EXHIBIT 10.51
STOCK SALE AND DEBT CANCELLATION AGREEMENT
This agreement (the "Agreement") is made as of the 12th day of
September, 2002 by and between CECO Filters, Inc., a Delaware corporation (the
"Seller"), CECO Group, Inc., a Delaware corporation ("Group) and CECO
Environmental Corp., a Delaware corporation (the "Purchaser").
A. Purchaser currently owns ninety-three and ninety-five one
hundredths percent (93.95%) of the issued and outstanding common stock of
Seller.
B. Group is a wholly-owned subsidiary of Purchaser.
C. The Seller is justly indebted to Purchaser and Group in an amount
in excess of $3,153,644 (the "Debt").
D. The Seller desires to sell 31,536,440 newly-issued shares of
common stock (the "Shares") representing eighty-two and twelve one hundredths
percent (82.12%) of the issued and outstanding shares of the common stock of the
Seller immediately after the purchase and sale contemplated herein, in exchange
for the cancellation of a certain portion of the Debt of Seller to Purchaser and
Group.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations,
warranties and undertakings contained herein, the parties hereto agree as
follows:
1. Sale and Purchase of Shares. In accordance with the terms and
subject to the conditions contained herein, the Purchaser hereby agrees to
purchase from the Seller and the Seller hereby agrees to sell to the Purchaser
the 31,536,440 Shares for a price of $0.10 per share and an aggregate of
$3,153,644 in satisfaction of $3,153,644 of the Debt representing $3,044,423
owed by Seller to Group and $109,221 owed by Seller to Purchaser (the "Purchase
Price").
2. The Closing.
2.1 Delivery by Seller. At the closing (the "Closing") of the
transaction contemplated herein, the Seller shall deliver to the Purchaser
certificates representing the Shares ("Certificates") and the Purchaser and
Group shall deliver to the Seller releases in the forms of Exhibit A and Exhibit
B (the "Releases"). The Closing shall take place at such time and place as the
Seller and Purchaser shall mutually agree.
3. Representation and Warranties of the Seller. The Seller hereby
represents and warrants to the Purchaser and Group as follows:
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3.1 The Seller. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
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 Seller has taken all actions necessary to permit it lawfully to
do business in all jurisdictions where it is currently conducting its business.
3.2 Authority Relative to the Contracts. The Seller has the
authority to enter into this Agreement. This Agreement has been duly executed
and delivered by the Seller and is a valid and binding Agreement of the Seller
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.
3.3 No Violation or Conflict. Neither the execution nor the
consummation of this Agreement by the Seller nor the consummation of the
transactions contemplated herein, nor compliance by the Seller with any
provisions hereof, will violate any provision of the certificate of
incorporation or by-laws of the Seller 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
or imposition of any lien, charge, pledge, security interest or other
encumbrance upon the property of the Seller 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 Seller 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 Seller is a party. The execution, delivery and performance
of this Agreement and the consummation of transactions contemplated hereby and
thereby will not (i) violate or conflict with any federal or state securities
laws or regulations or any other statute or regulation, order, judgment,
injunction award or decree of any court, arbitrator or governmental or
regulatory body against, or binding upon or applicable to the Seller or upon the
securities, properties or business of the Seller; nor (ii) require the approval
or consent of any foreign, federal, state, county, local or other governmental
or regulatory body or the approval or consent of any other person.
3.4 Court Orders, Decrees and Laws. There is no outstanding or,
to the Seller's knowledge threatened, order, writ, injunction or decree of any
court, government agency or arbitrational tribunal against or affecting the
Seller or any of its assets that would significantly interfere with the Seller's
ability to consummate the transactions contemplated by this Agreement.
3.5 Absence of Litigation. There is no action, suit, proceeding,
claim, arbitration or investigation pending or, to the best knowledge of the
Seller, threatened or contemplated by any person including, without limitation
any governmental or regulatory agency, against the Seller or with respect to the
assets of the Seller or which seeks to prohibit, restrict or delay consummation
of this Agreement or the transactions contemplated hereby. There is no factual
basis known to the Seller which is known to present a possibility for any such
action, suit, proceeding, claim, arbitration or investigation.
3.6 Encumbrances. The Shares when issued to the Purchaser will
be free and clear of all liens, charges, encumbrances, security interests and
claims whatsoever, including
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without limitation, pre-emptive rights or claims or rights under "buy-sell" or
other similar agreements.
3.7 Capitalization. Immediately prior to the closing of the
purchase and sale of the Shares contemplated by this Agreement, the share
capital of the Seller is as follows: the number of authorized, and issued and
outstanding shares of capital stock of the Seller is 100,000,000 authorized
shares consisting of 99,000,000 shares of common stock (the "Common Stock"), of
which 6,867,667 are issued and outstanding and 1,000,000 of preferred stock, of
which no shares are issued and outstanding. The outstanding shares of Common
Stock are duly and validly authorized and issued, fully paid and non-assessable.
Immediately after the closing of the purchase and sale of the shares
contemplated by this Agreement, Seller will have 38,404,107 shares of common
stock issued and outstanding. Other than this Agreement, there are no
outstanding subscriptions, options, warrants, calls, commitments, or other
rights (including conversion or preemptive rights) or agreements for the
purchase or acquisition from the Seller of any shares of its capital stock. The
Seller is not a party or subject to any agreement or understanding, and, to the
best of knowledge the Seller, there is no agreement or understanding between any
persons and/or entities, which in either case affects or relates to the voting
or giving of written consents with respect to any security or by a director of
the Seller. There are no preemptive rights with respect to the issuance or sale
of the Seller's capital stock. There are no restrictions on the transfer of the
Seller's capital stock other than those arising from federal and state
securities laws.
4. Representations, Warranties and Covenants of the Purchaser. The
Purchaser hereby represents and warrants to the Seller as follows:
4.1 The Purchaser. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware 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 Purchaser 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 Relative to this Agreement. The Purchaser has the
authority to enter into this Agreement. This Agreement has been duly executed
and delivered, and is the legally valid and binding obligation of the Purchaser,
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 by the Purchaser nor the consummation of the
transactions contemplated herein, nor compliance by the Purchaser with any
provisions hereof, will violate any provision of the certificate of
incorporation or by-laws of the Purchaser 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
or imposition of any lien, charge, pledge, security interest or other
encumbrance upon the property of the Purchaser 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 Purchaser is a party or by which it, or its property is bound, or
permit the
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termination of any agreement, instrument, lien, license, lease or mortgage to
which the Purchaser is a party.
4.4 Court Orders, Decrees and Laws. There is no outstanding, or
to the Purchaser's knowledge threatened, order, writ, injunction or decree of
any court, government agency or arbitrational tribunal against or affecting the
Purchaser or any of its assets that would significantly interfere with the
Purchaser's ability to consummate the transactions contemplated by this
Agreement.
4.5 Fully Informed. Purchaser is the majority shareholder of the
Company and (i) has full access to all Company books and records, (ii) has full
knowledge of the Company's affairs, and (iii) is fully satisfied that it is an
informed purchaser.
4.6 Ownership of Debt. The Purchaser has good and marketable
title to the Debt and has neither transferred nor assigned it. The Debt is not
evidenced by a promissory note or any other negotiable or written instrument.
5. Representations, Warranties and Covenants of Group. Group hereby
represents and warrants to the Seller as follows:
5.1 Group. Group is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware 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.
Group has taken all actions necessary to permit it lawfully to do business in
all jurisdictions where it is currently conducting its business.
5.2 Authority Relative to this Agreement. Group has the
authority to enter into this Agreement. This Agreement has been duly executed
and delivered, and is the legally valid and binding obligation of the Purchaser,
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 by Group nor the consummation of the transactions
contemplated herein, nor compliance by Group with any provisions hereof, will
violate any provision of the certificate of incorporation or by-laws of Group 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 or imposition of any lien, charge, pledge,
security interest or other encumbrance upon the property of Group 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 Group 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 Group is a party.
5.4 Court Orders, Decrees and Laws. There is no outstanding, or
to Group's knowledge threatened, order, writ, injunction or decree of any court,
government agency or
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arbitrational tribunal against or affecting Group or any of its assets that
would significantly interfere with Group's ability to consummate the
transactions contemplated by this Agreement.
6. Conditions Precedent to Obligations of the Purchaser and Group.
Consummation of the transaction contemplated hereby on the parts of the
Purchaser and Group is subject to the fulfillment, to the reasonable
satisfaction of the Purchaser and Group of each of the following conditions:
6.1 Representations True at Closing. The representations and
warranties of the Seller contained in Section 3 of this Agreement shall be true
in all material respects on the date hereof and at the time of the delivery of
the Certificates and the Release.
6.2 Litigation. No litigation or proceeding shall be pending or
threatened to restrain, set aside or invalidate the transactions contemplated by
this Agreement.
6.3 Resolutions. Copies of the resolutions of the directors of
the Seller authorizing the execution, delivery and performance of this Agreement
and the transactions contemplated shall be delivered to Purchaser at or prior to
the Closing.
7.0 Conditions Precedent to Obligations of the Seller. Consummation
of the transactions contemplated hereby on the part of the Seller is subject to
the fulfillment, to the reasonable satisfaction of the Seller of each of the
following conditions:
7.1 Representations True at Closing. The Purchaser's and Group's
respective representations and warranties contained in Section 4 and Section 5
of this Agreement shall be true in all material respects at the date hereof and
at the time of the delivery of the Certificates and the Releases.
7.2 Litigation. No litigation or proceeding shall be pending or
threatened to restrain, set aside or invalidate the transactions contemplated by
this Agreement.
7.3 Resolutions. Copies of the resolutions of the directors of
the Purchaser and Group authorizing the execution, delivery and performance of
this Agreement and the transactions contemplated hereby shall be delivered to
Seller at or prior to the Closing.
8.0 Survival of Representations, Warranties, Covenants and
Agreements. All warranties, representations, covenants and agreements made
hereunder shall survive the Closing for a period of 18 months.
9. Miscellaneous. It is the understanding of the parties hereto
that:
9.1 Waiver. Any party may, at its option, waive in writing any
or all of the conditions herein contained to which its obligations hereunder are
subject. Only written waivers are valid.
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9.2 Expenses. Each party hereto shall bear its own expenses in
connection with this Agreement and the transactions contemplated herein.
9.3 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.
9.4 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be deemed modified in a legally permissible
manner so as to give maximum effect to the intention of the parties and the
economic arrangements to which they agreed.
9.5 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.
9.6 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
when deposited with the U.S. Postal Service, using certified mail, postage
prepaid, addressed to the recipient at:
The Seller:
CECO ENVIRONMENTAL CORP.
3120 Forrer Street
Cincinnati, OH 45209
Attention: Marshall Morris
The Purchaser:
CECO FILTERS, INC.
3120 Forrer Street
Cincinnati, OH 45209
Group:
CECO GROUP, INC.
3120 Forrer Street
Cincinnati, OH 45209
Attention: Marshall Morris
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or at such other address as a party may designate to another party in accordance
with the terms of this Section 9.6.
9.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to its rules
governing conflicts of laws) of the State of Delaware.
9.8 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.
9.9 Legend. A legend substantially in the following form will be
placed on the certificate representing the Shares:
"The securities represented hereby have not been registered under
the Securities Act of 1933 (the "Act") or the securities laws of
any state. Such securities may not be offered for sale, sold,
transferred, pledged or hypothecated in the absence of effective
registration statements covering such shares under the Act any
applicable state securities laws, or, if requested by the issuer,
an opinion of counsel satisfactory to the issuer that such
registration is not required."
9.10 Recitals. The recitals to this Agreement are incorporated
into this Agreement.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
CECO FILTERS, INC.
By: /s/ Michael Meyer
-----------------
Its: President
CECO GROUP, INC.
By: /s/ Marshall J. Morris
----------------------
Its: CFO
CECO ENVIRONMENTAL CORP.
By: /s/ Richard J. Blum
-------------------
Its: President
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EXHIBIT A
CECO Environmental Corp. ("CECO") hereby releases CECO Filters, Inc.,
a Delaware corporation ("Filters"), from all liability with respect to a portion
of that certain indebtedness of $109,221 (the "Debt") owed to CECO. This release
covers principal of $109,221, and does not include debt of Filters to CECO that
remains outstanding as of the date hereof in the principal amount of $500,000,
which amount bears interest at 10% per annum.
The undersigned hereby agrees to execute such other documents and to
do such other acts as Filters may reasonably request in order to more fully
carry out the foregoing release.
IN WITNESS WHEREOF, the undersigned caused this Agreement to be
executed as of this ______ day of __________, 2002.
CECO ENVIRONMENTAL CORP.
By: /s/ Richard J. Blum
-------------------
Title: President
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EXHIBIT B
CECO Group, Inc. ("Group") hereby releases CECO Filters, Inc., a
Delaware corporation ("Filters"), from all liability with respect to a portion
of that certain indebtedness of $3,044,423 (the "Debt") owed to GROUP. This
release covers principal of $3,044,423. There is no debt of Filters to GROUP
that remains outstanding after the release of said amount as of the date hereof.
The undersigned hereby agrees to execute such other documents and to
do such other acts as Filters may reasonably request in order to more fully
carry out the foregoing release.
IN WITNESS WHEREOF, the undersigned caused this Agreement to be
executed as of this ______ day of ___________, 2002.
CECO GROUP, INC.
By: /s/ Marshall J. Morris
----------------------
Title: CFO
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