EXHIBIT
10.1


 


SUMMA INDUSTRIES


AMENDED &
RESTATED

2005 EQUITY INCENTIVE PLAN


 


ARTICLE I

PURPOSE OF PLAN


 


The Company has adopted
this Plan to promote the interests of the Company and its stockholders by using
investment interests in the Company to attract, retain and motivate its
management, directors, employees and other persons, to encourage and reward
their contributions to the performance of the Company, and to align their
interests with the interests of the Company’s stockholders.  Capitalized terms not otherwise defined
herein have the meanings ascribed to them in Article VIII.


 


ARTICLE II

EFFECTIVE DATE AND TERM OF PLAN


 


2.1         Term
of Plan.


 


This Plan became
effective as of the Effective Date and will continue in effect until the
earlier of (a) the Expiration Date, or (b) the date of any Plan
termination by the Administrator pursuant to the provisions in Section 4.4.


 


2.2         Effect
on Awards.


 


Awards may be granted
only during the Plan Term, but each Award properly granted during the Plan Term
will remain in effect after the Expiration Date until such Award has been
exercised, terminated or expired in accordance with its terms and the terms of
this Plan.


 


2.3         Stockholder
Approval.


 


This Plan shall be
approved by the Company’s stockholders. 
The effectiveness of any Awards granted prior to such stockholder
approval shall be subject to such stockholder approval.


 


ARTICLE III

SHARES SUBJECT TO PLAN


 


3.1         Number
of Shares.


 


The maximum number of
shares of Common Stock that may be issued pursuant to Awards under this Plan is
500,000, subject to adjustment as set forth in Section 3.4.


 


3.2         Source
of Shares.


 


The Common Stock to be
issued under this Plan will be made available, at the discretion of the
Administrator, either from authorized but unissued shares of Common Stock or
from previously issued shares of Common Stock reacquired by the Company,
including without limitation shares purchased on the open market.


 


3.3         Availability
of Unused Shares.


 


Shares of Common Stock
subject to unexercised portions of any Award that expire, terminate or are
canceled, and shares of Common Stock issued pursuant to an Award that are
reacquired by the Company pursuant to this Plan or the terms of the Award under
which such shares were issued, will again become available for the grant of
further Awards under this Plan as part of the shares available under Section 3.1.  However, if the exercise price of, or
withholding taxes incurred in connection with, an Award is paid with shares of
Common Stock, or if shares of Common Stock otherwise issuable pursuant to
Awards are withheld by the Company in satisfaction of an exercise price or the
withholding taxes incurred in connection with any exercise or vesting of an
Award, then the number of shares of Common Stock available for issuance under the
Plan will be reduced by the gross number of shares for which the Award is
exercised or for which the Award vests, as applicable, and not by the net
number of shares of Common Stock issued to the holder of such Award.


 





















 


3.4         Adjustment
Provisions.


 


(a)                                  Adjustments.  Subject to Section 3.4(e), if the
Company consummates any Reorganization in which holders of shares of Common
Stock are entitled to receive in respect of such shares any additional shares
or new or different shares or securities, cash or other consideration
(including, without limitation, a different number of shares of Common Stock),
or if the outstanding shares of Common Stock are increased, decreased or
exchanged for a different number or kind of shares or other securities through
merger, consolidation, sale or exchange of all or substantially all of the
assets of the Company, reorganization, recapitalization, reclassification,
combination, stock dividend, stock split, reverse stock split, spin-off, or
similar transaction then, subject to Section 7.1, an appropriate
and proportionate adjustment shall be made by the Administrator in:  (i) the maximum number and kind of
shares subject to this Plan as provided in Section 3.1; (ii) the
number and kind of shares or other securities subject to then outstanding
Awards; and (iii) the price for each share or other unit of any other
securities subject to, or measurement criteria applicable to, then outstanding
Awards.


 


(b)                                 No
Fractional Interests.  No fractional interests will be issued under
the Plan resulting from any adjustments.


 


(c)                                  Adjustments
Related to Company Stock.  To the extent any adjustments relate to stock
or securities of the Company, such adjustments will be made by the
Administrator, whose determination in that respect will be final, binding and
conclusive.


 


(d)                                 Right
to Make Adjustment.  The grant of an Award will not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part
of its business or assets.


 


(e)                                  Limitations.  Notwithstanding anything to the contrary
herein, no adjustment to the terms of an Incentive Stock Option may be made
unless such adjustment either:  (i) would
not cause the Option to lose its status as an Incentive Stock Option; or (ii) is
agreed to in writing by the Administrator and the Recipient.


 


3.5         Reservation
of Shares.


 


The Company will at all
times reserve and keep available shares of Common Stock equaling at least the
total number of shares of Common Stock issuable pursuant to all outstanding
Awards.


 


ARTICLE IV

ADMINISTRATION OF PLAN


 


4.1         Administrator.


 


(a)                                  Plan
Administration.  Subject to the
provisions of Section 4.1(b), this Plan will be administered by the
Board and may also be administered by the Compensation Committee of the Board
appointed pursuant to Section 4.1(b).


 


(b)                                 Administration
by Compensation Committee.  The Board
in its sole discretion may from time to time appoint a Compensation Committee
of not fewer than two (2) Board members with authority to administer this
Plan in whole or part and, subject to applicable law, to exercise any or all of
the powers, authority and discretion of the Board under this Plan.  As long as the Board has delegated authority
to administer this Plan to the Compensation Committee and the Company has a
class of equity securities registered under Section 12 of the Exchange
Act, this Plan may be administered by a Compensation Committee of not less than
two (2) Board members appointed by the Board in its sole discretion from
time to time, each of whom is (i) a Non-Employee Director, (ii) an “Outside
Director” as defined in the regulations adopted under Section 162(m) of
the IRC, and (iii) “independent” as defined under applicable stock
exchange regulations.  The Board may from
time to time increase or decrease (but not below two (2)) the number of members
of the Compensation Committee, remove from membership on the Compensation
Committee all or any portion of its members, and/or appoint such person or
persons as it desires to fill any vacancy existing on the Compensation
Committee, whether caused by removal, resignation or otherwise.  Unless otherwise required by this Section 4.1(b),
the Board may disband the Compensation Committee at any time.


 


4.2         Authority
of Administrator.


 


(a)                                  Authority
to Interpret Plan.  Subject to the
express provisions of this Plan, the Administrator will have the power to
implement, interpret and construe this Plan and any Awards and Award Documents
or other documents defining the rights and obligations of the Company and
Recipients hereunder and thereunder, to determine all questions 


 





















 


arising
hereunder and thereunder, and to adopt and amend such rules and regulations
for the administration hereof and thereof as it may deem desirable.  The interpretation and construction by the
Administrator of any provisions of this Plan or of any Award or Award Document,
and any action taken by, or inaction of, the Administrator relating to this
Plan or any Award or Award Document, will be within the discretion of the
Administrator and will be conclusive and binding upon all persons.  Subject only to compliance with the express
provisions hereof, the Administrator may act in its discretion in matters
related to this Plan and any and all Awards and Award Documents.


 


(b)                                 Authority
to Grant Awards.  Subject to the
express provisions of this Plan, the Administrator may from time to time in its
discretion select the Eligible Persons to whom, and the time or times at which,
Awards will be granted or sold, the nature of each Award, the number of shares
of Common Stock or the number of rights that make up or underlie each Award,
the exercise price and period (if applicable) for the exercise of each Award,
and such other terms and conditions applicable to each individual Award as the
Administrator may determine.  Any and all
terms and conditions of Awards may be established by the Administrator without
regard to existing Awards or other grants and without incurring any obligation
of the Company in respect of subsequent Awards. 
The Administrator may grant at any time new Awards to an Eligible Person
who has previously received Awards or other grants (including other stock
options) regardless of the status of such other Awards or grants.  The Administrator may grant Awards singly or
in combination or in tandem with other Awards as it determines in its
discretion.


 


(c)                                  Procedures.  Subject to the
Company’s charter or bylaws or any Board resolution conferring authority on the
Compensation Committee, any action of the Administrator with respect to the
administration of this Plan must be taken pursuant to a majority vote of the
authorized number of members of the Administrator or by the unanimous written
consent of its members; provided, however,
that (i) if the Administrator is the Compensation Committee and consists
of two (2) members, then actions of the Administrator must be unanimous,
and (ii) actions taken by the Board will be valid if approved in
accordance with applicable law.


 


4.3         No
Liability.


 


No member of the Board or
the Compensation Committee or any designee thereof will be liable for any
action or inaction with respect to this Plan or any Award or any transaction
arising under this Plan or any Award except in circumstances constituting bad
faith of such member.


 


4.4         Amendments.


 


(a)                                  Plan
Amendments.  The Administrator may at
any time and from time to time in its discretion, insofar as permitted by
applicable law, rule or regulation and subject to Section 4.4(c),
suspend or discontinue this Plan or revise or amend it in any respect
whatsoever, and this Plan as so revised or amended will govern all Awards,
including those granted before such revision or amendment.  Without limiting the generality of the
foregoing, the Administrator is authorized to amend this Plan to comply with or
take advantage of amendments to applicable laws, rules or regulations,
including the Securities Act, the Exchange Act, the IRC, or the rules of
any exchange or market system upon which the Common Stock is listed or trades,
or any rules or regulations promulgated thereunder.  Except as provided in Section 4.4(c),
no stockholder approval of any amendment or revision will be required unless
such approval is required by applicable law, rule or regulation.


 


(b)                                 Award
Amendments.  The Administrator may at any time and from
time to time in its discretion, but subject to Section 4.4(c) and
Section 6.1(c) and compliance with applicable statutory or
administrative requirements, accelerate or extend the vesting or exercise
period of any Award as a whole or in part, and make such other modifications in
the terms and conditions of an Award as it deems advisable, provided, however, that any repricing,
reduction or modification of the exercise price of a Stock Option by the
Administrator is subject to Section 5.16 regarding stockholder
approval of certain actions. 
Notwithstanding the foregoing, the Administrator shall not waive any
applicable minimum restriction periods or minimum vesting periods applicable to
existing grants under the Plan.


 


(c)                                  Limitation.  Except as otherwise provided in this Plan or
in the applicable Award Document, no amendment, revision, suspension or
termination of this Plan or an outstanding Award that would cause an Incentive
Stock Option to cease to qualify as such or that would alter, impair or
diminish in any material respect any rights or obligations under any Award
theretofore granted under this Plan may be effected without the written consent
of the Recipient to whom such Award was granted.


 





















 


4.5         Other
Compensation Plans.


 


The adoption of this Plan
will not affect any other stock option, restricted stock, incentive or other
compensation plans in effect from time to time for the Company, and this Plan
will not preclude the Company from establishing any other forms of incentive or
other compensation for employees, directors, advisors or consultants of the
Company, whether or not approved by stockholders.


 


4.6         Plan
Binding on Successors.


 


This Plan will be binding
upon the successors and assigns of the Company.


 


4.7         References
to Successor Statutes, Regulations and Rules.


 


Any reference in this
Plan to a particular statute, regulation or rule will also refer to any
successor provision of such statute, regulation or rule.


 


4.8         Issuances
for Compensation Purposes Only.


 


This Plan constitutes an “employee
benefit plan” as defined in Rule 405 promulgated under the Securities
Act.  Awards to eligible employees or
directors shall be made for any lawful consideration, including compensation
for services rendered, promissory notes or otherwise.  Awards to consultants and advisors shall be
made only in exchange for bona fide services rendered by such consultants or
advisors and such services must not be in connection with the offer and sale of
securities in a capital-raising transaction.


 


4.9         Invalid
Provisions.


 


In the event that any
provision of this Plan is found to be invalid or otherwise unenforceable under
any applicable law, such invalidity or unenforceability is not to be construed
as rendering any other provisions contained herein invalid or unenforceable,
and all such other provisions are to be given full force and effect to the same
extent as though the invalid and unenforceable provision were not contained herein.


 


4.10             Governing
Law.


 


This Plan will be
governed by and interpreted in accordance with the internal laws of the State
of Delaware, without giving effect to the principles of the conflicts of laws
thereof.


 


4.11             Interpretation.


 


Headings herein are for
convenience of reference only, do not constitute a part of this Plan, and will
not affect the meaning or interpretation of this Plan.  References herein to Sections or Articles are
references to the referenced Section or Article hereof, unless
otherwise specified.


 


ARTICLE V

GENERAL AWARD PROVISIONS


 


5.1         Participation
in Plan.


 


(a)                                  Eligibility
to Receive Awards.  A person is
eligible to receive grants of Awards if, at the time of the grant of the Award,
such person is an Eligible Person or has received an offer of employment from
the Company, provided, however,
that Awards granted to a person who has received an offer of employment will
terminate and be forfeited without consideration if the employment offer is not
accepted within such time as may be specified by the Company.  Status as an Eligible Person will not be
construed as a commitment that any Award will be granted under this Plan to an
Eligible Person or to Eligible Persons generally.


 


(b)                                 Eligibility
to Receive Incentive Stock Options.  Incentive Stock Options may be granted only to
Eligible Persons meeting the employment requirements of Section 422 of the
IRC.


 





















 


(c)                                  Awards
to Foreign Nationals. 
Notwithstanding anything to the contrary herein, the Administrator may,
in order to fulfill the purposes of this Plan, modify grants of Awards to
Recipients who are foreign nationals or employed outside of the United States
to recognize differences in applicable law, tax policy or local custom.


 


5.2         Award
Documents.


 


Each Award must be
evidenced by an agreement duly executed on behalf of the Company and by the
Recipient or, in the Administrator’s discretion, a confirming memorandum issued
by the Company to the Recipient, setting forth such terms and conditions
applicable to the Award as the Administrator may in its discretion
determine.  Awards will not be deemed
made or binding upon the Company, and Recipients will have no rights thereto,
until such an agreement is entered into between the Company and the Recipient or
such a memorandum is delivered by the Company to the Recipient, but an Award
may have an effective date prior to the date of such an agreement or
memorandum.  Award Documents may be (but
need not be) identical and must comply with and be subject to the terms and
conditions of this Plan, a copy of which will be provided to each Recipient and
incorporated by reference into each Award Document.  Any Award Document may contain such other
terms, provisions and conditions not inconsistent with this Plan as may be
determined by the Administrator.  In case
of any conflict between this Plan and any Award Document, this Plan shall
control.


 


5.3         Payment
for Awards.


 


(a)                                  Payment
of Exercise Price.  The exercise
price or other payment for an Award is payable upon the exercise of a Stock
Option or upon other purchase of shares pursuant to an Award granted hereunder
by delivery of legal tender of the United States or payment of such other
consideration as the Administrator may from time to time deem acceptable in any
particular instance; provided, however,
that the Administrator may, in the exercise of its discretion, allow exercise
of an Award in a broker-assisted or similar transaction in which the exercise
price is not received by the Company until promptly after exercise.


 


(b)                                 No
Company Loans.  The Company may not
assist any person to whom an Award is granted (including, without limitation,
any officer or director of the Company) in the payment of the purchase price or
other amounts payable in connection with the receipt or exercise of that Award
by lending such amounts to such person.


 


(c)                                  Cashless
Exercise.  If permitted in any case
by the Administrator in its discretion, the exercise price for Awards may be
paid by capital stock of the Company delivered in transfer to the Company by or
on behalf of the person exercising the Award and duly endorsed in blank or
accompanied by stock powers duly endorsed in blank, with signatures guaranteed
in accordance with the Exchange Act if required by the Administrator; or
retained by the Company from the stock otherwise issuable upon exercise or
surrender of vested and/or exercisable Awards or other equity awards previously
granted to the Recipient and being exercised (if applicable) (in either case
valued at Fair Market Value as of the exercise date); or such other consideration
as the Administrator may from time to time in the exercise of its discretion
deem acceptable in any particular instance.


 


(d)                                 No
Precedent.  Recipients will have no
rights to the exercise techniques described in Section 5.3(c), and
the Company may offer or permit such techniques on an ad hoc
basis to any Recipient without incurring any obligation to offer or permit such
assistance or techniques on other occasions or to other Recipients.


 


5.4         No
Employment Rights.


 


Nothing contained in this
Plan (or in Award Documents or in any other documents related to this Plan or
to Awards) will confer upon any Eligible Person or Recipient any right to
continue in the employ of or engagement by the Company or any Affiliated Entity
or constitute any contract or agreement of employment or engagement, or
interfere in any way with the right of the Company or any Affiliated Entity to
reduce such person’s compensation or other benefits or to terminate the
employment or engagement of such Eligible Person or Recipient, with or without
cause.  Except as expressly provided in
this Plan or in any statement evidencing the grant of an Award, the Company has
the right to deal with each Recipient in the same manner as if this Plan and
any such statement evidencing the grant of an Award did not exist, including,
without limitation, with respect to all matters related to the hiring,
discharge, compensation and conditions of the employment or engagement of the
Recipient.  Unless otherwise set forth in
a written agreement binding upon the Company or an Affiliated Entity, all
employees of the Company or an Affiliated Entity are “at will” employees whose
employment may be terminated by the Company or the Affiliated Entity at any
time for any reason or no reason, without payment or penalty of any kind.  Any question(s) as to whether and when there
has been a termination of a Recipient’s employment or engagement, the reason
(if any) for such termination, and/or the consequences thereof under the terms
of this Plan or any statement evidencing the grant of an Award pursuant to this
Plan will be determined by the Administrator and the Administrator’s
determination thereof will be final and binding.


 





















 


5.5         Restrictions
Under Applicable Laws and Regulations.


 


(a)                                  Government
Approvals.  All Awards will be
subject to the requirement that, if at any time the Company determines, in its
discretion, that the listing, registration or qualification of the securities
subject to Awards granted under this Plan upon any securities exchange or
interdealer quotation system or under any federal, state or foreign law, or the
consent or approval of any governmental or regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such an
Award or the issuance, if any, or purchase of shares in connection therewith,
such Award may not be exercised as a whole or in part unless and until such
listing, registration, qualification, consent or approval has been effected or
obtained free of any conditions not acceptable to the Company.  During the term of this Plan, the Company
will use its reasonable efforts to seek to obtain from the appropriate
governmental and regulatory agencies any requisite qualifications, consents,
approvals or authorizations in order to issue and sell such number of shares of
its Common Stock as is sufficient to satisfy the requirements of this
Plan.  The inability of the Company to
obtain any such qualifications, consents, approvals or authorizations will
relieve the Company of any liability in respect of the nonissuance or sale of
such stock as to which such qualifications, consents, approvals or
authorizations pertain.


 


(b)                                 No
Registration Obligation; Recipient Representations.  The Company will be under no obligation to
register or qualify the issuance of Awards or underlying securities under the
Securities Act or applicable state securities laws.  Unless the issuance of Awards and underlying
securities have been registered under the Securities Act and qualified or registered
under applicable state securities laws, the Company shall be under no
obligation to issue any Awards or underlying securities unless the Awards and
underlying securities may be issued pursuant to applicable exemptions from such
registration or qualification requirements. 
In connection with any such exempt issuance, the Administrator may
require the Recipient to provide a written representation and undertaking to
the Company, satisfactory in form and scope to the Company and upon which the
Company may reasonably rely, that such Recipient is acquiring such Awards and
underlying securities for such Recipient’s own account as an investment and not
with a view to, or for sale in connection with, the distribution of any such
securities, and that such person will make no transfer of the same except in
compliance with any rules and regulations in force at the time of such
transfer under the Securities Act and other applicable law, and that if
securities are issued without registration, a legend to this effect (together
with any other legends deemed appropriate by the Administrator) may be endorsed
upon the securities so issued, and to the effect of any additional
representations that are appropriate in light of applicable securities laws and
rules.  The Company may also order its
transfer agent to stop transfers of such shares.  The Administrator may also require the
Recipient to provide the Company such information and other documents as the
Administrator may request in order to satisfy the Administrator as to the
investment sophistication and experience of the Recipient and as to any other
conditions for compliance with any such exemptions from registration or
qualification.


 


5.6         Additional
Conditions.


 


Any Award may be subject
to such provisions (whether or not applicable to any other Award or Recipient)
as the Administrator deems appropriate, including without limitation provisions
for the forfeiture of or restrictions on resale or other disposition of
securities of the Company acquired under this Plan, provisions giving the
Company the right to repurchase securities of the Company acquired under this
Plan in the event the Recipient leaves the Company for any reason or elects to
effect any disposition thereof, and provisions to comply with federal and state
securities laws.


 


5.7         No
Privileges Regarding Stock Ownership or Specific Assets. 


 


Except as otherwise set
forth herein, a Recipient or a permitted transferee of an Award will have no
rights as a stockholder with respect to any shares issuable or issued in
connection with the Award until the Recipient has delivered to the Company all
amounts payable and performed all obligations required to be performed in
connection with the exercise of the Award and the Company has issued such
shares.  No person will have any right,
title or interest in any fund or in any specific asset (including shares of
capital stock) of the Company by reason of any Award granted hereunder.  Neither this Plan (or any documents related
hereto) nor any action taken pursuant hereto is to be construed to create a
trust of any kind or a fiduciary relationship between the Company and any
person.  To the extent that any person
acquires a right to receive an Award hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Company.


 


5.8         Nonassignability.


 


No Award is assignable or
transferable except:  (a) by will or
by the laws of descent and distribution; or (b) subject to the final
sentence of this Section 5.8, upon dissolution of marriage pursuant
to a qualified domestic relations order or, in the discretion of the
Administrator on a case-by-case basis and under circumstances that would not
adversely affect the interests of the Company, transfers for estate planning
purposes or pursuant to a nominal transfer that does not result in a change in beneficial
ownership.  Subject to the final sentence
of this Section 5.8, during the lifetime of a Recipient, an 


 





















 


Award granted to such
person will be exercisable only by the Recipient (or the Recipient’s permitted
transferee) or such person’s guardian or legal representative.  Notwithstanding the foregoing, Stock Options
intended to be treated as Incentive Stock Options (or other Awards subject to
transfer restrictions under the IRC) (i) may not be assigned or
transferred in violation of Section 422(b)(5) of the IRC or the
regulations thereunder, and nothing herein is intended to allow such assignment
or transfer; and (ii) will be exercisable during a Recipient’s lifetime
only by the Recipient.


 


5.9         Information
to Recipients.


 


(a)                                  Provision
of Information.  The Administrator in its sole discretion may
determine what, if any, financial and other information is to be provided to
Recipients and when such financial and other information is to be provided
after giving consideration to applicable federal and state laws, rules and
regulations, including, without limitation, applicable federal and state
securities laws, rules and regulations.


 


(b)                                 Confidentiality.  The furnishing of financial and other
information that is confidential to the Company is subject to the Recipient’s
agreement to maintain the confidentiality of such financial and other
information, and not to disclose or use the information for any purpose other
than evaluating the Recipient’s position under this Plan.  The Administrator may impose other
restrictions on the access to and use of such confidential information and may
require a Recipient to acknowledge the Recipient’s obligations under this Section 5.9(b) (which
acknowledgment is not to be a condition to Recipient’s obligations under this Section 5.9(b)).


 


5.10             Withholding
Taxes.


 


Whenever the granting,
vesting or exercise of any Award, or the issuance of any Common Stock or other
securities upon exercise of any Award or transfer thereof, gives rise to tax or
tax withholding liabilities or obligations, the Administrator will have the
right as a condition thereto to require the Recipient to remit to the Company
an amount sufficient to satisfy any federal, state and local withholding tax
requirements arising in connection therewith. 
The Administrator may, in the exercise of its discretion, allow
satisfaction of tax withholding requirements by accepting delivery of stock of
the Company or by withholding a portion of the stock otherwise issuable in
connection with an Award, in each case valued at Fair Market Value as of the
date of such delivery or withholding, as the case may be.


 


5.11             Legends
on Awards and Stock Certificates. 


 


Each Award Document and
each certificate representing securities acquired upon vesting or exercise of
an Award must be endorsed with all legends, if any, required by applicable
federal and state securities and other laws to be placed on the Award Document
and/or the certificate.  The
determination of which legends, if any, will be placed upon Award Documents or
the certificates will be made by the Administrator in its discretion and such
decision will be final and binding.


 


5.12             Effect
of Termination of Employment on Awards.


 


(a)                                  Termination
of Vesting.  Notwithstanding anything
to the contrary herein, but subject to Section 5.12(b), Awards will
be exercisable by a Recipient (or the Recipient’s successor in interest)
following such Recipient’s termination of employment or service only to the
extent that installments thereof had become exercisable on or
prior to the date of such termination.


 


(b)                                 Alteration
of Vesting and Exercise Periods.  Subject to Section 6.1(c) and
notwithstanding anything to the contrary herein, the Administrator may in its
discretion (i) designate shorter or longer periods following a Recipient’s
termination of employment or service during which Awards may vest or be
exercised; provided, however, that any shorter
periods determined by the Administrator will be effective only if provided for
in this Plan or the instrument that evidences the grant to the Recipient of the
affected Award or if such shorter period is agreed to in writing by the
Recipient, and (ii) accelerate the vesting of all or any portion of any
Awards by increasing the number of shares purchasable at any time, without
increasing the total number of shares subject to such Awards.


 


(c)                                  Leave
of Absence.  In the case of any
employee on an approved leave of absence, the Administrator may make such
provision respecting continuance of Awards granted to such employee as the
Administrator in its discretion deems appropriate, except that in no event will
an Award be exercisable after the date such Award would expire in accordance
with its terms had the Recipient remained continuously employed.


 


(d)                                 General
Cessation.  Except as otherwise set
forth in this Plan or an Award Document or as determined by the Administrator
in its discretion, all Awards granted to a Recipient, and all of such Recipient’s
rights thereunder, will terminate upon termination for any reason of such
Recipient’s employment or service with the Company or any Affiliated Entity (or
cessation of any other service relationship between the Recipient and the
Company or any Affiliated Entity in place as of the date the Award was
granted).


 





















 


5.13             Lock-Up
Agreements.


 


Each Recipient agrees as
a condition to receipt of an Award that, in connection with any public offering
by the Company of its equity securities and upon the request of the Company and
the principal underwriter (if any) in such public offering, any shares of
Common Stock acquired or that may be acquired upon exercise or vesting of an
Award may not be sold, offered for sale, encumbered, or otherwise disposed of
or subjected to any transaction that will involve any sales of securities of
the Company, without the prior written consent of the Company or such
underwriter, as the case may be, for a period of not more than 180 days after
the effective date of the registration statement for such public offering.  Each Recipient will, if requested by the
Company or the principal underwriter, enter into a separate agreement to the
effect of this Section 5.13.


 


5.14             Restrictions
on Common Stock and Other Securities. 


 


Common Stock or other
securities of the Company issued or issuable in connection with any Award will
be subject to all of the restrictions imposed under this Plan upon Common Stock
issuable or issued upon exercise of Stock Options, except as otherwise
determined by the Administrator.


 


5.15             Limits
on Awards to Eligible Persons.


 


Notwithstanding any other
provision of this Plan, no one Eligible Person shall be granted Awards with
respect to more than 100,000 shares of Common Stock in any one calendar year.
The limitation set forth in this Section 5.15 will be subject to
adjustment as provided in Section 3.4 or under Section 7.1,
but only to the extent such adjustment would not affect the status of
compensation attributable to Awards as Performance-Based Compensation.


 


5.16             No
Option Repricing.


 


Without the approval of
the stockholders of the Company, the Company shall not reprice any Stock
Options.  For purposes of this Plan, the
term “reprice” shall include (i) lowering the exercise price of previously
awarded Stock Options within the meaning of Item 402(i) under Securities
and Exchange Commission Regulation S-K, and (ii) canceling previously
awarded Stock Options and granting in their place Stock Options having a lower
exercise price.


 





















 


ARTICLE VI

AWARDS


 


6.1         Stock
Options.


 


(a)                                  Nature
of Stock Options.  Stock Options may
be Incentive Stock Options or Nonqualified Stock Options.


 


(b)                                 Option
Exercise Price.  The exercise price
for each Stock Option will be determined by the Administrator as of the date
such Stock Option is granted; provided that, Stock Options shall not be granted
with exercise prices less than the fair market value of Common Stock on date of
grant.


 


(c)                                  Option
Period and Vesting.  Stock Options granted hereunder will vest and
may be exercised as determined by the Administrator; provided, however, that (i) no Stock Option shall first
become exercisable within one year from its date of grant, other than upon a
Change in Control as set forth in Section 7.1, and (ii) any
exercise of Stock Options after termination of the Recipient’s employment or
service shall be subject to Section 5.12 and Section 6.1(e).  Each Stock Option granted hereunder and all
rights or obligations thereunder shall expire on such date as may be determined
by the Administrator, but not later than 10 years after the date the Stock
Option is granted and may be subject to earlier termination as provided herein
or in the Award Document.  Except as
otherwise provided herein, a Stock Option will become exercisable, as a whole
or in part, on the date or dates specified by the Administrator and thereafter
will remain exercisable until the exercise, expiration or earlier termination
of the Stock Option.


 


(d)                                 Exercise
of Stock Options.  The exercise price for Stock
Options will be paid as set forth in Section 5.3.  No Stock Option will be exercisable except in
respect of whole shares, and fractional share interests shall be
disregarded.  Not fewer than 100 shares
of Common Stock (or such other amount as may be set forth in the applicable
Award Document) may be purchased at one time and Stock Options must be
exercised in multiples of 100 unless the number purchased is the total number
of shares for which the Stock Option is exercisable at the time of
exercise.  A Stock Option will be deemed
to be exercised when the Secretary or other designated official of the Company
receives written notice of such exercise from the Recipient in such form as the
Company may specify from time to time, together with payment of the exercise
price in accordance with Section 5.3 and any amounts required under
Section 5.10 or, with permission of the Administrator, arrangement
for such payment.  Notwithstanding any
other provision of this Plan, the Administrator may impose, by rule and/or
in Award Documents, such conditions upon the exercise of Stock Options
(including, without limitation, conditions limiting the time of exercise to
specified periods) as may be required to satisfy applicable regulatory
requirements, including, without limitation, Rule 16b-3 and Rule 10b-5
under the Exchange Act, and any amounts required under Section 5.10,
or any applicable section of or regulation under the IRC.


 


(e)                                  Termination
of Employment.


 


(i)                                     Termination
for Just Cause.  Subject to Section 5.12
and except as otherwise provided in a written agreement between the Company or
an Affiliated Entity and the Recipient, which may be entered into at any time before
or after termination of employment or service, in the event of a Just Cause
Dismissal of a Recipient all of the Recipient’s unexercised Stock Options,
whether or not vested, will expire and become unexercisable as of the date of
such Just Cause Dismissal.


 


(ii)                                  Termination
Other Than for Just Cause.  Subject
to Section 5.12 and except as otherwise provided in a written
agreement between the Company or an Affiliated Entity and the Recipient, which
may be entered into at any time before or after termination of employment or
service, if a Recipient’s employment or service with the Company or any
Affiliated Entity terminates for:


 


(A)                              any
reason other than for Just Cause Dismissal, death, Permanent Disability or
normal retirement, the Recipient’s Stock Options, to the extent unvested, will
expire and become unexercisable as of the date of termination, and to the
extent vested, will expire and become unexercisable as of the earlier of:  (1) the date such Stock Options would
expire in accordance with their terms had the Recipient remained employed; and (2) 90
days after the date of termination of employment or service.


 


(B)                                death,
Permanent Disability or normal retirement, the Recipient’s unexercised Stock
Options, to the extent unvested, will expire and become unexercisable as of the
date of termination, and to the extent vested, will expire and become
unexercisable as of the earlier of:  (1) the
date such Stock Options would expire in accordance with their terms had the
Recipient remained employed; and (2) two years after the date of
termination of employment or service.


 


(f)                                    Special
Provisions Regarding Incentive Stock Options.  Notwithstanding anything herein to the
contrary,


 





















 


(i)                                     The
exercise price and vesting period of any Stock Option intended to be treated as
an Incentive Stock Option must comply with the provisions of Section 422
of the IRC and the regulations thereunder. 
As of the Effective Date, such provisions require, among other matters,
that:  (A) the exercise price must
not be less than the Fair Market Value of the underlying stock as of the date
the Incentive Stock Option is granted, and not less than 110% of the Fair
Market Value as of such date in the case of a grant to a Significant
Stockholder; and (B) that the Incentive Stock Option not be exercisable
after the expiration of 10 years from the date of grant or the expiration of 5
years from the date of grant in the case of an Incentive Stock Option granted
to a Significant Stockholder.


 


(ii)                                  If
for any reason other than death or Permanent Disability, the employment or
service of a Recipient of Incentive Stock Options with the Company or any
Affiliated Entity terminates, such Recipient’s Incentive Stock Options, whether
or not vested, shall cease to qualify as such and will be treated as Nonqualified
Stock Options as of the earlier of:  (A) the
date such Incentive Stock Options would expire in accordance with their terms
had the Recipient remained employed with the Company or any Affiliated Entity;
and (B) three months after the date of termination of the Recipient’s
employment or service.


 


(iii)                               If
as a result of death or Permanent Disability, the employment or service of a
Recipient of Incentive Stock Options with the Company or any Affiliated Entity
terminates, such Recipient’s Incentive Stock Options, whether or not vested,
shall cease to qualify as such and will be treated as Nonqualified Stock
Options as of the earlier of:  (A) the
date such Incentive Stock Options would expire in accordance with their terms
had the Recipient remained employed with the Company or any Affiliated Entity;
and (B) one year after the date of termination of the Recipient’s
employment or service.


 


(iv)                              The
aggregate Fair Market Value (determined as of the respective date or dates of
grant) of the Common Stock for which one or more Incentive Stock Options
granted to any Recipient under this Plan (or any other plan of the Company or
of any Parent Corporation or Subsidiary Corporation) may for the first time
become exercisable as Incentive Stock Options under such plans during any one
calendar year may not exceed $100,000.


 


(v)                                 Any
Stock Options granted as Incentive Stock Options pursuant to this Plan that for
any reason fail or cease to qualify as such will be treated as Nonqualified
Stock Options.  If the limit described in
Section 6.1(f)(iv) is exceeded, the earliest granted Stock
Options will be treated as Incentive Stock Options, up to such limit.


 


6.2         Performance
Awards.


 


(a)                                  Grant
of Performance Award.  The Administrator will determine in its
discretion the pre-established, objective performance goals (which need not be
identical and may be established on an individual or group basis) governing
Performance Awards, the terms thereof, and the form and time of payment of
Performance Awards.


 


(b)                                 Payment
of Award.  Upon satisfaction of the conditions applicable
to a Performance Award, payment will be made to the Recipient in cash, in
shares of Common Stock valued at Fair Market Value as of the date payment is
due, or in a combination of Common Stock and cash, as the Administrator in its
discretion may determine.


 


(c)                                  Maximum
Amount of Compensation.  The maximum
amount payable pursuant to that portion of a Performance Award granted for any
calendar year to any Recipient that is intended to satisfy the requirements for
Performance-Based Compensation shall not exceed $1,000,000.


 


6.3         Restricted
Stock.


(a)                                  Award
of Restricted Stock.  The Administrator will determine the Purchase
Price (if any), the terms of payment of the Purchase Price, the restrictions
upon the Restricted Stock, and when such restrictions will lapse.


 


(b)                                 Requirements
of Restricted Stock.  All shares of
Restricted Stock granted or sold pursuant to this Plan will be subject to the
following conditions:


 


(i)                                     No
Transfer.  The shares may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of,
alienated or encumbered until the restrictions are removed or expire;


 


(ii)                                  Certificates.  The Administrator may require that the
certificates representing Restricted Stock granted or sold to a Recipient
remain in the physical custody of an escrow holder or the Company until all
restrictions are removed or expire;


 


(iii)                               Restrictive
Legends.  Each certificate representing Restricted Stock
granted or sold to a Recipient pursuant to this Plan will bear such legend or
legends making reference to the restrictions imposed upon such Restricted Stock
as the Administrator in its discretion deems necessary or appropriate to
enforce such restrictions; and


 





















 


(iv)                              Other
Restrictions.  The Administrator may impose
such other conditions on Restricted Stock as the Administrator may deem
advisable, including, without limitation, restrictions under the Securities
Act, under the Exchange Act, under the requirements of any stock exchange or
interdealer quotation system upon which such Restricted Stock or other
securities of the Company are then listed or traded and under any blue sky or
other securities laws applicable to such shares.


 


(v)                                 Minimum
Restriction Periods.  No Restricted
Stock shall first be transferable within one year from date of grant.


 


(c)                                  Lapse
of Restrictions.  The restrictions
imposed upon Restricted Stock will lapse in accordance with such terms or other
conditions as are determined by the Administrator.


 


(d)                                 Rights
of Recipient.  Subject to the provisions
of Section 6.3(b) and any restrictions imposed upon the
Restricted Stock, the Recipient will have all rights of a stockholder with
respect to the Restricted Stock granted or sold to such Recipient under this
Plan, including, without limitation, the right to vote the shares and receive
all dividends and other distributions paid or made with respect thereto.


 


(e)                                  Termination
of Employment.  Unless the Administrator in its discretion
determines otherwise, if a Recipient’s employment or service with the Company
or any Affiliated Entity terminates for any reason, all of the Recipient’s
Restricted Stock remaining subject to restrictions on the date of such
termination of employment or service will be repurchased by the Company at the
Purchase Price (if any) paid by the Recipient to the Company, without interest
or premium, and otherwise returned to the Company without consideration.


 


6.4         Stock
Appreciation Rights.


 


(a)                                  Granting
of Stock Appreciation Rights.  The
Administrator may at any time and from time to time approve the grant to
Eligible Persons of Stock Appreciation Rights, related or unrelated to Stock
Options.


 


(b)                                 Stock
Appreciation Rights Related to Options.


 


(i)                                     A
Stock Appreciation Right related to a Stock Option will entitle the holder of
the related Stock Option, upon exercise of the Stock Appreciation Right, to
surrender such Stock Option, or any portion thereof to the extent previously
vested but unexercised, with respect to the number of shares as to which such
Stock Appreciation Right is exercised, and to receive payment of an amount
computed pursuant to Section 6.4(b)(iii).  Such Stock Option will, to the extent
surrendered, then cease to be exercisable.


 


(ii)                                  A
Stock Appreciation Right related to a Stock Option hereunder will be exercisable
at such time or times, and only to the extent that, the related Stock Option is
exercisable, and will not be transferable except to the extent that such
related Stock Option may be transferable (and under the same conditions), will
expire no later than the expiration of the related Stock Option, and may be
exercised only when the market price of the Common Stock subject to the related
Stock Option exceeds the exercise price of the Stock Option.


 


(iii)                               Upon
the exercise of a Stock Appreciation Right related to a Stock Option, the
Recipient will be entitled to receive payment of an amount determined by
multiplying: (A) the difference obtained by subtracting the exercise price
of a share of Common Stock specified in the
related Stock Option from the Fair Market Value of a share of Common Stock on
the date of exercise of such Stock Appreciation Right (or, in the case of a
Stock Appreciation Right related to a Nonqualified Stock Option, as of such
other date or as of the occurrence of such event as may have been specified in
the instrument evidencing the grant of the Stock Appreciation Right), by (B) the
number of shares as to which such Stock Appreciation Right is exercised.


 


(c)                                  Stock
Appreciation Rights Unrelated to Options.  The Administrator may grant Stock Appreciation
Rights unrelated to Stock Options.  Section 6.4(b)(iii) will
govern the amount payable at exercise under such Stock Appreciation Right,
except that in lieu of an option exercise price the initial base amount
specified in the Award shall be used.


 


(d)                                 Limits.  Notwithstanding the foregoing, the
Administrator, in its discretion, may place a dollar limitation on the maximum
amount that will be payable upon the exercise of a Stock Appreciation Right.


 


(e)                                  Payments.  Payment of the amount determined under the
foregoing provisions may be made solely in whole shares of Common Stock valued
at their Fair Market Value on the date of exercise of the Stock Appreciation
Right or, alternatively, at the discretion of the Administrator, in cash or in
a combination of cash and shares of 


 





















 


Common
Stock as the Administrator deems advisable. 
The Administrator has full discretion to determine the form in which
payment of a Stock Appreciation Right will be made and to consent to or
disapprove the election of a Recipient to receive cash in full or partial
settlement of a Stock Appreciation Right. 
If the Administrator decides to make full payment in shares of Common
Stock, and the amount payable results in a fractional share, payment for the
fractional share will be made in cash.


 


6.5         Stock
Payments.


 


The Administrator may
approve Stock Payments to any Eligible Person on such terms and conditions as
the Administrator may determine; provided that, no individual Stock Payment
shall exceed five percent (5%) of the shares reserved for issuance under the
Plan.  Stock Payments will replace cash
compensation at the Fair Market Value of the Common Stock on the date payment
is due.


 


6.6         Dividend
Equivalents.


 


The Administrator may
grant Dividend Equivalents to any Recipient who has received a Stock Option,
Stock Appreciation Right or other Award denominated in shares of Common
Stock.  Dividend Equivalents may be paid
in cash, Common Stock or other Awards; the amount of Dividend Equivalents paid
other than in cash will be determined by the Administrator by application of
such formula as the Administrator may deem appropriate to translate the cash
value of dividends paid to the alternative form of payment of the Dividend
Equivalent.  Dividend Equivalents will be
computed as of each dividend record date and will be payable to Recipients
thereof at such time as the Administrator may determine.  Notwithstanding the foregoing, if it is
intended that an Award qualify as Performance-Based Compensation, and the
amount of compensation the Recipient could receive under the Award is based
solely on an increase in value of the underlying stock after the date of the
grant or award, then the payment of any Dividend Equivalents related to the
Award shall not be made contingent on the exercise of the Award.


 


6.7         Stock
Bonuses.


 


The Administrator may
issue Stock Bonuses to Eligible Persons on such terms and conditions as the
Administrator may determine.  In no event
shall any individual grant hereunder exceed five percent (5%) of the shares reserved
for issuance under the Plan.


 


6.8         Stock
Sales.


 


The Administrator may
sell to Eligible Persons shares of Common Stock on such terms and conditions as
the Administrator may determine.


 


6.9         Phantom
Stock.


 


The Administrator may
grant Awards of Phantom Stock to Eligible Persons.  Phantom Stock is a cash payment measured by
the Fair Market Value of a specified number of shares of Common Stock on a
specified date, or measured by the excess of such Fair Market Value over a
specified minimum, which may but need not include a Dividend Equivalent.


 


6.10             Other
Stock-Based Benefits.


 


The Administrator is
authorized to grant Other Stock-Based Benefits. 
Other Stock-Based Benefits are any arrangements granted under this Plan
not otherwise described above that:  (a) by
their terms might involve the issuance or sale of Common Stock or other
securities of the Company; or (b) involve a benefit that is measured, as a
whole or in part, by the value, appreciation, dividend yield or other features
attributable to a specified number of shares of Common Stock or other
securities of the Company.  In no event
shall any individual grant hereunder exceed five percent (5%) of the shares
reserved for issuance under the Plan.


 


ARTICLE VII

CHANGE IN CONTROL


 


7.1         Provision
for Awards Upon Change in Control.


 


Subject to any required
action by stockholders, (i) the maximum number and kind of shares subject
to this Plan as provided in Section 3.1; (ii) the number and
kind of shares or other securities subject to then outstanding Awards; and (iii) the
price for each share or other unit of any other securities subject to, or
measurement criteria applicable to, then outstanding Awards 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
Company.  Subject to any required action
by stockholders, if the Corporation is the surviving corporation in any merger
or consolidation, each outstanding Award shall pertain and apply to the
securities to which a holder of the number of shares subject to the Award would
have been entitled.  In the event of a
Change in Control, either (a) the date of exercisability of each and every
outstanding Award shall automatically accelerate to a date and time immediately
prior to such Change in Control, or (b) Awards will be canceled and
automatically converted into the right to receive the securities, cash or other
consideration that a holder of the shares underlying such Awards would have
been entitled to receive upon consummation of such Change in Control had such
shares been issued and outstanding immediately prior to the effective date and
time of the Change in Control (net of the appropriate option exercise
prices).  To the extent that the
foregoing adjustments relate to securities of the Company, such adjustments
shall be made by the Administrator whose determination shall be conclusive and
binding on all persons. Except as expressly provided in this Section 7.1,
the Recipient 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 Company 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 terms of existing Awards. The grant of an Award pursuant to the
Plan shall not affect in any way the right or power to the Company 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.


 


ARTICLE VIII

DEFINITIONS


 


Capitalized terms used in
this Plan and not otherwise defined have the meanings set forth below:


“Administrator” means the Board as long as no
Compensation Committee has been appointed and is in effect and also means the
Compensation Committee to the extent that the Board has delegated authority
thereto.


“Affiliated
Entity” means any Parent Corporation of the Company or
Subsidiary Corporation of the Company or any other entity controlling,
controlled by, or under common control with the Company.


“Applicable
Dividend Period” means (i) the period between the date a
Dividend Equivalent is granted and the date the related Stock Option, SAR, or
other Award is exercised, terminates, or is converted to Common Stock, or (ii) such
other time as the Administrator may specify in the written instrument
evidencing the grant of the Dividend Equivalent.


“Award”
means any Stock Option, Performance Award, Restricted Stock, Stock Appreciation
Right, Stock Payment, Stock Bonus, Stock Sale, Phantom Stock, Dividend
Equivalent, or Other Stock-Based Benefit granted or sold to an Eligible Person
under this Plan, or any similar award granted by the Company prior to the
Effective Date and outstanding as of the Effective Date that is governed by
this Plan.


“Award
Document” means the agreement or confirming memorandum
setting forth the terms and conditions of an Award.


“Board”
means the Board of Directors of the Company.


“Change
in Control” of the Company shall be deemed to have occurred
if (i) there shall have be consummated (x) any consolidation or merger of
the Company in which the Company is not the continuing or surviving corporation
or pursuant to which shares of the Common Stock are converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the 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 Company, or (ii) the
stockholders of the Company shall approve any plan or proposal for the
liquidation or dissolution of the Company, or (iii) any person (as such
term is used in Sections 13(d) and 14(d)(2) of 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 outstanding Common Stock (excluding the
Company’s 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 shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by the
Company’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.


 “Common
Stock” means the common stock of the Company, $0.01 par value per
share, as constituted on the Effective Date, and as thereafter adjusted under Section 3.4.


“Company”
means Summa Industries, a Delaware corporation.


“Compensation
Committee” means the compensation committee appointed by the
Board to administer this Plan pursuant to Section 4.1.


“Dividend
Equivalent” means a right granted by the Company under Section 6.6
to a holder of a Stock Option, Stock Appreciation Right or other Award
denominated in shares of Common Stock to receive from the Company during the
Applicable Dividend Period payments equivalent to the amount of dividends
payable to holders of the number of shares of Common Stock underlying such
Stock Option, Stock Appreciation Right, or other Award.


“Effective
Date” means January 24, 2005, the date this Plan was
approved and adopted by the Company’s stockholders.


 





















 


“Eligible
Person” includes directors, including Non-Employee Directors,
officers, employees, consultants and advisors of the Company or of any Affiliated
Entity; provided, however, that
in order to be Eligible Persons, consultants and advisors must render bona fide services to the Company or any
Affiliated Entity that are not in connection with capital-raising.


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


“Expiration
Date” means the 10th anniversary of the Effective Date.


“Fair
Market Value” of a share of the Company’s capital stock as of
a particular date means: (i) if the stock is listed on an established
stock exchange or exchanges (including for this purpose, the Nasdaq National
Market), the closing sale price of the stock for such date on the primary
exchange upon which the stock trades, as measured by volume, as published in The Wall Street Journal, or, if no sale price was quoted for
such date, then as of the next preceding date on which such a sale price was
quoted; or (ii) if the stock is not then listed on an exchange or the
Nasdaq National Market, the average of the closing bid and asked prices per
share for the stock in the over-the-counter market on such date (in the case of
(i) or (ii), subject to adjustment as and if necessary and appropriate to
set an exercise price not less than 100% of the fair market value of the stock
on the date an Award is granted); or (iii) if the stock is not then listed
on an exchange or quoted in the over-the-counter market, an amount determined
in good faith by the Administrator, provided, however,
that (A) when appropriate, the Administrator in determining Fair Market
Value of capital stock of the Company may take into account such other factors
as it may deem appropriate under the circumstances, and (B) if the stock
is traded on the Nasdaq SmallCap Market and both sales prices and bid and asked
prices are quoted or available, the Administrator may elect to determine Fair
Market Value under either clause (i) or (ii) above.  Notwithstanding the foregoing, the Fair
Market Value of capital stock for purposes of grants of Incentive Stock Options
must be determined in compliance with applicable provisions of the IRC.  The Fair Market Value of rights or property
other than capital stock of the Company means the fair market value thereof as
determined by the Administrator on the basis of such factors as it may deem
appropriate.


“Incentive
Stock Option” means a Stock Option that qualifies as an
incentive stock option under Section 422 of the IRC, or any successor
statute thereto.


“IRC”
means the Internal Revenue Code of 1986, as amended.


“Just
Cause Dismissal” means a termination of a Recipient’s employment
for any of the following reasons:  (i) the
Recipient violates any reasonable rule or regulation of the Board, the
Company’s President or Chief Executive Officer or the Recipient’s superiors
that results in damage to the Company or any Affiliated Entity or which, after
written notice to do so, the Recipient fails to correct within a reasonable
time not exceeding 20 days; (ii) any willful misconduct or gross
negligence by the Recipient in the responsibilities assigned to the Recipient; (iii) any
willful failure to perform the Recipient’s job as required to meet the
objectives of the Company or any Affiliated Entity; (iv) any wrongful
conduct of a Recipient which has an adverse impact on the Company or any
Affiliated Entity or which constitutes a misappropriation of assets of the
Company or any Affiliated Entity; (v) the Recipient’s performing services
for any other person or entity that competes with the Company or any Affiliated
Entity while the Recipient is employed by the Company or any Affiliated Entity
without the written approval of the Chief Executive Officer of the Company; or (vi) any
other conduct that the Administrator reasonably determines in good faith
constitutes Just Cause for Dismissal; provided, however,
that if a Recipient is party to an employment agreement with the Company or any
Affiliated Entity providing for just cause dismissal (or some comparable
concept) of Recipient from Recipient’s employment with the Company or any
Affiliated Entity, “Just Cause Dismissal” for purposes of this Plan will have
the same meaning as ascribed thereto or to such comparable concept in such
employment agreement.


“Non-Employee
Director” means a director of the Company who qualifies as a “Non-Employee
Director” under Rule 16b-3 under the Exchange Act.


“Nonqualified
Stock Option” means a Stock Option that is not an Incentive
Stock Option.


“Other
Stock-Based Benefits” means an Award granted under Section 6.10.


“Parent
Corporation” means any Parent Corporation as defined in Section 424(e) of
the IRC.


“Performance
Award” means an Award under Section 6.2,
payable in cash, Common Stock or a combination thereof, that vests and becomes
payable over a period of time upon attainment of pre-established, objective
performance goals established in connection with the grant of the Award.  For this purpose, a pre-established,
objective performance goal may include one or more of the following performance
criteria:  (a) cash flow, (b) earnings
per share (including earnings before interest, taxes, and amortization), (c) return
on equity, (d) total stockholder return, (e) return on capital, (f) return
on assets or net assets, (g) income or net income, (h) operating
income or net operating income, (i) operating margin, (j) return on
operating revenue, and (k) any other similar performance criteria.


“Performance-Based
Compensation” means performance-based compensation as
described in Section 162(m) of the IRC and the regulations issued
thereunder.  If the amount of
compensation an Eligible Person will receive under any Award is not based
solely on an increase in the value of Common Stock after the date of grant or
award, the Administrator, in order to qualify an Award as performance-based
compensation under Section 162(m) of the IRC, can condition the grant,
award, vesting, or exercisability of such an Award on the attainment of a
pre-established, objective performance goal including, but not limited to,
those pre-established, objective performance goals described in the definition
of Performance Award above.


“Permanent
Disability” means that the Recipient becomes physically or
mentally incapacitated or disabled so that the Recipient is unable to perform
substantially the same services as the Recipient performed prior to incurring
such incapacity or disability (the Company, at its option and expense, being
entitled to retain a physician to confirm the existence of such 


 





















 


incapacity or disability,
and the determination of such physician to be binding upon the Company and the
Recipient), and such incapacity or disability continues for a period of 3
consecutive months or 6 months in any 12-month period or such other period(s)
as may be determined by the Administrator with respect to any Award, provided, however, that for purposes of
determining the period during which an Incentive Stock Option may be exercised
pursuant to Section 6.1(e), Permanent Disability shall mean “permanent
and total disability” as defined in Section 22(e)(3) of the IRC.


“Person”
means any person, entity or group, within the meaning of Section 13(d) or
14(d) of the Exchange Act, but excluding (i) the Company and its
subsidiaries, (ii) any employee stock ownership or other employee benefit
plan maintained by the Company and (iii) an underwriter or underwriting
syndicate that has acquired the Company’s securities solely in connection with
a public offering thereof.


“Phantom
Stock” means an Award granted under Section 6.9.


“Plan”
means this 2005 Equity Incentive Plan of the Company.


“Plan
Term” means the period during which this Plan remains in
effect (commencing the Effective Date and ending on the Expiration Date).


“Purchase
Price” means the purchase price (if any) to be paid by a
Recipient for Restricted Stock as determined by the Administrator (which price
shall be at least equal to the minimum price required under applicable laws and
regulations for the issuance of Common Stock which is nontransferable and
subject to a substantial risk of forfeiture until specific conditions are met).


“Recipient”
means a person who has received an Award.


“Reorganization”
means any merger, consolidation or other reorganization.


“Restricted
Stock” means Common
Stock that is the subject of an Award made under Section 6.3 and
that is nontransferable and subject to a substantial risk of forfeiture until
specific conditions are met, as set forth in this Plan and in any statement
evidencing the grant of such Award.


“Securities
Act” means the Securities Act of 1933, as amended.


“Significant
Stockholder” is an individual who, at the time a Stock Option
is granted to such individual under this Plan, owns common stock representing
more than 10% of the total combined voting power of all classes of stock of the
Company or of any Parent Corporation or Subsidiary Corporation (after
application of the attribution rules set forth in Section 424(d) of
the IRC).


“Stock
Appreciation Right” or “SAR”
means a right granted under Section 6.4 to receive a payment that
is measured with reference to the amount by which the Fair Market Value of a
specified number of shares of Common Stock appreciates from a specified date,
such as the date of grant of the SAR, to the date of exercise.


“Stock
Bonus” means an issuance or delivery of unrestricted or
restricted shares of Common Stock under Section 6.7 as a bonus for
services rendered or for any other valid consideration under applicable law.


“Stock
Option” means a right
to purchase stock of the Company granted under Section 6.1 of this
Plan.


“Stock
Payment” means a payment in shares of the Company’s Common
Stock under Section 6.5 to replace all or any portion of the compensation
or other payment (other than base salary) that would otherwise become payable
to the Recipient in cash.


“Stock
Sale” means a sale of Common Stock to an Eligible Person
under Section 6.8.


“Subsidiary
Corporation” means any Subsidiary Corporation as defined in Section 424(f) of
the IRC.