Agreement & Plan Merger

EXHIBIT 2.5


EXECUTION COPY


AGREEMENT AND PLAN OF MERGER


by and among


CP Clare Corporation
as Buyer


Clare Micronix Integrated Systems, Inc.
as Buyer Sub


Micronix Integrated Systems, Inc.
as Company


Dennis Cocco, individually


and


the Principal Stockholders of the Company


July 6, 1998


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AGREEMENT AND PLAN OF MERGER


INDEX


Page


SECTION 1. MERGER..............................................................1
1.1 The Merger..........................................................1
1.2 Signing of Agreement................................................1
1.3 Effective Time; Closing.............................................2
1.4 Articles of Incorporation...........................................2
1.5 By-laws.............................................................2
1.6 Directors and Officers..............................................2
1.7 Effect on Securities of the Company.................................2
1.8 Effect on Securities of Buyer Sub...................................3
1.9 Manner of Payment...................................................3
1.10 Issuance of Options.................................................3


SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
MANAGEMENT .........................................................4
2.1 Making of Representations and Warranties............................4
2.2 Organization and Qualifications of the Company......................4
2.3 Capital Stock of the Company; Beneficial Ownership..................5
2.4 Subsidiaries........................................................5
2.5 Authority of the Company............................................5
2.6 Real and Personal Property..........................................6
2.7 Financial Statements................................................8
2.8 Taxes...............................................................9
2.9 Collectibility of Accounts Receivable..............................10
2.10 Inventories........................................................10
2.11 Absence of Certain Changes.........................................10
2.12 Ordinary Course....................................................12
2.13 Banking Relations..................................................12
2.14 Intellectual Property..............................................12
2.15 Contracts..........................................................14
2.16 Litigation.........................................................15
2.17 Compliance with Laws...............................................15
2.18 Insurance..........................................................15
2.19 Warranty or Other Claims...........................................15
2.20 Powers of Attorney.................................................16
2.21 Finder's Fee.......................................................16
2.22 Permits; Burdensome Judgments, etc.................................16
2.23 Corporate Records; Copies of Documents.............................16
2.24 Transactions with Interested Persons...............................16
2.25 Employee Benefit Programs..........................................16
2.26 Environmental Matters..............................................18
2.27 List of Directors and Officers.....................................20 3


2.28 Disclosure.........................................................20
2.29 Non-Foreign Status.................................................20
2.30 Backlog............................................................20
2.31 Employees; Labor Matters...........................................20
2.32 Customers, Distributors and Suppliers..............................21
2.33 Transfer of Shares.................................................21
2.34 Stock Repurchase...................................................21


SECTION 3. INTENTIONALLY OMITTED..............................................21


SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER............................21


4.1 Making of Representations and Warranties...........................21
4.2 Organization of Buyer and Buyer Sub................................22
4.3 Authority of Buyer and Buyer Sub...................................22
4.4 Litigation.........................................................22
4.5 Finder's Fee.......................................................23
4.6 Option Shares......................................................23


SECTION 5. CONDITIONS.........................................................23
5.1 Conditions to the Obligations of Buyer and Buyer Sub...............23
5.2 Conditions to Obligations of the Company, the Principal
Stockholders and Dennis Cocco.....................................26


SECTION 6. TERMINATION OF AGREEMENT...........................................27
6.1 Termination........................................................27
6.2 Failure to Merge...................................................27
6.3 Effect of Termination..............................................27


SECTION 7. RIGHTS AND OBLIGATIONS SUBSEQUENT TO AGREEMENT DATE
AND CLOSING........................................................27


7.1 Conduct of Business................................................27
7.2 Survival of Representations and Warranties.........................27
7.3 Repayment of Promissory Notes......................................28
7.4 Benefits to Company Employees......................................28
7.5 Tax Returns........................................................28
7.6 Further Assurances.................................................29


SECTION 8. INDEMNIFICATION....................................................29
8.1 Indemnification by the Cocco Entities..............................29
8.2 Limitations on Indemnification by the Cocco Entities...............29
8.3 Indemnification by Buyer...........................................30
8.4 Limitation on Indemnification by Buyer.............................30
8.5 Indemnification by Dave Adams......................................31
8.6 Notice; Defense of Claims..........................................31
8.7 Satisfaction of Cocco Entities Indemnification Obligations.........32


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SECTION 9. MISCELLANEOUS....................,,................................32
9.1 Fees and Expenses..................................................32
9.2 Governing Law......................................................33
9.3 Notices............................................................33
9.4 Entire Agreement...................................................34
9.5 Assignability; Binding Effect......................................34
9.6 Captions and Gender................................................35
9.7 Execution in Counterparts..........................................35
9.8 Amendments.........................................................35
9.9 Publicity and Disclosures..........................................35
9.10 Consent to Jurisdiction............................................35
9.11 Specific Performance...............................................35


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AGREEMENT AND PLAN OF MERGER


AGREEMENT AND PLAN OF MERGER (the "Agreement") entered into as of July 6, 1998 by and among CP Clare Corporation, a Massachusetts corporation ("Buyer"), Clare Micronix Integrated Systems, Inc., a California corporation and a wholly-owned subsidiary of Buyer ("Buyer Sub"), Micronix Integrated Systems, Inc. a California corporation (the "Company"), Dennis Cocco and Jill Cocco, as trustees of the Cocco Family Trust (the "Cocco Trust"), Cocco Investments, LLC, a Nevada limited liability company (the "Cocco LLC"), and Dave Adams (each a stockholder of the Company and, collectively, herein referred to as the "Principal Stockholders" and individually as a "Principal Stockholder"; the Principal Stockholders and said other stockholders of the Company being herein collectively referred to as the "Stockholders" and individually as a "Stockholder"). The Cocco Trust, the Cocco LLC and Jill Cocco and Dennis Cocco, individually, are, collectively with any entity (other than the Saint Anne School) to which the Cocco Trust has, since June 1, 1998, transferred shares of the Company, hereinafter referred to as the "Cocco Entities."


W I T N E S S E T H


WHEREAS, the outstanding capital stock of the Company consists of 14,549,138 shares of the Company's Common Stock, no par value per share (said shares being referred to herein as the "Company Shares"); and


WHEREAS, Buyer wishes to acquire the Company by means of a reverse merger of Buyer Sub with and into the Company.


NOW, THEREFORE, in order to consummate said transaction and in consideration of the mutual agreements set forth herein, the parties hereto agree as follows:


SECT65535ON 1. MERGER.


1.1 THE MERGER. On the Merger Effective Date and at the Effective Time (as such terms are defined in Section 1.3), Buyer Sub shall be merged with and into the Company in accordance with this Agreement and the separate existence of Buyer Sub shall thereupon cease (the "Merger"). The Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the "Surviving Corporation") and the name of the Surviving Corporation shall be "Clare Micronix Integrated Systems, Inc." The Merger shall have the effects specified in Section 1107 of the California General Corporation Law ("CGCL").


1.2 SIGNING OF AGREEMENT. The execution of this Agreement, and all other documents contemplated by this Agreement, shall occur at the offices of Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts 02109 at 10:00 a.m. on the date hereof (the "Agreement Date").


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1.3 EFFECTIVE TIME; CLOSING. The parties hereto shall cause an Agreement of Merger (in the form attached hereto as EXHIBIT K), with all necessary certificates, satisfying the requirements of Section 1101 of the CGCL to be properly executed, verified and delivered for filing in accordance with Section 1103 of the CGCL on the Agreement Date. The Merger shall become effective on the date (the "Merger Effective Date") such Agreement of Merger is filed with the Secretary of State of California in accordance with Section 1103 of the CGCL. The time at which the Merger becomes effective on the Merger Effective Date is hereinafter referred to as the "Effective Time." The closing of the Merger (herein called the "Closing") shall occur on the date the parties receive notification from the Secretary of State of California that such Agreement of Merger has been accepted for recording or filing. The date on which the Closing occurs is hereinafter referred to as the "Closing Date." In the event the Merger Effective Date is earlier than the Closing Date, the Merger Consideration shall be deemed to have been paid and the options to be issued pursuant to Section 1.10 shall be deemed to have been issued on the Merger Effective Date.


1.4 ARTICLES OF INCORPORATION. From and after the Effective Time, the Articles of Incorporation of Buyer Sub, as in effect immediately prior to the Effective Time and as attached hereto as EXHIBIT A, shall be and become the Articles of Incorporation of the Surviving Corporation, and shall thereafter continue in effect until amended as provided therein and in accordance with California law.


1.5 BY-LAWS. The By-laws of Buyer Sub, as in effect immediately prior to the Effective Time and as attached hereto as EXHIBIT B, shall be the By-laws of the Surviving Corporation, and shall thereafter continue in effect until amended as provided therein and in accordance with California law.


1.6 DIRECTORS AND OFFICERS. The directors and officers of Buyer Sub holding office on the Merger Effective Date shall, from and after the Merger Effective Date, be the directors and officers of the Surviving Corporation, until their respective successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Articles of Incorporation or By-laws.


1.7 EFFECT ON SECURITIES OF THE COMPANY.


(a) At the Effective Time, each Company Share outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the Company, Buyer Sub or the holders of any of the securities of either entity, be converted into the right to receive a cash payment on the Closing Date equal to the quotient obtained by dividing fifteen million eight hundred thousand dollars ($15,800,000) by the number of Company Shares (the "Merger Consideration") which number of Company Shares and the holders thereof shall be certified to Buyer by the Company and the Management (as such term is defined in Section 2.1) as of the Agreement Date and as of the Merger Effective Date. The Stockholders of the Company, and the portion of the Merger Consideration to be received by each, are set forth on EXHIBIT C attached hereto.


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(b) At the Effective Time, as a result of the Merger and without any action on the part of the holder thereof, the Company Shares outstanding immediately prior to the Effective Time shall cease to be outstanding, shall be canceled and retired and shall cease to exist and each holder of a certificate representing the Company Shares shall thereafter cease to have any rights with respect to such Company Shares except the right to receive, without interest, the Merger Consideration.


(c) Notwithstanding paragraph (a) or (b) above, no holder of Company Shares who shall have validly exercised his or her right to dissent from the Merger with respect to any Company Shares (such person, a "Dissenter"), as provided by California law, shall receive any portion of the Merger Consideration with respect to such Company Shares. Each Dissenter shall receive the amount awarded or otherwise payable to such Dissenter in accordance with California law.


(d) Each outstanding option to purchase shares of the Company's Common Stock shall be either exercised for shares of the Company's Common Stock (and such shares are included in the Company Shares) or be canceled prior to the Agreement Date. The provisions in any plan, program or arrangement providing for the issuance or grant of any interest in respect of the Company Shares shall be canceled as of the Effective Time.


1.8 EFFECT ON SECURITIES OF BUYER SUB. At the Effective Time, each share of Buyer Sub issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of Buyer Sub or the holder of such shares, be converted into one fully paid and nonassessable share of Common Stock of the Surviving Corporation.


1.9 MANNER OF PAYMENT. On the Closing Date, Buyer shall pay or cause to be paid to each Stockholder, by wire transfer of immediately available funds or by a check issued by Buyer, the portion of the Merger Consideration set forth opposite such Stockholder's name on EXHIBIT C attached hereto.


1.10 ISSUANCE OF OPTIONS. As of the Merger Effective Date, Buyer will award to the employees of the Company options to purchase an aggregate of 500,000 shares of Buyer's common stock, par value $.01 per share. Such options shall be delivered by Buyer on the Closing Date and shall be allocated among such employees as set forth in EXHIBIT D hereto. The options shall qualify as "incentive stock options" as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and shall be issued under the CP Clare Corporation 1995 Stock Option and Incentive Plan (the "Plan"); PROVIDED, HOWEVER, that if any such employee cannot lawfully receive incentive stock options to purchase such employee's full allotment of Buyer's common stock, such employee shall receive incentive stock options under the Plan only to the extent permitted by law and all other options awarded to such employee shall be non-qualified options (which term shall mean any option which does not qualify as an incentive stock option under the Code) and shall be approved in advance by Buyer's Board of Directors. Such non-qualified options shall incorporate the terms and


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conditions of the Plan and shall otherwise be in a form mutually agreed to by Buyer and such employee. All options granted pursuant to this Section 1.10 shall have a 10 year term, shall vest cumulatively in equal yearly installments over a 5 year period and be priced at the fair market value of Buyer's common stock, par value $.01 per share, on the date of grant. Any employee of the Company who receives options pursuant to this Section 1.10 shall execute, prior to the Agreement Date, a release of all claims against the Company and the Principal Stockholders in a form reasonably acceptable to Buyer.


SECT65535ON 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE MANAGEMENT.


2.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement to Buyer and Buyer Sub to enter into this Agreement and consummate the transactions contemplated hereby, the Company and each of Dennis Cocco and Dave Adams (Dennis Cocco and Dave Adams being herein referred to as the "Management") jointly and severally hereby make to Buyer and Buyer Sub the representations and warranties contained in this Section 2 effective as of the Agreement Date and as of the Merger Effective Date; PROVIDED, HOWEVER, that (i) Management shall not have any right of indemnity or contribution from the Company with respect to any breach of representation or warranty hereunder and (ii) the Stockholder warranties in Section 2.3(b) are only made severally by each Principal Stockholder with respect to the shares owned by such Principal Stockholder and by the Company with respect to the shares owned by any other Stockholder. Statements made to the knowledge of the Management refers to matters of which the Management should have been aware in connection with the discharge of their duties in the management of the Company.


2.2 ORGANIZATION AND QUALIFICATIONS OF THE COMPANY. The Company is a corporation duly organized, validly existing and in good standing under the laws of California with full corporate power and authority to own or lease its properties and to conduct its business in the manner and in the places where such properties are owned or leased or such business is currently conducted or proposed to be conducted. The copies of the Company's Articles of Incorporation as amended to date, certified by the California Secretary of State, and of the Company's by-laws, as amended to date, certified by the Company's Secretary, and heretofore delivered or made available to Buyer's counsel, are complete and correct, and no amendments thereto are pending except for amendments contemplated by this Agreement. The Company is not in violation of any term of its Articles of Incorporation or By-laws. All actions of the Board of Directors of the Company have been duly and validly taken or duly and validly ratified. The Company is not required to be licensed or qualified to conduct its business or own its property in any other jurisdiction except such jurisdictions where failure to so qualify would not have a material adverse effect on the Company.


2.3 CAPITAL STOCK OF THE COMPANY; BENEFICIAL OWNERSHIP.


(a) The authorized capital stock of the Company consists of 100,000,000


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shares of Common Stock, no par value per share, of which 14,549,138 shares are duly and validly issued, outstanding, fully paid and non-assessable and of which 85,450,862 shares are authorized but unissued. None of the Company's capital stock has been issued in violation of any federal or state law. Except as set forth in the SCHEDULE 2.3(a) attached hereto, there are no voting trusts, voting agreements, proxies or other agreements, instruments or undertakings with respect to the voting of the Company Shares to which the Company or, to the knowledge of the Management, any of the Stockholders is a party.


(b) Each of the Stockholders owns beneficially and of record the Company Shares set forth opposite such Stockholder's name on EXHIBIT C hereto free and clear of any liens, restrictions or encumbrances. The Company Shares set forth on EXHIBIT C constitute all of the issued and outstanding securities of the Company.


(c) Except as disclosed on SCHEDULE 2.3(c) hereof, there are no outstanding options, warrants, rights, commitments, preemptive rights or agreements of any kind for the issuance or sale of, or outstanding securities convertible into, any additional shares of capital stock of any class of the Company.


(d) The Stock Confirmation, Stock Purchase and Mutual General Release Agreements entered into by and among the Company, Dennis Cocco and each Stockholder and such Stockholder's spouse were duly executed and constitute the valid and binding obligation of the Company, each in accordance with its terms.


2.4 SUBSIDIARIES. The Company's subsidiaries and investments in any other corporation or business organization are listed in SCHEDULE 2.4 (collectively, the "Subsidiaries" or individually, a "Subsidiary"). There are no material liabilities of the Company in connection with any Subsidiaries.


2.5 AUTHORITY OF THE COMPANY. The Company has full right, authority and power to enter into this Agreement and each agreement, document and instrument to be executed and delivered by the Company pursuant to this Agreement and to carry out the transactions contemplated hereby. The execution, delivery and performance by the Company of this Agreement and each such other agreement, document and instrument have been duly authorized by all necessary action of the Company and no other action on the part of the Company or the Stockholders is required in connection therewith.


This Agreement and each agreement, document and instrument executed and delivered by the Company pursuant to this Agreement constitutes, or when executed and delivered will constitute, valid and binding obligations of the Company enforceable in accordance with their terms. The execution, delivery and performance by the Company of this Agreement and each such agreement, document and instrument:


(i) does not and will not violate any provision of the Articles
of Incorporation or by-laws of the Company;


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(ii) except as set forth in SCHEDULE 2.5, does not and will not
violate any laws of the United States, or any state or other jurisdiction
applicable to the Company or require the Company to obtain any approval,
consent or waiver of, or make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or made, except for
filings to be made and identified in this Agreement or where such violation
or the failure to obtain such approval, consent or waiver or make such
filing will not have a material adverse effect on the Company; and


(iii) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which the Company is a party or by which the property
of the Company is bound or affected, or result in the creation or
imposition of any mortgage, pledge, lien, security interest or other charge
or encumbrance on any of the Company's assets or the Company Shares, except
as specifically identified on SCHEDULE 2.5 or where such breach, default,
acceleration, right of termination, creation or imposition will not have a
material adverse effect on the Company.


2.6 REAL AND PERSONAL PROPERTY.


(a) REAL PROPERTY. The Company does not own any real property. All of the real property leased by the Company is identified on SCHEDULE 2.6(a) (herein referred to as the "Leased Real Property").


(i) TITLE. The Company has good, clear, record and marketable
title to enforceable leasehold interests in the Leased Real Property, in
each case free and clear of all easements, covenants, restrictions, leases,
mortgages, liens, assessments, claims, rights, judgments, encroachments or
other matters affecting title (collectively, "Encumbrances"), other than:


(x) easements, covenants, restrictions and similar encumbrances
that do not and could not materially interfere with the use
of the real property as currently used and improved, and


(y) minor encroachments that do not and could not materially
adversely affect the value or use of the real property as
currently used and improved and that could be removed
without material cost


((x) and (y) are collectively referred to as "Permitted Encumbrances"),
subject only to the right of reversion of the Lessor, except as set forth
in SCHEDULE 2.6(a).


(ii) STATUS OF LEASES. All leases of Leased Real Property are


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identified on SCHEDULE 2.6(a), and true and complete copies thereof have
been delivered or made available to Buyer. Except as set forth on SCHEDULE
2.6(a), each of said leases has been duly authorized and executed by the
Company and is in full force and effect. The Company is not in default
under any of said leases, nor has any event occurred which, with notice or
the passage of time, or both, would give rise to such a default. To the
knowledge of the Management, the other party to each of said leases is not
in default under any of said leases and there is no event which, with
notice or the passage of time, or both, would give rise to such a default.


(iii)CONDITION OF LEASED REAL PROPERTY. Except as set forth in
SCHEDULE 2.6(a), to the knowledge of the Management, (a) there are no
material defects in the physical condition of any buildings or improvements
constituting part of the Leased Real Property and (b) all such buildings
and improvements are in good operating condition and repair, have been well
maintained. To the knowledge of the Management, none of the Leased Real
Property is located in an area designated by ...