CECO Environmental Corp. 2020 Employee Stock Purchase Plan

WITNESSETH:

WHEREAS, CECO Environmental Corp. (the “Corporation”) desires to provide
eligible employees of the Corporation and its subsidiaries interest in the
Corporation through the purchase of shares of common stock of the Corporation
(“Common Stock”); and

WHEREAS, the Corporation desires to offer further inducement to eligible
employees to remain as employees by providing a plan for the purchase of Common
Stock at a discounted rate.

NOW, THEREFORE, the Corporation hereby establishes this 2020 Employee Stock
Purchase Plan (the “Plan”) pursuant to the provisions of Section 423 of the
Internal Revenue Code of 1986, as amended, as follows:

ARTICLE I

ESTABLISHMENT OF PLAN

The Plan is hereby established effective as of June 11, 2020; provided, however,
that the Plan shall not become effective unless it has received the approval of
the majority of the shares of Common Stock of the Corporation represented (in
person or by proxy) at a meeting of shareholders of the Corporation duly held
within 12 months after the date the Plan is adopted by the Board of Directors of
the Corporation.

ARTICLE II

DEFINITIONS AND CONSTRUCTION

Section 2.01 Definitions. When the initial letter of a word or phrase is
capitalized, the meaning of such word or phrase shall be as follows:

 

 

(a)

“Account” means one or more bookkeeping accounts where a recording of each
Participant’s interest in the Plan, consisting of the sum of the Participant’s
payroll deductions under the Plan and the number of shares of Common Stock
purchased by the Participant, all of which shall be maintained by the Custodian.
Each Account shall be in the name of the Participant or, if permitted by the
Committee and so indicated on his or her enrollment form, in his or her name
jointly with a member of his or her family, with right of survivorship. If
permitted by the Committee, a Participant who is a resident of a jurisdiction
that does not recognize such a joint tenancy may have an Account in his or her
name as tenant in common with a member of his or her family, without rights of
survivorship.

 

 

(b)

“Act” means the Securities Exchange Act of 1934, as amended.

 

 

(c)

“Board of Directors” means the Board of Directors of the Corporation as it shall
exist from time to time.

 

 

(d)

“Code” means the Internal Revenue Code of 1986, as amended, or any subsequently
enacted federal revenue law, as well as any regulations duly promulgated
thereunder.

 

 

(e)

“Committee” means (i) the Compensation Committee of the Board of Directors, or
(ii) another committee of the Board of Directors designated by the Board of
Directors to act as the Committee for purposes of the Plan, or (iii) the Board
of Directors if it determines that it shall act as the Committee for purposes of
the Plan.

 

 

(f)

“Common Stock” means the shares of Common Stock, $0.01 par value, of the
Corporation.

 

 

(g)

“Corporation” means CECO Environmental Corp., a Delaware corporation, and its
successors (by merger, consolidation or otherwise) and assigns.

 

 

(h)

“Custodian” means any party designated by the Committee pursuant to Section 7.02
to act as custodian of the Plan.

 

 

(i)

“Effective Date” means the effective date of the Plan, which is June 11, 2020.

 

 

(j)

“Eligible Employee” means any person employed by the Corporation or any of its
subsidiaries or controlled entities (as designated by the Committee), except
for:

 

 

(1)

employees who have been employed less than six months; or

 

 

(2)

employees whose customary employment is 20 hours or less per week.

 

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In applying the six-month employment requirement of Section 2.01(j)(1) above,
such employee’s period of employment shall include any period of employment with
any Subsidiary acquired by the Corporation. In addition, the Committee may
establish any other eligibility requirements for “Eligible Employees” consistent
with Code Section 423.

 

 

(k)

“Fair Market Value” means the closing trading price of a share of Common Stock
as reported on any national securities exchange on which the shares are listed
(or, if listed on more than one such exchange, then on the one located in New
York City), or if not so listed, the price reasonably determined by the
Committee in accordance with Treas. Reg. section 20.2031-2.

 

 

(l)

“Offering Date” means the first business day of each of July and January during
the Plan Term on which Fair Market Value can be determined and Common Stock is
offered for purchase hereunder and/or such other date or dates selected by the
Committee from time to time on which Common Stock is offered for purchase
hereunder (with Fair Market Value determined on such date or, if not quoted on
such date, on the last day prior thereto on which Fair Market Value is quoted).

 

 

(m)

“Offering Period” means a period commencing on an Offering Date and ending on a
Purchase Date as determined by the Committee following such Offering Date. The
Committee will have the authority to establish additional or alternative
sequential or overlapping Offering Periods, a different duration for one or more
Offering Periods or different commencement or ending dates for such Offering
Periods with respect to future offerings without shareholder approval if such
change is announced prior to the scheduled beginning of the first Offering
Period to be affected thereafter; provided that no Offering Period may have a
duration exceeding 27 months.

 

 

(n)

“Participant” means an Eligible Employee who (i) authorizes the Corporation to
make payroll deductions from Plan Compensation for the purpose of purchasing
Common Stock pursuant to the Plan, (ii) has commenced participation in the Plan
pursuant to Section 3.01, and (iii) has not incurred a withdrawal, voluntary or
involuntary, pursuant to Article VI.

 

 

(o)

“Payday” means the date on which an Eligible Employee receives any Plan
Compensation.

 

 

(p)

“Plan” means this CECO Environmental Corp. 2020 Employee Stock Purchase Plan.

 

 

(q)

“Plan Compensation” means all compensation paid by the Corporation or any
Subsidiary to an employee through their respective payroll systems for services
as an employee, including wages, salary, incentive compensation and bonuses, but
excluding therefrom profit sharing payments, stock incentive program payments
and all other fringe benefit payments.

 

 

(r)

“Plan Term” means the period from the Effective Date to and including June 10,
2030, subject to earlier termination in accordance with the provisions of
Section 8.02.

 

 

(s)

“Purchase Date” means the last business day of each December and June during the
Plan Term on which Fair Market Value can be determined and on which Common Stock
is acquired hereunder and/or such other date or dates selected by the Committee
from time to time on which Common Stock is acquired hereunder (with Fair Market
Value determined on such date or, if not quoted on such date, on the last day
prior thereto on which Fair Market Value is quoted); provided, that the first
Purchase Date shall be the last business day of December 2020, or such other
Purchase Date determined by the Committee.

 

 

(t)

“Purchase Price” means the price per share of Common Stock for purchase by
Participants as defined in Section 5.02.

 

 

(u)

“Section” when not preceded by the word “Code,” means a section of the Plan.

 

 

(v)

“Subsidiary” has the meaning set forth in Code Section 424(f).

Section 2.02. Construction and Governing Law; Purpose.

(a)The Plan shall be construed, enforced and administered and the validity
thereof determined in accordance with the Code and the regulations thereunder,
and in accordance with the laws of the State of Delaware when such laws are not
inconsistent with the Code.

(b)The Plan is intended to qualify as an employee stock purchase plan under Code
Section 423 (including any amendments to such section), and the provisions of
the Plan shall be construed so as to fulfill this intention. The Plan provides
for both Code Section 423 and non-Code Section 423 components.

 

ARTICLE III PARTICIPATION

 

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Section 3.01 Participation. Any person who is an Eligible Employee as of any
Offering Date under the Plan may become a Participant in the Plan beginning on
such Offering Date by completing and delivering to the Committee such enrollment
form(s) as the Committee shall require to authorize payroll deductions and to
request participation in the Plan no later than 10 business days prior to such
Offering Date or such other deadline as may be prescribed by the Committee.

Section 3.02 Payroll Deductions.

(a)Payroll deductions for a Participant shall commence on the first Payday after
the Offering Date when the Eligible Employee becomes a Participant and shall
continue thereafter until the earlier of (i) the termination of the Plan, as
provided in Section 8.02, or (ii) the date the Participant suspends his or her
payroll deductions pursuant to paragraph (b) of this Section 3.02. Each
Participant shall authorize the Corporation or his or her employing Subsidiary
to make deductions from Participant’s Plan Compensation on each Payday during
such time as he or she is a Participant in the Plan at whole percentage rates
from 2% through 8% of the Participant’s Plan Compensation; provided, however,
that the maximum aggregate amount that may be deducted from a Participant’s Plan
Compensation during any calendar year shall be $10,000, or such other amount as
may be determined by the Committee.

  (b)A Participant may increase, decrease or suspend his or her payroll
deduction one time only between Offering Dates during participation effective as
of the Payday following delivery of written notice to the Committee, or as soon
as administratively reasonable thereafter. A Participant’s suspension of payroll
deductions shall not automatically result in withdrawal from participation in
the Plan. If a Participant, on any scheduled Payday, shall receive no pay or his
or her net pay shall be insufficient, after all required deductions, to permit
withholding the payroll deduction in full as authorized hereunder and in the
enrollment form, the Corporation or its Subsidiary shall (i) if the pay is
insufficient for any deduction hereunder, suspend the deduction until the next
Payday in which Participant’s net pay is sufficient for such withholding, or
(ii) if the pay is insufficient for a full deduction hereunder, effect a partial
deduction equal to the net pay available for such deduction; provided, however,
that no withdrawal shall be deemed to have occurred in either event. If no
deduction or if a partial deduction is effected, no carryover of the balance of
the authorized deduction shall occur.

 

Section 3.03 Participant’s Account. On each Payday, the Corporation or its
Subsidiary, as the case may be, shall deduct the authorized amount from each
Participant’s Plan Compensation and, as soon as administratively reasonable,
shall report the amount of such deductions to the Custodian. The Custodian shall
credit the Account of each Participant with the amount of the Participant’s
payroll deduction under the Plan effective as of the Payday on which it was
deducted. Interest may be earned and retained by the Corporation but interest
shall not be paid on amounts held in a Participant’s Account.

ARTICLE IV COMMON STOCK

The shares subject to issuance under the Plan shall be Common Stock. The total
number of shares of Common Stock which may be purchased under the Plan shall not
exceed in the aggregate 1.3 million shares, of which not more than 130,000
shares of Common Stock shall be issued in any one calendar year during the Plan
Term, except as such numbers of shares of Common Stock shall be or have been
adjusted in accordance with Sections 5.01(a) and 8.01 of the Plan. In the event
the aggregate number of shares of Common Stock issuable for any calendar year
shall exceed 130,000 shares of Common Stock (adjusted pursuant to Sections
5.01(a) and 8.01 of the Plan) (the “Annual Maximum”), the Committee shall reduce
proportionately each Participant’s purchase hereunder to the extent necessary so
that the aggregate number of shares of Common Stock will not exceed the Annual
Maximum (allocated proportionately for each Purchase Date during each calendar
year) and if any such reduction results in cash credited to a Participant’s
Account, such cash credited shall remain credited to the Participant’s Account
and be used to purchase Common Stock on the next Purchase Date. Common Stock
required to satisfy purchases pursuant to the Plan shall be provided out of the
Corporation’s authorized and unissued shares or treasury shares or acquired by
the Corporation in open market transactions. If shares of Common Stock are
purchased in one or more transactions on the open market transactions at the
direction of the Committee, the Corporation will pay the difference between the
Purchase Price and the price at which such shares are purchased for
Participants.

 

 

ARTICLE V PURCHASE OF COMMON STOCK

Section 5.01 The Offering.

(a)The Corporation shall offer an aggregate of 65,000 shares of Common Stock for
purchase by Participants during each Offering Period pursuant to the terms of
the Plan, or such other amount determined by the Committee. Unless otherwise
determined by the Committee, the number of shares of Common Stock offered in
each Offering Period hereunder shall be increased by the aggregate number of
shares of Common Stock, if any, which were offered but not purchased during
prior Offering Periods and shall be subject to further adjustment in accordance
with Section 8.01 of the Plan.

(b)Notwithstanding any provision in the Plan to the contrary:

 

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(1)a Participant may not purchase Common Stock hereunder to the extent that,
after such purchase, the Participant would own (or be considered to own) of
record or beneficially shares in the Corporation possessing five percent (5%) or
more of the total combined voting power or value of all classes of shares of the
Corporation, within the meaning of Code Section 423(b)(3); and

(2)no Participant may be granted rights to purchase Common Stock under the Plan
and all employee stock purchase plans of the Corporation and its subsidiaries
which accrue at a rate that exceeds $25,000 of Fair Market Value of shares of
Common Stock (determined at the Offering Date) for each calendar year during
which such a right to purchase Common Stock is outstanding, as provided in Code
Section 423(b)(8).

 

Section 5.02 Purchase Price. The “Purchase Price” for Common Stock purchased
shall be equal to the lesser of (a) 85% of Fair Market Value per share of the
Common Stock on the Offering Date, or (b) 85% of Fair Market Value per share of
the Common Stock on the Purchase Date.

Section 5.03 Purchase of Common Stock; Limitations.

(a)Within 10 days following each Purchase Date during the Plan Term, the
Committee shall determine the Purchase Price per share of Common Stock in
accordance with Section 5.02 herein. Each Participant shall thereupon
automatically purchase from the Corporation and the Corporation, upon payment of
the purchase price by the Custodian, shall cause to be issued to the
Participant, as promptly as administratively possible, that number of shares
(including fractional shares unless otherwise determined by the Committee) of
Common Stock which such Participant’s Account shall enable such Participant to
purchase at the Purchase Price. All shares purchased shall be maintained by the
Custodian in the Account for each Participant. All cash dividends paid with
respect to shares of the Common Stock held in the Account shall be added to the
Participant’s Account and shall be used to purchase shares of Common Stock at
the next Purchase Date. Expenses incurred in the purchase of such shares shall
be paid by the Corporation. All dividends distributed in-kind with respect to
Common Stock held in the Account shall be added to the shares held for a
Participant in his or her Account. Any distribution of shares with respect to
shares of Common Stock held for a Participant in his or her Account shall be
added to the shares of Common Stock held for a Participant in his or her
Account.

(b)A Participant shall have no interest in, or rights as a shareholder with
respect to, Common Stock subject to purchase under the Plan until such shares of
Common Stock have been issued to the Participant’s account.

 

Section 5.04 Sale of Common Stock. Unless otherwise prohibited by law or policy
of the Corporation, the Committee may permit a Participant to have the right at
any time to direct that any shares of Common Stock in his or her Account be sold
and that the proceeds, less expenses of sale, be remitted to him or her.

ARTICLE VI WITHDRAWAL

Section 6.01 Voluntary Withdrawal. A Participant may withdraw from participation
in the Plan at any time. A Participant’s withdrawal shall be effective as of the
Payday following delivery of written notice to the Committee, or as soon as
administratively reasonable thereafter. The Committee shall notify the Custodian
of the withdrawal of any Participant. As soon as administratively reasonable
after the effective date of a Participant’s withdrawal from the Plan, the cash
balance of the Participant’s Account shall be paid to him or her in cash. Upon a
voluntary withdrawal of a Participant, the Participant may elect to have his or
her shares sold by the Custodian and the proceeds, after selling expenses,
remitted to him or her, or the Participant may elect to have the shares of
Common Stock credited to his or her Account or a certificate (if the Common
Stock is certificated) for the shares of Common Stock credited to the
Participant’s Account forwarded to him or her. No partial withdrawals are
permitted. Any Eligible Employee who withdraws from the Plan shall be entitled
to resume payroll deductions and become a Participant only after compliance with
Section 3.01.

Section 6.02 Involuntary Withdrawal. Upon termination of a Participant’s
employment with the Corporation or any Subsidiary for any reason, or no reason,
including resignation, discharge (with or without cause), disability or
retirement, the cash balance of the Participant’s Account shall be paid to the
Participant and the shares of Common Stock held in the Participant’s Account
shall be remitted to the Participant, or, in the case of the Participant’s
death, to the Participant’s beneficiary as provided in Section 6.04. The
Corporation or the Custodian shall pay such amount as soon as administratively
reasonable after the Committee has received notification of such termination of
employment.

Section 6.03 Interest. No payroll deductions or Account balances paid to a
Participant, or paid to any beneficiary in accordance with Section 6.04, shall
be credited with interest unless otherwise required by applicable law.

 

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Section 6.04 Participant’s Beneficiary.

(a)A Participant may file with the Committee a written designation of a
beneficiary who is to receive any Common Stock or cash credited to the
Participant’s Account under the Plan in the event of the Participant’s death.
Such designation of beneficiary may be changed by the Participant at any time by
written notice to the Committee on the form approved by the Committee.

(b)Upon the death of a Participant, and on receipt by the Committee of
reasonable proof of the identity and existence of the Participant’s designated
beneficiary, the Committee shall cause delivery of the shares or cash as
provided in Section 6.04(a), if any, to such beneficiary as soon as
administratively reasonable. If a Participant dies without a surviving
designated beneficiary, the Committee shall cause delivery of such shares or
cash to the estate or a representative of the estate of the Participant.

(c)No designated beneficiary and no heir or beneficiary of the estate of a
deceased Participant shall acquire any interest in the Common Stock or cash
credited to the Participant’s Account under the Plan prior to the death of the
Participant.

 

ARTICLE VII

PLAN ADMINISTRATION

Section 7.01 Administrative Committee.

(a)The Plan shall be administered, at the expense of the Corporation, by the
Committee.

(b)The Committee shall be vested with full authority to take any and all actions
necessary to implement the Plan and to interpret the Plan and make, rescind,
administer and interpret such rules and regulations as it deems necessary to
administer the Plan. Any determination, construction, interpretation,
administration, or application of the Plan by the Committee shall be final,
conclusive and binding on all Participants, beneficiaries and any and all other
persons claiming under or through any Participant. The Committee may delegate
administration of the Plan to one or more employees or positions of the
Corporation or to an administrative committee appointed by the Committee or by
the Corporation.

(c)Service on the Committee shall constitute service as a director of the
Corporation so that members of the Committee shall be entitled to such
indemnification and reimbursement as directors of the Corporation as provided in
its Articles of Incorporation and/or Bylaws.

(d)The Committee shall have the power, in its discretion, to establish separate,
simultaneous or overlapping offerings having different terms and conditions and
to designate a Subsidiary or Subsidiaries that may participate in a particular
offering, provided that each offering shall individually comply with the terms
of the Plan and the requirements of Code Section 423(b)(5) and that all
Participants granted purchase rights pursuant to such offering shall have the
same rights and privileges within the meaning of such section.

 

 

Section 7.02 Custodian.

 

(a)The Committee, in its sole discretion, shall appoint a Custodian. The
Custodian may be removed by the Committee at any time.

 

(b)The Custodian shall keep or cause to be kept accurate and detailed
bookkeeping accounts of all contributions, receipts, disbursements and transfers
of cash and shares of Common Stock under the Plan, and all bookkeeping accounts,
books and records relating thereto shall be open to inspection and audit at all
reasonable times by any person designated by the Board of Directors or the
Committee.

 

(c)The expenses of the Custodian shall be borne by the Corporation.

 

Section 7.03 Transferability. Neither payroll deductions credited to a
Participant’s Account nor any rights with regard to the purchase or receipt of
Common Stock under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way by the Participant, except with respect to the death of
the Participant as provided in Sections 6.02 and 6.04. Any such attempted
assignment, transfer, pledge, or other disposition shall be without effect,
except that the Committee, in its sole discretion, may treat such act as an
election to withdraw from the Plan in accordance with Section 6.01.

 

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Section 7.04 Separate Accounting for Payroll Deductions. All funds received or
held by the Corporation under the Plan may be used for the Corporation’s general
corporate purposes, and the Corporation shall not be obligated to segregate such
payroll deductions.

Section 7.05 Only Employees Eligible To Participate. Notwithstanding any other
provision of the Plan, to be eligible to purchase Common Stock hereunder as of a
Purchase Date, a Participant must remain an employee at all times from the
Offering Date through such Purchase Date.

Section 7.06 Equal Rights and Privileges. Notwithstanding any other provision of
the Plan, all Eligible Employees who participate in an Offering Period shall
have the same rights and privileges with respect to the offering under such
Offering Period, as required by Code Section 423 and the regulations thereunder,
and the Committee shall administer the Plan and interpret and apply the
provisions of the Plan accordingly; provided, however, that employees
participating in a sub-plan adopted pursuant to Section 9.04 which is not
designed to qualify under Code Section 423 of the Code need not have the same
rights and privileges and employees participating in the Plan generally.

ARTICLE VIII AMENDMENT AND TERMINATION

Section 8.01 Adjustment of Stock. In the event of any change after the Effective
Date in the outstanding shares of the Corporation by reason of any
reorganization, recapitalization, stock split, stock dividend, combination of
shares, exchange of shares, merger or consolidation, liquidation, or any other
change after the Effective Date in the nature of the Common Stock, the Committee
shall make a corresponding adjustment in the number and kind of shares reserved
under the Plan, and in the purchase price and the number and kind of shares
covered by outstanding purchase commitments under the Plan as determined by the
Committee. Any determination by the Committee hereunder shall be conclusive,
final and binding on all persons. If the Corporation is a party to a
consolidation or a merger in which the Corporation is not the surviving
corporation, a transaction that results in the acquisition of substantially all
of the Corporation’s outstanding stock by a single person or group, or a sale or
transfer of substantially all of the Corporation’s assets, the Committee may
take such actions with respect to the Plan as the Committee deems appropriate.

Section 8.02 Amendment and Termination.

(a)The Board of Directors, may at any time and from time to time, alter, amend,
suspend, or terminate the Plan in any way; provided, however, that if the Plan
is terminated the effective date of termination shall be immediately after the
next Purchase Date; provided further, that the Board of Directors may not,
without approval by the holders of the issued and outstanding shares of Common
Stock:

 

(1)

increase the maximum number of shares of Common Stock that may be issued under
the Plan (other than to reflect adjustment permitted under Section 8.01 hereof);

(2)change the class of shares that may be issued under the Plan;

 

(3)change the designation of the persons or class of persons eligible to
participate and receive Common Stock under the Plan; or

(4)change the provision of Section 5.02 concerning the Purchase Price.

(b)Unless earlier terminated by the Board of Directors pursuant to paragraph (a)
of this Section 8.02, the Plan will terminate on the earlier of: (i) the last
day of the Plan Term, or (ii) the date on which the authorized remaining Common
Stock reserved for the Plan are not sufficient to enable each Participant on
such date to purchase at least one share of Common Stock. No purchases of Common
Stock shall be made after the termination of the Plan.

 

ARTICLE IX MISCELLANEOUS

Section 9.01 Notices. All notices or other communications by a Participant to
the Committee under or in connection with the Plan shall be deemed to have been
duly given when received in the form and at the location or by the person
specified by the Committee. Any notices or other communications by the Committee
to a Participant under or in connection

 

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with the Plan shall be deemed to have been duly given when mailed by the
Committee to the most recent address of the Participant on the business records
of the Corporation.

Section 9.02 No Right To Continued Employment. Neither enrollment in the Plan,
the purchase of Common Stock hereunder, nor participation otherwise in the Plan
shall impose any obligation on the Corporation or any Subsidiary to continue to
employ any person.

Section 9.03 Notice of Sale. As a condition of participation in the Plan, each
Participant agrees to notify the Corporation if he or she sells or otherwise
disposes of any of his or her shares of Common Stock purchased pursuant to the
Plan within two years of the Offering Date on which such shares were offered or
within one year of the Purchase Date on which such shares were purchased.
Notwithstanding anything herein to the contrary, the Corporation or Subsidiary
shall have the right to satisfy any obligations to withhold taxes incurred by
reason of the issuance and/or sale of Common Stock hereunder.

Section 9.04 Non-U.S. Participants. To the extent permitted under Code
Section 423, without the amendment of the Plan, the Company may provide for the
participation in the Plan by employees of the Company or a Subsidiary who are
subject to the laws of foreign countries or jurisdictions on such terms and
conditions different from those specified in the Plan as may in the judgment of
the Company be necessary or desirable to foster and promote achievement of the
purposes of the Plan and, in furtherance of such purposes the Company may make
such modifications, amendments, procedures, sub-plans and the like as may be
necessary or advisable to comply with provisions of laws of other countries or
jurisdictions in which the Company or the Company’s Subsidiaries operate or have
employees. Each sub-plan shall constitute a separate “offering” under the Plan
in accordance with Treas. Reg. section 1.423-2(a) and may contain terms that do
not satisfy the requirements of Code Section 423.