**EXHIBIT 10.2**

 

SUMMA INDUSTRIES

STOCK OPTION PLAN

 

STOCK OPTION AGREEMENT

 

**(NONSTATUTORY STOCK OPTION)**

 

This Agreement is made and entered into effective as of               **,**by and between Summa Industries, a Delaware corporation(the “Corporation”), and**              **(the “Optionee”).

 

R E C I T A L S

 

A.  The Board of Directors of theCorporation (the “Board”) has adopted, and the stockholders of the Corporationhave approved, the Summa Industries 1995 Stock Option Plan (the “Plan”) inorder to provide key employees and directors of, and key consultants, vendors,customers, and others expected to provide significant services to, theCorporation, with a favorable opportunity to acquire shares of the Corporation’scommon stock (the “Stock”).

 

B.  Pursuant to the Plan optionsmay be granted which are intended to qualify as Incentive Stock Options whichare afforded special tax treatment under Section 422A of the InternalRevenue Code of 1986, as amended (the “Code”), as well as Nonstatutory Optionswhich are not intended to so qualify.

 

C.  The Board has by resolutionduly adopted that it is in the best interests of the Corporation and itsstockholders to grant to Optionee, as an employee of the Corporation, theoption to purchase shares of Stock on the terms and conditions provided for inthis Agreement, as an inducement to Optionee to continue to remain in theservice of the Corporation and to provide Optionee with additional incentivefor increasing his or her efforts and contributions to the success of theCorporation during such service.

 

NOW THEREFORE, it is agreed as follows:

 

1.  Definitions andIncorporation.  The terms used inthis Agreement shall have the meanings given to such terms in the Plan.  The Plan is hereby incorporated in and made apart of this Agreement as if fully set forth herein.  The Optionee hereby acknowledges receipt of acopy of the Plan.

 

2.  Grant of Option.  The Corporation hereby grants to Optionee asof the date hereof the right and option to purchase, on the terms and conditionshereinafter set forth, all or any part of an aggregate of      shares of Stock (the “Option”), subject to adjustment in accordance with Section 10of the Plan.  It is understood andacknowledged that the Option will be a Nonstatutory Stock Option which willnot qualify as an Incentive Stock Option under Section 422A of the Code.

 

3.  Option Price.            Theprice to be paid for Stock upon exercise of the Option or any part thereofshall be **$     ** pershare (the “Purchase Price”), which is equal to or greater than 85% of the FairMarket Value of one share of Stock as of the date hereof.

 

4.  Right to Exercise.  Subject to the conditions set forth in thisAgreement, the option shall become exercisable in four cumulative installmentsas follows:

 

(i)             Thefirst installment shall consist of 25% of the shares subject to the Option andshall become exercisable on the first anniversary of the date the Option isgranted.

 

(ii)          Thesecond installment shall consist of 25% of the shares subject to the Option andshall become exercisable on the second anniversary of the date the Option isgranted.

 

(iii)       Thethird installment shall consist of 25% of the shares subject to the Option andshall become exercisable on the third anniversary of the date the option isgranted.

 

(iv)      Thefourth installment shall consist of 25% of the shares subject to the Option andshall become exercisable on the fourth anniversary of the date the Option isgranted.

 

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The unexercised portion of the Option may not be exercised afterParticipant ceases to be an Employee, except as otherwise provided in paragraph7 below.

 

5.  Securities LawRequirements.  No part of the Optionshall be exercised if counsel to the Corporation determines that any applicableregistration requirement under the Securities Act of 1933, as amended, or anyother applicable requirement of Federal or state law has not been met.

 

6.  Term of Option.  The Option shall terminate on the earliest tooccur of (a) the      rd day of          ,20     at 4:00 P.M. Pacific Time, (b) theexpiration of the period described in Paragraph 7 below, (c) theexpiration of the period described in Paragraph 8 below, or (d) theexpiration of the period described in Paragraph 9 below.

 

7.  Exercise FollowingTermination of Service.  If theOptionee’s service as an employee of the Corporation terminates for any reasonother than death, disability or retirement, the Option (to the extent it hasnot previously been exercised and is then exercisable in accordance with theprovisions of paragraph 4 above) will terminate 30 days after such terminationof service.  The foregoingnotwithstanding, the Option shall cease to be exercisable on the date of suchtermination if the termination is for cause or if the Optionee upon suchtermination becomes an employee, director or consultant of a person who is indirect competition with the Corporation. For this purpose, “cause” shall mean conviction of a felony,misappropriation of assets of the Corporation or any subsidiary, continued orrepeated insobriety, continued or repeated absence from service during theusual working hours of the Optionee’s position for reason other than disabilityor sickness, or refusal to carry out the reasonable directions of theCorporation’s executive officers or of the Board.

 

8.  Exercise Following Deathor Disability.  If the Optionee’sservice with the Corporation terminates by reason of the Optionee’s death ordisability, or if the Optionee dies after termination of service but while theOption would have been exercisable hereunder, the Option (to the extent it hasnot previously been exercised and is then exercisable in accordance with theprovisions of paragraph 4 above) may be exercised at any time prior to andincluding, but not later than the termination date set forth in paragraph 6(a) above.  In the case of death, the exercise may bemade by Optionee’s representative or by the person entitled thereto underOptionee’s will or the laws of descent and distribution; provided that suchrepresentative or such person consents in writing to abide by and be subject tothe terms of this Agreement and such writing is delivered to the President ofthe Corporation.

 

9.  Exercise FollowingRetirement.  If the Optionee’sservice with the Corporation terminates by reason of retirement (the voluntaryretirement of employment upon attainment of 65 years of age and completion of20 years of service), the Option (to the extent it has not previously beenexercised and is then exercisable in accordance with the provisions ofparagraph 4 above) may be exercised at any time prior to and including, but notlater than the termination date set forth in paragraph 6(a) above.

 

10.  Time of Termination ofService.  For the purposes of thisAgreement, Optionee’s service shall be deemed to have terminated on the earlierof (a) the date when Optionee’s service in fact terminated or (b) thedate when the Optionee gave or received written notice that his or her serviceis to terminate.

 

11.  Nontransferability.  Unless the Corporation otherwise consents inwriting, the option and all rights and privileges granted hereunder shall benon-assignable and non-transferable by the Optionee, either voluntarily or byoperation of law, except by will or by operation of the laws of descent anddistribution, shall not be pledged or hypothecated in any way, and shall beexercisable during lifetime only by the Optionee.  Except as otherwise provided herein, anyattempted alienation, assignment, pledge, hypothecation, attachment, executionor similar process, whether voluntary or involuntary, with respect to all orany part of the Option or any right thereunder, shall be null and void and, atthe Corporation’s option, shall cause all of Optionee’s rights under thisAgreement to terminate.

 

12.  Effect of Exercise.  Upon exercise of all or any part of theOption, the number of shares of Stock subject to option under this Agreementshall be reduced by the number of shares with respect to which such exercise ismade.

 

13.  Method of Exercise.  Each exercise of the Option shall be by meansof a written notice of exercise in substantially the form prescribed from timeto time by the Board delivered to the Secretary of the Corporation at itsprincipal office and accompanied by payment in full of the option price foreach share of Stock purchased under the Option. Such notice shall specify the number of shares of Stock with respect towhich the Option is exercised and shall be signed by the person exercising theOption.  If the Option is exercised by aperson other than the Optionee, such notice shall be accompanied by proof,reasonably satisfactory to the Corporation, of such person’s right to exercisethe Option.

 

The Purchase Price specified in paragraph 3 above shall be paid in fullupon the exercise of the Option (i) by cash, 

 

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in United States dollars; by the surrender of Shares in good form fortransfer, owned by the person exercising the Option and having a Fair MarketValue on the date of exercise equal to the Purchase Price, or in anycombination of cash and Shares, as long as the sum of the cash so paid and theFair Market Value of the Shares so surrendered equal the Purchase Price; (ii) bycancellation of indebtedness owed by the Corporation to the Optionee; or (iii) byany combination of the foregoing.

 

14.  Withholding Taxes.  If the Optionee is an employee or formeremployee of the Corporation when all or part of the Option is exercised, theCorporation may require the Optionee to deliver payment of any withholdingtaxes (in addition to the Option exercise price) in cash with respect to thedifference between the Option exercise price and the fair market value of theStock acquired upon exercise.

 

15.  Issuance of Shares.  Subject to the foregoing conditions, theCorporation, as soon as reasonably practicable after receipt of a proper noticeof exercise and without transfer or issue tax or other incidental expense tothe person exercising the Option, shall deliver to such person at the principaloffice of the Corporation, or such other location as may be acceptable to theCorporation and such person, one or more certificates for the shares of Stockwith respect to which the option has been exercised.  Such shares shall be fully paid andnonassessable and shall be issued in the name of such person.  However, at the request of the Optionee, suchshares may be issued in the names of the Optionee and his or her spouse (a) asjoint tenants with right of survivorship, (b) as community property or (c) astenants in common without right of survivorship.

 

16.  Limitation of Optionee’sRights.  Neither Optionee nor anyperson entitled to exercise the Option shall be or have any of the rights of astockholder of the Corporation in respect of any share issuable upon theexercise of the Option unless and until a certificate or certificates representingshares of Stock shall have been issued and delivered upon exercise of theOption in full or in part.  No adjustmentshall be made for dividends or other rights for which the record date is priorto the date such stock certificates are issued.

 

17.  Consent Required toTransfer.  In connection with anyunderwritten public offering by the Corporation of its equity securitiespursuant to an effective registration statement filed under the 1933 Act,including the Corporation’s initial public offering, Optionee shall not sell,make any short sale of, loan, hypothecate, pledge, grant any option for thepurchase of, or otherwise dispose or transfer for value or otherwise agree toengage in any of the foregoing transactions with respect to, any Stock purchasedunder the Option without the prior written consent of the Corporation or itsunderwriters.  Such limitations shall bein effect for such period of time from and after the effective date of suchregistration statement as may be requested by the Corporation or suchunderwriters.

 

18.  Notices.  Any notice to the Corporation contemplated bythis Agreement shall be addressed to it in care of its President; any notice tothe Optionee shall be addressed to him or her at the address on file with theCorporation on the date hereof or at such other address as Optionee mayhereafter designate in a writing delivered to the Corporation as providedherein.

 

19.  Interpretation.  The interpretation, construction, performanceand enforcement of this Agreement shall lie within the sole discretion of theBoard, and the Board’s determinations shall be conclusive and binding on allinterested persons.

 

20.  Governing Law.  This Agreement has been made, executed anddelivered in, and the interpretation, performance and enforcement hereof shallbe governed by and construed under the laws of the State of California.

 

IN WITNESS WHEREOF, each of the parties hereto has executed thisAgreement, in the case of the Corporation by its duly authorized office, as theday and year first above written.

 
|   | Summa Industries,      |
|--------|------------------------|
|   | a Delaware corporation |
|   |                   |
|   | By:                    |   |   |
|   | Title:                 |   |   |
|   |                   |
|   | Optionee:              |   |   |
|   | Social Security No.    |   |   |
|        |                        |  |  |  |  |  |  |

 

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