Exhibit 10.1
DECTRON INTERNATIONAL LTD.
1998 STOCK OPTION PLAN
ARTICLE ONE
PURPOSE AND INTERPRETATION
SECTION 1.01 PURPOSE. The purpose of the Plan is to advance the interests
of the Corporation by encouraging equity participation in the Corporation
through the acquisition of Common Shares of the Corporation by directors,
officers and employees of, and certain other persons who provide services to,
the Corporation.
SECTION 1.02 DEFINITIONS. In the Plan, the following capitalized words and
terms shall have the following meanings:
(a) "ACT" means the CANADA BUSINESS CORPORATIONS ACT or its successor,
as amended from time to time.
(b) "AFFILIATE" shall have the meaning ascribed thereto in the
Securities Act.
(c) "ASSOCIATE" shall have the meaning ascribed thereto in the
Securities Act.
(d) "BOARD OF DIRECTORS" means the board of directors of the
Corporation as constituted from time to time and any committee of
the board of directors which shall be comprised of at least two
non-employee directors.
(e) "COMMON SHARES" means the common shares of the Corporation as
constituted on the date hereof.
(f) "COMPETITOR" means any person engaged in a business that the Board
of Directors determines competes or intends to compete with the
business carried on by the Corporation and its Affiliates from
time to time.
(g) "CORPORATION" means Dectron International Inc., a corporation
incorporated under the Act, and its successors from time to time.
(h) "DESIGNATED AFFILIATE" means the Affiliates of the Corporation
designated by the Board of Directors for purposes of the Plan from
time to time.
(i) "EXCHANGE" means, at any time, any stock exchange on which the
Common Shares are listed, posted and called for trading.
(j) "HOLDING COMPANY" shall have the meaning specified in Section 2.02
hereof.
(k) "INSIDER" shall have the meaning ascribed thereto in the
Securities Act, other than a person who is an Insider solely by
virtue of being a director of senior officer of a subsidiary of
the Corporation and any Associate of an Insider.
(l) "KEY CONTRIBUTORS" means a person who is a director, officer,
employee or consultant engaged by the Corporation to assist the
Corporation in the conduct and growth of its business.
(m) "ISSUER BID" shall have the meaning ascribed thereto in the
Securities Act.
(n) "OPTION PERIOD" means the period of time an option may be
exercised as specified in Subsection 2.07(a) hereof.
(m) "PARTICIPANT" means a participant under the Plan.
(p) "PLAN" means the share option plan provided for herein.
(q) "RRSP" shall have the meaning specified in Section 2.02 hereof.
(r) "SECURITIES LAWS" means, collectively, the applicable securities
laws, regulations, schedules, prescribed forms, policy statements,
notices, blanket rulings and other similar instruments of each of
the jurisdictions in which the Corporation is or becomes a
reporting issuer or equivalent and also includes, as the context
so requires, the by-laws, rules, regulations and policies of any
Exchange.
(s) "SHARE COMPENSATION ARRANGEMENT" means a stock option, stock
option plan, employee stock purchase plan or any other
compensation or incentive mechanism involving the issuance or
potential issuance of securities of the Corporation to one or more
of the following persons: (i) an employee or insider of the
Corporation or of any of its subsidiaries; and (ii) any other
person or company engaged to provide ongoing management or
consulting services for the listed company or for any entity
controlled by the listed company, including a share purchase from
treasury which is financially assisted by the Corporation by way
of a loan, guarantee or otherwise.
(t) "TAKE-OVER BID" shall have the meaning ascribed thereto in the
Securities Act.
ARTICLE TWO
SHARE OPTION PLAN
SECTION 2.01 THE PLAN. The Plan is hereby established for Key Contributors
of the Corporation and Designated Affiliates.
SECTION 2.02 PARTICIPANTS. Participants in the Plan shall be Key
Contributors of the Corporation or any of its Designated Affiliates (including
officers thereof, whether or not directors) who, by the nature of their
positions are, in the opinion of the Board of Directors, upon the recommendation
of the President of the Corporation, in a position to contribute to the success
of the Corporation. At the request of any Participant, options granted to such
Participant may be issued to and registered in the name of a personal holding
company wholly-owned by such Participant ("Holding Company") or to a registered
retirement savings plan established by such Participant ("RRSP") and, in such
event, the provisions of this Plan shall apply to such options mutatis mutadis
as though they were issued to and registered in the name of the Participant.
SECTION 2.03 AMOUNT OF OPTIONS. The determination regarding the aggregate
number of Common Shares subject to options in favour of any Participant will
take into consideration the Participant's present and potential contribution to
the success of the Corporation and shall be determined from time to time by the
Board of Directors. The aggregate number of Common Shares issuable upon the
exercise of options pursuant to this Plan and any other Share Compensation
Arrangements, subject to adjustment or increase of such number pursuant to
Section 2.10 hereof, shall be 650,000 Common Shares. The maximum number of
Common Shares reserved for issuance to any one Participant upon the exercise of
options shall not exceed 5% of the total number of Common Shares outstanding
immediately prior to such issuance.
SECTION 2.04 LIMITS WITH RESPECT TO INSIDERS.
(a) The number of Common Shares issuable to Insiders pursuant to
options granted under the Plan, together with Common Shares
issuable to Insiders under any other Share Compensation
Arrangement of the Corporation, shall not:
(i) exceed 10% of the number of Common Shares outstanding
immediately prior to the grant of any such option; or
(ii) result in the issuance to Insiders, within a one year
period, of in excess of 10% of the number of Common Shares
outstanding immediately prior to the grant of any such
option.
(b) The number of Common Shares issuable to any Insider and such
Insider's Associates pursuant to options granted under the Plan,
together with Common Shares issuable to such Insider or such
Insider's Associates under any other Share Compensation
Arrangement of the Corporation shall not, within a one year
period, exceed 5% of the number of Common Shares outstanding
immediately prior to the grant of any such option.
(c) Any Common Shares issuable pursuant to an option granted to a
Participant prior to the Participant becoming an Insider shall be
excluded for the purposes of the limits set out in Subsections
2.04(a) and 2.04(b) hereof.
SECTION 2.05 PRICE. The exercise price per Common Share shall be determined
by the Board of Directors at the time the option is granted, but such price
shall not be less than such price as is required or permitted as the minimum
exercise price under the Securities Laws, including the requirements of any
Exchange on which the Common Shares are listed. The exercise price of all
options granted hereunder shall be at least 100% of the fair market value of the
Common Shares on the date of grant of the options as determined by the Board of
Directors.
SECTION 2.06 LAPSE OPTIONS. In the event that options granted under the
Plan are surrendered, terminate or expire without being exercised in whole or in
part, the Common Shares reserved for issuance but not purchased under such
lapsed options shall be available for subsequent options to be granted under the
Plan.
SECTION 2.07 CONSIDERATION, OPTION PERIOD AND PAYMENT.
(a) The period during which options may be exercised shall be
determined by the Board of Directors, in its discretion, to a
maximum of ten years from the date the option is granted (the
"Option Period"), except as the same may be reduced with respect
to any option as provided in Sections 2.08 and 2.09 hereof
respecting termination of employment or death of the Participant.
(b) Subject to any other provision of this Plan, an option may be
exercised from time to time during the Option Period by delivery
to the Corporation at its registered office of a written notice of
exercise addressed to the Secretary of the Corporation specifying
the number of Common Shares with respect to which the option is
being exercised and accompanied by payment in full of the exercise
price therefor. Certificates for such Common Shares shall be
issued and delivered to the Participant as soon as practicable
following receipt of such notice and payment. The Corporation may,
at its discretion, as determined by the Board of Directors or its
nominee administering the Plan, accept in lieu of cash payment of
the exercise price, the tender of Common Shares having a fair
market value equal to the exercise price, a personal recourse note
secured by a pledge against the Common Shares so issuable, an
assignment to the Corporation of sufficient proceeds from the sale
of Common Shares acquired on the exercise of the option consented
to and acknowledged by a duly qualified investment dealer and
accompanied by an irrevocable direction of the Participant
exercising such option to such investment dealer to cause such
payment to be made to the direction of the Corporation, or any
combination of the foregoing.
(c) Except as set forth in Sections 2.08 and 2.09 hereof, no option
may be exercised unless the Participant is, at the time of such
exercise, a Key Contributor of or in the employ of the Corporation
or any of its Designated Affiliates and shall have been
continuously a Key Contributor since the grant of his or her
option. Absence on leave with the approval of the Corporation or a
Designated Affiliate shall not be considered an interruption of
employment for purposes of the Plan.
(d) The exercise of any option will be contingent upon receipt by the
Corporation of cash payment of the full exercise price of the
Common Shares which are the subject of the exercised option or
such other arrangements for payment as are approved by the Board
of Directors or its nominee under (b) above. No Participant or his
or her legal representatives, legatees or distributees will be, or
will be deemed to be, a holder of any Common Shares with respect
to which he or she was granted an option under the Plan, unless
and until certificates for such Common Shares are issued to him or
her under the terms of the Plan.
(e) Notwithstanding any other provision of this Plan or in any option
granted to a Participant, the Corporation's obligation to issue
Common Shares to a Participant pursuant to the exercise of an
option shall be subject to:
(i) completion of such registration or other qualification of
such Common Shares or obtaining approval of such regulatory
authorities as the Corporation shall determine to be
necessary or advisable in connection with the
authorization, issuance or sale thereof;
(ii) the listing of such Common Shares on any Exchange, on which
the Common Shares are listed and posted for trading; and
(iii) the receipt from the Participant of such representations,
warranties, agreements and undertakings, including as to
future dealings in such Common Shares, as the Corporation
or its counsel determines to be necessary or advisable in
order to ensure compliance with all applicable securities
laws.
(f) If there is a Take-over Bid or Issuer Bid made for all or any of
the issued and outstanding Common Shares, then the Board of
Directors may, by resolution, permit all options outstanding under
the Plan to become immediately exercisable in order to permit
Common Shares issuable under such options to be tendered to such
bid.
SECTION 2.08 TERMINATION OF EMPLOYMENT. If a Participant shall:
(a) cease to be a Key Contributor of the Corporation or any of its
Designated Affiliates as determined by the Board of Directors; or
(b) cease to be employed or engaged by the Corporation or any of its
Designated Affiliates (and is not or does not continue to be a
director or senior office thereof) for any reason (other than
death, disability or retirement at or after age 70) or shall
receive notice from the Corporation or any of its Designated
Affiliates of the termination of his or her employment or
engagement; (collectively, "Termination") he or she or it may, but
only within three months next succeeding such Termination,
exercise his or her or its options to the extent that he or she or
it was entitled to exercise such options at the date of such
Termination; provided that in no event shall such right extend
beyond the Option Period. This section is subject to any agreement
with any director or senior officer of the Corporation or any of
its Designated Affiliates with respect to the rights of such
director or senior office upon Termination or change in control of
the Corporation. Notwithstanding the foregoing, if the Termination
is for cause from the acceptance by the Participant of an officer
of employment with a Competitor, or if such Participant accepts
employment with a Competitor following such Termination and prior
to the date that the options held by such Participant expire under
this Section 2.08, then unless otherwise determined by the Board
of Directors, the entitlement of the Participant to options
previously granted under this Plan that remain unexercised,
whether or not previously granted under this Plan that remain
unexercised, whether or not previously vested, shall immediately
terminate. For purposes of this Plan, employment with a competitor
shall include acting on behalf of a Competitor in any capacity,
whether as a shareholder, director, officer, employee, advisor,
consultant, partner, lender or in any other capacity. In addition
to the foregoing, notwithstanding any other provision of this
Plan, all Common Shares issued to Participants on their exercise
of options granted under the Plan shall remain subject to the
right of the Corporation to repurchase such Common Shares for
cancellation following any Termination of the employment of such
Participant if such Participant accepts employment with a
Competitor during the period of 12 months following the effective
date of such Termination. Such right of repurchase may be
exercised by the Corporation upon refunding the option exercise
price therefore paid by the Participant, such payment to be made
by the Corporation to the Participant or any subsequent holder of
such Common Shares as of the date such right is exercised by the
Corporation. The Corporation shall cause notice of such right of
repurchase to be set forth on the certificates evidencing any
Common Shares issued to a Participant upon any exercise of options
granted from time to time under the Plan.
SECTION 2.09 DEATH, DISABILITY OR RETIREMENT OF PARTICIPANT. In the event
of the death, permanent disability or retirement at or after age 70 of a
Participant who is a Key Contributor of the Corporation or any of its Designated
Affiliates or who is an employee having been continuously in the employ of the
Corporation or any of its Designated Affiliates for one year from and after the
date of the granting of his or her option, the option therefore granted to him
or her shall be exercisable within the twelve months next succeeding such death,
disability or retirement (including the rights under Subsection 2.07(f) and
then, in the event of death, only:
(a) by the person or persons to whom the Participant's rights under
the option shall pass by the Participant's will or the laws of
descent and distribution; and
(b) to the extent that he or she was entitled to exercise the option
at the date of his or her death, provided that in no event shall
such right extend beyond the Option Period.
SECTION 2.10 ADJUSTMENT IN SHARES SUBJECT TO THE PLAN. In the event that:
(a) there is any change in the Common Shares of the Corporation
through subdivisions or consolidation of the share capital of the
Corporation, or otherwise;
(b) the Corporation declares a dividend on Common Shares payable in
Common Shares or securities convertible into or exchangeable for
Common Shares; or
(c) the Corporation issues Common Shares, or securities convertible
into or exchangeable for Common Shares, in respect of, in lieu of,
or in exchange for, existing Common Shares, the number of Common
Shares available for option, the Common Shares subject to any
option, and the option price thereof, shall be adjusted
appropriately by the Board of Directors in its sole discretion and
such adjustment shall be effective and binding for all purposes of
the Plan.
SECTION 2.11 EFFECTING GRANTS. Subject to Section 3.04, the grant of
options under the Plan shall be affected by the execution and delivery of a
stock option agreement in such form which is consistent with the provisions of
the Plan as may be approved by the Board of Directors from time to time.
SECTION 2.12 RECORD KEEPING. The Corporation shall maintain a register in
which shall be recorded:
(a) the name and address of each Participant in the Plan; and
(b) the number of options granted to a Participant and the number of
options outstanding.
ARTICLE THREE
GENERAL
SECTION 3.01 TRANSFERABILITY. The benefits, rights and options accruing to
any Participant in accordance with the terms and conditions of the Plan shall
not be transferable by the Participant except (i) from the Participant to his or
her Holding Company or RRSP or from a Holding Company or RRSP to the Participant
and, in either such event, the provisions of this Plan shall apply mutatis
mutandis as though they were originally issued to and registered in the name of
the Participant, or (ii) as otherwise specifically provided herein. During the
lifetime of a Participant, all benefits, rights and options shall only be
exercised by the Participant or by his or her guardian or legal representative.
SECTION 3.02 EMPLOYMENT. Nothing contained in the Plan shall confer upon
any Participant any right with respect to employment or continuance of
employment with the Corporation or any Affiliate, or interfere in any way with
the right of the Corporation or any Affiliate to terminate the Participant's
employment at any time. Participation in the Plan by a Participant shall be
voluntary.
SECTION 3.03 DELEGATION TO COMPENSATION COMMITTEE. All of the powers
exercisable by the Board of Directors under the Plan may, to the extent
permitted by applicable law and authorized by resolution of the Board of
Directors of the Corporation, be exercised by a Compensation Committee of not
less than three (3) directors. A majority of the members of any such
Compensation Committee shall not be employees of the Corporation. In addition,
if determined appropriate by the Board of Directors of the Corporation, the
Board of Directors may delegate any or all of the powers of the Board of
Directors of the Corporation under the Plan to an independent consultant.
SECTION 3.04 ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Board of Directors of the Corporation. The Board of Directors shall be
authorized to interpret and construe the Plan and may, from time to time,
establish, amend or rescind rules and regulations required for carrying out the
purposes, provisions and administration of the Plan and determine the
Participants to be granted options, the number of Common Shares covered thereby,
the exercise price therefor and the time or times when they may be exercised.
Any such interpretation or construction of the Plan shall be final and
conclusive. All administrative costs of te Plan shall be paid by the
Corporation. The senior officers of the Corporation are hereby authorized and
directed to do all things and execute and deliver all instruments, undertakings
and applications and writings as they, in their absolute discretion, consider
necessary for the implementation of the Plan and of the rules and regulations
established for administering the Plan.
SECTION 3.05 AMENDMENT, MODIFICATION OR TERMINATION OF THE PLAN. Subject to
Section 3.03, the Board of Directors reserves the right to amend, modify or
terminate the Plan at any time if and when it is advisable in the absolute
discretion of the Board of Directors. However, any amendment of the Plan which
would:
(a) materially increase the benefits under the Plan;
(b) increase the number of Common Shares which may be issued under the
Plan; or
(c) materially modify the requirements as to the eligibility for
participation in the Plan; shall be effective only upon the
approval of the shareholders of the Corporation. Any material
amendment to any provision of the Plan shall be subject to any
necessary approvals by the Exchange, other quotation system or any
stock exchange or regulatory body having jurisdiction over the
securities of the Corporation. Notwithstanding the foregoing, the
Plan will terminate 10 years from the date hereof.
SECTION 3.06 APPLICATION FOR RULING UNDER THE SECURITIES ACT. The
Corporation is not a "private company" (as defined in the Securities Act and,
accordingly, is not entitled to the exemptions for such companies from the
registration and prospectus requirements of the Securities Act where they are
not offered for sale to the public. In order to ensure compliance with the
Securities Act, the grant of options under the Plan to Key Contributors other
than officers and employees of the Corporation and its Affiliates shall be
subject to receipt of such rulings or other relief as may be required under the
Securities Act that the granting and exercise of such options shall not be
subject to the prospectus and registration requirements of the Securities Act,
subject to such terms and conditions as the Board of Directors may in its
absolute discretion approval.
SECTION 3.07 CONSOLIDATION, MERGER, ETC. If there is a change in control,
which is defined as a consolidation, merger or statutory amalgamation or
arrangement of the Corporation with or into another corporation, a separation of
the business of the Corporation into two or more entities, a transfer of all or
substantially all of the assets of the Corporation to another entity, or the
change in the majority of the board of directors other than by election by the
shareholders pursuant to board solicitation or by vacancies filled by the board
caused by death or resignation of such person, upon the exercise of an option
under the Plan, the holder thereof shall be entitled to receive the securities,
property or cash which the holder would have received upon such consolidation,
merger, amalgamation, arrangement, separation or transfer if the holder had
exercised the option immediately prior to such event, unless the directors of
the Corporation otherwise determine the basis upon which such option shall be
exercisable.
SECTION 3.08 NO REPRESENTATION OR WARRANTY. The Corporation makes no
representation or warranty as to the future market value of any Common Shares
issued in accordance with the provisions of the Plan.
SECTION 3.09 INTERPRETATION. This Plan shall be governed by and construed
in accordance with the laws of the Province of Quebec.
SECTION 3.10 APPROVAL AND EFFECTIVE DATE. This Plan shall be effective as
of the date it is approved by the Board of Directors and any securities
regulatory body or stock exchange in Canada having jurisdiction over the
securities of the Corporation.