Document:

EXHIBIT 10.1

 

SUMMA INDUSTRIES

 

SERIES A PREFERRED STOCK & COMMON STOCK
REPURCHASE AGREEMENT

 

THIS SERIES A PREFERRED STOCK & COMMON STOCK REPURCHASE AGREEMENT
(this “Agreement”) is made and entered into as of May 3, 2004, by and among
Summa Industries, a Delaware corporation (the “Company”), and the parties
listed on the Schedule of Investors attached hereto as Exhibit A
(each, an “Investor” and collectively, “Investors”).

 

WHEREAS, on December 14, 2001, the Company issued and sold an
aggregate of 5,000 shares of its Series A Preferred Stock, $.001 par value (the
“Preferred Shares”), to Investors in the amounts for each set forth on the
Schedule of Investors attached hereto as Exhibit A;

 

WHEREAS, from time to time prior to the date hereof, Investors have purchased
shares of the Company’s Common Stock, $.001 par value, in the open market and
now hold an aggregate of 452,856 shares (the “Common Shares”), in the amounts
for each set forth on the Schedule of Investors attached hereto as Exhibit
A; and

 

WHEREAS, Investors
desire to sell to the Company, and the Company desires to repurchase from
Investors, the Preferred Shares and the Common Shares (collectively, the
“Shares”) on the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in
consideration of the foregoing recitals and the covenants and conditions set
forth in this Agreement, the parties hereto agree as follows:

 

1.                                       Sale
& Repurchase of the Shares.

 

1.1                                 Sale & Repurchase. 
Subject to the terms and conditions hereof, each Investor agrees,
jointly and severally, to sell to the Company, and the Company agrees to
repurchase from each such Investor at the Closing (as defined in Section 1.4),
the number of Shares set forth opposite the name of such Investor on the
Schedule of Investors attached hereto as Exhibit A.

 

1.2                                 Repurchase Price.

 

(a)                                  Preferred
Shares.  The repurchase price for
the Preferred Shares shall be equal to the value determined on the Closing Date
(as defined by Section 1.4) by application of that certain
accretion formula set forth in Section 3(b)(ii) of the Certificate of
Designations for the Series A Preferred Stock filed by the Company with the
Secretary of State of the State of Delaware (the “Certificate of
Designations”).  For example, assuming a
Closing Date of April 30, 2004, the aggregate repurchase price for the
Preferred Shares would equal Six Million Five Hundred Forty-Six Thousand Five
Hundred Eighty Dollars ($6,546,580.00).

 

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(b)                                 Common
Shares.   The repurchase price for
the Common Shares shall be equal to ninety-two percent (92%) of the average of
the high and low trading price reported by Nasdaq for the Common Shares on the
Closing Date (or on the latest prior trading date if there is no trading of
Common Stock on the Closing Date).  For
example, assuming high and low trading prices of $8.95 and $8.75 on the Closing
Date, the aggregate repurchase price for the Common Shares would equal Three
Million Six Hundred Eighty-seven Thousand One Hundred Fifty-four ($3,687,154.00).

 

1.3                                 Payment
of Repurchase Price.  At Closing,
the Company shall execute and deliver to each Investor one Subordinated
Promissory Note in the form attached hereto as Exhibit B (each, a “Note”
and collectively, the “Notes”) in consideration for such Investor’s sale and
transfer of the Shares.

 

1.4                                 Closing.  The closing
of the sale and repurchase of the Shares shall take place as soon as
practicable at the offices of the Company, One Park Plaza, Suite 600, Irvine,
California, simultaneously with the execution and delivery of this Agreement
and the Notes (the “Closing Date”), at 2:00 p.m., or at such other time and
place as the parties may agree (the “Closing”).  No party shall have any obligation to consummate the Closing
contemplated herein prior to the execution and delivery by such party of this
Agreement.

 

1.5                                 Deliveries.  Subject to
the terms of this Agreement, at the Closing:

 

 (a)                               The Company will execute and deliver to each Investor
(i) an original of this Agreement, and (ii) a Note representing the purchase
price due to such Investor based on the number of Shares set forth opposite the
name of such Investor on the Schedule of Investors attached hereto as Exhibit
A.

 

(b)                                 Each
Investor will execute and deliver to the Company (i) an original of this
Agreement, and (ii) a Note.  In
addition, each Investor shall deliver the Shares set forth opposite the name of
such Investor on the Schedule of Investors attached hereto as Exhibit A,
duly endorsed for valid transfer to the Company.

 

1.6                                 Amendment
of Certificate of Designations. 
Immediately prior to the Closing, the Company shall file an amendment to
Section 3(b)(ii) of the Certificate of Designations in the form attached
hereto as Exhibit C to permit the repurchase by the Company of the
Preferred Shares as contemplated hereby.

 

2.                                       Representations and Warranties of the
Company.  The Company 
hereby represents and warrants to each Investor that:

 

2.1                                 Organization; Standing and Power. 
The Company (a) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (b) has all requisite
corporate power and authority to own and operate its properties and to carry on
its businesses as presently conducted, and (c) has all requisite corporate
power and authority to execute and deliver, and perform all of its obligations
under this Agreement and the Notes.

 

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2.2                                 Authorization; No Conflict and Binding
Obligation.

 

(a)                                  The execution and delivery by the Company
of this Agreement and the Notes, the performance of the Company’s obligations
hereunder and thereunder, and the consummation of the transactions contemplated
hereby and thereby (including the issuance and delivery of the Notes) have been
duly authorized by all necessary corporate action on the part of the Company,
and will not, either prior to or as a result of the consummation of the
transactions contemplated by this Agreement: (i) violate any law or any
governmental rule or regulation applicable to the Company, any provision of the
certificate of incorporation or bylaws of the Company, or any contract,
indenture, agreement or other instrument to which the Company is a party, or by
which the Company or any of its assets or properties are bound or (ii) be in
conflict with, result in a breach of, or constitute (after the giving of notice
or lapse of time or both) a default under, or result in the creation or
imposition of any lien of any nature whatsoever upon any of the property or
assets of the Company pursuant to the provisions of any contract, indenture,
agreement or other instrument to which the Company is a party or by which its
assets or property is bound, except where such violation, conflict, breach or
default likely would not have, individually or in the aggregate, a material
adverse effect, or where prior consent has been obtained.  The Company is not required to obtain any
approval, consent or authorization from, or to file any declaration or
statement with, any governmental instrumentality or agency in connection with
or as a condition to the execution, delivery or performance of this Agreement
(including the issuance and delivery of the Notes), other than
(i) approval of the Board of Directors of the Company, which has been
obtained, and (ii) the filing of a Form 8-K with the Securities and Exchange
Commission (“SEC”).  No other corporate
action on the part of the Company is necessary to authorize the execution,
delivery and performance of this Agreement and the Notes and the consummation
of the transactions contemplated hereby and thereby. All consents necessary for
the Company to perform its respective obligations hereunder have been obtained.

 

(b)                                 The Agreement and the Notes have been
duly executed and delivered by the Company, and each of the Agreement and the
Notes is the legally valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors’ rights generally or by equitable principles relating to
enforceability.

 

2.3                                 Financial Statements. 
The financial statements of the Company included in its filings with the
SEC since August 31, 2003 (a) complied as of their respective dates of filing
with the SEC in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto, (b)
have been prepared (i) in accordance with generally accepted accounting
principles (“GAAP”) (except, in the case of unaudited statements, as permitted
by Regulation S-X promulgated by the SEC), (ii) on a consistent basis for all
periods presented (except as may be indicated in the notes thereto),  and
(iii) in accordance with the books and records of the Company, (c) are complete
and correct in all material respects, and (d) fairly present in all material
respects the financial condition of the Company as at such dates, and the
results of operations and cash flows for the periods stated (subject, in the
case of unaudited statements, to normal year-end audit adjustments).

 

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2.4                                 No Material Adverse Change. 
Since February 29, 2004, there has not been:

 

(a)                                  any changes in the assets, liabilities,
financial condition or operations of the Company from that reflected in the
financial statements which has had or would be reasonably expected to have a
Material Adverse Effect;

 

(b)                                 any material change, except in the
ordinary course of business, in the contingent obligations of the Company
whether by way of guarantee, endorsement, indemnity, warranty or otherwise; or

 

(c)                                  any damage, destruction or loss, whether
or not covered by insurance, that would have a Material Adverse Effect.

 

2.5                                 SEC Reports. 
The Company has timely filed all SEC Reports with the SEC since
August 31, 2003.  The Company has
made available to the Investors true and complete copies of the SEC
Reports.  As of their respective filing
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act of 1933, as amended (the “Securities Act”), and the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules
and regulations of the SEC promulgated thereunder applicable to such SEC
Reports.  None of the SEC Reports
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading as of their respective filing dates, except to the extent
corrected by a subsequently filed SEC Report. 
Since February 29, 2004, there has not been any material
change from the information filed in the most recent SEC Report that would have
been required to be filed therein if occurring prior to or on such date,
excluding all information relating in any manner to the financial performance
of the Company since such date.

 

2.6                                 No Integrated Offering. 
Neither the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has directly or indirectly made any offers or sales in any
security or solicited any offers to buy any security under circumstances that
would require registration under the Securities Act of the issuance of the Notes
to the Investors.  The issuance of the
Notes to the Investors will not be integrated with any past issuance of the
Company’s securities for purposes of the Securities Act or any applicable rules
of Nasdaq.

 

2.7                                 Investment Company. 
The Company is not, and after consummation of the sale of the Notes will
not be, an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for an investment company, or, to its knowledge, a
company “controlled by” an “investment company” (other than any Investor)
within the meaning of the Investment Company Act of 1940, as amended.

 

2.8                                                                                 Insurance.  The Company
maintains and will continue to maintain insurance of the types and in the
amounts that the Company reasonably believes is prudent and adequate for its
business, all of which insurance is in full force and effect.

 

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2.9                                                                                 Not Active in Market. 
From and after April 23, 2004, neither the Company nor any of its
representatives has purchased or sold, directly or indirectly, in the public
marketplace or otherwise, any Common Stock of the Company.

 

3.                                       Representations
and Warranties of each Investor. 
Investors, jointly and severally, represent and warrant to the Company
that:

 

3.1                                 Ownership
of Shares.   Each Investor owns,
beneficially and of record, the Shares set forth opposite the name of such
Investor on the Schedule of Investors attached hereto as Exhibit A,
free and clear of all liens, pledges, charges, claims, equities, restrictions or
encumbrances whatsoever, and each Investor has and will have the full right,
power and authority to sell, transfer and deliver the Shares to the Company at
the Closing.  Upon delivery of the
Shares to the Company at the Closing and upon receipt by Investors of the
Purchase Price, good and valid title to the Shares will pass to the Company
free and clear of all liens, pledges, charges, claims, equities, restrictions
and encumbrances.  The sale by each
Investor of the Shares does not constitute a breach or violation of, or default
under, any will, deed, trust, agreement or other instrument of any kind,
whether written or oral, by which each Investor is bound.

 

3.2                                 Organization. 
Each Investor is a limited partnership duly organized, validly existing
and in good standing in the jurisdiction of its formation.  Each Investor has all requisite power and
authority to execute, deliver and perform all of its obligations of this
Agreement and the Notes.

 

3.3                                 Authorization; No Conflict; and Binding
Effect.

 

(a)                                  The execution and delivery of this
Agreement and the Notes, the performance of each Investor’s obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby or thereby have been duly authorized by all necessary action on the part
of each Investor and will not, either prior to or as a result of the
consummation of the transactions contemplated by this Agreement:
(i) violate any law or any governmental rule or regulation applicable to
the Investor, any provision of the organizational documents of the Investor, or
any contract, indenture, agreement or other instrument to which the Investor is
a party, or by which the Investor or any of its assets or properties are bound,
or (ii) be in conflict with, result in a breach of, or constitute (after the
giving of notice or lapse of time or both) a default under, or result in the
creation or imposition of any lien of any nature whatsoever upon any of the
property or assets of the Investor pursuant to the provisions of any contract,
indenture, agreement or other instrument to which the Investor is a party or by
which its assets or property is bound, except where such violation, conflict,
breach or default likely would not have, individually or in the aggregate, a
material adverse effect on the financial condition, business, operations,
assets or results of operations of the Investor.  Each Investor has obtained any approval, consent or authorization
from, and filed any declaration or statement with, any governmental
instrumentality or agency required in connection with or as a condition to the
execution, delivery or performance of this Agreement, excluding any filings not
required until after Closing.  No other
action on the part of each Investor is necessary to authorize the execution,
delivery and performance of this Agreement and the Notes and the consummation
of the transactions contemplated hereby and thereby.

 

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(b)                                 Upon the execution and delivery by each
Investor, this Agreement and the Notes shall constitute the legal, valid and
binding obligations of each Investor enforceable against the Investor in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, liquidation, reorganization, moratorium or
other laws relating to or limited creditors’ rights generally or by equitable
principles relating to enforceability.

 

3.4                                 Investment Intent. 
Each Investor is acquiring the Note pursuant to this Agreement with its
own funds for its own account and not as a nominee or agent for the account of
any other person.  No other person has
any interest, beneficial or otherwise, in the Note to be purchased by the
Investor.  Except as provided herein,
the Investor is not obligated to transfer the Note to any other person, nor
does the Investor have any agreement or understanding with any other person to
do so.  The Investor is purchasing Note
for investment purposes and not with a present view to the sale or distribution,
by public or private sale or other disposition, and the Investor has no present
intention of selling, granting any participation in or otherwise distributing
or disposing the Note.  The Investor
further represents that the Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or any third person, with respect to the Note.
Notwithstanding the foregoing, the disposition of the Investor’s property shall
be at all times within the Investor’s own control, and the Investor’s right to
sell or otherwise dispose of the Note purchased by it pursuant to an effective
registration statement under the Securities Act or under an exemption under the
Securities Act shall not be prejudiced. Nothing herein shall prevent the
distribution of any Note to any member, partner or stockholder, former member,
partner or stockholder of the Investor in compliance with the Securities Act
and applicable state “blue sky” laws.

 

 3.5                              No Public Offering.  Each
Investor is able to bear the economic risk of its investment in the Note.  Each Investor is aware that the Note has not
been, and when issued will not be, registered under the Securities Act or
registered or qualified under any state securities law.  Each Investor understands that the Company’s
reliance on such exemption from registration is predicated on the Investors’
representations set forth herein.

 

3.6                                 Notes may be “Restricted Securities”. The Investor understands that the Notes
may be “restricted securities” as that term is defined in Rule 144 promulgated
under the Securities Act and, accordingly, that the Notes may not be sold,
transferred or otherwise disposed of and must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available.

 

3.7                                 Accredited Investor. 
Each Investor has been advised or is aware of the provisions of
Regulation D under the Securities Act relating to the accreditation of
investors, and the Investor is an “accredited investor” as defined in Rule 501
of Regulation D promulgated under the Securities Act.

 

3.8                                 Sophistication of Investors. 
Each Investor has such knowledge and experience in financial and
business matters that the Investor is capable of evaluating the merits and risks
of the investment contemplated by this Agreement and has the capacity to
protect its own interests.  Each
Investor acknowledges that investment in the Notes is highly speculative

 

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and involves a substantial and high degree of risk of loss of the
Investor’s entire investment.  The
Investor has adequate means of providing for current and anticipated financial
needs and contingencies, is able to bear the economic risk of the investment
for an indefinite period of time and has no need for liquidity of the
investment in the Notes and could afford a complete loss of such investment.

 

3.9                                 Not Active in Market. 
From and after April 23, 2004, neither any Investor nor any
Investor representative has purchased or sold, directly or indirectly, in the
public marketplace or otherwise, any Common Stock of the Company.

 

4.                                       Certain Covenants and Agreements.

 

4.1                                 Efforts.  Each of the
Company and each Investor shall cooperate and use commercially reasonable
efforts to take, or cause to be taken, all appropriate action, and to make, or
cause to be made, all filings necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement.

 

4.2                                 No Integration. 
The Company will not make any offers or sales of any security under
circumstances that would cause the offering of the Notes to be integrated with
any other offering of securities by the Company.

 

4.3                                 Limitation
on Debt Funding.  Until such time as
the Notes are paid in full, the Company shall not raise additional debt funding
for any reason which shall be senior or equivalent in liquidation preference to
the Notes if the resulting Net Debt (as defined below) of the Company after any
such funding would be in excess of four and one half (4.5) times the Company’s
trailing four-quarters’ EBITDA, including the pro forma EBITDA of any acquired
entities.  As used herein, “EBITDA”
shall mean earnings before interest, income taxes, depreciation and amortization,
and “Net Debt” shall mean the aggregate amount owed and/or payable by the
Company in respect of any loans, notes, bonds, debentures and mortgages, which
(i) is senior or equivalent in liquidation preference to the Notes, or (ii) if
junior in liquidation preference to the Notes, to the extent such is due prior
to September 5, 2006, plus aggregate indebtedness outstanding under the
Notes, less cash and cash equivalents.

 

4.4                                 Registration.  If the Company registers any debt securities
similar to the Notes, then the Company, in its sole discretion, may include the
Notes in any such registration.

 

4.5                                 SPA;
Warrants; Certificate of Designations.  
Investors acknowledge and agree that any and all of their rights of any
kind under or pursuant to that certain Series A Preferred Stock Purchase
Agreement dated December 14, 2001 among Investors and the Company shall
terminate at Closing.  The Company
previously authorized the issuance to Investors of warrants to purchase shares
of the Company’s common stock (the “Warrants”) if and only if the Company’s
ratios triggered such an issuance. 
Investors acknowledge and agree that no such Warrants have been nor
should have been issued.  Investors
acknowledge and agree that the Company may terminate the Certificate of Designations
at any time following the Closing, and that Investors shall have no rights of
any kind under or pursuant to the Certificate of Designations after Closing.

 

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4.6                                 Third
Party Indemnity.  Each party (the
“Indemnifying Party”) agrees to indemnify and hold harmless the other parties,
their affiliates, and their respective directors, officers, employees, agents
and assigns (collectively, the Indemnified Party”), from and against any and
all liabilities, obligations, losses, damages, claims and expenses (including
reasonable attorney’s fees) incurred by, imposed on, borne by or asserted
against any Indemnified Party in any way relating to, arising out of or
resulting from claims by third parties based on any inaccuracy in or the breach
or nonperformance of any of the representations, warranties, covenants or
agreements made by the Indemnifying Party in this Agreement or in any Note;
provided that, the Indemnifying Party shall have received timely written notice
of such claim or demand (it being understood and agreed that any failure to
receive timely notice from any Indemnified Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent the
Indemnifying Party is prejudiced by such failure).  The Indemnifying Party shall defend against such claim or demand
at its sole expense and through counsel of its own choosing and shall give
written notice confirming its assumption of the defense within twenty (20) days
of the receipt of the notice referred to above.  The Indemnified Parties shall fully cooperate in the defense of
such claim or demand, at the Indemnifying Party’s expense, and shall, among
other things, make available to the indemnifying party or its counsel pertinent
information and personnel under their control relating thereto.  The Indemnifying Party shall have the right
in its sole discretion to enter into any judgment or proposed settlement that
involves only the payment of money damages and does not impose any injunction
or other equitable or conduct relief upon any Indemnified Party or its assets.

 

5.                                       Miscellaneous.

 

5.1                                 Public Statements or Press Releases. 
None of the parties to this Agreement shall make, issue, or release any
announcement, whether to the public generally, or to any of its suppliers or
customers, with respect to this Agreement or the Notes or the transactions
provided for herein or therein, or make any statement or acknowledgment of the
existence of, or reveal the status of, this Agreement or the transactions
provided for herein, without the prior consent of the other parties, which
shall not be unreasonably withheld or delayed, provided, that (a)
nothing in this Section shall prevent any of the parties hereto from
making such public announcements as it may consider necessary in order to
satisfy its legal obligations, but to the extent not inconsistent with such
obligations, it shall provide the other parties with an opportunity to review
and comment on any proposed public announcement before it is made, and (b)
announcements, information and disclosures made by any Investor in any of its
investor letters to limited partners after the Closing Date are excluded from
the prohibitions of this Section 5.1.

 

5.2                                 Survival of Warranties. 
The representations and warranties of the Company and each Investor
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing for a period of the later of (a)
three (3) years, or (b) such time as all obligations due under the Notes have
been paid in full.

 

5.3                                 Amendments and Waivers. 
Any term of this Agreement may be amended and the observance of any term
of this Agreement may be waived (either generally or in a

 

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particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Investors.  Any amendment or waiver effective in
accordance with this Section shall be binding upon each Investor and its
representatives, successors and permitted assigns, and the Company and its
representatives, successors and permitted assigns.

 

5.4                                 Notices.  Any notice,
consent, authorization or other communication to be given hereunder shall be in
writing and shall be deemed duly given and received when delivered personally
or transmitted by facsimile transmission, three (3) days after being mailed by
first class mail, or the next business day after being deposited for next-day
delivery with a nationally recognized, receipted, overnight delivery service,
charges and postage prepaid, properly addressed to the party to receive such
notice at the address(es) specified on the signature page of this Agreement for
the Company and each Investor (or at such other address as shall be specified
by like notice).

 

5.5                                 Entire Agreement. 
This Agreement (including the Exhibits and the Notes) contains the
entire agreement of the parties and supersede all prior negotiations,
correspondence, term sheets, agreements and understandings, written and oral,
between or among the parties regarding the subject matter hereof.

 

5.6                                 Successors and Assigns. 
This Agreement shall inure to the benefit of and be binding upon the
respective heirs, representatives, successors and permitted assigns of the
parties.  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective heirs, representatives, successors and permitted
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.

 

5.7                                 Severability. 
If any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable under applicable law, such provision shall be
replaced with a provision that accomplishes, to the extent possible, the
original business purpose of such provision in a valid and enforceable manner,
and the balance of the Agreement shall be interpreted as if such provision were
so modified and shall be enforceable in accordance with its terms.

 

5.8                                 Governing Law. 
This Agreement shall be governed by and construed and interpreted in
accordance with the law of the State of California, without regard to that
state’s conflict of laws principles.

 

5.9                                 Attorneys’ Fees. 
If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys’ fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.

 

5.10                           Interpretation. 
This Agreement shall be construed according to its fair language.  The rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.

 

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5.11                           Further Assurances. 
Each party shall execute such other and further certificates,
instruments and other documents as may be reasonably necessary and proper to
implement, complete and perfect the transactions contemplated by this
Agreement.

 

5.12                           Counterparts; Facsimile Signatures. 
This Agreement may be executed in any number of counterparts, each of
which shall constitute an original, and all of which together shall be
considered one and the same agreement. 
Signatures submitted via facsimile shall be deemed originals for all
purposes.

 

5.13                           Assignment.  No party
shall assign this Agreement or any rights hereunder or delegate any duties
hereunder without the prior written consent of the other parties.  Any attempted or purported assignment or
delegation in violation of the preceding sentence shall be void.  Notwithstanding the foregoing, a change in
control of the Company shall not be deemed an assignment, and the Company may
merge with or sell itself to any third party in its sole and absolute
discretion.

 

5.14                           Expenses.  Whether or not the transactions contemplated
hereby are consummated, all fees, costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such fees, costs or expenses.

 

5.15                           Consent to Jurisdiction: Forum Selection. 
The parties agree that all actions or proceedings arising in connection
with this Agreement shall be tried and litigated exclusively in the Federal or
state courts located in the County of Los Angeles, State of California.  The aforementioned choice of venue is
intended by the parties to be mandatory and not permissive in nature, thereby
precluding the possibility of litigation between the parties with respect to or
arising out of this Agreement in any jurisdiction other than those specified in
this section.  Each party hereby waives
any right it may have to assert the doctrine of forum non conveniens or similar
doctrine or to object to venue with respect to any proceeding brought in
accordance with this section, and stipulates that the Federal and state courts
located in the County of Los Angeles, State of California shall have in
personam jurisdiction and venue over each of them for the purpose of litigating
any dispute, controversy or proceeding arising out of or related to this
Agreement.  Each party hereby authorizes
and accepts service of process sufficient for personal jurisdiction in any action
against it as contemplated by this paragraph by registered or certified mail,
return receipt requested, postage prepaid, to its address for the giving of
notices as set forth in this Agreement, or in the manner set forth in Section 5.4
of this Agreement for the giving of notice. 
Any final judgment rendered against a party in any action or proceeding
shall be conclusive as to the subject of such final judgment and may be
enforced in other jurisdictions in any manner provided by law.

 

5.16                           California
Corporate Securities Law.  THE SALE
OF SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED
WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE
OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY

 

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SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE.  THE RIGHTS TO ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.

 

[Remainder of this
page intentionally left blank.]

 

11

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first set forth above.

 

	
   

  	
  THE COMPANY

  
	
   

  	
   

  
	
   

  	
  SUMMA INDUSTRIES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Trygve M. Thoresen

  	
   

  
	
   

  	
  Print Name:

  	
  Trygve M. Thoresen

  	
   

  
	
   

  	
  Title:

  	
  Vice President & Secretary

  	
   

  
	
   

  	
  Address:

  	
  21250 Hawthorne Blvd., Suite 500

  
	
   

  	
   

  	
  Torrance, CA 90503

  
	
   

  	
  Fax:

  	
  (310) 792-7079

  

 

12

 

	
   

  	
  THE
  INVESTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  STADIUM
  CAPITAL PARTNERS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Stadium
  Capital Management, LLC, General

  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Bradley R. Kent

  	
   

  
	
   

  	
  Print
  Name:

  	
  Bradley
  R. Kent

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
  Address:

  	
  19875
  Village Office Court

  
	
   

  	
   

  	
  Bend,
  OR 97702

  
	
   

  	
  Fax:

  	
  (541)
  322-0604

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  STADIUM
  SEPARATE I, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Stadium
  Capital Management, LLC, General

  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  s/
  Bradley R. Kent

  	
   

  
	
   

  	
  Print
  Name:

  	
  Bradley
  R. Kent

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
  Address:

  	
  19875
  Village Office Court

  
	
   

  	
   

  	
  Bend,
  OR 97702

  
	
   

  	
  Fax:

  	
  (541)
  322-0604

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  STADIUM
  RELATIVE VALUE PARTNERS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Stadium
  Capital Management, LLC, General

  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  s/
  Bradley R. Kent

  	
   

  
	
   

  	
  Print
  Name:

  	
  Bradley
  R. Kent

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
  Address:

  	
  19875
  Village Office Court

  
	
   

  	
   

  	
  Bend,
  OR 97702

  
	
   

  	
  Fax:

  	
  (541)
  322-0604

  

 

13

 

EXHIBIT A

 

Schedule of Investors

 

	
  Investor

  	
   

  	
  Series A
  Preferred Stock

  	
   

  	
  Common
  Stock

  	
   

  
	
  Stadium Capital Partners, L.P.

  	
   

  	
  4,096

  	
   

  	
  381,907

  	
   

  
	
  Stadium Separate I, L.P.

  	
   

  	
  576

  	
   

  	
  49,200

  	
   

  
	
  Stadium Relative Value Partners, L.P.

  	
   

  	
  328

  	
   

  	
  21,749

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL SHARES:

  	
   

  	
  5,000

  	
   

  	
  452,856

  	
   

  

 

14

 

EXHIBIT B

 

Form of Subordinated Promissory Note

 

No.       

 

SUBORDINATED PROMISSORY NOTE

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE NOTE UNDER
SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT AND, IN ANY CASE, SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH HEREIN.

 

THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF THAT CERTAIN
SUBORDINATION AGREEMENT WITH WELLS FARGO BANK, NATIONAL ASSOCIATION, OF EVEN
DATE HEREWITH.

 

	
  $                .00

  	
   

  	
  May    , 2004

  
	
   

  	
   

  	
  Torrance, California

  

 

THIS SUBORDINATED PROMISSORY NOTE (this
“Note”) is made and entered into as of the date above by and between Summa
Industries, a Delaware corporation (“Maker”), and Stadium
                       
L.P., a                      
limited partnership (“Payee”).

 

RECITALS

 

WHEREAS, on
December 14, 2001, Maker issued and sold an aggregate of 5,000 shares of
its Series A Preferred Stock, $.001 par value (the “Preferred Shares”), to
Payee and two related parties (collectively, “Investors”) in the amounts for
each set forth in that certain Series A Preferred Stock Purchase Agreement
dated December 14, 2001 by and among Maker and Investors (the “Stock
Purchase Agreement”), including                
Preferred Shares held by Payee;

 

WHEREAS, from time
to time prior to the date hereof, Investors have purchased shares of the
Company’s Common Stock, $.001 par value, in the open market and now hold an
aggregate of 452,856 shares (the “Common Shares”), including
                   
Common Shares held by Payee; and

 

WHEREAS, simultaneously with the execution
and delivery hereof, Maker and Investors have executed and delivered that
certain Series A Preferred Stock & Common Stock Repurchase Agreement (the
“Repurchase Agreement”) providing for, among other things, the repurchase by
Maker of all the Preferred Shares and the Common Shares (collectively, the
“Shares”) from Investors on the terms set forth therein and herein (the
“Repurchase”); and

 

WHEREAS, in connection with the Repurchase,
Maker has agreed to issue this Note to Payee, and similar notes to the other
Investors (collectively, the “Notes”), in consideration for the Shares.

 

 

NOW, THEREFORE, in consideration of the
foregoing recitals and the mutual covenants herein contained, the parties
hereto hereby agree as follows:

 

1.                                       Promise
to Pay. Maker promises to pay to the order of  Payee, at Bend, Oregon, or at such other place as Payee may
designate and so notify Maker, the principal sum of
                                                                                                              DOLLARS
($                 .00),
with simple interest thereon from the date hereof through September 5,
2006.  Unless sooner due as hereinafter
provided, but subject in all events to the provisions of Section 2
below, principal and interest shall be due and payable as follows:

 

(a)                                  Interest
Payments.  Interest on the unpaid
principal balance shall accrue daily and be due and payable in arrears on a
monthly basis on the last day of each full or partial calendar month until all
principal and accrued but unpaid interest due and payable hereunder has been
paid in full.

 

(b)                                 Interest
Rates.  Subject to Section 1(e),  this
Note shall bear interest on the unpaid principal amount hereof at a rate per
annum equal to (i) twelve percent (12%) at any time when the aggregate unpaid
principal amount of the Notes is greater than Four Million Dollars
($4,000,000.00), (ii) eight percent (8%) at any time when the aggregate unpaid
principal amount of the Notes is equal to or less than Four Million Dollars
($4,000,000.00), and (iii) reduced by an additional one half of one percent
(0.5%) for each One Million Dollars ($1,000,000.00) by which the aggregate
unpaid principal amount of the Notes is reduced below Four Million Dollars,
such that the residual interest rate shall be six and one half percent (6.5%)
when the aggregate unpaid principal amount of the Notes is less than One
Million Dollars ($1,000,000.00).

 

(c)                                  Principal
Payments. Subject to Sections 1(d) and 4, Principal shall be
due and payable on the dates and in the amounts set forth on Schedule 1
attached hereto.  Any payment under this
Note, other than prepayments, shall first be applied to interest due and owing
at the date of such payment, and whatever remains after the amount of such
interest is deducted from such payment shall be applied to the principal
balance due hereunder.

 

(d)                                 Prepayment.
Maker shall have the right, without penalty, to prepay the indebtedness
represented hereby in part or in full at any time or times during the
continuance hereof; provided that, any prepayments will be made on a pro rata
basis amongst the Notes based upon remaining principal balances.  Any prepayment pursuant hereto shall first
be applied to principal and interest due and owing at the date of such payment,
then to the remaining principal balance due hereunder, credited to the earliest
due scheduled principal payments as set forth in the maturity schedule in Section 1(c)
above.

 

(e)                                  Default
Interest Rate.  If the indebtedness
represented hereby is not paid in full at maturity (or earlier upon the
acceleration thereof as provided in Section 4 below), it shall
thereupon accrue, and Maker hereby expressly agrees to pay as liquidated
damages and not as a penalty, interest on the remaining unpaid balance of
principal and accrued but unpaid interest at twelve percent (12%) per annum
until any and all unpaid principal and interest is paid in full.

 

(f)                                    Certain
Waivers; Nature and Place of Payment. Maker hereby waives demand,
presentment for payment, protest, notice of protest, notice of nonpayment and
diligence in collecting the indebtedness represented hereby.  All payments due under this Note shall be

 

 

made by Maker to Payee without set-off or counterclaim, in lawful money
of the United States of America in immediately available same day funds.

 

2.                                       Subordination;
Security.

 

(a)                                  The
payment of principal and interest hereunder is expressly subordinated to the
full payment of all indebtedness of Maker for money borrowed from commercial
banks and other secured lenders, including without limitation Wells Fargo Bank,
National Association and affiliates (“Senior Lender”), whether currently
outstanding or from time to time incurred hereafter (collectively, the “Senior
Debt”). Concurrently with the execution and delivery hereof, if requested,
Payee and Senior Lender will enter into a mutually acceptable agreement setting
forth in more detail the terms and conditions upon which payments hereunder
shall be subordinated to certain Senior Debt. 
It is expressly understood, however, that so long as there is no defined
event of default or potential event of default under the terms of the Senior
Debt, Maker shall make all payments hereunder when due, and may make
prepayments of principal hereunder.

 

(b)                                 This
Note is unsecured in all respects.

 

3.                                       Events
of Default.  If any of the following
events shall occur (herein individually referred to as an “Event of Default”),
Payee may exercise its right to accelerate this Note pursuant to the terms of Section 4:

 

(a)                                  Failure
to Timely Pay.  Default in the
payment when due of the principal and/or accrued interest on this Note which
continues uncured by Maker for a period of five (5) days after written notice
thereof from Payee;

 

(b)                                 Bankruptcy.  The institution by Maker of proceedings to
be adjudicated bankrupt or insolvent, or the consent by Maker to institution of
bankruptcy or insolvency proceedings against it or the filing by Maker of a
petition or answer or consent seeking reorganization or release under the 11
U.S.C. Section 101, et seq. of the Federal Bankruptcy Code, or any other
applicable federal or state law, or the consent by Maker to the filing of any
such petition or the appointment of a receiver, liquidator, assignee, trustee or
other similar official, of Maker, or the making by it of an assignment for the
benefit of creditors, or the admission by Maker in writing of its inability to
pay its debts generally as they become due;

 

(c)                                  Indebtedness.
The Net Debt (as defined below) of Maker at the end of any fiscal quarter is in
excess of five (5.0) times Maker’s trailing four-quarters’ EBITDA, including
the pro forma EBITDA of any acquired entities. 
As used herein, “EBITDA” shall mean earnings before interest, income
taxes, depreciation and amortization, and “Net Debt” shall mean the aggregate
amount owed and/or payable by Maker in respect of any loans, notes, bonds,
debentures and mortgages, which (i) is senior or equivalent in liquidation
preference to this Note, or (ii) if junior in liquidation preference to this
Note, to the extent such is due prior to September 5, 2006, plus aggregate
indebtedness outstanding under the Notes, less cash and cash equivalents;

 

(d)                                 Consolidated
Financial Statements.  Maker shall
fail to make available to Payee (i) internally prepared consolidated quarterly
reports of Maker (within 45 days following the end of each fiscal quarter),
consisting of consolidated income statements for the preceding calendar quarter
and the fiscal year to date, and a consolidated balance sheet as of the end of
the

 

 

calendar quarter, and (ii) annual consolidated financial statements of
Maker (within 90 days following the end of each fiscal year), which have been
audited by an independent, certified public accounting firm, in all case
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with that on which the historical financial statements of
Maker were most recently prepared prior to the date hereof;

 

(e)                                  Cross-Default
(Repurchase Agreement). There shall have occurred an event which
constitutes a breach by Maker of any representation, warranty, covenant or
obligation of this Note or of the Repurchase Agreement, which continues uncured
by Maker for a period of five (5) days after written notice thereof from Payee;
or

 

(f)                                    Change
in Control.  Maker is a party to any
sale, merger, reorganization or consolidation with one or more unrelated third
party entities, sells all or substantially all of its assets or voting capital
stock, or otherwise engages in any transaction which results in a change in
control of Maker.

 

4.                                       Notice
of Default; Acceleration Upon Default. 
Maker shall notify Payee of any breach of Section 4.3 of the
Repurchase Agreement or a default of Section 3(c) of this Note within
fifteen (15) business days of the end of any fiscal quarter of Maker in which
such breach or default occurred. Upon the occurrence of a default specified in Section 3
above, but subject in all events to the provisions of Section 2
above, the principal amount of all indebtedness then owing hereunder and all
unpaid accrued interest thereon shall become immediately due and payable,
without notice, presentment or demand of any kind, all of which are expressly
waived by Maker.  In such event, Payee
may proceed to satisfy such default by enforcing its rights under this Note in
any manner provided by law.  The amount
involved in the default shall include the costs and expenses, including
reasonable attorney’s fees, incurred by Payee in enforcing its rights hereunder.  Payee may exercise all of its rights and
remedies concurrently or in such order as it may determine, and the failure of
Payee to exercise any rights or remedies it may have upon a default hereunder
shall not be deemed a waiver of any rights, or a release of Maker from any
obligation hereunder, unless such waiver or release is given in writing by
Payee, and, in such event, no such waiver shall be deemed to constitute a
waiver of any succeeding default.  In
the event that Payee is precluded from enforcing any of its rights hereunder by
virtue of the provisions of Section 2 above, and for so long as the
restrictions imposed under Section 2 shall continue, Maker shall
not incur any new interest bearing indebtedness for borrowed money.  Any accelerated payments shall be made on a
pro rata basis amongst the Notes based upon remaining principal balances.

 

5.                                       Representations.

 

(a)                                  By
Maker.

 

(i)                                     The execution and delivery by Maker of
this Note and the performance of Maker’s obligations hereunder has been duly
authorized by all necessary corporate action on the part of Maker, and will
not, either prior to or as a result of the consummation of the transactions
contemplated by this Note: (i) violate any law or any governmental rule or
regulation applicable to Maker, any provision of the certificate of
incorporation or bylaws of Maker, or any contract, indenture, agreement or
other instrument to which Maker is a party, or by which Maker or any of its
assets or properties are bound or (ii) be in conflict with, result in a breach
of, or constitute (after the giving of notice or lapse of time or

 

 

both) a default under, or result in the creation or imposition of any
lien of any nature whatsoever upon any of the property or assets of Maker
pursuant to the provisions of any contract, indenture, agreement or other
instrument to which Maker is a party or by which its assets or property is
bound, except where such violation, conflict, breach or default likely would
not have, individually or in the aggregate, a material adverse effect, or where
prior consent has been obtained.  No
other action on the part of Maker is necessary to authorize the execution,
delivery and performance of this Note and the consummation of the transactions
contemplated hereby. All consents necessary for Maker to perform its
obligations hereunder have been obtained.

 

(b)                                 By
Payee.

 

(i)                                     By
acceptance hereof, Payee acknowledges that (A) this Note is being acquired
solely for the Payee’s own account for investment and not with a view toward
resale or distribution of any part thereof, and not as a nominee for any other
party, and that Payee will not offer, sell or otherwise dispose of this Note
except under circumstances that will not result in a violation of the
Securities Act of 1933, as amended, or any state securities laws; (B) Payee is
aware that this Note is not registered under the Act or any state securities or
blue sky laws and, as a result, substantial restrictions may exist with respect
to the transferability of this Note; (C) Payee is an “accredited investor” as
defined by Rule 501(a) of Regulation D of the Securities and Exchange
Commission (the “SEC”) and can afford to sustain a total loss on its
investment; and (D) Payee has been afforded the opportunity to ask questions
of, and receive satisfactory answers from, Maker and its officers and
directors, concerning the terms and conditions of this Note.

 

(ii)                                  By acceptance hereof,
Payee acknowledges that it has received and reviewed copies of Maker’s Annual
Report on Form 10-K for the fiscal year ended August 31, 2003, Forms 10-Q
for the fiscal quarters ended November 30, 2003 and February 29,
2004, Forms 8-K, and recent press releases including, without limitation, one
entitled “Summa Provides Third Quarter Outlook” dated April 26, 2004.

 

(iii)                               The execution and delivery by Payee of
this Note in exchange for the Preferred Shares and the Common Shares has been
duly authorized by all necessary partnership action on the part of Payee, and
will not, either prior to or as a result of the consummation of the
transactions contemplated by this Note: (i) violate any law or any
governmental rule or regulation applicable to Payee, any provision of the
governing documents of Payee, or any contract, indenture, agreement or other
instrument to which Payee is a party, or by which Payee or any of its assets or
properties are bound or (ii) be in conflict with, result in a breach of, or
constitute (after the giving of notice or lapse of time or both) a default
under, or result in the creation or imposition of any lien of any nature
whatsoever upon any of the property or assets of Payee pursuant to the
provisions of any contract, indenture, agreement or other instrument to which
Payee is a party or by which its assets or property is bound, except where such
violation, conflict, breach or default likely would not have, individually or
in the aggregate, a material adverse effect, or where prior consent has been
obtained.  No other action on the part
of Payee is necessary to authorize the execution, delivery and performance of
this Note and the consummation of the transactions contemplated hereby. All
consents necessary for Payee to perform its obligations hereunder have been
obtained.

 

6.                                       Miscellaneous.

 

 

(a)                                  Notices.  All notices or other communications required
or permitted to be given hereunder shall be in writing and shall be delivered
by hand or sent prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one Business Day in the
case of express mail or overnight courier service), as follows:

 

	
  (i)                       if
  to Maker:

  
	
   

  
	
  Summa Industries

  
	
  21250 Hawthorne Blvd., Suite 500

  
	
  Torrance, CA 90503

  
	
  Fax: (310) 792-7079

  
	
  Attention:  James R. Swartwout

  
	
   

  
	
  (ii)                    if
  to Payee:

  
	
   

  
	
  Stadium
                  ,
  L.P.

  
	
  19875 Village Office Court, Suite 101

  
	
  Bend, OR 97702

  
	
  Fax: (541) 322-0604

  
	
  Attention:  John L. Wellborn
  Jr.

  

 

(b)                                 Usury Savings Clause. 
It is expressly understood that in no event, whether by reason of
acceleration of maturity of the indebtedness evidenced by this Note or
otherwise, shall the amount paid or agreed to be paid to Payee which is deemed
interest under applicable law exceed the maximum permitted rate of interest
under applicable law (the “Maximum Permitted Rate”), which shall mean the law
in effect on the date of this Note, except that if there is a change in such
law which results in a higher Maximum Permitted Rate, then this Note shall be
governed by such amended law from and after its effective date.  In the event that fulfillment of any
provision of this Note, or any document, instrument or agreement providing
security for this Note results in the rate of interest charged hereunder being
in excess of the Maximum Permitted Rate, that obligation to be fulfilled shall
automatically be reduced to eliminate such excess.  If, notwithstanding the foregoing, Payee receives an amount which
under applicable law could cause the interest rate hereunder to exceed the
Maximum Permitted Rate, the portion thereof which would be excessive shall
automatically be applied to and be deemed a prepayment of the unpaid principal
balance of this Note and not a payment of interest.

 

(c)                                  Amendments.  Any term of
this Note may be amended only with the written consent of Maker and Payee.  Any amendment effective in accordance with
this Section shall be binding upon Payee, his, her or its heirs,
representatives or permitted assigns, and Maker and its heirs, representatives
and permitted assigns.

 

(d)                                 Waivers.   Any particular Event of Default as described
in Section 3 may be waived only upon the written consent of Payee
or the subsequent holder(s) of this Note. 
Payee shall not be deemed by any act, omission or commission to have
waived any of its rights or remedies hereunder unless such waiver is in writing
and signed by Payee and then only to the extent specifically set forth in such
writing.  A waiver of one event shall
not be construed as continuing or a bar to or waiver of any right or remedy
with respect to a subsequent event.

 

 

(e)                                  Entire Agreement. 
This Note, together with the Repurchase Agreement, contains the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior oral and written agreements and
understandings relating to the subject matter hereof.

 

(f)                                    Successors and Assigns. 
Except as restricted elsewhere herein, this Note shall inure to the
benefit of and be binding upon the respective heirs, representatives,
successors and permitted assigns of the parties.  Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective heirs,
representatives, successors and permitted assigns any rights, remedies,
obligations, or liabilities under or by reason of this Note, except as
expressly provided in this Note.

 

(g)                                 Transferability.  This Note may not be transferred or assigned
in any manner without compliance with all applicable federal and state
securities laws by the transferor and the transferee, including without
limitation the Securities Act of 1933, as amended (the “Act”) and the rules and
regulations promulgated thereunder.  
Subject to the foregoing, this Note may only be transferred or assigned
in full and only to a person or entity who is not in direct competition with
Maker and its subsidiaries.

 

(h)                                 Severability. 
If any provision of this Note is held by a court of competent
jurisdiction to be unenforceable under applicable law, such provision shall be
replaced with a provision that accomplishes, to the extent possible, the
original business purpose of such provision in a valid and enforceable manner,
and the balance of the Note shall be interpreted as if such provision were so
modified and shall be enforceable in accordance with its terms.

 

(i)                                     Governing Law. 
This Agreement shall be governed by and construed and interpreted in
accordance with the law of the State of California, without regard to that
state’s conflict of laws principles.

 

(j)                                     Counterparts;
Facsimile Signatures.  This Note may
be executed in any number of counterparts, each of which shall constitute an
original, and all of which together shall be considered one and the same
agreement.  Signatures submitted via
facsimile shall be deemed originals for

 

(k)                                  Consent to Jurisdiction: Forum Selection. 
The parties agree that all actions or proceedings arising in connection
with this Note shall be tried and litigated exclusively in the Federal or state
courts located in the County of Los Angeles, State of California.  The aforementioned choice of venue is
intended by the parties to be mandatory and not permissive in nature, thereby
precluding the possibility of litigation between the parties with respect to or
arising out of this Note in any jurisdiction other than those specified in this
section.  Each party hereby waives any
right it may have to assert the doctrine of forum non conveniens or similar doctrine
or to object to venue with respect to any proceeding brought in accordance with
this section, and stipulates that the Federal and state courts located in the
County of Los Angeles, State of California shall have in personam jurisdiction
and venue over each of them for the purpose of litigating any dispute,
controversy or proceeding arising out of or related to this Note.  Each party hereby authorizes and accepts
service of process sufficient for personal jurisdiction in any action against
it as contemplated by this paragraph by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices as
set forth in this Note,

 

 

or in the manner set forth in Section 6(a) of this Note for
the giving of notice.  Any final
judgment rendered against a party in any action or proceeding shall be
conclusive as to the subject of such final judgment and may be enforced in
other jurisdictions in any manner provided by law.

 

IN WITNESS WHEREOF, each of the parties hereto, intending to be legally
bound, has caused this Note to be executed and delivered by a duly authorized
agent effective as of the date first above written.

 

	
  Maker:

  
	
   

  
	
  SUMMA INDUSTRIES, a

  
	
  Delaware corporation

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Print
  Name:

  	
  Trygve
  M. Thoresen

  	
   

  
	
  Title:

  	
  Vice
  President & Secretary

  	
   

  
	
   

  
	
  Payee:

  
	
   

  
	
  STADIUM
                      ,
  L.P., a

  
	
                             
  limited partnership

  
	
   

  
	
  By:

  	
  Stadium
  Capital Management, LLC, General

  Partner

  
	
  By:

  	
   

  	
   

  
	
  Print
  Name:

  	
  Bradley
  R. Kent

  	
   

  
	
  Title:

  	
  Managing
  Director

  	
   

  

 

 

Schedule 1

 

Principal Payments

 

	
  Date:

  	
   

  	
  Amount
  Due:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 5, 2004

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 5, 2005

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 5, 2005

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 5, 2005

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 5, 2005

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
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  September 5, 2006

  	
   

  	
   

  	
   

  

 

 

EXHIBIT C

 

Amendment to Certificate of Designations

 

CERTIFICATE OF AMENDMENT

TO

CERTIFICATE OF DESIGNATIONS

OF THE 

SERIES A PREFERRED STOCK

OF

SUMMA INDUSTRIES

Pursuant to Section 151 of
the

 

General Corporation Law of the
State of Delaware

 

The undersigned, James R. Swartwout, President of Summa Industries, a
Delaware corporation (hereinafter, the “Corporation”), does hereby certify that
the following resolutions have been duly adopted by the Board of Directors of
this Corporation (the “Board of Directors”):

 

RESOLVED, that the following two sentences be inserted as the first and
second sentences to Section 3(b)(ii) of that certain Certificate of
Designations of the Series A Preferred Stock of Summa Industries:

 

“At any time prior to the third (3rd) anniversary of the
Series A Original Issuance Date, by mutual agreement of the Corporation and a
majority of the holders of the Series A Preferred Stock, the Corporation may
redeem the Series A Preferred Stock then outstanding at the Series A Redemption
Price plus a Premium equal to an amount which equals a twelve (12) percent
annual increase over the Original Series A Issue Price per share, in cash.  The term “cash” as used in this
Section 3(b)(ii) shall be deemed to include promissory notes issued by the
Corporation in respect of any cash payment to be made to any holder of Series A
Preferred Stock hereunder.”

 

The foregoing Amendment to the Certificate of Designations of the
Series A Preferred Stock of Summa Industries has been duly adopted in
accordance with the provisions of Section 242 and 228 of the General
Corporation Law of the State of Delaware.

 

IN WITNESS WHEREOF, this Certificate of Amendment to Certificate of
Designations of the Series A Preferred Stock of Summa Industries is executed on
this 29th day of April 2004.

 

	
   

  	
  SUMMA INDUSTRIES

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    James R. Swartwout, President

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
    Trygve M. Thoresen, SecretaryExhibit 10.1

 

PURCHASE AGREEMENT

 

A.            This PURCHASE
AGREEMENT (the “Agreement”),
dated March 19, 2004, is made and entered into by and among CRIIMI MAE Inc., a
Maryland corporation (the “Corporation”), and Neuberger Berman LLC, a Delaware
limited liability company (the “Adviser”), on behalf of the Accounts (as hereinafter
defined).

 

RECITALS

 

A.            The
Corporation desires, upon the terms and subject to the conditions contained
herein, to issue and sell to the Adviser, on behalf of certain investment
advisory accounts that the Adviser advises (each, an “Account” and collectively, the “Accounts”), 508,950 shares of
the Corporation’s Series B Cumulative Convertible Preferred Stock, par value
$0.01 per share (the “Offered Shares”).

 

B.            The
Adviser (on behalf of the Accounts) desires to purchase the Offered Shares on
the terms and subject to the conditions set forth in this Agreement.

 

C.            Such
purchase and sale will be made pursuant to a registration statement on Form S-3
(File No. 333-112259) (the “Registration Statement”), including the base prospectus
included therein (the “Base Prospectus”) and the prospectus supplement dated
the date hereof relating to the Offered Shares, which prospectus supplement and
Base Prospectus are referred to herein collectively as the “Prospectus.”

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the
premises and the mutual covenants and agreements contained in this Agreement,
the parties agree as follows:

 

1.             Issuance
and Sale of the Offered Shares. 
Subject to the terms and conditions set forth herein and in reliance
upon the respective representations and warranties of the parties set forth
herein, the Corporation hereby agrees to issue and sell to the Adviser (on
behalf of the Accounts), and the Adviser (on behalf of the Accounts) hereby
agrees to purchase from the Corporation, the Offered Shares for $25.42 per
Offered Share ($12,937,509.00 in aggregate, referred to herein as the “Purchase Price”).

 

2.             Delivery
of the Offered Shares at the Closing. 
Subject to the terms and conditions contained herein, the closing of the
purchase and sale of the Offered Shares to be acquired by the Adviser (on
behalf of the Accounts) from the Corporation under this Agreement (the “Closing”) shall take
place at the offices of Willkie Farr & Gallagher LLP, 787 Seventh Avenue,
New York, NY  10019 at 9:00 A.M. (New
York time) on March 23, 2004 or at such other time and date (the “Closing Date”) agreed
upon by the Corporation and the Adviser. 
At the Closing, the Corporation shall deliver to the Adviser

 

 

(on behalf of the Accounts) the
Offered Shares by notation on the registry of the Corporation’s transfer agent
against the wire transfer by the Adviser on the Closing Date of the Purchase
Price to the Corporation’s account.

 

3.             Adviser
Representations and Warranties.  The
Adviser represents and warrants to the Corporation that the following
statements are true and correct on the date hereof and will be true and correct
on the Closing Date.

 

3.1           The
Adviser and, to the knowledge of the Adviser, each holder of an Account, who is
not an individual, is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization.  The Adviser is registered as an investment
adviser under the Investment Advisors Act of 1940, as amended, with assets
under management of not less than $1,000,000.

 

3.2           The
Adviser:  (a) acts as a fiduciary
and has been granted investment control over each Account and, pursuant to such
investment control, is authorized to effect the purchase of the Offered Shares
as contemplated hereby; (b) is purchasing the Offered Shares on behalf of the
Accounts in the ordinary course of its business as a registered investment
adviser; (c) is not an underwriter (as defined in Section 2(a) of the Securities
Act of 1933, as amended (the “Securities Act”)) of the Offered Shares; (d) has not
received, directly or indirectly, any commission or other remuneration in
connection with the offer, purchase or sale of the Offered Shares; and (e) has
not received, directly or indirectly, any compensation in connection with the
transaction contemplated by this Agreement other than the advisory fees payable
pursuant to the investment advisory agreements entered into between Adviser and
each Account in the ordinary course of the Adviser’s business as a registered
investment adviser.

 

3.3           None
of (a) the Adviser and its affiliates (as defined under the Securities Exchange
Act of 1934, as amended) (each an “Affiliate” and collectively, the “Affiliates”), (b) to the knowledge of the
Adviser, any Account and its Affiliates, or (c) to the knowledge of the
Adviser, the Adviser and its Affiliates and the Accounts and their respective
Affiliates considered as a whole, is: 
(i) a “Related Party” (as such term is defined in Rule 312.03(b) of the
Rules of the New York Stock Exchange, Inc. (the “NYSE”)) of the Corporation; (ii) a
subsidiary, affiliate or other closely related person of a Related Party of the
Corporation; (iii) a holder of an interest equal to or more than either five
percent of the number of shares of issued and outstanding (calculated in
accordance with Rule 312.04(c) of the NYSE) common stock of the Corporation or
five percent of the “Voting Power Outstanding” (as such term is defined in Rule
312.04(e) of the Rules of the NYSE) of the Corporation; or (iv) a company or
entity in which a Related Party of the Corporation has a substantial direct or
indirect interest (as such terms are used in Rule 312.03(b)(3) of the Rules of
the NYSE).

 

2

 

3.4           Contemporaneous
with or prior to receiving this Agreement, the Adviser received the Base
Prospectus and prior to executing and delivering this Agreement, the Adviser
received the Prospectus.  Other than the
Prospectus, neither the Adviser, any of its Affiliates nor to the knowledge of
the Adviser, the Accounts or their respective Affiliates has received any other
prospectus or written offering material relating to the Offered Shares, whether
from the Corporation or any underwriter or placement agent.

 

3.5           The Adviser has all requisite power
and authority to enter into and perform its obligations under this Agreement.
The execution, delivery and performance by the Adviser of this Agreement have
been duly authorized by all necessary action. This Agreement has been duly and
validly executed and delivered by the Adviser and constitutes the legal, valid
and binding obligation of the Adviser and the Accounts, enforceable against it
and them in accordance with its terms.

 

3.6           The execution, delivery and
performance of this Agreement do not and will not (with or without the passage
of time or the giving of notice):  (a)
violate or conflict with the organizational documents of the Adviser or, to the
knowledge of the Adviser, any Account; (b) violate or conflict with any law
binding upon the Adviser or, to the knowledge of the Adviser, any Account; (c)
violate or conflict with the investment policies of any Account agreed upon by
the holder of such Account and the Adviser; or (d) require any consent, notice,
authorization, waiver by or filing with any governmental agency, administrative
body or other third party to be obtained or made by the Adviser or, to the
knowledge of the Adviser, any Account.

 

4.             Corporation’s
Representations and Warranties.  The
Corporation represents and warrants to the Adviser that the following
statements are true and correct on the date hereof and will be true and correct
on the Closing Date.

 

4.1           The
Registration Statement has been declared effective by the Securities and Exchange
Commission (the “SEC”).

 

4.2           To
the Corporation’s knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been initiated or threatened by the SEC.

 

4.3           The
Corporation has delivered the Prospectus to the Adviser.  Other than the Prospectus, the Corporation
has not delivered to the Adviser or any of its Affiliates any other prospectus
or written offering material relating to the Offered Shares, whether directly
or through any underwriter or placement agent.

 

4.4           The
Registration Statement, in the form in which it became or becomes effective and
also in such form as it may be when any post-effective amendment thereto shall
become effective and the Prospectus and any amendment

 

3

 

or supplement
thereto, when filed with the SEC, complied or will comply in all material
respects with the provisions of the Securities Act and the rules promulgated
thereunder.

 

4.5           The
Offered Shares are duly authorized for issuance and, upon payment of the
Purchase Price as contemplated by this Agreement, will be validly issued and
fully paid and non-assessable.

 

4.6           The Corporation is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation.

 

4.7           The Corporation has all requisite
corporate power and authority to enter into and perform its obligations under
this Agreement. The execution, delivery and performance by the Corporation of
this Agreement have been duly authorized by all necessary action. This
Agreement has been duly and validly executed and delivered by the Corporation
and constitutes the legal, valid and binding obligation of the Corporation,
enforceable against it in accordance with its terms.

 

4.8           The execution, delivery and
performance of this Agreement do not and will not (with or without the passage
of time or the giving of notice):  (a)
violate or conflict with the articles of incorporation or bylaws of the
Corporation; (b) violate or conflict with any law binding upon the Corporation;
(c) violate or conflict with, result in a breach of, constitute a default or
otherwise cause any loss of benefit under any material agreement or other
material obligation to which the Corporation is a party, or by which it or any
of its assets are otherwise bound; (d) result in the creation of any
encumbrance pursuant to, or give rise to any penalty, acceleration of remedies,
right of termination or otherwise cause any alteration of any rights or obligations
of any party under any material contract to which the Corporation is a party or
by which its assets are otherwise bound; or (e) require any consent, notice,
authorization, waiver by or filing with any governmental agency, administrative
body or other third party, except for the filing of the Registration Statement
and the Prospectus with the SEC.

 

5.             Conditions
to Adviser’s Obligations.  The
obligations of the Adviser (on behalf of the Accounts) are subject to the
satisfaction or waiver of the following conditions:

 

5.1           Receipt
by the Corporation of notice from the NYSE that the Offered Shares have been
duly listed on such exchange, subject to notice of issuance;

 

5.2           No
stop order suspending the effectiveness of the Registration Statement has been issued
and no proceeding, investigation or other inquiry with respect to the Offered
Shares or the Registration Statement has been initiated or threatened by the
SEC;

 

4

 

5.3           The
Adviser has received an officer’s certificate from the Corporation dated as of
the Closing Date stating that, as of the Closing Date, (a) the representations
and warranties set forth in Section 4 are true and correct in all
material respects as of the Closing Date;

 

5.4           The
issuance and sale of the Offered Shares as contemplated hereby does not violate
any federal or state law, rule or regulation; and

 

5.5           The
Corporation has filed the Prospectus with the SEC under Rule 424(b) promulgated
under the Securities Act.

 

6.             Conditions
to Corporation’s Obligations.  The
obligations of the Corporation are subject to the satisfaction or waiver of the
following conditions:

 

6.1           Receipt
by the Corporation of notice from the NYSE that the Offered Shares have been
duly listed on such exchange, subject to notice of issuance;

 

6.2           No
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceeding, investigation or other inquiry with respect to the
Offered Shares or the Registration Statement has been initiated or threatened
by the SEC;

 

6.3           The
issuance and sale of the Offered Shares as contemplated hereby does not violate
any federal or state law, rule or regulation; and

 

6.4           The
Corporation has received an officer’s certificate from the Adviser dated as of
the Closing Date stating that the representations and warranties set forth in Section
3 are true and correct in all material respects as of the Closing Date.

 

7.             Corporation
Covenant  The Corporation will use
commercially reasonable efforts to satisfy the conditions to Closing set forth
in Section 5.

 

8.             Adviser
Covenant.  The Adviser will use
commercially reasonable efforts to satisfy the conditions to Closing set forth
in Section 6.4.

 

9.             Termination.  Either party hereto may terminate this
Agreement if the conditions set forth in Sections 5 and 6 are not
satisfied or waived by 5:00 P.M. New York time on March 31, 2004 (or such later
date and/or time agreed upon by the Corporation and the Adviser).  Upon any such termination, the provisions of
this Agreement (other than this Section 9) shall be of no further force
or effect and neither the

 

5

 

Corporation, the Adviser nor
any of the Accounts shall have any rights or obligations under this Agreement
(except as provided in this Section 9).

 

10.           Expenses.  Each party hereto shall bear its own
expenses in connection with this Agreement; provided, however, that, at the
Closing, the Corporation shall pay the reasonable fees and expenses of Willkie
Farr & Gallagher LLP, counsel to the Adviser, not to exceed $10,000,
arising in connection with the negotiation, preparation, execution and delivery
of this Agreement and the effectuation of the Closing.

 

11.           Notices.  All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, or nationally recognized overnight express
courier postage prepaid, and shall be deemed given when so mailed and shall be
delivered as addressed as follows:

 

if to the Corporation, to:

 

CRIIMI MAE
Inc.

11200
Rockville Pike

Rockville,
MD  20852

Attention:  Chief Financial Officer

 

with a copy (which shall not constitute
notice) to:

 

Venable LLP

Two Hopkins
Plaza – Suite 1800

Baltimore,
MD  21201-2978

Attention:  Thomas D. Washburne, Jr., Esq.

 

or to such other person at such other place
as the Corporation shall designate to the Adviser in writing; and

 

if to the
Adviser:

 

Neuberger
Berman LLC

605 Third
Avenue

New York,
NY  10158

Attention:  Samantha Rick

 

with a copy (which shall not constitute
notice) to:

 

Willkie Farr
& Gallagher LLP

787 Seventh
Avenue

New York,
NY  10019

Attention: 
David K. Boston, Esq.

 

6

 

or to such other person at such other place
as the Adviser shall designate to the Corporation in writing.

 

12.           Other
Matters.  This Agreement may not be
modified or amended except pursuant to an instrument in writing signed by the
Corporation and the Adviser.  The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.  In case any provision
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland (without regard
to the laws relating to conflicts of laws of such state) and the federal laws
of the United States of America.  This
Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the parties parties.

 

[The next page is the signature page.]

 

7

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their duly authorized representatives
as of the day and year first above written.

 

	
   

  	
  CRIIMI MAE Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark R. Jarrell

  	
   

  
	
   

  	
  Name:

  	
  Mark R. Jarrell

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
  and Chief Operating Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NEUBERGER BERMAN LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles Kantor

  	
   

  
	
   

  	
  Name: 

  	
  Charles Kantor

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

8

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