Exhibit 10.1


 


OPTION AGREEMENT


 


THE BOARD OF DIRECTORS
of Lapolla Industries, Inc. authorized and approved the Equity Incentive Plan ("Plan"). The Plan provides for the grant
of Options to employees, directors and consultants of Lapolla Industries, Inc. (“Company”). Unless otherwise provided
herein all defined terms shall have the respective meanings ascribed to them under the Plan.


 


1.Grant of Option. Pursuant
to authority granted under the Plan, the Administrator responsible for administering the Plan hereby grants to JAY C. NADEL, as
a director of the Company (“Optionee”) and as of JANUARY 16, 2007 ("Grant Date"), the following Option: 450,000.
Each Option permits you to purchase one share of Lapolla Industries, Inc.’s common stock, $.01 par value per share ("Shares").


 


2.Character of Options. Pursuant
to the Plan, Options granted herein may be Incentive Stock Options or Non-Qualified Stock Options, or both. To the extent permitted
under the Plan and by law, such Options shall first be considered Incentive Stock Options.


 


3.Exercise Price. The Exercise
Price for each Non-Qualified Stock Option granted herein is $ .60 per Share, and the exercise price for each Incentive Stock Option
granted herein shall be $ .60 per Share [except that an Incentive Stock Option granted to a Ten Percent Owner shall be $ .66 per
Share].


 


4.Exercisability. The exercisability
of the Options granted hereby is subject to the following performance criteria and restrictions: A description and illustration
is attached hereto as Exhibit 1 and incorporated in its entirety herein by this reference.


 


5.Term of Options. The term
of each Option granted herein shall be for a term of up to five (5) years from the Grant Date, provided, however, that the term
of any Incentive Stock Option granted herein to an Optionee who is at the time of the grant, a Ten Percent Owner, shall not be
exercisable after the expiration of five (5) years from the Grant Date.


 


6.Payment of Exercise Price.
Options represented hereby may be exercised in whole or in part by delivering to the Company your payment of the Exercise Price
of the Option so exercised (i) in cash, by check or cash equivalent, (ii) by tender to the Company of shares of Stock
owned by the Participant having a Fair Market Value not less than the exercise price; (iii) by tender to the Company of a written
consent to accept a reduction in the number of shares of Stock to which the Option relates (“Reduced Number of Shares”),
which Reduced Number of Shares, when ascribed a value, shall be equal to the exercise price of the balance of shares of Stock covered
by the Option; (iv) by delivery of a properly executed notice of exercise together with irrevocable instructions to a broker providing
for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon
the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T
as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a "Cashless Exercise"),
(v) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable
law, or (vi) by any combination thereof. The Company reserves, at any and all times, the right, in the Company's sole and
absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means
of a Cashless Exercise.


 


7.Limits on Transfer of Options.
The Option granted herein shall not be transferable by you otherwise than by will or by the laws of descent and distribution, except
for gifts to family members subject to any specific limitation concerning such gift by the Administrator in its discretion; provided,
however, that you may designate a beneficiary or beneficiaries to exercise your rights and receive any Shares purchased with respect
to any Option upon your death. Each Option shall be exercisable during your lifetime only by you or, if permissible under applicable
law, by your legal representative. No Option herein granted or Shares underlying any Option shall be pledged, alienated, attached
or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Company. Notwithstanding the foregoing, to the extent permitted by the Administrator, in its discretion, an Option
shall be assignable or transferable subject to the applicable limitations, if any, described in the General Instructions to Form S-8
Registration Statement under the Securities Act of 1933, as amended.











     

     

    

 


 


8.Termination of Employment.
If your employment is terminated with the Company, the Option and any unexercised portion shall be subject to the provisions below:


 


(a)Upon the termination of your employment
with the Company, to the extent not theretofore exercised, your Option shall continue to be valid; provided, however, that: (i)
If the Participant shall die while in the employ of the Company or during the one (1) year period, whichever is applicable, specified
in clause (ii) below and at a time when such Participant was entitled to exercise an Option as herein provided, the legal representative
of such Participant, or such Person who acquired such Option by bequest or inheritance or by reason of the death of the Participant,
may, not later than fifteen (15) months from the date of death, exercise such Option, to the extent not theretofore exercised,
in respect of any or all of such number of Shares specified by the Administrator in such Option; and (ii) If the employment of
any Participant to whom such Option shall have been granted shall terminate by reason of the Participant's retirement (at such
age upon such conditions as shall be specified by the Board of Directors), disability (as described in Section 22(e) of the Code)
or dismissal by the Company other than for cause (as defined below), and while such Participant is entitled to exercise such Option
as herein provided, such Participant shall have the right to exercise such Option so granted, to the extent not theretofore exercised,
in respect of any or all of such number of Shares as specified by the Administrator in such Option, at any time up to one (1) year
from the date of termination of the Optionee's employment by reason of retirement or dismissal other than for cause or disability,
provided, that if the Optionee dies within such twelve (12) month period, subclause (i) above shall apply.


 


(b)If you voluntarily terminate your
employment, or are discharged for cause, any Options granted hereunder shall forthwith terminate with respect to any unexercised
portion thereof.


 


(c)If any Options granted hereunder
shall be exercised by your legal representative if you should die or become disabled, or by any person who acquired any Options
granted hereunder by bequest or inheritance or by reason of death of any such person written notice of such exercise shall be accompanied
by a certified copy of letters testamentary or equivalent proof of the right of such legal representative or other person to exercise
such Options.


 


(d)For all purposes of the Plan, the
term "for cause" shall mean "cause" as defined in the Plan or your employment agreement with the Company.


 


9.Restriction; Securities Exchange
Listing. All certificates for shares delivered upon the exercise of Options granted herein shall be subject to such stop transfer
orders and other restrictions as the Administrator may deem advisable under the Plan or the rules, regulations and other requirements
of the Securities and Exchange Commission and any applicable federal or state securities laws, and the Administrator may cause
a legend or legends to be placed on such certificates to make appropriate reference to such restrictions. If the Shares or other
securities are traded on a national securities exchange, the Company shall not be required to deliver any Shares covered by an
Option unless and until such Shares have been admitted for trading on such securities exchange.


 


10.Adjustments. If there is
any change in the capitalization of the Company affecting in any manner the number or kind of outstanding shares of Common Stock
of the Company, whether by stock dividend, stock split, reclassification or recapitalization of such stock, or because the Company
has merged or consolidated with one or more other corporations (and provided the Option does not thereby terminate pursuant to
Section 5 hereof), then the number and kind of shares then subject to the Option and the price to be paid therefor shall be appropriately
adjusted by the Board of Directors; provided, however, that in no event shall any such adjustment result in the Company's being
required to sell or issue any fractional shares. Any such adjustment shall be made without change in the aggregate purchase price
applicable to the unexercised portion of the option, but with an appropriate adjustment to the price of each Share or other unit
of security covered by this Option.


 


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11.Change in Control. In the
event of a Change in Control (as defined in the Plan), the surviving, continuing, successor, or purchasing entity or parent thereof,
as the case may be (the "Acquiror"), may, without the consent of any Participant, either assume the Company's
rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options for the
Acquiror's stock. In the event the Acquiror elects not to assume or substitute for outstanding Options in connection with a Change
in Control, the Committee shall provide that any unexercised and/or unvested portions of outstanding Options shall be immediately
exercisable and vested in full as of the date thirty (30) days prior to the date of the Change in Control. The exercise and/or
vesting of any Option that was permissible solely by reason of this Section 11 shall be conditioned upon the consummation of the
Change in Control. Any Options which are not assumed by the Acquiror in connection with the Change in Control nor exercised as
of the time of consummation of the Change in Control shall terminate and cease to be outstanding effective as of the time of consummation
of the Change in Control.


 


12.Amendment to Options Herein Granted.
The Options granted herein may not be amended without your consent.


 


13.Withholding Taxes. As provided
in the Plan, the Company may withhold from sums due or to become due to Optionee from the Company an amount necessary to satisfy
its obligation to withhold taxes incurred by reason of the disposition of the Shares acquired by exercise of the Options in a disqualifying
disposition (within the meaning of Section 421(b) of the Code), or may require you to reimburse the Company in such amount.


 


LAPOLLA INDUSTRIES, INC.


 


 





	 /s/  Michael T. Adams, Secretary	 	1/16/07	 	 
	Corporate Secretary	 	Date	 	 
	 	 	 	 	 
	OPTIONEE	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 /s/ Jay C. Nadel	 	    Jay C. Nadel	 	1/16/07
	Signature	 	Printed Name	 	           Date







 


 


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EXHIBIT 1


 


Description and Illustration of Exercisability
Restrictions


 


 


	Jay C. Nadel	 	 	 	 	 	 
	 	1/16/2007	1/16/2008	1/16/2009	1/16/2010	1/16/2011	1/16/2012
	Grant Date	         450,000	 	 	 	 	 
	 	 	 	 	 	 	 
	Vesting Dates	 	         150,000	         150,000	         150,000	 	 
	 	 	 	 	 	 	 
	Exercisability Dates (1/15/2008)	 	           50,000	           50,000	           50,000	 	 
	 	 	 	 	 	 	 
	Exercisability Dates (1/15/2009)	 	 	           50,000	           50,000	           50,000	 
	 	 	 	 	 	 	 
	Exercisability Dates (1/15/2010)	 	 	 	           50,000	           50,000	           50,000


 


 


 


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