of another award or as a freestanding award. A Dividend Equivalent Right may also be granted to an Independent Director pursuant to Section 8(d). The terms and conditions of Dividend Equivalent Rights shall be specified in the grant. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled in cash or shares of Stock or a combination thereof, in a single installment or installments. A Dividend Equivalent Right granted as a component of another award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other award. A Dividend Equivalent Right granted as a component of another award may also contain terms and conditions different from such other award. (b) INTEREST EQUIVALENTS. Any award under this Plan that is settled in whole or in part in cash on a deferred basis may provide in the grant for interest equivalents to be credited with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon such terms and conditions as may be specified by the grant. SECTION 11. TAX WITHHOLDING (a) PAYMENT BY PARTICIPANT. Each participant shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includible in the gross income of the participant for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the participant. (b) PAYMENT IN STOCK. Subject to approval by the Administrator, participant may elect to have such tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due, or (ii) transferring to the Company shares of Stock owned by the participant with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due filed all reports and statements required to be filed pursuant to that Section for that year. 15 SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC. For purposes of the Plan, the following events shall not be deemed a termination of employment: (a) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee's right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing. SECTION 13. AMENDMENTS AND TERMINATION The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award (or provide substitute Awards at the same or reduced exercise or purchase price or with no exercise or purchase price, but such price, if any, must satisfy the requirements which would apply to the substitute or amended Award if it were then initially granted under this Plan) for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder's consent. SECTION 14. STATUS OF PLAN With respect to the portion of any Award which has not been exercised and any payments in cash, Stock or other consideration not received by a participant, a participant shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Company's obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence. SECTION 15. CHANGE OF CONTROL PROVISIONS Upon the occurrence of a Change of Control as defined in this Section 15: (a) Each outstanding Stock Option and Stock Appreciation Right shall automatically become fully exercisable notwithstanding any provision to the contrary herein. (b) Each Restricted Stock Award and Performance Share Award shall be subject to such terms, if any, with respect to a Change of Control as have been provided by the Committee in connection with such Award. (c) "Change of Control" shall mean the occurrence of any one of the following events: 16 (i) any "person," as such term is used in Sections 13(d) and 14(d) of the Act (other than the Company, any of its Subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its Subsidiaries), together with all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 50% or more of either (A) the combined voting power of the Company's then outstanding securities having the right to vote in an election of the Company's Board of Directors ("Voting Securities") or (B) the then outstanding shares of Stock of the Company (in either such case other than as a result of an acquisition of securities directly from the Company); or (ii) persons who, as of the Effective Date, constitute the Company's Board of Directors (the "Incumbent Directors") cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to the Effective Date whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall, for purposes of this Plan, be considered an Incumbent Director; or (iii) the stockholders of the Company shall approve (A) any consolidation or merger of the Company or any Subsidiary where the shareholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate 60% or more of the voting shares of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), (B) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or (C) any plan or proposal for the liquidation or dissolution of the Company; Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Stock or other Voting Securities outstanding, increases (x) the proportionate number of shares of Stock beneficially owned by any person to 50% or more of the shares of Stock then outstanding or (y) the proportionate voting power represented by the Voting Securities beneficially owned by any person to 50% or more of the combined voting power of all then outstanding Voting Securities; PROVIDED, HOWEVER, that if any person referred to in clause (x) or (y) of this sentence shall thereafter become the beneficial owner of any additional shares of Stock or other Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction), then a "Change of Control" shall be deemed to have occurred for purposes of the foregoing clause (i). SECTION 16. GENERAL PROVISIONS (a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The Committee may require each person acquiring Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof. 17 No shares of Stock shall be issued pursuant to an Award until all applicable securities law and other legal and stock exchange or similar requirements have been satisfied. The Committee may require the placing of such stop-orders and restrictive legends on certificates for Stock and Awards as it deems appropriate. (b) DELIVERY OF STOCK CERTIFICATES. Delivery of stock certificates to participants under this Plan shall be deemed effected for all purposes when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the participant, at the participant's last known address on file with the Company. (c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary. SECTION 17. EFFECTIVE DATE OF PLAN This Plan shall become effective upon approval by the holders of a majority of the shares of stock of the Company present or represented and entitled to vote at a meeting of stockholders. Subject to such approval by the stockholders and to the requirement that no Stock may be issued hereunder prior to such approval, Stock Options and other Awards may be granted hereunder on and after adoption of this Plan by the Board. The Plan was adopted by the Board of Directors of the Corporation in March 1995 and approved by the stockholders in April 1995. The Plan was amended and restated as of May 19, 1995 and October 2, 1995. The Plan was further amended as of March 28, 1996, which amendment was approved by stockholders on September 17, 1996. The Plan was further amended as of June 17, 1998 and July 14, 1998, which amendments were approved by Stockholders on September 24, 1998. SECTION 18. GOVERNING LAW This Plan shall be governed by Massachusetts law except to the extent such law is preempted by federal law. 18 EX-99.2 6 f82534exv99w2.txt EXHIBIT 99.2 EXHIBIT 99.2 GRANT NUMBER: 544 C.P. CLARE CORPORATION C.P. CLARE NON-QUALIFIED STOCK OPTION PLAN GRANTED TO DENNIS COCCO No. of Shares: 184,830 July 6, 1998 CP Clare Corporation (the "Company") hereby grants to Dennis Cocco (the "Optionee") an Option to purchase on or prior to July 6, 2008 (the "Expiration Date") all or any part of 184,830 shares (the "Option Shares") of common stock of the Company, par value $0.01 per share ("Common Stock"), at a price of $9.0625 per share, the fair market value on the date of grant, and subject to the terms and conditions set forth hereinafter. This Option is intended to be a Non-Qualified Stock Option and shall not be treated as an "incentive stock option" within the meaning of Section 422(b) of the Internal Revenue Code. This Option is not granted pursuant to the Company's 1995 Stock Option and Incentive Plan (the "Plan"), but capitalized terms not otherwise defined herein shall have the meanings assigned to them by Section 1 of the Plan. 1. VESTING SCHEDULE. Subject to Section 4 and Section 8 hereof, and subject to the determination of the Committee to accelerate the vesting schedule hereunder due to other circumstances, the Option shall become vested and exercisable with respect to the following numbers of Option Shares at the expiration of each of the following periods from the date of the Option:

NUMBER OF OPTION SHARES FOR WHICH PERIOD FROM THE DATE OF THE OPTION OPTION EXERCISABLE AFTER WHICH IT BECOMES EXERCISABLE - --------------------------------------- -------------------------------------- 36,966 July 6, 1999 36,966 July 6, 2000 36,966 July 6, 2001 36,966 July 6, 2002 36,966 July 6, 2003

In any event the Option shall become fully vested and exercisable with respect to all of the Option Shares five years after the date hereof. Once vested, the Option shall continue to be exercisable to purchase Option Shares at any time or times prior to the Expiration Date. 2. MANNER OF EXERCISE. The Optionee may exercise this Option only in the following manner: from time to time on or prior to the Expiration Date, the Optionee may give written notice to the Company of his election to purchase some or all of the vested Option Shares purchasable at the time of such notice. This notice shall specify the number of Option Shares to be purchased. Payment of the purchase price for the Option Shares may be made by one or more of the following methods: (a) in cash, by certified or bank check or other instrument acceptable to the Committee; (b) in the form of shares of Common Stock that are not then subject to restrictions under any Company plan and that have been held by the Optionee for at least six months; or (c) by the Optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the option purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure. Payment instruments will be received subject to collection. The delivery of certificates representing the Option Shares will be contingent upon the Company's receipt from the Optionee of full payment for the Option Shares, as set forth above and any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Common Stock to be purchased pursuant to the exercise of Options hereunder and any subsequent resale of the shares of Common Stock will be in compliance with applicable laws and regulations. 3. NON-TRANSFERABILITY OF OPTION. This Option shall not be transferable by the Optionee otherwise than by will or by the laws of descent and distribution and this Option shall be exercisable, during the Optionee's lifetime, only by the Optionee. 4. TERMINATION OF EMPLOYMENT. If the Optionee's employment by the Company or a Subsidiary is terminated, the extent to which and the period within which the Option may be exercised shall be as set forth below: (a) TERMINATION DUE TO DEATH. If the Optionee's employment terminates by reason of death, the Option shall become fully exercisable and may thereafter be exercised by the Optionee's legal representative or legatee for a period of 12 months from the date of death or until the Expiration Date, if earlier. (b) TERMINATION DUE TO DISABILITY. If the Optionee's employment terminates by reason of Disability, the Option shall become fully exercisable and may thereafter be exercised for a period of 12 months from the date of termination or until the Expiration Date, if earlier. The death of the Optionee during the 12 month period provided in this Section 4(b) shall extend such period for six months from the date of death or until the Expiration Date, if earlier. (c) TERMINATION DUE TO RETIREMENT. If the Optionee's employment terminates by reason of Retirement, the Option may thereafter be exercised to the extent it was exercisable on the date of termination for a period of 12 months from the date of termination or until the Expiration Date, if earlier. The death of the Optionee during the 12-month period provided in this Section 4(c) shall extend such period for six months from the date of death or until the Expiration Date, if earlier. (d) TERMINATION FOR GOOD CAUSE. If the Optionee's employment terminates for Good Cause, as defined in the Employment Agreement between Optionee and the Company dated July 6, 1998, the Option shall immediately terminate and be of no further force and effect. (e) OTHER TERMINATION. If the Optionee's employment is terminated by the Company for any reason other than death, Disability, Retirement or Good Cause, the Option 2 shall continue to vest on the schedule set forth in Section 1 hereof, and thereafter may be exercisable until the Expiration Date. (f) RESIGNATION. If the Optionee's employment terminates due to his resignation from the Company, the Option may thereafter be exercised, to the extent it was exercisable on the date of termination, for a period of three months from the date of such termination or until the Expiration Date, if earlier. 5. NO SPECIAL EMPLOYMENT RIGHTS. This Option will not confer upon the Optionee any right with respect to continued employment by the Company or a Subsidiary, nor will it interfere in any way with any right of the Optionee's employer to terminate the Optionee's employment at any time. 6. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a shareholder with respect to any shares of Common Stock that may be purchased by exercise of this Option unless and until a certificate or certificates representing such shares of Common Stock are duly issued and delivered to the Optionee. Adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued only to the extent such adjustment would be made under the Plan for an option issued pursuant to the Plan. 7. TAX WITHHOLDING. No later than the date as of which part or all of the value of any shares of Common Stock received under the Option first becomes includible in the Optionee's gross income for Federal tax purposes, the Optionee shall make arrangements with the Company regarding the payment of any federal, state or local taxes required to be withheld with respect to such income. 8. ACCELERATION. Upon a Change in Control, the Option shall automatically become fully exercisable notwithstanding any provision to the contrary herein. 9. RECAPITALIZATIONS; MERGERS. In the event of any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity or in the event of a liquidation of the Company, the Option shall be treated as if it had been issued pursuant to the Plan. 10. MISCELLANEOUS. (a) NOTICES. Notices hereunder shall be mailed or delivered to the Company at its principal place of business, 78 Cherry Hill Drive, Beverly, MA 01915-1048 and shall be mailed or delivered to the Optionee at the address set forth below, or in either case at such other address as one party may subsequently furnish to the other party in writing. 3 (b) ENTIRE AGREEMENT; MODIFICATION. This Option constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Option. This Option may be modified, amended or rescinded only by a written agreement executed by both parties; provided, however, that the Committee may, at any time, amend or cancel the Option (or provide a substitute Award at the same or reduced exercise or purchase price or with no exercise or purchase price) for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect Optionee's rights under the Option without the Optionee's consent. (c) SEVERABILITY. The invalidity, illegality or unenforceability of any provision of this Option shall in no way affect the validity, legality or enforceability of any other provision. (d) SUCCESSORS AND ASSIGNS. This Option shall be binding upon the inure to the benefit of the parties hereto and their respective successors and assigns, subject to the limitations set forth in Section 3 hereof. (e) GOVERNING LAW. This Agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts without reference to the conflict of laws provisions thereof. (f) EFFECTIVE DATE. This Agreement shall be effective as of the date of execution thereof by the Company and the Optionee. This Agreement was adopted by the Compensation Committee of the Board of Directors of the Corporation on June 17th, 1998 and is intended to be an approved plan in accordance with Rule 16b-3 (d) (1) promulgated pursuant to the Securities Exchange Act of 1934, as amended. CP CLARE CORPORATION By: /s/ Arthur Buckland ------------------------------------- Title: President and CEO ---------------------------------- Receipt of the foregoing Option is acknowledged and its terms and conditions are hereby agreed to: Date: August 11, 1998 Optionee: /s/ Dennis Cocco ------------------------------- Dennis Cocco Address: 4 Little Pond, Laguna Niguel, CA 92677 Social Security Number: _______________________ 4 -----END PRIVACY-ENHANCED MESSAGE-----

EX-5.1

                                                                     Exhibit 5.1







July 10, 2002



IXYS Corporation
3540 Bassett St.
Santa Clara, CA 95054-2704

Dear Ladies and Gentlemen:

You have requested our opinion with respect to certain matters in connection
with the filing by IXYS Corporation, a Delaware corporation (the "Company"), of
a Registration Statement on Form S-8 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") covering the offering of
up to 992,293 shares of the Company's Common Stock, $0.01 par value (the
"Shares"), pursuant to the C.P. Clare Corporation Non-Qualified Stock Option
Plan and the C.P. Clare Corporation 1995 Stock Option and Incentive Plan
(collectively, the "Plans").

In connection with this opinion, we have examined and relied upon the
Registration Statement and related Prospectus, the Company's Amended and
Restated Certificate of Incorporation and By-laws, as amended, and such other
documents, records, certificates, memoranda and other instruments as we deem
necessary as a basis for this opinion. We have assumed the genuineness and
authenticity of all documents submitted to us as originals, the conformity to
originals of all documents submitted to us as copies thereof and the due
execution and delivery of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof.

On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Registration
Statement, the Plans and the options granted thereunder, will be validly issued,
fully paid and non-assessable (except as to shares issued pursuant to certain
deferred payment arrangements, which will be fully paid and nonassessable when
such deferred payments are made in full).

We consent to the filing of this opinion as an exhibit to the Registration
Statement.

Sincerely,

COOLEY GODWARD LLP


/s/ SUZANNE SAWOCHKA HOOPER
- ---------------------------
Suzanne Sawochka Hooper

EX-23.1

                                                               EXHIBIT 23.1

                      CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated May 20, 2002, except for Note 14 as to
which the date is June 12, 2002, relating to the financial statements of IXYS
Corporation, which appears in IXYS Corporation's Annual Report on Form 10-K for
the year ended March 31, 2002.





/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Jose, California
July 9, 2002

EX-99.1

                                                                    EXHIBIT 99.1

                              CP CLARE CORPORATION

                      1995 STOCK OPTION AND INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS

        The name of the plan is the CP CLARE CORPORATION 1995 Stock Option and
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
the officers, employees, consultants and Directors of CP CLARE CORPORATION (the
"Company") and its Subsidiaries upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.

        This Plan supersedes, amends and restates the CP Clare Corporation
Amended and Restated 1994 Employee, Director and Consultant Stock Option Plan
(the "1994 Plan"), subject to Section 2(d) below.

        The following terms shall be defined as set forth below:

        "Act" means the Securities Exchange Act of 1934, as amended.

        "Administrator" means the Board or the Committee.

        "Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Unrestricted Stock
Awards, Performance Share Awards and Dividend Equivalent Rights.

        "Board" means the Board of Directors of the Company.

        "Cause" means the occurrence of one or more of the following: (i)
employee or Independent Director is convicted of, pleads guilty to, or confesses
to any felony or any act of fraud, misappropriation or embezzlement which has an
immediate and materially adverse effect on the Company or any Subsidiary, as
determined by the Board in good faith in its sole discretion, (ii) employee or
Independent Director engages in a fraudulent act to the material damage or
prejudice of the Company or any Subsidiary or in conduct or activities
materially damaging to the property, business or reputation of the Company or
any Subsidiary, all as determined by the Board in good faith in its sole
discretion, (iii) any material act or omission by employee or Independent
Director involving malfeasance or negligence in the performance of employee's or
Independent Director's duties to the Company or any Subsidiary to the material
detriment of the Company or any Subsidiary, as determined by the Board in good
faith in its sole discretion, which has not been corrected by employee or
Independent Director within 30 days after written notice from the Company of any
such act or omission, (iv) failure by employee to comply in any material respect
with the terms of his employment agreement, if any, or any


                                       1


written policies or directives of the Board as determined by the Board in good
faith in its sole discretion, which has not been corrected by employee within 30
days after written notice from the Company of such failure, or (v) material
breach by employee of his noncompetition agreement with the Company, if any, as
determined by the Board in good faith in its sole discretion.

        "Change of Control" is defined in Section 15.

        "Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.

        "Committee" means the Committee of two or more independent Directors
appointed by the Board to administer the Plan, all of which shall be "Outside
Directors" within the meaning of Section 162m of the Code and the rules
promulgated thereunder and of "Non-Employee Directors" within the meaning of
Rule 16b-3, promulgated under the Act, or any successor rule.

        "Disability" means an employee's inability to perform his normal
required services for the Company and its Subsidiaries for a period of six
consecutive months by reason of the employee's mental or physical disability, as
determined by the Committee in good faith in its sole discretion.

        "Dividend Equivalent Right" means Awards granted pursuant to Section 10.

        "Effective Date" means the date on which the Plan is approved by
stockholders as set forth in Section 17.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the related rules, regulations and interpretations.

        "Fair Market Value" on any given date means the last reported sale price
at which Stock is traded on such date or, if no Stock is traded on such date,
the most recent date on which Stock was traded, as reflected on the NASDAQ
National Market or, if applicable, any other national stock exchange on which
the Stock is traded or if the Stock is not traded on a national exchange, the
fair market value of the Stock as determined by the Board or the Committee in
good faith; provided, however, that "Fair Market Value" on the effective date of
the Company's initial public offering shall be the offering price to the public
on such date.

        "Incentive Stock Option" means any Stock Option designated and qualified
as an "incentive stock option" as defined in Section 422 of the Code.

        "Independent Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.

        "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

        "Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.


                                       2


        "Performance Share Award" means Awards granted pursuant to Section 9.

        "Restricted Stock Award" means Awards granted pursuant to Section 7.

        "Retirement" means the employee's termination of employment with the
Company and its Subsidiaries after attainment of the age and/or service
requirements to qualify for early or normal retirement under the Company's
qualified retirement plan.

        "Stock" means the Common Stock, par value $.01 per share, of the
Company, subject to adjustments pursuant to Section 3.

        "Stock Appreciation Right" means Awards granted pursuant to Section 6.

        "Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities, beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting
power of all classes of stock or other interests in one of the other
corporations or entities in the chain.

        "Unrestricted Stock Award" means Awards granted pursuant to Section 8.

SECTION 2. ADMINISTRATION OF PLAN; AUTHORITY TO SELECT PARTICIPANTS AND
DETERMINE AWARDS

        (a) ADMINISTRATOR. The Plan shall be administered by the Administrator.

        (b) POWERS OF ADMINISTRATOR. The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:

            (i) to select the officers, other employees and consultants of the
Company and its Subsidiaries to whom Awards may from time to time be granted;

            (ii) to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock Awards, Unrestricted Stock Awards, Performance Share
Awards and Dividend Equivalent Rights, or any combination of the foregoing,
granted to any one or more participants;

            (iii) to determine the number of shares of Stock to be covered by
any Award;

            (iv) to determine and modify the terms and conditions, including
restrictions, not inconsistent with the terms of the Plan, of any Award, which
terms and conditions may differ among individual Awards and participants, and to
approve the form of written instruments evidencing the Awards;

            (v) to accelerate the exercisability or vesting of all or any
portion of any Award;


                                       3


            (vi) subject to the provisions of Section 5(a)(iii), to extend the
period in which Stock Options may be exercised;

            (vii) to determine whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the participant and whether
and to what extent the Company shall pay or credit amounts constituting interest
(at rates determined by the Committee) or dividends or deemed dividends on such
deferrals; and

            (viii) to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and proceedings as
it shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related written instruments); to make all determinations it
deems advisable for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.

All decisions and interpretations of the Administrator e shall be binding on all
persons, including the Company and Plan participants.

        (c) DELEGATION OF AUTHORITY TO GRANT OPTIONS. The Administrator may, in
its sole discretion, delegate to the President and Chief Executive Officer of
the Company power and authority, under Section 2(b) (including paragraphs (i)
through (iv) thereof) and Section 5, to grant Options to employees of the;
provided, however, that no such grant shall be made to an employee who is
subject to the reporting requirements of Section 16 of the Act; and provided
further that the power and authority delegated hereunder shall not include any
power and authority conferred by paragraphs (v) through (viii) of Section 2(b)
or by Section 14 or any power and authority under Section 5 to alter the rights
of the employee or otherwise exercise discretion with respect to the Option
after the grant date. The power and authority delegated hereunder shall be
subject to such additional limitations as the Administrator may specify.

        (d) PRIOR GRANTS UNDER 1994 PLAN. Options granted to an optionee under
the 1994 Plan (or its predecessors) shall not be subject to any terms in this
Plan that would be deemed to modify, extend or renew such option within the
meaning of Section 424(h) of the Code.

SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

        (a) STOCK ISSUABLE. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 4,180,000 shares which represents
the total of (i) 2,000,000 shares authorized under the 1994 Plan, (ii) 680,000
additional shares authorized in connection with the approval of this Plan, (iii)
1,000,000 additional shares authorized on March 28, 1996 and (iv) 500,000
additional shares authorized on June 17, 1998. For purposes of this limitation,
the shares of Stock underlying any Awards which are forfeited, canceled,
reacquired by the Company, satisfied without the issuance of Stock or otherwise
terminated (other than by exercise) shall be added back to the shares of Stock
available for issuance under the Plan. Subject to such overall limitation,
shares of Stock may be issued up to such maximum number pursuant to any type or
types of Award; provided, however, that Stock Options or Stock Appreciation
Rights with respect to not more than 1,000,000 shares of Stock may be granted to


                                       4


any one individual participant during any calendar year period. The shares
available for issuance under the Plan may be authorized but unissued shares of
Stock or shares of Stock reacquired by the Company. Upon the exercise of a Stock
Appreciation Right settled in shares of Stock, the right to purchase an equal
number of shares of Stock covered by a related Stock Option, if any, shall be
deemed to have been surrendered and will no longer be exercisable, and said
number of shares of Stock shall no longer be available under the Plan.

        (b) RECAPITALIZATIONS. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or kind
of shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, the
Committee shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options or Stock Appreciation Rights that can be granted to any one
individual participant, (iii) the number and kind of shares or other securities
subject to any then outstanding Awards under the Plan, and (iv) the price for
each share subject to any then outstanding Stock Options under the Plan, without
changing the aggregate exercise price as to which such Stock Options and Stock
Appreciation Rights remain exercisable. The adjustment by the Committee shall be
final, binding and conclusive. No fractional shares of Stock shall be issued
under the Plan resulting from any such adjustment, but the Committee in its
discretion may make a cash payment in lieu of fractional shares.

        (c) MERGERS. In the event a consolidation or merger or sale of all or
substantially all of the assets of the Company in which outstanding shares of
Common Stock are exchanged for securities, cash or other property of any other
corporation or business entity or in the event of a liquidation of the Company,
the Board, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to outstanding Stock Options and Stock Appreciation Rights: (i)
provide that such Stock Options shall be assumed or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), (ii) upon written notice to the optionees, provide that all
unexercised Stock Options and Stock Appreciation Rights will terminate
immediately prior to the consummation of such transaction unless exercised by
the optionee within a specified period following the date of such notice, and/or
(iii) in the event of a business combination under the terms of which holders of
the Stock of the Company will receive upon consummation thereof a cash payment
for each share surrendered in the business combination, make or provide for a
cash payment to the optionees equal to the difference between (A) the value (as
determined by the Committee) of the consideration payable per share of Stock
pursuant to the business combination (the "Merger Price") times the number of
shares of Stock subject to such outstanding Stock Options and Stock Appreciation
Rights (to the extent then exercisable at prices not in excess of the Merger
Price) and (B) the aggregate exercise price of all such outstanding Stock
Options and Stock Appreciation Rights in exchange for the termination of such
Stock Options and Stock Appreciation Rights.

        (d) SUBSTITUTE AWARDS. The Administrator may grant Awards under the Plan
in substitution for stock and stock based awards held by employees and
consultants of another


                                       5


corporation who concurrently become employees of the Company or a Subsidiary as
the result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation. The Committee may direct that
the substitute awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.

SECTION 4. ELIGIBILITY

        Participants in the Plan will be such full or part-time officers and
other employees and consultants of the Company and its Subsidiaries who are
responsible for or contribute to the management, growth or profitability of the
Company and its Subsidiaries as are selected from time to time by the
Administrator, in its sole discretion, or by the President and Chief Executive
Officer of the Company pursuant to authority delegated under Section 2(c).
Independent Directors are also eligible to participate in the Plan but only to
the extent provided in Section 5(c) and Section 8 below.

SECTION 5. STOCK OPTIONS

        Any Stock Option granted under the Plan shall be in such form as the
Administrator (or, if granted pursuant to authority delegated under Section
2(c), the President and Chief Executive Officer) may from time to time approve.

        Stock Options granted under the Plan may be either Incentive Stock
Options or Non- Qualified Stock Options. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary that is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code. To the extent
that any Option does not qualify as an Incentive Stock Option, it shall
constitute a Non-Qualified Stock Option.

        No Incentive Stock Option shall be granted under the Plan after March
12, 2005.

        (a) STOCK OPTIONS GRANTED TO EMPLOYEES. The Administrator in its
discretion may grant Stock Options to eligible employees of the Company or any
Subsidiary. Stock Options granted to employees pursuant to this Section 5(a)
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Administrator shall deem desirable:

            (i) EXERCISE PRICE. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5(a) shall be
determined by the Administrator at the time of grant but shall not be less than
100% of the Fair Market Value on the date of grant in the case of Incentive
Stock Options, or 85% of the Fair Market Value on the date of grant, in the case
of Non-Qualified Stock Options. Notwithstanding the foregoing, with respect to
Non-Qualified Stock Options which are granted in lieu of cash bonus, the
exercise price per share shall not be less than 50% of the Fair Market Value on
the date of grant. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than 10% of
the combined voting power of all classes of stock of the Company or any parent
or subsidiary corporation and an Incentive Stock Option is granted to such
employee, the option price of such Incentive Stock Option shall be not less than
110% of the Fair Market Value on the grant date.


                                       6


               (ii) GRANT OF DISCOUNT OPTIONS IN LIEU OF CASH BONUS. In the sole
discretion of the Administrator, an employee may be granted a Non-Qualified
Stock Option in lieu of cash bonus, or any portion thereof, to which he may
become entitled pursuant to any other plan of the Company. The exercise price
per share shall be determined by the Administrator but shall not be less than
50% of the Fair Market Value of the Stock on the date the Stock Option is
granted. The number of shares of Stock subject to the Stock Option shall be
determined by dividing the amount of the bonus to be paid pursuant to this
Section 5(a)(ii) by the difference between the Fair Market Value of the Stock on
the date the Stock Option is granted and the exercise price per Stock Option.
The Stock Option shall be granted for whole number of shares so determined; the
value of any fractional share shall be paid in cash.

            (iii) OPTION TERM. The term of each Stock Option shall be fixed by
the Administrator, but no Incentive Stock Option shall be exercisable more than
ten years after the date the option is granted. If an employee owns or is deemed
to own (by reason of the attribution rules of Section 424(d) of the Code) more
than 10% of the combined voting power of all classes of stock of the Company or
any parent or subsidiary corporation and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.

            (iv) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock Options shall
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Administrator at or after the grant
date. The Committee may at any time accelerate the exercisability of all or any
portion of any Stock Option. An optionee shall have the rights of a stockholder
only as to shares acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.

            (v) METHOD OF EXERCISE. Stock Options may be exercised in whole or
in part, by giving written notice of exercise to the Company, specifying the
number of shares to be purchased. Payment of the purchase price may be made by
one or more of the following methods:

                (A) In cash, by certified or bank check or other instrument
acceptable to the Administrator;

                (B) In the form of shares of Stock that are not then subject to
restrictions under any Company plan and that have been held by the optionee for
at least six months, if permitted by the Administrator in its discretion. Such
surrendered shares shall be valued at Fair Market Value on the exercise date; or

                (C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable to the
Company to pay the purchase price; provided that in the event the optionee
chooses to pay the purchase price as so provided, the optionee and the broker
shall comply with such procedures and enter into such agreements of indemnity
and other agreements as the Administrator shall prescribe as a condition of such
payment procedure.


                                       7


        Payment instruments will be received subject to collection. The delivery
of certificates representing the shares of Stock to be purchased pursuant to the
exercise of a Stock Option will be contingent upon receipt from the optionee (or
a purchaser acting in his stead in accordance with the provisions of the Stock
Option) by the Company of the full purchase price for such shares and the
fulfillment of any other requirements contained in the Stock Option or
applicable provisions of laws.

             (vi) TERMINATION BY REASON OF DEATH. Any Stock Option held by an
optionee whose employment by the Company and its Subsidiaries is terminated by
reason of death shall become fully exercisable and may thereafter be exercised
by the legal representative or legatee of the optionee, for a period of 12
months (or such longer period as the Administrator shall specify at any time)
from the date of death, or until the expiration of the stated term of the
Option, if earlier.

             (vii) TERMINATION BY REASON OF DISABILITY.

                   (A) Any Stock Option held by an optionee whose employment by
the Company and its Subsidiaries is terminated by reason of Disability shall
become fully exercisable and may thereafter be exercised, for a period of 12
months (or such longer period as the Administrator shall specify at any time)
from the date of such termination of employment, or until the expiration of the
stated term of the Option, if earlier.

                   (B) The Administrator shall have sole authority and
discretion to determine whether a participant's employment has been terminated
by reason of Disability.

                   (C) The death of an optionee during the period provided in
this Section 5(a)(vii) for the exercise of a Stock Option shall extend such
period for six months (or for such longer period as the Administrator shall
specify at any time) from the date of death, subject to termination on the
expiration of the stated term of the Option, if earlier.

             (viii) TERMINATION BY REASON OF RETIREMENT.

                   (A) Any Stock Option held by an optionee whose employment by
the Company and its Subsidiaries is terminated by reason of Retirement may
thereafter be exercised, to the extent it was exercisable at the time of such
termination, for a period of 12 months (or such other period as the
Administrator shall specify at any time) from the date of such termination of
employment, or until the expiration of the stated term of the Option, if
earlier.

                   (B) The death of an optionee during a period provided in this
Section 5(a)(viii) for the exercise of a Stock Option shall extend such period
for six months (or for such longer period as the Administrator shall specify at
any time) from the date of death, subject to termination on the expiration of
the stated term of the Option, if earlier.

             (ix) TERMINATION FOR CAUSE. If any optionee's employment by the
Company and its Subsidiaries is terminated for Cause, any Stock Option held by
such optionee, including any Stock Option that is immediately exercisable at the
time of such termination, shall immediately terminate and be of no further force
and effect; provided, however, that the Committee may, in its sole discretion,
provide that such Stock Option can be exercised for a


                                       8


period of up to 30 days from the date of termination of employment or until the
expiration of the stated term of the Option, if earlier.

             (x) OTHER TERMINATION. Unless otherwise determined by the
Administrator, if an optionee's employment by the Company and its Subsidiaries
terminates for any reason other than death, Disability, Retirement, or for
Cause, any Stock Option held by such optionee may thereafter be exercised, to
the extent it was exercisable on the date of termination of employment, for
three months (or such longer period as the Committee shall specify at any time)
from the date of termination of employment or until the expiration of the stated
term of the Option, if earlier.

             (xi) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent
required for "incentive stock option" treatment under Section 422 of the Code,
the aggregate Fair Market Value (determined as of the time of grant) of the
shares of stock with respect to which Incentive Stock Options granted under this
Plan and any other plan of the Company or its parent and subsidiary corporations
become exercisable for the first time by an optionee during any calendar year
shall not exceed $100,000. To the extent that any Stock Option exceeds this
limit, it shall constitute a Non-Qualified Stock Option.

        (b) RELOAD OPTIONS. At the discretion of the Administrator, Options
granted under Section 5(a) may include a so-called "reload" feature pursuant to
which an optionee exercising an option by the delivery of a number of shares of
Stock in accordance with Section 5(a)(v)(B) hereof would automatically be
granted an additional Option (with an exercise price equal to the Fair Market
Value of the Stock on the date the additional Option is granted and with the
same expiration date as the original Option being exercised, and with such other
terms as the Committee may provide) to purchase that number of shares of Stock
equal to the number delivered to exercise the original Option.

         (c) STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS.

             (i) AUTOMATIC GRANT OF OPTIONS.

                   (A) Each Independent Director shall be granted on the
effective date of the Company's initial public offering a Non-Qualified Stock
Option to acquire 10,000 shares of Stock.

                   (B) Each Independent Director who is first elected to serve
as a Director after the effective date of the Company's initial public offering
shall be granted, on the fifth business day after his election, a Non-Qualified
Stock Option to acquire 10,000 shares of Stock.

                   (C) Each Independent Director who is serving as Director of
the Company on the fifth business day after each annual meeting of shareholders,
beginning with the annual meeting following the grant of a Stock Option to the
Independent Director pursuant to (A) or (B) above, shall automatically be
granted on such day a Non-Qualified Stock Option to acquire 10,000 shares of
Stock.


                                       9


                   (D) The exercise price per share for the Stock covered by any
Stock Option granted under this Section 5(c) shall be equal to the Fair Market
Value of the Stock on the date the Stock Option is granted.

               (ii) EXERCISE; TERMINATION; NON-TRANSFERABILITY.

                    (A) Subject to the provisions of Section 15, each Option
granted under Section 5(c) shall become exercisable one year after the date of
grant or upon the death of the Optionee, if sooner, provided that the Optionee
has been a Director throughout such period. An Option granted under Section 5(c)
shall not be exercisable after the expiration of ten years from the date of
grant.

                    (B) If an Independent Director ceases to be a Director for
any reason other than Cause or death, an Option granted under this Section 5(c)
may thereafter be exercised, if it is exercisable in accordance with Section
5(c)(ii)(A) above, for a period of six months from the date such optionee ceases
to be a Director of the Company or until the specified expiration date, if
earlier. If the optionee ceases to be a Director for Cause, all rights in an
Option granted under this Section 5(c) shall terminate immediately on the date
on which he ceases to be a Director.

                    (C) No Stock Option granted under this Section 5(c) shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and such Options shall be exercisable during the optionee's
lifetime only by the optionee. Any Option granted to an Independent Director and
exercisable on the date of his death in accordance with Section 5(c)(ii)(A), may
be exercised by the legal representative or legatee of the optionee for a period
of six months from the date of death or until the expiration of the stated term
of the option, if earlier.

                    (D) Options granted under this Section 5(c) may be exercised
only by written notice to the Company specifying the number of shares to be
purchased. Payment of the full purchase price of the shares to be purchased may
be made by one or more of the methods specified in Section 5(a)(v). An optionee
shall have the rights of a stockholder only as to shares acquired upon the
exercise of a Stock Option and not as to unexercised Stock Options.

             (iii) LIMITED TO INDEPENDENT DIRECTORS. The provisions of this
Section 5(c) shall apply only to Options granted or to be granted to Independent
Directors, and shall not be deemed to modify, limit or otherwise apply to any
other provision of this Plan or to any Option issued under this Plan to a
participant who is not an Independent Director of the Company. To the extent
inconsistent with the provisions of any other Section of this Plan, the
provisions of this Section 5(c) shall govern the rights and obligations of the
Company and Independent Directors respecting Options granted or to be granted to
Independent Directors.

        (d) STOCK OPTIONS GRANTED TO CONSULTANTS. The Committee in its
discretion may grant Non-Qualified Stock Options to eligible consultants of the
Company or any Subsidiary, on such terms and conditions, not inconsistent with
the terms of the Plan, as the Committee shall deem desirable; provided, however,
that (i) the exercise price per share for the Stock covered by a Stock Option
granted pursuant to this Section 5(d) shall not be less than 85% of the Fair


                                       10


Market Value on the date of grant, (ii) the method of exercise of such Stock
Option shall be limited to one or more of the methods described in Section
5(a)(v) hereof, and (iii) such Stock Option shall not include a "reload" feature
as described in Section 5(b) hereof or any similar feature.

        (e) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee. Notwithstanding the foregoing, the
Committee may provide in an option agreement that the optionee may transfer,
without consideration for the transfer, his Stock Options to members of his
immediate family, to trusts for the benefit of such family members and to
partnerships in which such family members are the only partners.

        (f) FORM OF SETTLEMENT. Shares of Stock issued upon exercise of a Stock
Option shall be free of all restrictions under the Plan, except as otherwise
provided in the Plan.

SECTION 6. STOCK APPRECIATION RIGHTS.

        (a) NATURE OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is
an Award entitling the recipient to receive an amount in cash or shares of Stock
or a combination thereof having a value equal to the excess of the Fair Market
Value of the Stock on the date of exercise over the exercise price per Stock
Appreciation Right set by the Administrator at the time of grant, which price
shall not be less than 85% of the Fair Market Value of the Stock on the date of
grant (or over the option exercise price per share, if the Stock Appreciation
Right was granted in tandem with a Stock Option) multiplied by the number of
shares of Stock with respect to which the Stock Appreciation Right shall have
been exercised, with the Administrator having the right to determine the form of
payment.

        (b) GRANT AND EXERCISE OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights may be granted to any eligible employee or consultant of the Company or
any Subsidiary by the Administrator in tandem with, or independently of, any
Stock Option granted pursuant to Section 5 of the Plan. In the case of a Stock
Appreciation Right granted in tandem with a Non-Qualified Stock Option, such
Stock Appreciation Right may be granted either at or after the time of the grant
of such Option. In the case of a Stock Appreciation Right granted in tandem with
an Incentive Stock Option, such Stock Appreciation Right may be granted only at
the time of the grant of the Option.

A Stock Appreciation Right or applicable portion thereof granted in tandem with
a Stock Option shall terminate and no longer be exercisable upon the termination
or exercise of the related Option.

        (c) TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. Stock
Appreciation Rights shall be subject to such terms and conditions as shall be
determined from time to time by the Committee, subject to the following:

            (i) Stock Appreciation Rights granted in tandem with Options shall
be exercisable at such time or times and to the extent that the related Stock
Options shall be exercisable.


                                       11


               (ii) Upon exercise of a Stock Appreciation Right, the applicable
portion of any related Option shall be surrendered.

               (iii) Stock Appreciation Rights granted in tandem with an Option
shall be transferable only when and to the extent that the underlying Option
would be transferable. Stock Appreciation Rights not granted in tandem with a
Option shall not be transferable otherwise than by will or the laws of descent
or distribution. All Stock Appreciation Rights shall be exercisable during the
participant's lifetime only by the participant or the participant's legal
representative.

SECTION 7. RESTRICTED STOCK AWARDS

        (a) NATURE OF RESTRICTED STOCK AWARDS. The Administrator may grant
Restricted Stock Awards to any eligible employee or consultant of the Company or
any Subsidiary. A Restricted Stock Award is an Award entitling the recipient to
acquire, at no cost or for a purchase price determined by the Committee, shares
of Stock subject to such restrictions and conditions as the Committee may
determine at the time of grant ("Restricted Stock"). Conditions may be based on
continuing employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives. Restricted Stock Awards may be
granted or sold as described in the preceding sentences in respect of past
services or other valid consideration, or in lieu of any cash compensation due
to the recipient.

        (b) ACCEPTANCE OF AWARD. A participant who is granted a Restricted Stock
Award shall have no rights with respect to such Award unless the participant
shall have accepted the Award within 60 days (or such shorter date as the
Administrator may specify) following the award date by making payment to the
Company, if required, by certified or bank check or other instrument or form of
payment acceptable to the Administrator in an amount equal to the specified
purchase price, if any, of the shares covered by the Award and by executing and
delivering to the Company a written instrument that sets forth the terms and
conditions of the Restricted Stock Award in such form as the Administrator shall
determine.

        (c) RIGHTS AS A STOCKHOLDER. Upon complying with Section 7(b) above, a
participant shall have the rights of a stockholder with respect to the voting of
the Restricted Stock, subject to such conditions contained in the written
instrument evidencing the Restricted Stock Award. Unless the Administrator shall
otherwise determine, certificates evidencing the Restricted Stock shall remain
in the possession of the Company until such Restricted Stock is vested as
provided in Section 7(e) below.

        (d) RESTRICTIONS. Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the written instrument evidencing the
Restricted Stock Award. In the case of Restricted Stock granted to an employee,
if the participant's employment by the Company and its Subsidiaries terminates
for any reason other than death or Disability, the Company shall have the right,
at the discretion of the Administrator , to repurchase Restricted Stock with
respect to which conditions have not lapsed at their purchase price, or to
require forfeiture of such shares to the Company if acquired at no cost, from
the participant or the participant's legal representative. The Company must
exercise such right of repurchase or forfeiture not later than the 90th day
following such termination of employment (unless otherwise specified in the
written instrument evidencing the


                                       12


Restricted Stock Award). Restricted Stock granted to a consultant shall be
subject to such repurchase and forfeiture provisions as the Administrator shall
specify at the time of grant.

        (e) VESTING OF RESTRICTED STOCK. The Administrator at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed "vested." A participant whose employment is
terminated for reason of death or Disability shall become fully vested on his
termination date in any Restricted Stock he received as an employee to the
extent such vesting is otherwise contingent only on continued service with the
Company. Where vesting is contingent on attainment of pre-established
performance goals, the vesting of Restricted Stock in the case of death or
Disability shall remain dependent on the attainment of such goals and shall be
determined as of such date or dates specified by the Administrator.

        (f) WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The written
instrument evidencing the Restricted Stock Award may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on the
Restricted Stock.

SECTION 8. UNRESTRICTED STOCK AWARDS

        (a) GRANT OR SALE OF UNRESTRICTED STOCK. The Administrator may, in its
sole discretion, grant (or sell at a purchase price determined by the
Administrator) an Unrestricted Stock Award to any eligible employee or
consultant of the Company or any Subsidiary, pursuant to which the recipient may
receive shares of Stock free of any restrictions ("Unrestricted Stock") under
the Plan. Unrestricted Stock Awards may be granted or sold as described in the
preceding sentence in respect of past services or other valid consideration, or
in lieu of any cash compensation due to the recipient.

        (b) ELECTIONS TO RECEIVE UNRESTRICTED STOCK IN LIEU OF COMPENSATION.
Upon the request of an eligible employee of the Company or any Subsidiary and
with the consent of the Administrator, such employee may, pursuant to an
irrevocable written election delivered to the Company no later than the date or
dates specified by the Administrator receive a portion of the cash compensation
otherwise due to such employee in the form of shares of Unrestricted Stock
(valued at Fair Market Value on the date or dates the cash compensation would
otherwise be paid).

        (c) ELECTIONS TO RECEIVE UNRESTRICTED STOCK IN LIEU OF DIRECTOR FEES.
Each Independent Director may, pursuant to an irrevocable written election
delivered to the Company, receive all or a portion of such Independent
Director's director fees in shares of Unrestricted Stock (valued at Fair Market
Value on the date or dates that the director fees would otherwise be paid in
cash).

        (d) DEFERRAL OF AWARDS. Each Independent Director who has made an
election to receive shares of Unrestricted Stock under Section 8(c) above will
have the right to defer receipt of up to 100% of such shares of Unrestricted
Stock payable to such Independent Director in


                                       13


accordance with such rules and procedures as may from time to time be
established by the Company for that purpose, and such election shall be at the
beginning of the next calendar year. The deferred Unrestricted Stock shall be
entitled to receive Dividend Equivalent Rights settled in shares of Stock.

        (e) RESTRICTIONS ON TRANSFERS. The right to receive Unrestricted Stock
on a deferred basis may not be sold, assigned, transferred, pledged or otherwise
encumbered, other than by will or the laws of descent and distribution.

SECTION 9. PERFORMANCE SHARE AWARDS

        (a) NATURE OF PERFORMANCE SHARE AWARDS. A Performance Share Award is an
award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Administrator may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any eligible
employee or consultant of the Company or any Subsidiary, including those who
qualify for awards under other performance plans of the Company. The Committee
in its sole discretion shall determine whether and to whom Performance Share
Awards shall be made, the performance goals applicable under each such Award,
the periods during which performance is to be measured, and all other
limitations and conditions applicable to the awarded Performance Shares;
provided, however, that the Administrator may rely on the performance goals and
other standards applicable to other performance unit plans of the Company in
setting the standards for Performance Share Awards under the Plan.

        (b) RESTRICTIONS ON TRANSFER. Performance Share Awards and all rights
with respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.

        (c) RIGHTS AS A SHAREHOLDER. A participant receiving a Performance Share
Award shall have the rights of a shareholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Administrator).

        (d) TERMINATION. Except as may otherwise be provided by the
Administrator at any time prior to termination of employment (or other business
relationship in respect of which the Awards were granted), a participant's
rights in all Performance Share Awards shall automatically terminate upon the
termination of the participant's employment by (or such other business
relationship with) the Company and its Subsidiaries for any reason.

        (e) ACCELERATION, WAIVER, ETC. At any time prior to the termination of
the participant's employment by the Company and its Subsidiaries (or other
business relationship with the Company and its Subsidiaries in respect of which
the Award was granted), the Administrator may in its sole discretion accelerate,
waive or, subject to Section 13, amend any or all of the goals, restrictions or
conditions imposed under any Performance Share Award.


                                       14


SECTION 10. DIVIDEND EQUIVALENT RIGHTS

        (a) DIVIDEND EQUIVALENT RIGHTS. A Dividend Equivalent Right is an award
entitling the recipient to receive credits based on cash dividends that would be
paid on the shares of Stock specified in the Dividend Equivalent Right (or other
award to which it relates) if such shares were held by the recipient. A Dividend
Equivalent Right may be granted hereunder to an eligible employee or consultant,
as a component of another award or as a freestanding award. A Dividend
Equivalent Right may also be granted to an Independent Director pursuant to
Section 8(d). The terms and conditions of Dividend Equivalent Rights shall be
specified in the grant. Dividend equivalents credited to the holder of a
Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at Fair Market Value on the date of
reinvestment or such other price as may then apply under a dividend reinvestment
plan sponsored by the Company, if any. Dividend Equivalent Rights may be settled
in cash or shares of Stock or a combination thereof, in a single installment or
installments. A Dividend Equivalent Right granted as a component of another
award may provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on, such other
award, and that such Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A Dividend Equivalent
Right granted as a component of another award may also contain terms and
conditions different from such other award.

        (b) INTEREST EQUIVALENTS. Any award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.

SECTION 11. TAX WITHHOLDING

        (a) PAYMENT BY PARTICIPANT. Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includible in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
income. The Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the participant.

        (b) PAYMENT IN STOCK. Subject to approval by the Administrator,
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company shares
of Stock owned by the participant with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount due
filed all reports and statements required to be filed pursuant to that Section
for that year.


                                       15


SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC.

        For purposes of the Plan, the following events shall not be deemed a
termination of employment:

        (a) a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another; or

        (b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the Committee
otherwise so provides in writing.

SECTION 13. AMENDMENTS AND TERMINATION

        The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award (or
provide substitute Awards at the same or reduced exercise or purchase price or
with no exercise or purchase price, but such price, if any, must satisfy the
requirements which would apply to the substitute or amended Award if it were
then initially granted under this Plan) for the purpose of satisfying changes in
law or for any other lawful purpose, but no such action shall adversely affect
rights under any outstanding Award without the holder's consent.

SECTION 14. STATUS OF PLAN

        With respect to the portion of any Award which has not been exercised
and any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Administrator shall otherwise expressly
determine in connection with any Award or Awards. In its sole discretion, the
Administrator may authorize the creation of trusts or other arrangements to meet
the Company's obligations to deliver Stock or make payments with respect to
Awards hereunder, provided that the existence of such trusts or other
arrangements is consistent with the foregoing sentence.

SECTION 15. CHANGE OF CONTROL PROVISIONS

        Upon the occurrence of a Change of Control as defined in this Section
15:

        (a) Each outstanding Stock Option and Stock Appreciation Right shall
automatically become fully exercisable notwithstanding any provision to the
contrary herein.

        (b) Each Restricted Stock Award and Performance Share Award shall be
subject to such terms, if any, with respect to a Change of Control as have been
provided by the Committee in connection with such Award.

        (c) "Change of Control" shall mean the occurrence of any one of the
following events:


                                       16


            (i) any "person," as such term is used in Sections 13(d) and 14(d)
of the Act (other than the Company, any of its Subsidiaries, or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its Subsidiaries), together with
all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under
the Act) of such person, shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 50% or more of either (A) the combined voting power of
the Company's then outstanding securities having the right to vote in an
election of the Company's Board of Directors ("Voting Securities") or (B) the
then outstanding shares of Stock of the Company (in either such case other than
as a result of an acquisition of securities directly from the Company); or

            (ii) persons who, as of the Effective Date, constitute the Company's
Board of Directors (the "Incumbent Directors") cease for any reason, including,
without limitation, as a result of a tender offer, proxy contest, merger or
similar transaction, to constitute at least a majority of the Board, provided
that any person becoming a director of the Company subsequent to the Effective
Date whose election or nomination for election was approved by a vote of at
least a majority of the Incumbent Directors shall, for purposes of this Plan, be
considered an Incumbent Director; or

            (iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the shareholders
of the Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, shares
representing in the aggregate 60% or more of the voting shares of the
corporation issuing cash or securities in the consolidation or merger (or of its
ultimate parent corporation, if any), (B) any sale, lease, exchange or other
transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company;

Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have
occurred for purposes of the foregoing clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of shares
of Stock or other Voting Securities outstanding, increases (x) the proportionate
number of shares of Stock beneficially owned by any person to 50% or more of the
shares of Stock then outstanding or (y) the proportionate voting power
represented by the Voting Securities beneficially owned by any person to 50% or
more of the combined voting power of all then outstanding Voting Securities;
PROVIDED, HOWEVER, that if any person referred to in clause (x) or (y) of this
sentence shall thereafter become the beneficial owner of any additional shares
of Stock or other Voting Securities (other than pursuant to a stock split, stock
dividend, or similar transaction), then a "Change of Control" shall be deemed to
have occurred for purposes of the foregoing clause (i).

SECTION 16. GENERAL PROVISIONS

        (a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The Committee
may require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.


                                       17


        No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Committee may require the placing of such
stop-orders and restrictive legends on certificates for Stock and Awards as it
deems appropriate.

        (b) DELIVERY OF STOCK CERTIFICATES. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.

        (c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.

SECTION 17. EFFECTIVE DATE OF PLAN

        This Plan shall become effective upon approval by the holders of a
majority of the shares of stock of the Company present or represented and
entitled to vote at a meeting of stockholders. Subject to such approval by the
stockholders and to the requirement that no Stock may be issued hereunder prior
to such approval, Stock Options and other Awards may be granted hereunder on and
after adoption of this Plan by the Board. The Plan was adopted by the Board of
Directors of the Corporation in March 1995 and approved by the stockholders in
April 1995. The Plan was amended and restated as of May 19, 1995 and October 2,
1995. The Plan was further amended as of March 28, 1996, which amendment was
approved by stockholders on September 17, 1996. The Plan was further amended as
of June 17, 1998 and July 14, 1998, which amendments were approved by
Stockholders on September 24, 1998.

SECTION 18. GOVERNING LAW

        This Plan shall be governed by Massachusetts law except to the extent
such law is preempted by federal law.


                                        18

EX-99.2

                                                                    EXHIBIT 99.2

                                GRANT NUMBER: 544

                             C.P. CLARE CORPORATION

                   C.P. CLARE NON-QUALIFIED STOCK OPTION PLAN
                             GRANTED TO DENNIS COCCO

No. of Shares: 184,830                                        July 6, 1998

CP Clare Corporation (the "Company") hereby grants to Dennis Cocco (the
"Optionee") an Option to purchase on or prior to July 6, 2008 (the "Expiration
Date") all or any part of 184,830 shares (the "Option Shares") of common stock
of the Company, par value $0.01 per share ("Common Stock"), at a price of
$9.0625 per share, the fair market value on the date of grant, and subject to
the terms and conditions set forth hereinafter. This Option is intended to be a
Non-Qualified Stock Option and shall not be treated as an "incentive stock
option" within the meaning of Section 422(b) of the Internal Revenue Code. This
Option is not granted pursuant to the Company's 1995 Stock Option and Incentive
Plan (the "Plan"), but capitalized terms not otherwise defined herein shall have
the meanings assigned to them by Section 1 of the Plan.

        1. VESTING SCHEDULE. Subject to Section 4 and Section 8 hereof, and
subject to the determination of the Committee to accelerate the vesting schedule
hereunder due to other circumstances, the Option shall become vested and
exercisable with respect to the following numbers of Option Shares at the
expiration of each of the following periods from the date of the Option:



  NUMBER OF OPTION SHARES FOR WHICH      PERIOD FROM THE DATE OF THE OPTION
          OPTION EXERCISABLE             AFTER WHICH IT BECOMES EXERCISABLE
- --------------------------------------- --------------------------------------
                                      
            36,966                                  July 6, 1999
            36,966                                  July 6, 2000
            36,966                                  July 6, 2001
            36,966                                  July 6, 2002
            36,966                                  July 6, 2003



In any event the Option shall become fully vested and exercisable with respect
to all of the Option Shares five years after the date hereof. Once vested, the
Option shall continue to be exercisable to purchase Option Shares at any time or
times prior to the Expiration Date.

        2. MANNER OF EXERCISE. The Optionee may exercise this Option only in the
following manner: from time to time on or prior to the Expiration Date, the
Optionee may give written notice to the Company of his election to purchase some
or all of the vested Option Shares purchasable at the time of such notice. This
notice shall specify the number of Option Shares to be purchased.

        Payment of the purchase price for the Option Shares may be made by one
or more of the following methods: (a) in cash, by certified or bank check or
other instrument acceptable to the



Committee; (b) in the form of shares of Common Stock that are not then subject
to restrictions under any Company plan and that have been held by the Optionee
for at least six months; or (c) by the Optionee delivering to the Company a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the option purchase price as so provided, the Optionee and
the broker shall comply with such procedures and enter into such agreements of
indemnity and other agreements as the Committee shall prescribe as a condition
of such payment procedure. Payment instruments will be received subject to
collection.

        The delivery of certificates representing the Option Shares will be
contingent upon the Company's receipt from the Optionee of full payment for the
Option Shares, as set forth above and any agreement, statement or other evidence
that the Company may require to satisfy itself that the issuance of Common Stock
to be purchased pursuant to the exercise of Options hereunder and any subsequent
resale of the shares of Common Stock will be in compliance with applicable laws
and regulations.

        3. NON-TRANSFERABILITY OF OPTION. This Option shall not be transferable
by the Optionee otherwise than by will or by the laws of descent and
distribution and this Option shall be exercisable, during the Optionee's
lifetime, only by the Optionee.

        4. TERMINATION OF EMPLOYMENT. If the Optionee's employment by the
Company or a Subsidiary is terminated, the extent to which and the period within
which the Option may be exercised shall be as set forth below:

           (a) TERMINATION DUE TO DEATH. If the Optionee's employment terminates
by reason of death, the Option shall become fully exercisable and may thereafter
be exercised by the Optionee's legal representative or legatee for a period of
12 months from the date of death or until the Expiration Date, if earlier.

           (b) TERMINATION DUE TO DISABILITY. If the Optionee's employment
terminates by reason of Disability, the Option shall become fully exercisable
and may thereafter be exercised for a period of 12 months from the date of
termination or until the Expiration Date, if earlier. The death of the Optionee
during the 12 month period provided in this Section 4(b) shall extend such
period for six months from the date of death or until the Expiration Date, if
earlier.

           (c) TERMINATION DUE TO RETIREMENT. If the Optionee's employment
terminates by reason of Retirement, the Option may thereafter be exercised to
the extent it was exercisable on the date of termination for a period of 12
months from the date of termination or until the Expiration Date, if earlier.
The death of the Optionee during the 12-month period provided in this Section
4(c) shall extend such period for six months from the date of death or until the
Expiration Date, if earlier.

           (d) TERMINATION FOR GOOD CAUSE. If the Optionee's employment
terminates for Good Cause, as defined in the Employment Agreement between
Optionee and the Company dated July 6, 1998, the Option shall immediately
terminate and be of no further force and effect.

           (e) OTHER TERMINATION. If the Optionee's employment is terminated by
the Company for any reason other than death, Disability, Retirement or Good
Cause, the Option


                                       2


shall continue to vest on the schedule set forth in Section 1 hereof, and
thereafter may be exercisable until the Expiration Date.

           (f) RESIGNATION. If the Optionee's employment terminates due to his
resignation from the Company, the Option may thereafter be exercised, to the
extent it was exercisable on the date of termination, for a period of three
months from the date of such termination or until the Expiration Date, if
earlier.

        5. NO SPECIAL EMPLOYMENT RIGHTS. This Option will not confer upon the
Optionee any right with respect to continued employment by the Company or a
Subsidiary, nor will it interfere in any way with any right of the Optionee's
employer to terminate the Optionee's employment at any time.

        6. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock that may be purchased by
exercise of this Option unless and until a certificate or certificates
representing such shares of Common Stock are duly issued and delivered to the
Optionee. Adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued only to the
extent such adjustment would be made under the Plan for an option issued
pursuant to the Plan.

        7. TAX WITHHOLDING. No later than the date as of which part or all of
the value of any shares of Common Stock received under the Option first becomes
includible in the Optionee's gross income for Federal tax purposes, the Optionee
shall make arrangements with the Company regarding the payment of any federal,
state or local taxes required to be withheld with respect to such income.

        8. ACCELERATION. Upon a Change in Control, the Option shall
automatically become fully exercisable notwithstanding any provision to the
contrary herein.

        9. RECAPITALIZATIONS; MERGERS. In the event of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding shares of
Common Stock are increased or decreased or are exchanged for a different number
or kind of shares or other securities of the Company, or additional shares or
new or different shares or other securities of the Company or other non-cash
assets are distributed with respect to such shares of Common Stock or other
securities consolidation or merger or sale of all or substantially all of the
assets of the Company in which outstanding shares of Common Stock are exchanged
for securities, cash or other property of any other corporation or business
entity or in the event of a liquidation of the Company, the Option shall be
treated as if it had been issued pursuant to the Plan.

        10. MISCELLANEOUS.

            (a) NOTICES. Notices hereunder shall be mailed or delivered to the
Company at its principal place of business, 78 Cherry Hill Drive, Beverly, MA
01915-1048 and shall be mailed or delivered to the Optionee at the address set
forth below, or in either case at such other address as one party may
subsequently furnish to the other party in writing.


                                       3


            (b) ENTIRE AGREEMENT; MODIFICATION. This Option constitutes the
entire agreement between the parties relative to the subject matter hereof, and
supersedes all proposals, written or oral, and all other communications between
the parties relating to the subject matter of this Option. This Option may be
modified, amended or rescinded only by a written agreement executed by both
parties; provided, however, that the Committee may, at any time, amend or cancel
the Option (or provide a substitute Award at the same or reduced exercise or
purchase price or with no exercise or purchase price) for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect Optionee's rights under the Option without the Optionee's
consent.

            (c) SEVERABILITY. The invalidity, illegality or unenforceability of
any provision of this Option shall in no way affect the validity, legality or
enforceability of any other provision.

            (d) SUCCESSORS AND ASSIGNS. This Option shall be binding upon the
inure to the benefit of the parties hereto and their respective successors and
assigns, subject to the limitations set forth in Section 3 hereof.

            (e) GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Massachusetts
without reference to the conflict of laws provisions thereof.

            (f) EFFECTIVE DATE. This Agreement shall be effective as of the date
of execution thereof by the Company and the Optionee. This Agreement was adopted
by the Compensation Committee of the Board of Directors of the Corporation on
June 17th, 1998 and is intended to be an approved plan in accordance with Rule
16b-3 (d) (1) promulgated pursuant to the Securities Exchange Act of 1934, as
amended.

                                CP CLARE CORPORATION

                                 By: /s/ Arthur Buckland
                                    -------------------------------------

                                 Title: President and CEO
                                       ----------------------------------

Receipt of the foregoing Option is acknowledged and its terms and conditions are
hereby agreed to:

Date: August 11, 1998            Optionee:  /s/ Dennis Cocco
                                         -------------------------------
                                           Dennis Cocco

                                 Address: 4 Little Pond, Laguna Niguel, CA 92677

                 Social Security Number: _______________________

                                       4