EXHIBIT 10.34
INCENTIVE STOCK OPTION AGREEMENT
CECO ENVIRONMENTAL CORP.
1997 STOCK OPTION PLAN
THIS AGREEMENT is dated and made effective as of January 20, 2000 ("Effective
Date") by and between CECO ENVIRONMENTAL CORP. a New York corporation (the
"Company"), and XXXXXXXX X. XXXXXX ("Optionee").
WITNESSETH:
WHEREAS, Optionee on the date hereof is an officer of the Company or one of its
Subsidiaries; and
WHEREAS, the Company desires to grant an incentive stock option to Optionee to
purchase shares of the Company's Common Stock pursuant to the Company's 1997
Stock Option Plan, as amended (the "Plan"); and
WHEREAS, the Board of Directors of the Company has authorized the grant of an
incentive stock option to Optionee and has determined that, on the Effective
Date, the Fair Market Value of Option Stock of the Company is $2.50 per share.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Optionee as of the Effective
Date the right and option (the "Option") to purchase as many as fifty thousand
(50,000) shares of Option Stock ("Shares") at an exercise price of $2.50 per
share on the terms and conditions set forth herein and subject to the terms and
conditions of the Plan. This Option is intended to qualify as an "incentive
stock option" within the meaning of Section 422, or any successor provision, of
the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder.
All capitalized terms not defined in this Agreement shall have the meaning set
forth in the Plan.
2. Duration and Exercisability.
a. Vesting/Exercise Period. The Option shall become exercisable as to portions
of the Shares as follows: (i) the Option shall not be exercisable with respect
to any of the Shares until January 20, 2001 (the "First Vesting Date"); (ii) if
Optionee has continuously provided services to the Company or any Subsidiary or
Parent of the Company from the Effective Date through the First Vesting Date and
has not been Terminated (as hereafter defined) on or before the First Vesting
Date, then on the First Vesting Date the Option shall become exercisable as to
twenty percent (20%) of the Shares (10,000 Shares); and (iii) thereafter,
provided that Optionee continuously provides services to the Company or any
Subsidiary of the Company and is not Terminated, upon each successive
anniversary of the First Vesting Date, the Option shall become exercisable as to
an additional twenty percent (20%) of the Shares (10,000 Shares); provided, that
the Option shall in no event ever become exercisable with respect to more than
100% of the Shares. The Shares vesting under the Option have been limited to the
number of Shares allowed to conform to the $100,000 limit set forth at Section
9(c) of the Plan.
b. Expiration . The Option shall expire on January 20, 2010 ("Expiration Date")
and must be exercised, if at all, on or before the earlier of the Expiration
Date and any date on which the Option terminated in accordance with the
provisions of Section 3.
c. Lapse Upon Expiration. To the extent that this Option is not exercised prior
to the applicable expiration date set forth in Section 2(b) or Section 3 of this
Agreement, all rights of Optionee under this Option shall thereupon be
forfeited.
3. Termination.
a. Termination for Any Reason Other than Death, Disability or a Change of
Control. If Optionee is Terminated for any reason other than his death,
Disability or a Change of Control (both terms as hereafter defined), this Option
shall be exercisable only to the extent the Option was exercisable on the date
of Termination, but had not previously been exercised, and shall expire on the
earlier of (i) the close of business three months after the Termination Date (as
hereafter defined) and (ii) the Expiration Date. Notwithstanding the foregoing,
if the Optionee is terminated for Cause, then the Option shall terminate
immediately on the Optionee's Termination Date.
b. Termination Because of Death or Disability. If Optionee is Terminated because
of his death or his Disability (or Optionee dies within three (3) months after a
Termination other than because of his Disability or for Cause), then this Option
shall be exercisable by Optionee, or the person or persons to whom Optionee's
rights under this Option shall have passed by Optionee's will or by the laws of
descent and distribution, only to the extent the Option was exercisable on the
date of Optionee's Termination, but had not previously been exercised, and shall
expire on the earlier of: (i) the close of business six months after Optionee's
Termination Date and (ii) the Expiration Date.
c. Change of Control. Notwithstanding the provisions of Section 2(a), upon a
Change of Control (and without regard for any Termination or absence thereof),
the Option shall be fully vested and exercisable by Optionee. The provisions of
Section 3(a) or 3(b) shall govern such Option thereafter, as the case may be.
A "Change of Control" shall mean a sale, assignment or other transfer
(collectively, "Transfer") of legal or beneficial ownership of shares of the
voting stock of the Company (other than as security for a loan), representing
more than one-half of the votes of all such shares of stock then outstanding, to
one or more persons other than the owners of stock in the Company or their
affiliates or its Subsidiaries on the Effective Date (collectively, the "present
owners"). A Change of Control will occur on the date that the present owners
cease to own more than one-half of the shares of the voting stock of the Company
then outstanding. For this purpose, an "affiliate" is an ancestor or lineal
descendant of an individual shareholder of the Company; the grantor, trustee or
beneficiary of a shareholder of the Company that is a trust; or any person that
directly, or indirectly controls, or is controlled by, or is under common
control with a shareholder of the Company.
d. Definitions.
"Termination" or "Terminated" means that Optionee has for any reason ceased to
provide services as an employee of the Company or Subsidiary of the Company,
except in the case of sick leave, military leave, or any other leave of absence
approved by the Administrator, provided that such leave is for a period of not
more than ninety (90) days, or reinstatement upon the expiration of such leave
is guaranteed by contract or statute. The Administrator shall have sole
discretion to determine whether Optionee has ceased to provide services and the
effective date on which Optionee ceased to provide services (the "Termination
Date").
"Disability" means a permanent and total disability within the meaning of
Section 22(e)(3) of the Code (as provided under Section 422(c)(6), or such
applicable successor provision, of the Code), as determined by the
Administrator.
"Cause" means that Optionee:
(a) shall have been convicted of any felony or a crime involving fraud,
theft, misappropriation, dishonesty, or embezzlement;
(b) shall have committed intentional acts that materially impair the
goodwill or business of the Company or cause material damage to its
property, goodwill or business; or
(c) shall have failed to perform his material duties to the Company
(other than as a result of a short-term disability (i.e., a
disability that does not fall within the previously defined
parameters of a Disability), or a short term disability or medical
emergency involving a member of the Optionee's immediate family, or
as a result of any Company approved leave).
4. Manner of Exercise.
a. General. The Option may be exercised only by Optionee (or other proper party
in the event of death or incapacity), subject to the conditions of the Plan and
this Agreement, and subject to such other administrative rules as the
Administrator deems advisable, by delivering written notice of exercise to the
Company at its principal office. The notice shall state the number of Shares
exercised and shall be accompanied by payment in full of the Option price for
all Shares exercised pursuant to the notice. Any exercise of the Option shall be
effective upon receipt of such notice by the Company together with payment that
complies with the terms of the Plan and this Agreement. The Option may be
exercised with respect to any number or all of the shares as to which it can
then be exercised and, if partially exercised, may be so exercised as to the
unexercised shares at any time and from time to time prior to expiration of the
Option as provided in this Agreement.
b. Form of Payment. Subject to approval by the Administrator, payment of the
Option price by Optionee shall be in the form of cash, personal check, certified
check, or where permitted by law and provided that a public market for the
Company's stock exists: (i) through a "same day sale" commitment from Optionee
and a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD Dealer") whereby Optionee irrevocably elects to exercise the
Option and to sell a portion of the Shares so purchased to pay for the exercise
price and whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the exercise price directly to the Company; (ii) through a
"margin" commitment from Optionee and a NASD Dealer whereby Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to the
Company; or (iii) by tender of shares of Common Stock of the Company having a
Fair Market Value on the date received by the Company equal to the exercise
price for the Shares exercised. Optionee shall be solely responsible for any
income or other tax consequences from any payment for Shares with Optionee's
Common Stock of the Company.
c. Stock Transfer Records. Provided that the notice of exercise and payment are
in form and substance satisfactory to counsel for the Company, as soon as
practicable after the effective exercise of all or any part of the Option,
Optionee shall be recorded on the stock transfer books of the Company as the
owner of the Shares purchased, and the Company shall deliver to Optionee, or to
the NASD Dealer, as the case may be, one or more duly issued stock certificates
evidencing such ownership. All requisite original issue or transfer documentary
stamp taxes shall be paid by the Company. Optionee shall pay all other costs of
the Company incurred to issue such Shares to such NASD Dealer.
Shares purchased pursuant to exercise hereunder: (i) may be deposited with a
NASD Dealer designated by Optionee, in street name, if so provided in such
exercise notice accompanied by all applications and forms reasonably required by
the Administrator to effect such deposit, or (ii) may be issued to Optionee and
such other person, as joint owners with the right of survivorship, as is
specifically described in such exercise notice. Optionee shall be solely
responsible for any income or other tax consequences of such a designation of
ownership hereunder (or the severance thereof).
5. Miscellaneous.
a. Employment Rights as Shareholder. This Agreement shall not confer on Optionee
any right with respect to continuance of employment by the Company or any
Subsidiary, nor shall it affect the right of the Company to Terminate such
employment. Optionee shall have no rights as a shareholder with respect to
Shares subject to this Option until such Shares are issued to Optionee upon the
exercise of this Option. No adjustment shall be made for dividends (ordinary or
extra-ordinary, whether in cash, securities or other property), distributions or
other rights for which the record date is prior to the date such shares are
issued, except as provided in Section 12 of the Plan.
b. Securities Law Compliance. The exercise of the Option and the issuance and
transfer of Shares shall be subject to compliance by the Company and Optionee
with all applicable requirements of federal and state securities laws and with
all applicable requirements of any stock exchange on which the Company's Common
Stock may be listed at the time of such issuance or transfer.
c. Mergers, Recapitalization, Stock Splits, Etc. Subject to the provisions of
Section 3(c) of this Agreement, the provisions of Section 11 of the Plan, as
amended effective the Effective Date, shall govern all Options in the event of
any reorganization, merger, consolidation, recapitalization, reclassification,
change in par value, stock split-up, combination of shares or dividend payable
in capital stock, or other such transaction described under Section 11 of the
Plan, and the Company reserves all discretion provided therein.
d. Withholding Taxes on Disqualifying Disposition. In the event of a
disqualifying disposition of the Shares acquired through the exercise of this
Option, Optionee hereby agrees to promptly provide the Company written notice of
such disposition, which notice shall be deemed delivered when received by the
Company. Upon notice of a disqualifying disposition, the Company may take such
action as it deems appropriate to insure that, if necessary to comply with all
applicable federal or state income tax laws or regulations, all applicable
federal and state payroll, income or other taxes are withheld from any amounts
payable by the Company to Optionee. If the Company is unable to withhold such
federal and state taxes, for whatever reason, Optionee hereby agrees to pay to
the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal or state law. Optionee may, subject to the
approval and discretion of the Administrator or such administrative rules it may
deem advisable, elect to have all or a portion of such tax withholding
obligations satisfied by delivering shares of the Company's Common Stock having
a fair market value equal to such obligations. For the purpose of this Section
5(d), a "disqualifying disposition" means a sale or other transfer of any Shares
on or before the later of (i) the date two years after the Effective Date and
(ii) the date one (1) year after transfer of such Shares to Optionee upon
exercise of the Option, as more particularly set forth at Section 422(a)(1) of
the Code
e. Nontransferability. The Option may not be transferred in any manner other
than by will or by the laws of descent and distribution and may be exercised
during the lifetime of Participant only by Participant. The terms of the Option
shall be binding upon the executors, administrators, successors and assigns of
Participant.
f. 1997 Stock Option Plan. The Option evidenced by this Agreement is granted
pursuant to the Plan, as amended the Effective Date, a copy of which Plan has
been made available to Optionee and is hereby incorporated into this Agreement.
This Agreement shall be subject to and in all respects limited and conditioned
as provided in the Plan. The Plan governs this Option and, in the event of any
questions as to the construction of this Agreement or in the event of a conflict
between the Plan and this Agreement, the Plan shall govern, except as the Plan
otherwise provides.
g. Accounting Compliance. Optionee agrees that, in the event of a transaction
subject to Section 12, treated as a "pooling of interests" under generally
accepted accounting principles, and Optionee is an affiliate of the Company or
any Subsidiary (as defined in Section 12 of the Plan) at the time of such change
of control transaction, Optionee will comply with all requirements of Rule 145
of the Securities Act of 1933, as amended, and the requirements of such other
legal or accounting principles, and will execute any documents necessary to
ensure such compliance.
h. Stock Legend. The Administrator may require that the certificates for any
Shares purchased by Optionee (or, in the case of death, Optionee's successors)
bear an appropriate legend to reflect the restrictions of Section 5(g), of this
Agreement.
i. Scope of Agreement. This Agreement shall bind and inure to the benefit of the
Company and its successors and assigns and Optionee and any successor or
successors of Optionee permitted by Section 3 or Section 5(e) of this Agreement.
j. Interpretation. The Administrator shall have the sole discretion to interpret
and administer the Plan. Any determination made by the Administrator with
respect to any Option shall be final and binding on the Company and on all
persons having an interest in the Option granted under this Agreement and the
Plan.
k. Entire Option. The Plan, as amended, is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof and supersede all
prior understandings and agreements with respect to such subject matter.
l. Successors and Assigns. The Company may assign any of its rights under the
Option. The Option shall be binding upon and inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer
set forth herein, the Option shall be binding upon Optionee and Optionee's
heirs, executors, administrators, legal representatives, successors and assigns.
m. Governing Law. The Option shall be governed by and construed in accordance
with the internal laws of the State of Ohio, without regard to that body of law
pertaining to choice of law or conflict of law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first above written.
CECO ENVIRONMENTAL CORP. OPTIONEE
By: /s/ Xxxxxxx Xxxx /s/ Xxxxxxxx X. Xxxxxx
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Its: /s/ President Xxxxxxxx X. Xxxxxx
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The Grant set forth in this
Agreement has been approved by
The Board of Directors of CECO
Environmental Corp.
