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EXHIBIT 10.1
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SUMMA INDUSTRIES
1999 STOCK OPTION PLAN
1. PURPOSE. This Plan is intended to provide incentive to key employees
and non-employee directors of, and key consultants, vendors, customers, and
others expected to provide significant services to, the Corporation and/or its
Subsidiaries, to encourage proprietary interest in the Corporation, to encourage
key employees to remain in the employ of the Corporation and its Subsidiaries,
to attract new employees with outstanding qualifications, and to afford
additional incentives to consultants, vendors, customers and others to increase
their efforts in providing significant services to the Corporation and/or its
Subsidiaries.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Corporation.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "COMMITTEE" shall mean the committee, if any, appointed by
the Board in accordance with Section 4 of the Plan.
(d) "COMMON STOCK" shall mean the Common Stock, par value $.001
per share, of the Corporation.
(e) "CORPORATION" shall mean Summa Industries, a Delaware
corporation.
(f) "DISABILITY" shall mean the condition of an Employee who is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve (12) months.
(g) "EMPLOYEE" shall mean an individual who is employed (within
the meaning of Code Section 3401 and the regulations thereunder) by the
Corporation or a Subsidiary.
(h) "EXERCISE PRICE" shall mean the price per Share of Common
Stock, determined by the Board or the Committee, at which an Option may
exercised.
(i) "FAIR MARKET VALUE" shall mean the value of one (1) Share of
Stock as determined by the price at which the Shares traded at the close of
business on the date of valuation, or if not listed on an exchange, the fair
market value as determined by the Board or the Committee in good faith. Such
determination shall be conclusive and binding on all persons.
(j) "INCENTIVE STOCK OPTION" shall mean an option described in
Section 422 of the Code.
(k) "NONSTATUTORY STOCK OPTION" shall mean an option not
described in Section 422(b), 422A(b), 423(b) or 424(b) of the Code.
(l) "OPTION" shall mean any stock option granted pursuant to the
Plan.
(m) "OPTIONEE" shall mean a person who has been granted an
Option.
(n) "PLAN" shall mean this 1999 Stock Option Plan, as may be
amended from time to time.
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(o) "PURCHASE PRICE" shall mean the Exercise Price times the
number of Shares with respect to which an Option is exercised.
(p) "RETIREMENT" shall mean the voluntary termination of
employment by an Employee upon the attainment of age sixty-five (65) and the
completion of not less than twenty (20) years of service with the Corporation or
a Subsidiary.
(q) "SHARE" shall mean one (1) share of Common Stock, adjusted in
accordance with Section 10 of the Plan (if applicable).
(r) "SUBSIDIARY" shall mean any corporation or limited liability
company at least fifty percent (50%) of the total combined voting power of which
is owned by the Corporation or by another Subsidiary.
3. EFFECTIVE DATE. The Plan has been adopted by the Board and is
effective as of September 1, 1998, subject to approval by the stockholders of
the Corporation at the Company's Annual Meeting of Stockholders to be held in
December 1998 or as soon thereafter as practicable.
4. ADMINISTRATION. The Plan shall be administered by the Board, or by a
committee appointed by the Board which shall consist of two (2) or more
non-employee directors of the Corporation (the "Committee"). The Board shall
appoint one of the members of the Committee, if there be one, as Chairman of the
Committee. If a Committee has been appointed, the Committee shall hold meetings
at such times and places as it may determine. Acts of a majority of the
Committee at which a quorum is present, or acts reduced to or approved in
writing by a majority of the members of the Committee, shall be the valid acts
of the Committee. The Board, or the Committee if there be one, shall from time
to time at its discretion select the Employees, directors, vendors and
consultants who are to be granted Options, determine the number of Shares to be
optioned to each Optionee and designate such Options such as Incentive Stock
Options or Nonstatutory Stock Options, except that no Incentive Stock Option may
be granted to anyone other than an Employee. Notwithstanding the foregoing, no
Incentive Stock Options may be granted under the Plan unless and until the Plan
has been approved by the Corporation's stockholders. A member of the Board or a
Committee member shall in no event participate in any determination relating to
Options held by or to be granted to such Board or Committee member. The
interpretation and construction by the Board, or by the Committee if there be
one, of any provision of the Plan or of any Option granted thereunder shall be
final. No member of the Board or of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Option
granted thereunder.
5. PARTICIPATION.
(a) Eligibility. The Optionees shall be such persons as the
Board, or the Committee if there be one, may select from among the following
classes of persons, subject to the terms and conditions of subsection (b) below:
(i) Employees of the Corporation or a Subsidiary (who may be officers and/or
directors); (ii) non-employee directors of the Corporation or a Subsidiary; and
(iii) consultants, vendors, customers and others expected to provide significant
services to the Corporation or a Subsidiary.
For purposes of this Plan, an Optionee who is a non-employee
director or a consultant, vendor, customer, or other provider of significant
services to the Corporation or a Subsidiary shall be deemed to be an Employee,
and service as a director, consultant, vendor, customer or other provider of
significant services to the Corporation or a Subsidiary shall be deemed to be
employment, except that no Incentive Stock Option may be granted to a
non-employee director or non-employee consultant, vendor, customer or other
provider of significant services to the Corporation or a Subsidiary, and except
that no Nonstatutory Stock Option may be granted to a non-employee director or
non-employee consultant, vendor, customer or other provider of significant
services to the Corporation or a Subsidiary other than upon a finding by the
Board, or the Committee if there be one, that the value of the services rendered
or to be rendered to the Corporation or a Subsidiary by such non-employee
director or non-employee consultant, vendor, customer or other provider of
services is at least equal to the value of the option or options granted.
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(b) Ten-Percent Stockholders. An Employee who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
stock of the Corporation, its parent or any of its Subsidiaries shall not be
eligible to receive an Incentive Stock Option unless (i) the Exercise Price of
the Shares subject to such Option is at least one hundred ten percent (110%) of
the Fair Market Value of such Shares on the date of grant and (ii) such Option
by its terms is not exercisable after the expiration of five (5) years from the
date of grant.
(c) Stock Ownership. For purposes of subsection (b) above, in
determining stock ownership an Employee shall be considered as owning the stock
owned, directly or indirectly, by or for his brothers, sisters, spouses,
ancestors and lineal descendants. Stock owned, directly or indirectly, by or for
a corporation, partnership, estate or trust shall be considered as being owned
proportionately by or for its stockholders, partners or beneficiaries. Stock
with respect to which such Employee holds an Option shall not be counted.
(d) Outstanding Stock. For purposes of subsection (b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant of the Option to the Optionee. "Outstanding stock"
shall not include shares authorized for issue under outstanding Options held by
the Optionee or by any other person.
6. STOCK. The stock subject to Options granted under the Plan shall be
Shares of the Corporation's authorized but unissued or reacquired Common Stock.
The aggregate number of Shares which may be issued upon exercise of Options
under the Plan shall not exceed 500,000 shares. The number of Shares subject to
Options outstanding at any time shall not exceed the number of Shares remaining
available for issuance under the Plan. In the event that any outstanding Option
for any reason expires or is terminated, the Shares allocable to the unexercised
portion of such Option may again be made subject to any Option. The limitations
established by this Section 6 shall be subject to adjustment in the manner
provided in Section 10 hereof upon the occurrence of an event specified therein.
7. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreements. Options shall be evidenced by
written stock option agreements in such form as the Board, or the Committee if
there be one, shall from time to time determine. Such agreements shall comply
with and be subject to the terms and conditions set forth below.
(b) Number of Shares. Each Option shall state the number of
Shares to which it pertains and shall provide for the adjustment thereof in
accordance with the provisions of Section 10 hereof.
(c) Exercise Price. Each Option shall state the Exercise Price.
The Exercise Price in the case of any Incentive Stock Option shall not be less
than the Fair Market Value on the date of grant and, in the case of any
Incentive Stock Option granted to an Optionee described in Section 5(b) hereof,
shall not be less than one hundred ten percent (110%) of the Fair Market Value
on the date of grant. The Exercise Price in the case of any Nonstatutory Stock
Option shall not be less than 85 % of the Fair Market Value on the date of
grant.
(d) Medium and Time of Payment. The Purchase Price shall be
payable in full upon the exercise of an Option (i) in United States dollars,
(ii) by the surrender of Shares in good form for transfer, owned by the person
exercising the Option and having a Fair Market Value on the date of exercise
equal to the Purchase Price, (iii) in any combination of cash and Shares, as
long as the sum of the cash so paid and the Fair Market Value of the Shares so
surrendered equal the Purchase Price, or (iv) in such other consideration as the
Board or the Committee may from time to time in the exercise of its discretion
deem acceptable in a particular instance. In addition, an Option may be
exercised through a broker-assisted or similar transaction in which the full
Purchase Price is not received by the Corporation until promptly after such
exercise (a "Cashless Exercise"). In the event the Corporation determines that
it is required to withhold state or Federal income tax as a result of the
exercise of an Option, as a condition to the exercise thereof, an Employee may
be required to make arrangements satisfactory to the Corporation to enable it to
satisfy such withholding requirements. The Corporation shall be entitled to a
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tax deduction upon exercise of any Nonstatutory Stock Option and shall report
related taxable income to Optionee.
(e) Term and Nontransferability of Options. Each Option shall
state the time or times, and the conditions upon which, all or part thereof
becomes exercisable. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted, and no Incentive Stock Option granted
to an Optionee described in Section 5(b) hereof shall be exercisable after the
expiration of five (5) years from the date it was granted. During the lifetime
of the Optionee, the Option shall be exercisable only by the Optionee and shall
not be assignable or transferable. In the event of the Optionee's death, the
Option shall not be transferable by the Optionee other than by will or the laws
of descent and distribution.
(f) Termination of Employment. Except by death, Disability or
Retirement, if an Optionee ceases to be an Employee for any reason other than
his or her death, Disability or Retirement, such Optionee shall have the right,
subject to the restrictions of subsection (e) above, to exercise the Option at
any time within three months after termination of employment, but only to the
extent that, at the date of termination of employment, the Optionee's right to
exercise such Option had accrued pursuant to the terms of the applicable option
agreement and had not previously been exercised; provided, however, that if the
Optionee was terminated for cause, any Option not exercised in full prior to
such termination shall be canceled. For this purpose, the employment
relationship shall be treated as continuing intact while the Optionee is on
military leave, sick leave or other bona fide leave of absence (to be determined
in the sole discretion of the Committee). The foregoing notwithstanding, (i) in
the case of an Incentive Stock Option, employment shall not be deemed to
continue beyond the ninetieth (90th) day after the Optionee's reemployment
rights are guaranteed by statute or by contract, and (ii) in the case of a
Nonstatutory Stock Option, the Board, or the Committee if there be one, may
extend or otherwise modify the period of time specified herein during which the
Option may be exercised following termination of Optionee's employment.
(g) Death of Optionee. If an Optionee dies while an Employee or
vendor, or after ceasing to be an Employee or vendor but during the period while
he or she could have exercised the Option under this Section 7, and has not
fully exercised the Option, then the Option may be exercised in full, subject to
the restrictions of subsection (e) above, at any time within twelve (12) months
after the Optionee's death, by the executors or administrators of his or her
estate or by any person or persons who have acquired the Option directly from
the Optionee by bequest or inheritance, but only to the extent that, at the date
of death, the Optionee's right to exercise such Option had accrued and had not
been forfeited pursuant to the terms of the applicable stock option agreement
and had not previously been exercised. The foregoing notwithstanding, in the
case of a Nonstatutory Stock Option, the Board, or the Committee if there be
one, may extend or otherwise modify the period of time specified herein during
which the Option may be exercised following termination of Optionee's
employment.
(h) Disability of Optionee. If an Optionee ceases to be an
Employee or vendor by reason of Disability, such Optionee shall have the right,
subject to the restrictions of subsection (e) above, to exercise the Option at
any time within twelve (12) months after termination of employment or status as
a vendor, but only to the extent that, at the date of termination of employment
or status as a vendor, the Optionee's right to exercise such Option had accrued
pursuant to the terms of the applicable option agreement and had not previously
been exercised. The foregoing notwithstanding, in the case of a Nonstatutory
Stock Option, the Board, or the Committee if there be one, may extend or
otherwise modify the period of time specified herein during which the Option may
be exercised following termination of Optionee's employment or status as a
vendor.
(i) Retirement of Optionee. If an Optionee ceases to be an
Employee or vendor by reason of Retirement, such Optionee shall have the right,
subject to the restrictions of subsection (e) above, to exercise the Option at
any time within three (3) months after termination of employment or status as a
vendor, but only to the extent that, at the date of termination of employment or
status as a vendor, the Optionee's right to exercise such Option had accrued
pursuant to the terms of the applicable option agreement and had not previously
been exercised. The foregoing notwithstanding, in the case of a Nonstatutory
Stock Option, the Board, or the Committee if there be one, may extend or
otherwise modify
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the period of time specified herein during which the Option may be exercised
following termination of Optionee's employment or status as a vendor.
(j) Rights as a Stockholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property), distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 10 hereof.
(k) Modification, Extension and Renewal of Option. Within the
limitations of the Plan, the Board, or the Committee, if there be one, may
modify, extend or renew outstanding Options or accept the cancellation of
outstanding Options (to the extent not previously exercised) for the granting of
new Options in substitution therefor. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, alter or
impair any rights or obligations under any Option previously granted.
(l) Other Provisions. The stock option agreements authorized
under the Plan may contain such other provisions not inconsistent with the terms
of the Plan (including, without limitation, restrictions upon the exercise of
the Option) as the Board, or the Committee, if there be one, shall deem
advisable.
8. LIMITATION ON VALUE OF EXERCISABLE SHARES. In the case of Incentive
Stock Options granted hereunder, the aggregate Fair Market Value (determined as
of the date of the grant thereof) of the Shares with respect to which Incentive
Stock Options become exercisable by any employee of the Company for the first
time during any calendar year (under this Plan and all other plans maintained by
the Corporation, its parent or its Subsidiaries) shall not exceed $100,000.
9. TERM OF PLAN. Options may be granted pursuant to the Plan until the
expiration of ten (10) years from the effective date of the Plan.
10. RECAPITALIZATIONS. Subject to any required action by stockholders,
the number of Shares covered by the Plan as provided in Section 6 hereof, the
number of Shares covered by each outstanding Option and the Exercise Price
thereof shall be proportionately adjusted for any increase of decrease in the
number of issued Shares resulting from a subdivision or consolidation of Shares
or the payment of a stock dividend (but only of Common Stock) or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Corporation. Subject to any required action by
stockholders, if the Corporation is the surviving corporation in any merger or
consolidation, each outstanding Option shall pertain and apply to the securities
to which a holder of the number of Shares subject to the Option would have been
entitled. In the event of a Change in Control (as defined below) of the
Corporation, the date of exercisability of each and every outstanding Option
shall automatically accelerate to a date and time immediately prior to such
Change in Control. For purposes of the Plan, a "Change in Control" of the
Corporation shall be deemed to have occurred if (i) there shall have be
consummated (x) any consolidation or merger of the Corporation in which the
Corporation is not the continuing or surviving corporation or pursuant to which
shares of the Corporation's Common Stock are converted into cash, securities or
other property, other than a merger of the Corporation in which the holders of
the Corporation's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger (including a reincorporation), or (y) any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Corporation, or (ii) the
stockholders of the Corporation shall approve any plan or proposal for the
liquidation or dissolution of the Corporation, or (iii) any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the
Corporation's outstanding Common Stock (excluding the Corporation's ESOP and
401(k) Plan from the definition of "person"), or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by the
Corporation's stockholders, of each new director was approved by a vote of at
least a majority of the directors then still in office who were directors at the
beginning of the period. To
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the extent that the foregoing adjustments relate to securities of the
Corporation, such adjustments shall be made by the Board, or the Committee, if
there be one, whose determination shall be conclusive and binding on all
persons. Except as expressly provided in this Section 10, the Optionee shall
have no rights by reason of subdivision or consolidation of shares of stock of
any class, the payment of any stock dividend or any other increase or decrease
in the number of shares of stock of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or stock of another
corporation, and any issue by the Corporation of shares of stock of any class,
or securities convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power to the Corporation to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business assets.
11. SECURITIES LAW REQUIREMENTS.
(a) Legality of Issuance. The issuance of any Shares upon the
exercise of any Option and the grant of any Option shall be contingent upon the
following:
(i) the Corporation and the Optionee shall have taken
all actions required to register the Shares under the Securities Act of 1933, as
amended (the "Act"), and to qualify the Option and the Shares under any and all
applicable state securities or "blue sky" laws or regulations, or to perfect an
exemption from the respective registration and qualification requirements
thereof;
(ii) any applicable listing requirement of any stock
exchange on which the Common Stock is listed shall have been satisfied; and
(iii) any other applicable provision of state or Federal
law shall have been satisfied.
(b) Restrictions on Transfer. Regardless of whether the offering
and sale of Shares under the Plan has been registered under the Act or has been
registered or qualified under the securities laws of any state, the Corporation
may impose restrictions on the sale, pledge or other transfer of such Shares
(including the placement of appropriate legends on stock certificates) if, in
the judgment of the Corporation and its counsel, such restrictions are necessary
or desirable in order to achieve compliance with the provisions of the Act, the
securities laws of any state or any other law. In the event that the sale of
Shares under the Plan is not registered under the Act but an exemption is
available which required an investment representation or other representation,
each Optionee shall be required to represent that such Shares are being acquired
for investment, and not with a view to the sale or distribution thereof, and to
make such other representations as are deemed necessary or appropriate by the
Corporation and its counsel. Any determination by the Corporation and its
counsel in connection with any of the matters set forth in this Section 11 shall
be conclusive and binding on all persons. Stock certificates evidencing Shares
acquired under the Plan pursuant to an unregistered transaction shall bear the
following restrictive legend and such other restrictive legends as are required
or deemed advisable under the provisions of any applicable law:
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). ANY TRANSFER OF SUCH
SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN
EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER SUCH
REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT."
(c) Registration or Qualification of Securities. The Corporation
may, but shall not be obligated to register or qualify the issuance of Options
and/or the sale of Shares under the Act or any other applicable law. The
Corporation shall not be obligated to take any affirmative action in order to
cause the issuance of Options or the sale of Shares under the plan to comply
with any law.
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(d) Exchange of Certificates. If, in the opinion of the
Corporation and its counsel, any legend placed on a stock certificate
representing shares sold under the Plan is no longer required, the holder of
such certificate shall be entitled to exchange such certificate for a
certificate representing the same number of Shares but lacking such legend.
12. AMENDMENT OF THE PLAN. The Board may from time to time, with respect
to any Shares at the time not subject to Options, suspend or discontinue the
Plan or revise or amend it in any respect whatsoever except that, without the
approval of the Corporation's stockholders if they have previously approved the
Plan, no such revision or amendment shall:
(a) Increase the number of Shares subject to the Plan;
(b) Change the designation in Section 5 hereof with respect to
the class of persons eligible to receive Options; or
(c) Amend this Section 12 to defeat its purpose.
13. EMPLOYMENT RIGHTS. No provision of the Plan or any stock option
agreement entered into in connection with the Plan shall (a) confer upon an
Optionee any right to continue in the employ of the Corporation or any
Subsidiary, (b) affect the right of the Corporation or any Subsidiary to
terminate the employment of an Optionee, with or without cause, or (c) confer
upon an Optionee any right to participate in any employee welfare or benefit
plan or other program with the Corporation or any Subsidiary other than the Plan
pursuant to a stock option agreement.
14. APPLICATION OF FUNDS. The proceeds received by the Corporation from
the sale of Common Stock pursuant to the exercise of an Option will be used for
general corporate purposes.
15. EXECUTION. To record the adoption of the Plan in the form set forth
above by the Board effective as of September 1, 1998, the Corporation has caused
this Plan to be executed in the name and on behalf of the Corporation where
provided below by an officer of the Corporation hereunto duly authorized.
SUMMA INDUSTRIES
By: /s/ Trygve M. Thoresen
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Trygve M. Thoresen
Vice President & Secretary