EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as
of the 13th day of August, 1997 by and between CECO Environmental Corp., a New
York corporation (the "Acquiror"), CECO Filters, Inc., a Delaware corporation
("CECO"), and Xxxxxx X. Xxxx (the "Shareholder").
RECITALS:
A. The Shareholder is the owner of 1,165,000 shares of common stock
("CECO Shares") of CECO.
B. Acquiror wishes to acquire and the Shareholder wishes to transfer
all of the CECO Shares in a transaction intended to qualify as a reorganization
within the meaning of Internal Revenue Code ("IRC") ss.368(a)(1)(B), as amended,
in exchange for 582,500 shares of the Acquiror's common stock (the "CEC
Shares").
C. There is a dispute between Acquiror and the Shareholder regarding
the value of the CECO Shares. Because of said dispute, the Shareholder and the
Acquiror agree to place 100,000 of the CEC Shares (the "Escrowed Shares") into
an escrow subject to the amount by which gross revenues of CECO for the calendar
year 1998 equal or exceed target levels.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual representations,
warranties and undertakings contained herein, the parties hereto agree as
follows:
1. Exchange of Shares. In accordance with the terms and subject to the
conditions contained herein, Acquiror hereby agrees to issue to the Shareholder
the CEC Shares in exchange for the CECO Shares.
2. The Closing.
2.1 Delivery by Acquiror. The Acquiror shall deliver to the
Shareholder certificates representing 482,500 of the CEC Shares (the "Delivered
Shares") issued in the name of the Shareholder and the Acquiror shall deliver
the certificates representing the Escrowed Shares issued in the name of the
Shareholder to the Acquiror or such other party as the Acquiror and Shareholder
agree upon, who shall hold such Escrowed Shares as escrowee ("Escrowee").
2.2 Delivery by Shareholder. The Shareholder shall deliver to the
Acquiror the CECO Shares endorsed in blank or
accompanied by assignments separate from certificate sufficient to transfer the
CECO Shares into the name of the Acquiror. The Shareholder shall deliver to the
Escrowee assignments separate from certificates sufficient to transfer both
fifty percent (50%) and one hundred percent (100%) of the Escrowed Shares to the
Acquiror.
2.3 Closing Date. The closing of the transaction contemplated
hereby (the "Closing") shall occur at a time, date and place mutually agreed by
the parties hereto.
3. Escrowed Shares.
3.1 Release of Escrowed Shares. The Escrowed Shares and
assignments separate from certificates, shall be released to the Shareholder
and/or the Acquiror in accordance with subsections 3.1(a)-(c) below following
the receipt by the Acquiror of CECO's audited financial statements for the year
ending December 31, 1998, as prepared by CECO's regular independent accountants.
(a) Gross Revenues Equal to or Greater Than 1997 Revenues. In the
event that the gross revenues of CECO for the year ending December 31, 1998 are
equal to or greater than the gross revenues of CECO for the year ending December
31, 1997, as shown by CECO's audited financial statements prepared by CECO's
regular independent accountants, Escrowee shall promptly deliver all of the
Escrowed Shares and assignments separate from certificates that were previously
delivered to Escrowee to the Shareholder.
(b) Gross Revenues Ninety-Five Percent of 1997 Gross Revenues. In
the event that the gross revenues of CECO for the year ending December 31, 1998
are equal to or greater than ninety-five percent (95%) of the gross revenues of
CECO for the year ending December 31, 1997, but less than one hundred percent
(100%) of the gross revenues for the year ending December 31, 1997, as shown by
CECO's audited financial statements prepared by CECO's regular independent
accountants, Escrowee shall promptly deliver fifty percent (50%) of the Escrowed
Shares and assignments separate from certificates that were previously delivered
to Escrowee to the Shareholder and fifty percent (50%) of the Escrowed Shares to
the Acquiror with the assignment separate from certificate to transfer fifty
percent (50%) of the Escrowed Shares into the name of the Acquiror.
(c) Gross Revenues Less Than Ninety-Five Percent of 1997 Gross
Revenues. In the event that the gross revenues of CECO for the year ending
December 31, 1998 are less than ninety-five percent (95%) of the gross revenues
of CECO for the year ending December 31, 1997, as shown by CECO's audited
financial statements prepared by CECO's regular independent accountants,
Escrowee shall promptly deliver all of the Escrowed Shares to the Acquiror with
the assignment separate from certificate to transfer one hundred percent (100%)
of the Escrowed Shares into the name of the Acquiror.
3.2 Ownership of Escrowed Shares. As of the date of Closing, the
books and records of the Acquiror shall be changed to reflect the Shareholder as
the owner of the Escrowed Shares, unless and until a portion or all of such
Escrowed Shares are returned to the Acquiror in accordance with Section 3.1.
Until the Escrowed Shares are released by the Escrowee, all dividends paid on
the Escrowed Shares shall be distributed to the Shareholder and all voting
rights of such Escrowed Shares shall be exercisable by or on behalf of the
Shareholder or his authorized agent.
4. Representations and Warranties of the Acquiror. The Acquiror hereby
represents and warrants to the Shareholder as follows:
4.1 The Acquiror. The Acquiror is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and has all requisite right, power and authority necessary to own, lease and
operate all of its property and to carry on its business as it is now being
carried on. The Acquiror has taken all actions necessary to permit it lawfully
to do business in all jurisdictions where it is currently conducting its
business.
4.2 Authority. The Acquiror has the authority to enter into this
Agreement. This Agreement has been duly executed and delivered by the Acquiror
and is a valid and binding Agreement enforceable in accordance with its terms,
except as such enforcement is subject to bankruptcy, insolvency, reorganization
or other laws relating to or affecting the enforcement of creditors' rights
generally.
4.3 No Violation or Conflict. Neither the execution nor the
consummation of this Agreement will violate any provision of the articles of
incorporation or by-laws of the Acquiror or violate or result, with the giving
of notice or lapse of time, or both, in a violation of or result in the
acceleration of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any obligation under, or result in the creation
of imposition of any lien, charge, pledge, security interest or other
encumbrance upon the property of the Acquiror pursuant to any provision of any
contract, agreement, note, mortgage, lien, indenture, license, lease, other
instrument, arbitration order, judgment or decree to which the Acquiror is a
party or by which it, or its property is bound, or permit the termination of any
agreement, instrument, lien, license, lease or mortgage to which the Acquiror is
a party.
4.4 Issuance. Upon delivery of the Delivered Shares to the
Shareholder and the Escrowed Shares to the Escrowee, the CEC Shares will be
validly issued and delivered and fully paid and nonassessable.
5. Representations, Warranties and Covenants of the Shareholder. The
Shareholder hereby represents and warrants to the Acquiror as follows:
5.1 The Shareholder. The Shareholder has the legal capacity to
enter into this Agreement.
5.2 Authority. The Shareholder has the authority to enter into
this Agreement. This Agreement has been duly executed and delivered by the
Shareholder and is a valid and binding Agreement enforceable in accordance with
its terms except as such enforcement is subject to bankruptcy, insolvency,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights generally.
5.3 No Violation or Conflict. Neither the execution nor the
consummation of this Agreement will (i) violate or result, with the giving of
notice or lapse of time, or both, in a violation of or result in the
acceleration of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any obligation under, or result in the creation
or imposition of any lien, charge, pledge, security interest or other
encumbrance upon the property of the Shareholder pursuant to any provision of
any contract, agreement, note, mortgage, lien, indenture, license, lease, other
instrument, law, ordinance, regulation, arbitration order, judgment or decree to
which the Shareholder is a party or by which he or his property is bound, or
(ii) permit the termination of any agreement, instrument, lien, license, lease
or mortgage to which the Shareholder is a party.
5.4 Court Orders, Decrees and Laws. There is no outstanding, or
to the Shareholder's knowledge threatened, order, writ, injunction or decree of
any court, government agency or arbitrational tribunal against or affecting the
Shareholder or any of his assets that would significantly interfere with the
Shareholder's ability to consummate the transaction contemplated by this
Agreement.
5.5 Ownership. The Shareholder has good and marketable title to
the CECO Shares free and clear of all liens, security interests and other
encumbrances.
5.6 Information. The Shareholder or his representative(s) have
had the opportunity to examine to the full extent that they desired all the
books and records of the Acquiror, and to discuss the business, assets and
prospects of the Acquiror with the Acquiror's officers. The Shareholder
acknowledges and agrees that he (i) has received no information with respect to
CECO from the Acquiror or the Acquiror's representatives, (ii) has his own
sources of information with respect to CECO and (iii) is as fully informed as he
desires with respect to the business, assets and prospects of CECO and the
Acquiror.
6. Conditions Precedent to Obligations of the Shareholder. Consummation
of the transaction contemplated hereby on the part of the Shareholder is subject
to the fulfillment, to the reasonable satisfaction of the Shareholder of each of
the following conditions:
6.1 Representations True at Closing. The representations and
warranties of the Acquiror contained in Section 4 of this Agreement shall be
true in all material respects on the date hereof and at the time of the Closing.
6.2 Litigation. No litigation or proceeding shall be pending or
threatened at the time of the Closing to restrain, set aside or invalidate the
transactions contemplated by this Agreement.
7. Conditions Precedent to Obligations of the Acquiror. Consummation of
the transactions contemplated hereby on the part of the Acquiror is subject to
the fulfillment, to the reasonable satisfaction of the Acquiror of each of the
following conditions:
7.1 Representations True at Closing. The Shareholder's
representations and warranties contained in Section 5 of this Agreement shall be
true in all material respects at the date hereof and at the time of the Closing.
7.2 Litigation. No litigation or proceeding shall be pending or
threatened at the time of the Closing to restrain, set aside or invalidate the
transactions contemplated by this Agreement.
8. Survival of Representations, Warranties, Covenants and Agreements.
All warranties, representations, covenants and agreements made hereunder shall
survive the Closing.
9. Termination. If any of the conditions for the consummation by the
Acquiror or the Shareholder of the Closing of the transactions hereunder shall
not have been fulfilled (despite the best efforts of the party, if any,
obligated to fulfill such condition) or waived by the date 90 days from the date
hereof, then this Agreement may thereafter be terminated by any party hereto.
Such termination hereunder shall be effected by notice by the terminating party
to the other parties hereunder, and upon such termination this Agreement shall
be without further force and effect, and no party hereto shall be liable to any
other for any claim, damage, cost or expense arising from the execution and
delivery of this Agreement or the failure to consummate the transactions
contemplated hereby.
10. Remedies. The parties hereto, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, shall be entitled to specific performance of their rights under this
Agreement and all other appropriate equitable remedies. The parties agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach of the provisions of this Agreement, and hereby
agree to waive the defense, in any action for specific performance, that
monetary damages would be adequate compensation. The parties hereto further
agree that in the event of any breach of this Agreement, the breaching party
shall be liable for all damages arising as a consequence of such breach,
including without limitation, costs and expenses (including, without limitation,
attorneys' fees), incurred by the non-breaching party in attempting to enforce
its or his rights hereunder.
11. Reporting Requirements. The parties hereto agree to comply with the
reporting requirements of Regulation 1.368-3 promulgated under the IRC.
12. Miscellaneous. It is the understanding of the parties hereto that:
12.1 Waiver. Any party may, at its or his option, waive in
writing any or all of the conditions herein contained to which its or his
obligations hereunder are subject.
12.2 Expenses. Each party hereto shall bear its or his own
expenses in connection with this Agreement and the transactions contemplated
herein.
12.3 Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements, arrangements
and communications, whether oral or written, with respect to the subject matter
hereof. This Agreement shall not be modified or amended except by written
agreement of the parties hereto. Captions appearing in this Agreement are for
convenience only and shall not be deemed to explain, limit or amplify the
provisions or contents hereof.
12.4 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if the invalid
or unenforceable provision were omitted.
12.5 Binding Effect; Assignment. All the terms, provisions,
covenants and conditions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
heirs and successors. This Agreement and the rights and obligations of the
parties hereto shall not be assigned or delegated by any party hereto without
the written consent of the other parties hereto.
12.6 Notices. Any notice or other instrument or thing required or
permitted to be given, served or delivered to any of the parties hereto shall be
in writing and shall be considered given when hand-delivered to the recipient or
two (2) days after deposit with the U.S. Postal Service, using registered mail,
air mail (if available), postage prepaid, or two (2) days after deposit with a
recognized overnight courier service, addressed to the recipient at:
The Acquiror:
CECO ENVIRONMENTAL CORP.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
XXXXXX
Attention: Xxxxxxx XxXxxxxx
The Shareholder:
Xxxxxx X. Xxxx
0000 Xxxxxxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
CECO:
CECO Filters, Inc.
0000-00 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000-0000
or at such other address as a party may designate to another party in accordance
with the terms of this Section 12.6.
12.7 Governing Law. This Agreement shall in all respects be
governed by the laws of the State of New York and the United States of America
(without respect to their choice of law rules).
12.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.9 Miscellaneous. Wherever necessary or proper herein, the
singular imports the plural or vice versa, and masculine, feminine and neuter
expressions are interchangeable. Any reference to section numbers in this
Agreement shall be deemed to be to sections in the Agreement. The section titles
used herein are provided for reference purposes only and shall affect neither
the meaning of the terms nor the intent of the parties. Any portion of this
Agreement which shall be deemed void, unenforceable, or contrary to public
policy by a court of competent jurisdiction shall be deemed to be reduced in
scope to that point at which it is valid and enforceable, and if it cannot be so
reduced, it shall be deemed severed from this Agreement, without affecting the
remaining provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
THE ACQUIROR:
CECO ENVIRONMENTAL CORP.
By:/s/ Xxxxxxx XxXxxxxx
-------- ------------------------
Its:/s/ President
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SHAREHOLDER:
/s/ Xxxxxx X. Xxxx
-------- ---------------------------
Xxxxxx X. Xxxx
ESCROWEE:
CECO ENVIRONMENTAL CORP.
By:/s/ Xxxxxxx XxXxxxxx
--------- ------------------------
Its:/s/ President
------------- --------------------
CECO FILTERS, INC.
By:/s/ Xxxxxxx XxXxxxxx
--------- ------------------------
Its:/s/ Vice-President
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