EXHIBIT 10.1
SUMMA INDUSTRIES
CALNETICS ACQUISITION STOCK OPTION PLAN
1. PURPOSE. The Corporation has recently entered into an agreement to
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acquire Calnetics Corporation, a California corporation ("Calnetics"), pursuant
to which Calnetics will become a wholly-owned subsidiary of the Corporation. In
connection with the acquisition of Calnetics, the Corporation is required to
grant to certain employees of Calnetics options to purchase shares of the Common
Stock (defined below) of the Corporation in exchange for their options to
purchase shares of the common stock of Calnetics. This Plan is intended to set
forth the terms and conditions upon which such options would be granted, and to
provide for the grant of additional options to purchase shares of the Common
Stock to other key employees and directors of, and key consultants, vendors,
customers, and others expected to provide significant services to, Calnetics, as
a subsidiary of the Corporation, to encourage proprietary interest in Calnetics
and the Corporation, to encourage such key employees to remain in the employ of
Calnetics, to attract new employees with outstanding qualifications, and to
afford additional incentive to consultants, vendors, customers, and others to
increase their efforts in providing significant services to Calnetics and the
Corporation.
2. DEFINITIONS.
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(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the committee, if any, appointed by the
Board in accordance with Section 4 of the Plan.
(d) "Common Stock" shall mean the Common Stock, par value $.001 per
share, of the Corporation.
(e) "Corporation" shall mean Summa Industries, a California
corporation.
(f) "Disability" shall mean the condition of an Employee who is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve (12) months.
(g) "Employee" shall mean an individual who is employed (within the
meaning of Code Section 3401 and the regulations thereunder) by the Corporation
or a Subsidiary.
(h) "Exercise Price" shall mean the price per Share of Common Stock,
determined by the Board or the Committee, at which an Option may exercised.
(i) "Fair Market Value" shall mean the value of one (1) Share of Common
Stock, determined as follows:
(1) If the Shares are traded on an exchange, the price at which
Xxxxxx traded at the close of business on the date of valuation;
(2) If the Shares are traded over-the-counter on the NASDAQ
System, the closing price if one is available, or the mean between the bid
and asked prices on said System at the close of business on the date of
valuation; and
(3) If neither (1) nor (2) applies, the fair market value as
determined by the Board or the Committee in good faith. Such determination
shall be conclusive and binding on all persons.
(j) "Incentive Stock Option" shall mean an option described in
Section 422 of the Code.
(k) "Nonstatutory Stock Option" shall mean an option not described in
Section 422(b), 422A(b), 423(b) or 424(b) of the Code.
(l) "Option" shall mean any stock granted pursuant to the Plan.
(m) "Optionee" shall mean an employee who has received an Option.
(n) "Plan" shall mean this Calnetics Acquisition Stock Option Plan, as
it may be amended from time to time.
(o) "Purchase Price" shall mean the Exercise Price times the number of
Shares with respect to which an Option is exercised.
(p) "Retirement" shall mean the voluntary termination of employment by
an Employee upon the attainment of age sixty-five (65) and the completion of not
less than twenty (20) years of service with the Corporation or a Subsidiary.
(q) "Share" shall mean one (1) share of Common Stock, adjusted in
accordance with Section 10 of the Plan (if applicable).
(r) "Subsidiary" shall mean Calnetics and any other corporation at
least fifty percent (50%) of the total combined voting power of which is owned
by the Corporation or by another Subsidiary.
3. EFFECTIVE DATE. The Plan was adopted by the Board on September __,
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1997, which shall be the effective date of the Plan.
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4. ADMINISTRATION. The Plan shall be administered by the Board, or by a
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committee appointed by the Board which shall consist of not less than three (3)
members (the "Committee"). The Board shall appoint one of the members of the
Committee, if there be one, as Chairman of the Committee. If a Committee has
been appointed, the Committee shall hold meetings at such times and places as it
may determine. Acts of a majority of the Committee at which a quorum is
present, or acts reduced to or approved in writing by a majority of the members
of the Committee, shall be the valid acts of the Committee. The Board, or the
Committee if there be one, shall from time to time at its discretion select the
Employees, directors and consultants who are to be granted Options, determine
the number of Shares to be optioned to each Optionee and designate such Options
such as Incentive Stock Options or Non-statutory Stock Options, except that no
Incentive Stock Option may be granted to a non-Employee director or a non-
Employee consultant. Notwithstanding the foregoing, no Incentive Stock Options
may be granted under the Plan unless and until the Plan has been approved by the
corporation's shareholders. A member of the Board or a Committee member shall
in no event participate in any determination relating to Options held by or to
be granted to such Board or Committee member. The interpretation and
construction by the Board, or by the Committee if there be one, of any provision
of the Plan or of any Option granted thereunder shall be final. No member of
the Board or of the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any Option granted thereunder.
5. PARTICIPATION.
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(a) Eligibility. The Optionees shall be such persons as the Board, or
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the Committee if there be one, may select from among the following classes of
persons, subject to the terms and conditions of (b) below:
(1) Employees of Calnetics (who may be officers and/or
directors); and
(2) Consultants, vendors, customers, and others expected to
provide significant services to the Calnetics.
For purposes of this Plan, an Optionee who is a director or a
consultant, vendor, customer, or other provider of significant services to
Calnetics shall be deemed to be an Employee, and service as a director,
consultant, vendor, customer, or other provider of significant services to
Calnetics shall be deemed to be employment, except that no Incentive Stock
Option may be granted to a non-Employee director or non-Employee consultant,
vendor, customer, or other provider of significant services to Calnetics, and
except that no Nonstatutory Stock Option may be granted to a non-Employee
director or non-Employee consultant, vendor, customer, or other provider of
significant services to Calnetics other than upon a finding by the Board, or the
Committee if there be one, that the value of the services rendered or to be
rendered to Calnetics by such non-Employee director or non-Employee consultant,
vendor, customer, or other provider of services is at least equal to the value
of the option or options granted.
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(b) Ten-Percent Shareholders. An Employee who owns more than ten
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percent (10%) of the total combined voting power of all classes of outstanding
stock of the Corporation, its parent or any of its Subsidiaries shall not be
eligible to receive an Incentive Stock Option unless (i) the Exercise Price of
the Shares subject to such Option is at least one hundred ten percent (110%) of
the Fair Market Value of such Shares on the date of grant and (ii) such Option
by its terms is not exercisable after the expiration of five (5) years from the
date of grant.
(c) Stock Ownership. For purposes of (b) above, in determining stock
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ownership an Employee shall be considered as owning the stock owned, directly or
indirectly, by or for his brothers, sisters, spouses, ancestors and lineal
descendants. Stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be considered as being owned proportionately
by or for its shareholders, partners or beneficiaries. Stock with respect to
which such Employee holds an Option shall not be counted.
(d) Outstanding Stock. For purposes of (b) above, "outstanding stock"
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shall include all stock actually issued and outstanding immediately after the
grant of the Option to the Optionee. "Outstanding stock" shall not include
shares authorized for issue under outstanding Options held by the Optionee or by
any other person.
6. STOCK. The stock subject to Options granted under the Plan shall be
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Shares of the Corporation's authorized but unissued or reacquired Common Stock.
The aggregate number of Shares which may be issued upon exercise of Options
under the Plan shall not exceed 400,000 shares. The number of Shares subject to
Options outstanding at any time shall not exceed the number of Shares remaining
available for issuance under the Plan. In the event that any outstanding Option
for any reason expires or is terminated, the Shares allocable to the unexercised
portion of such Option may again be made subject to any Option. The limitations
established by this Section 6 shall be subject to adjustment in the manner
provided in Section 10 hereof upon the occurrence of an event specified therein.
7. TERMS AND CONDITIONS OF OPTIONS.
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(a) Stock Option Agreements. Options shall be evidenced by written
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stock option agreements in such form as the Board, or the Committee if there be
one, shall from time to time determine. Such agreements shall comply with and
be subject to the terms and conditions set forth below.
(b) Number of Shares. Each Option shall state the number of Shares to
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which it pertains and shall provide for the adjustment thereof in accordance
with the provisions of Section 10 hereof.
(c) Exercise Price. Each Option shall state the Exercise Price. The
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Exercise Price in the case of any Incentive Stock Option shall not be less than
the Fair Market Value on the date of grant and, in the case of any Incentive
Stock Option granted to an Optionee described in
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Section 5(b) hereof, shall not be less than one hundred ten percent (110%) of
the Fair Market Value on the date of grant. The Exercise Price in the case of
any Nonstatutory Stock Option shall not be less than 85% of the Fair Market
Value on the date of grant.
(d) Medium and Time of Payment. The Purchase Price shall be payable
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in full in United States dollars upon the exercise of the Option; provided,
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however, that if the applicable Option Agreement so provides the Purchase Price
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may be paid (i) by the surrender of Shares in good form for transfer, owned by
the person exercising the Option and having a Fair Market Value on the date of
exercise equal to the Purchase Price, or in any combination of cash and Shares,
as long as the sum of the cash so paid and the Fair Market Value of the Shares
so surrendered equal the Purchase Price, (ii) by cancellation of indebtedness
owed by the Corporation to the Optionee, (iii) with a full recourse promissory
note executed by the Optionee, or (iv) any combination of the foregoing. The
interest rate and other terms and conditions of such note shall be determined by
the Board, or the Committee if there be one. The Board, or the Committee if
there be one, may require that the Optionee pledge his or her Shares to the
Corporation for the purpose of securing the payment of such note. In no event
shall the stock certificate(s) representing such Shares by released to the
Optionee until such note shall be been paid in full. In the event the
Corporation determines that it is required to withhold state or Federal income
tax as a result of the exercise of an Option, as a condition to the exercise
thereof, an Employee may be required to make arrangements satisfactory to the
Corporation to enable it to satisfy such withholding requirements.
(e) Term and Nontransferability of Options. Each Option shall state
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the time or times, and the conditions upon which, all or part thereof becomes
exercisable. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted, and no Incentive Stock Option granted to an
Optionee described in Section 5(b) hereof shall be exercisable after the
expiration of five (5) years from the date it was granted. During the lifetime
of the Optionee, the Option shall be exercisable only by the Optionee and shall
not be assignable or transferable. In the event of the Optionee's death, the
Option shall not be transferable. In the event of the Optionee's death, the
Option shall not be transferable by the Optionee other than by will or the laws
of descent and distribution.
(f) Termination of Employment, Except by Death, Disability or
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Retirement. If an Optionee ceases to be an Employee for any reason other than
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his or her death, Disability or Retirement, such Optionee shall have the right,
subject to the restrictions of (e) above, to exercise the Option at any time
within three months after termination of employment, but only to the extent
that, at the date of termination of employment, the Optionee's right to exercise
such Option had accrued pursuant to the terms of the applicable option agreement
and had not previously been exercised; provided, however, that if the Optionee
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was terminated for cause, any Option not exercised in full prior to such
termination shall be canceled. For this purpose, the employment relationship
shall be treated as continuing intact while the Optionee is on military leave,
sick leave or other bona fide leave of absence (to be determined in the sole
discretion of the Committee). The foregoing notwithstanding, (i) in the case of
an Incentive Stock Option, employment shall not
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be deemed to continue beyond the ninetieth (90th) day after the Optionee's
reemployment rights are guaranteed by statute or by contract, and (ii) in the
case of a Nonstatutory Option, the Board, or the Committee if there be one, may
extend or otherwise modify the period of time specified herein during which the
Option may be exercised following termination of Optionee's employment.
(g) Death of Optionee. If an Optionee dies while an Employee, or
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after ceasing to be an Employee but during the period while he or she could have
exercised the Option under this Section 7, and has not fully exercised the
Option, then the Option may be exercised in full, subject to the restrictions of
(e) above, at any time within twelve (12) months after the Optionee's death, by
the executors or administrators of his or her estate or by any person or persons
who have acquired the Option directly from the Optionee by bequest or
inheritance, but only to the extent that, at the date of death, the Optionee's
right to exercise such Option had accrued and had not been forfeited pursuant to
the terms of the applicable Option Agreement and had not previously been
exercised. The foregoing notwithstanding, in the case of a Nonstatutory Option,
the Board, or the Committee if there be one, may extend or otherwise modify the
period of time specified herein during which the Option may be exercised
following termination of Optionee's employment.
(h) Disability of Optionee. If an Optionee ceases to be an Employee
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by reason of Disability, such Optionee shall have the right, subject to the
restrictions of (f) above, to exercise the Option at any time within twelve (12)
months after termination of employment, but only to the extent that, at the date
of termination of employment, the Optionee's right to exercise such Option had
accrued pursuant to the terms of the applicable Option Agreement and had not
previously been exercised. The foregoing notwithstanding, in the case of a
Nonstatutory Option, the Board, or the Committee if there be one, may extend or
otherwise modify the period of time specified herein during which the Option may
be exercised following termination of Optionee's employment.
(i) Retirement of Optionee. If an Optionee ceases to be an Employee
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by reason of Retirement, such Optionee shall have the right, subject to the
restrictions of (e) above, to exercise the Option at any time within three (3)
months after termination of employment, but only to the extent that, at the date
of termination of employment, the Optionee's right to exercise such Option had
accrued pursuant to the terms of the applicable Option Agreement and had not
previously been exercised. The foregoing notwithstanding, in the case of a
Nonstatutory Option, the Board, or the Committee if there be one, may extend or
otherwise modify the period of time specified herein during which the Option may
be exercised following termination of Optionee's employment.
(j) Rights as a Shareholder. An Optionee, or a transferee of an
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Optionee, shall have no rights as a shareholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 10 hereof.
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(k) Modification, Extension and Renewal of Option. Within the
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limitations of the Plan, the Board, or the Committee, if there be one, may
modify, extend or renew outstanding Options or accept the cancellation of
outstanding Options (to the extent not previously exercised) for the granting of
new Options in substitution therefor. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, alter or
impair any rights or obligations under any Option previously granted.
(l) Other Provisions. The stock option agreements authorized under
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the Plan may contain such other provisions not inconsistent with the terms of
the Plan (including, without limitation, restrictions upon the exercise of the
Option) as the Board, or the Committee, if there be one, shall deem advisable.
8. LIMITATION ON VALUE OF EXERCISABLE SHARES. In the case of Incentive
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Stock Options granted hereunder, the aggregate Fair Market Value (determined as
of the date of the grant thereof) of the Shares with respect to which Incentive
Stock Options become exercisable by any employee of the Company for the first
time during any calendar year (under this Plan and all other plans maintained by
the Corporation, its parent or its Subsidiaries) shall not exceed $100,000.
9. TERM OF PLAN. Options may be granted pursuant to the Plan until the
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expiration of ten (10) years from the effective date of the Plan.
10. RECAPITALIZATIONS. Subject to any required action by shareholders,
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the number of Shares covered by the Plan as provided in Section 6 hereof, the
number of Shares covered by each outstanding Option and the Exercise Price
thereof shall be proportionately adjusted for any increase of decrease in the
number of issued Shares resulting from a subdivision or consolidation of Shares
or the payment of a stock dividend (but only of Common Stock) or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Corporation. Subject to any required action by
shareholders, if the Corporation is the surviving corporation in any merger or
consolidation, each outstanding Option shall pertain and apply to the securities
to which a holder of the number of Shares subject to the Option would have been
entitled. In the event of a merger or consolidation in which the Corporation is
not the surviving corporation, the date of exercisability of each outstanding
Option shall be accelerated to a date prior to such merger or consolidation,
unless the agreement of merger or consolidation provides for the assumption of
the Option by the successor to the Corporation. To the extent that the
foregoing adjustments relate to securities of the Corporation, such adjustments
shall be made by the Board, or the Committee, if there be one, whose
determination shall be conclusive and binding on all persons. Except as
expressly provided in this Section 10, the Optionee shall have no rights by
reason of subdivision or consolidation of shares of stock of any class, the
payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class or by reason of any dissolution, liquidation,
merger or consolidation or spin-off of assets or stock of another corporation,
and any issue by the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or
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power to the Corporation to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business assets.
11. SECURITIES LAW REQUIREMENTS.
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(a) Legality of Issuance. The issuance of any Shares upon the
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exercise of any Option and the grant of any Option shall be contingent upon the
following:
(1) the Corporation and the Optionee shall have taken all actions
required to register the Shares under the Securities Act of 1933, as
amended (the "Act"), and to qualify the Option and the Shares under any and
all applicable state securities or "blue sky" laws or regulations, or to
perfect an exemption from the respective registration and qualification
requirements thereof;
(2) any applicable listing requirement of any stock exchange on
which the Common Stock is listed shall have been satisfied; and
(3) any other applicable provision of state of Federal law shall
have been satisfied.
(b) Restrictions on Transfer. Regardless of whether the offering and
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sale of Shares under the plan has been registered under the Act or has been
registered or qualified under the securities laws of any state, the Corporation
may impose restrictions on the sale, pledge or other transfer of such Shares
(including the placement of appropriate legends on stock certificates) if, in
the judgment of the Corporation and its counsel, such restrictions are necessary
or desirable in order to achieve compliance with the provisions of the Act, the
securities laws of any state or any other law. In the event that the sale of
Shares under the Plan is not registered under the Act but an exemption is
available which required an investment representation or other representation,
each Optionee shall be required to represent that such Shares are being acquired
for investment, and not with a view to the sale or distribution thereof, and to
make such other representations as are deemed necessary or appropriate by the
Corporation and its counsel. Any determination by the Corporation and its
counsel in connection with any of the matters set forth in this Section 11 shall
be conclusive and binding on all persons. Stock certificates evidencing Shares
acquired under the Plan pursuant to an unregistered transaction shall bear the
following restrictive legend and such other restrictive legends as are required
or deemed advisable under the provisions of any applicable law:
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). ANY TRANSFER OF SUCH SECURITIES
WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER SUCH REGISTRATION IS
UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT."
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(c) Registration or Qualification of Securities. The Corporation may,
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but shall not be obligated to register or qualify the issuance of Options and/or
the sale of Shares under the Act or any other applicable law. The Corporation
shall not be obligated to take any affirmative action in order to cause the
issuance of Options or the sale of Shares under the plan to comply with any law.
(d) Exchange of Certificates. If, in the opinion of the Corporation
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and its counsel, any legend placed on a stock certificate representing shares
sold under the Plan is no longer required, the holder of such certificate shall
be entitled to exchange such certificate for a certificate representing the same
number of Shares but lacking such legend.
12. AMENDMENT OF THE PLAN. The Board may from time to time, with respect
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to any Shares at the time not subject to Options, suspend or discontinue the
plan or revise or amend it in any respect whatsoever except that, without the
approval of the Corporation's shareholders if they have previously approved the
Plan, no such revision or amendment shall:
(a) Increase the number of Shares subject to the Plan;
(b) Change the designation in Section 5 hereof with respect to the
classes of persons eligible to receive Options; or
(c) Amend this Section 12 to defeat its purpose.
13. APPLICATION OF FUNDS. The proceeds received by the Corporation from
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the sale of Common Stock pursuant to the exercise of an Option will be used for
general corporate purposes.
14. EXECUTION. To record the adoption of the Plan in the form set forth
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above by the Board effective as of September , 1997, the Corporation has
caused this Plan to be executed in the name and on behalf of the Corporation
where provided below by an officer of the Corporation thereunto duly authorized.
SUMMA INDUSTRIES
By:_________________________________________
President
By:_________________________________________
Secretary
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