EXHIBIT 10.2
MERILUS, INC.
2000 STOCK PLAN
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1. Purposes of the Plan. The purposes of this Stock Plan are to attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to Employees, Directors and Consultants and to
promote the success of the Company's business. Options granted under the Plan
may be Incentive Stock Options or Non-statutory Stock Options, as determined by
the Administrator at the time of grant. Stock Purchase Rights may also be
granted under the Plan.
2. Definitions. As used in this Stock Plan, the following definitions will
apply:
(a) "Administrator" means the Board or any of its Committees as will be
administering the Plan under Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws,
U.S. federal and state securities laws, the Code, any stock exchange
or quotation system on which the Common Stock is listed or quoted and
the applicable laws of any other country or jurisdiction where Options
or Stock Purchase Rights are granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the Board
under Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Merilus, Inc., a Nevada corporation.
(h) "Consultant" means any person who is engaged by the Company or any
Parent or Subsidiary to render consulting or advisory services to such
entity.
(i) "Director" means a member of the Board of Directors of the Company.
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider will not cease to be an Employee in the case of (i)
any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. For purposes of Incentive Stock Options,
no such leave may exceed ninety days, unless re-employment on
expiration of such leave is guaranteed by statute or contract. If
re-employment on expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any
Incentive Stock Option held by the Optionee will cease to be treated
as an Incentive Stock Option and will be treated for tax purposes as a
Non-statutory Stock Option. Neither service as a Director nor payment
of a director's fee by the Company will be sufficient to constitute
"employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value will be the closing
sales price for the stock (or the closing bid, if no sales were
reported) as quoted on the exchange or system for the last market
trading day prior to the time of determination, as reported in
The Wall Street Journal or any other source as the Administrator
considers reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair
Market Value will be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior
to the day of determination; or
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(iii)In the absence of an established market for the Common Stock,
the Fair Market Value will be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
(o) "Non-statutory Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.
(p) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(q) "Option" means a stock option granted pursuant to the Plan.
(r) "Option Agreement" means a written or electronic agreement between the
Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms
and conditions of the Plan.
(s) "Option Exchange Program" means a program whereby outstanding Options
are exchanged for Options with a lower exercise price.
(t) "Optioned Stock" means the Common Stock subject to an Option or a
Stock Purchase Right.
(u) "Optionee" means the holder of an outstanding Option or Stock Purchase
Right granted under the Plan.
(v) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(w) "Plan" means this 2000 Stock Plan.
(x) "Restricted Stock" means shares of Common Stock acquired pursuant to a
grant of a Stock Purchase Right under Section 11 below.
(y) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(z) "Section 16(b)" means Section 16(b) of the Exchange Act.
(aa) "Service Provider" means an Employee, Director or Consultant.
(bb) "Share" means a share of the Common Stock, as adjusted under Section
12 below.
(cc) "Stock Purchase Right" means a right to purchase Common Stock pursuant
to Section 11 below.
(dd) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the
Plan, the maximum aggregate number of Shares that may be subject to option and
sold under the Plan is 1,400,000 Shares. The Shares may be authorized but
unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable without
having been exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased underlying Shares will become available for future
grant or sale under the Plan (unless the Plan has terminated). However, Shares
that have actually been issued under the Plan, on exercise of either an Option
or Stock Purchase Right, will not be returned to the Plan and will not become
available for future distribution under the Plan, except that if Shares of
Restricted Stock are repurchased by the Company at their original purchase
price, the Shares will become available for future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered by
different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the Administrator determines
it to be desirable to qualify Options granted hereunder as
"performance-based compensation," within the meaning of Section
162(m) of the Code, the Plan will be administered by a Committee
of two or more "outside directors," within the meaning of Section
162(m) of the Code.
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(iii)Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the Plan will
be administered by (A) the Board or (B) a Committee, which
committee will be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan
and, in the case of a Committee, the specific duties delegated by the
Board to the Committee, and subject to the approval of any relevant
authorities, the Administrator will have the authority in its
discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may from time to time be granted hereunder;
(iii)to determine the number of Shares to be covered by each award
granted under the Plan;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, of any Option or Stock
Purchase Right granted under the Plan. The terms and conditions
include, but are not limited to, the exercise price, the time or
times when Options or Stock Purchase Rights may be exercised
(which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Stock Purchase
Right or underlying Common Stock, based in each case on the
factors as the Administrator, in its sole discretion, will
determine;
(vi) to determine whether and under what circumstances an Option may
be settled in cash under subsection 9(e) instead of Common Stock;
(vii)to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock
covered by the Option has declined since the date the Option was
granted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and regulations relating to
the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax
treatment under foreign tax laws;
(x) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be
issued on exercise of an Option or Stock Purchase Right that
number of Shares having a Fair Market Value equal to the amount
required to be withheld. The Fair Market Value of the Shares to
be withheld will be determined on the date that the amount of tax
to be withheld is to be determined. All elections by Optionees to
have Shares withheld for this purpose will be made in the form
and under the conditions as the Administrator may consider
necessary or advisable; and
(xi) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.
(c) Effect of Administrator's Decision. All decisions, determinations and
interpretations of the Administrator will be final and binding on all
Optionees.
5. Eligibility.
(a) Non-statutory Stock Options and Stock Purchase Rights may be granted
to Service Providers. Incentive Stock Options may be granted only to
Employees.
(b) Each Option will be designated in the Option Agreement as either an
Incentive Stock Option or a Non-statutory Stock Option. However,
notwithstanding the designation, to the extent that the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Optionee during any
calendar year (under all plans of the Company and any Parent or
Subsidiary) exceeds $100,000, the Options will be treated as Non-
statutory Stock Options. For purposes of this Section 5(b), Incentive
Stock Options will be taken into account in the order in which they
were granted. The Fair Market Value of the Shares will be determined
as of the time the Option with respect to the Shares is granted.
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(c) Neither the Plan nor any Option or Stock Purchase Right will confer on
any Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor will it
interfere in any way with his or her right or the Company's right to
terminate the relationship at any time, with or without cause.
(d) The following limitations will apply to grants of Options:
(i) No Service Provider will be granted, in any fiscal
year of the Company, Options to purchase more than
___________ Shares.
(ii) In connection with his or her initial service, a
Service Provider may be granted Options to purchase
up to an additional _________ Shares which will not
count against the limit set forth in subsection (i)
above.
(iii) The foregoing limitations will be adjusted
proportionately in connection with any change in the
Company's capitalization as described in Section 12.
(iv) If an Option is cancelled in the same fiscal year of
the Company in which it was granted (other than in
connection with a transaction described in Section
12), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above.
For this purpose, if the exercise price of an Option
is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new
Option.
6. Term of Plan. The Plan will become effective on its adoption by the Board. It
will continue in effect for a term of ten (10) years unless terminated at an
earlier date under Section 14 of the Plan.
7. Term of Option. The term of each Option will be stated in the Option
Agreement; provided, however, that the term will be no more than ten (10) years
from the date of grant. In the case of an Incentive Stock Option granted to an
Optionee who, at the time the Option is granted, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option will be five (5)
years from the date of grant or a shorter term as may be provided in the Option
Agreement.
8. Option Exercise Price and Consideration.
(a) Option Exercise Price. The per share exercise price for the Shares to
be issued on exercise of an Option will be the price as is determined
by the Administrator, but will be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of
grant of the Option, owns stock representing
more than ten percent (10%) of the voting
power of all classes of stock of the Company
or any Parent or Subsidiary, the exercise
price will be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any other Employee, the per Share
exercise price will be no less than 100% of
the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Non-statutory Stock Option, the per
Share exercise price will be determined by the
Administrator. In the case of a Non-statutory Stock
Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of
the Code, the per Share exercise price will be no
less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price other than as
required above pursuant to a merger or other
corporate transaction.
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(b) Consideration. The consideration to be paid for the Shares to be
issued on exercise of an Option, including the method of payment, will
be determined by the Administrator (and, in the case of an Incentive
Stock Option, will be determined at the time of grant). The
consideration may consist of:
(i) cash,
(ii) check,
(iii) promissory note,
(iv) other Shares which:
(A) in the case of Shares acquired on exercise
of an Option, have been owned by the
Optionee for more than six months on the
date of surrender, and
(B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise
price of the Shares as to which the Option
will be exercised,
(v) consideration received by the Company under a
cashless exercise program implemented
by the Company in connection with the Plan, or
(vi) any combination of the foregoing methods of payment.
In making its determination as to the type of consideration to
accept, the Administrator will consider if acceptance of the
consideration may be reasonably expected to benefit the
Company.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
under the Plan will be exercisable according to the terms of the Plan
at the times, and under any other conditions as determined by the
Administrator and set forth in the Option Agreement. Unless the
Administrator provides otherwise, vesting of Options granted to
Officers and Directors will be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
An Option will be considered exercised when the Company
receives:
(i) written or electronic notice of exercise (under the
Option Agreement) from the person entitled to exercise
the Option, and
(ii) full payment for the Shares with respect to which the
Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the
Plan. Shares issued on exercise of an Option will be issued in
the name of the Optionee or, if requested by the Optionee, in
the name of the Optionee and his or her spouse. Until the
Shares are issued (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends
or any other rights as a shareholder will exist with respect
to the Shares, notwithstanding the exercise of the Option. The
Company will issue (or cause to be issued) the Shares promptly
after the Option is exercised. No adjustment will be made for
a dividend or other right for which the record date is prior
to the date the Shares are issued, except as provided in
Section 12 of the Plan.
Exercise of an Option in any manner will result in a decrease
in the number of Shares thereafter available, both for
purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, the Optionee may exercise his or her
Option within the period of time as is specified in the Option
Agreement to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of
the Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option will remain
exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his
or her entire Option, the Shares covered by the unvested portion of
the Option will revert to the Plan. If, after termination, the
Optionee does not exercise his or her
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Option within the time specified by the Administrator, the Option will
terminate, and the Shares covered by the Option will revert to the
Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service Provider
as a result of the Optionee's Disability, the Optionee may exercise
his or her Option within the period of time as is specified in the
Option Agreement to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of
the Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option will remain
exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option will revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within
the time specified, the Option will terminate, and the Shares covered
by the Option will revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider, the
Option may be exercised within the period of time as is specified in
the Option Agreement to the extent that the Option is vested on the
date of death (but in no event later than the expiration of the term
of the Option as set forth in the Option Agreement) by the Optionee's
estate or by a person who acquires the right to exercise the Option by
bequest or inheritance. In the absence of a specified time in the
Option Agreement, the Option will remain exercisable for twelve (12)
months following the Optionee's termination. If, at the time of death,
the Optionee is not vested as to the entire Option, the Shares covered
by the unvested portion of the Option will immediately revert to the
Plan. If the Option is not so exercised within the time specified, the
Option will terminate, and the Shares covered by the Option will
revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to buy out
for a payment in cash or Shares, an Option previously granted, based
on the terms and conditions as the Administrator will establish and
communicate to the Optionee at the time that the offer is made.
10. Non-Transferability of Options and Stock Purchase Rights. The Options and
Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either alone,
in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it
will advise the offeree in writing or electronically of the terms,
conditions and restrictions related to the offer, including the number
of Shares that the person will be entitled to purchase, the price to
be paid, and the time within which the person must accept the offer.
The offer will be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock purchase agreement will grant the Company a
repurchase option exercisable on the voluntary or involuntary
termination of the purchaser's service with the Company for any reason
(including death or disability). The purchase price for Shares
repurchased pursuant to the Restricted Stock purchase agreement will
be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The
repurchase option will lapse at the rate as the Administrator may
determine.
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(c) Other Provisions. The Restricted Stock purchase agreement will contain
any other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is exercised,
the purchaser will have rights equivalent to those of a shareholder
and will be a shareholder when his or her purchase is entered on the
records of the duly authorized transfer agent of the Company. No
adjustment will be made for a dividend or other right for which the
record date is prior to the date the Stock Purchase Right is
exercised, except as provided in Section 12 of the Plan.
12. Adjustments On Changes in Capitalization, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock
covered by each outstanding Option or Stock Purchase Right, and the
number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options or Stock Purchase
Rights have yet been granted or which have been returned to the Plan
on cancellation or expiration of an Option or Stock Purchase Right, as
well as the price per share of Common Stock covered by each
outstanding Option or Stock Purchase Right, will be proportionately
adjusted for any increase or decrease in the number of issued shares
of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company.
The conversion of any convertible securities of the Company will not
be considered to have been "effected without receipt of
consideration." The adjustment will be made by the Board, whose
determination in that respect will be final, binding and conclusive.
Except as expressly provided in this Plan, no issuance by the Company
of shares of stock of any class, or securities convertible into shares
of stock of any class, will affect, and no adjustment will be made to,
the number or price of shares of Common Stock subject to an Option or
Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Administrator will notify the
Optionee not less than fifteen (15) days prior to the proposed action.
To the extent it has not been previously exercised, the Option or
Stock Purchase Right will terminate immediately prior to the
consummation of the proposed action.
(c) Merger. In the event of a merger, sale or reorganization of the
Company with or into any other corporation or corporations or a sale
of all or substantially all of the assets or outstanding stock of the
Company, in which transaction the Company's stockholders immediately
prior to the transaction own immediately after the transaction less
than 50% of the equity securities of the surviving corporation or its
parent, all Options that have not been terminated under the Stock
Option Agreement that will become vested within 18 months of the
closing date of the merger, sale or reorganization will be
accelerated. In the event of a merger of the Company with or into
another corporation, each outstanding Option or Stock Purchase Right
may be assumed or an equivalent option or right may be substituted by
the successor corporation or a parent or subsidiary of the successor
corporation. If, in the event, an Option or Stock Purchase Right is
not assumed or substituted, the Option or Stock Purchase Right will
terminate as of the date of the closing of the merger. For the
purposes of this paragraph, the Option or Stock Purchase Right will be
considered assumed if, following the merger, the Option or Stock
Purchase Right confers the right to purchase or receive, for each
Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger, the consideration (whether stock,
cash, or other securities or property) received in the merger by
holders of Common Stock for each Share held on the effective date of
the transaction (and if the holders are offered a choice of
consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares). If the consideration received in
the merger is not solely common stock of the successor corporation or
its Parent, the
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Administrator may, with the consent of the successor corporation,
provide for the consideration to be received on the exercise of the
Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common
stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common
Stock in the merger.
13. Non-Transferability of Options and Stock Purchase Rights. Unless determined
otherwise by the Administrator, an Option or Stock Purchase Right may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, the Option
or Stock Purchase Right will contain all additional terms and conditions as the
Administrator considers appropriate.
14. Time of Granting Options and Stock Purchase Rights. The date of grant of an
Option or Stock Purchase Right will, for all purposes, be the date on which the
Administrator makes the determination granting the Option or Stock Purchase
Right, or any other date as is determined by the Administrator. Notice of the
determination will be given to each Service Provider to whom an Option or Stock
Purchase Right is so granted within a reasonable time after the date of the
grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) Shareholder Approval. The Board will obtain shareholder approval of
any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan will impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by
the Optionee and the Company. Termination of the Plan will not affect
the Administrator's ability to exercise the powers granted to it with
respect to Options granted under the Plan prior to the date of
termination.
16. Conditions On Issuance of Shares.
(a) Legal Compliance. Shares will not be issued pursuant to the
exercise of an Option unless the exercise of the Option and
the issuance and delivery of the Shares will comply with
Applicable Laws and will be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of
an Option, the Administrator may require the person exercising
the Option to represent and warrant at the time of exercise
that the Shares are being purchased only for investment and
without any present intention to sell or distribute the Shares
if, in the opinion of counsel for the Company, such a
representation is required.
17. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
considered by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares the Plan, will relieve the Company of any liability in
respect of the failure to issue or sell the Shares as to which the requisite
authority may not have been obtained.
18. Reservation of Shares. The Company, during the term of this Plan, will at
all times reserve and keep available a sufficient number of Shares to satisfy
the requirements of the Plan.
19. Shareholder Approval. The Plan will be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Shareholder approval must be obtained in the degree and manner required
under Applicable Laws.
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MERILUS, INC.
2000 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined in this Stock Option Agreement, the terms defined in
the 2000 Stock Plan will have the same defined meanings in this Stock Option
Agreement.
1. Notice of Stock Option Grant.
Name: ______________________________ "Optionee"
The Optionee has been granted an Option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Date of Grant: __________________________
Vesting Commencement Date: _____________"VCD"
Exercise Price per Share: _________________
Total Number of Shares Granted: __________ Number of shares
Total Exercise Price: _____________________Total Price
Type of Option: _________________________ Incentive Stock Option
_________________________ Non-statutory Stock Option
Term/Expiration Date: ___________________
Vesting Schedule:
The vesting schedule shall be determined by the Administrator in its
sole discretion.
Termination Period:
This Option will be exercisable for one month after Optionee ceases to
be a Service Provider. On Optionee's death or Disability, this Option
may be exercised for one year after Optionee ceases to be a Service
Provider. In no event may Optionee exercise this Option after the
Term/Expiration Date as provided above.
2. Agreement.
1. Grant of Option. The Plan Administrator of the Company grants
to the Optionee named in the Notice of Grant (the "Optionee"),
an option (the "Option") to purchase the number of Shares set
forth in the Notice of Grant, at the exercise price per Share
set forth in the Notice of Grant (the "Exercise Price"), and
subject to the terms and conditions of the Plan, which is
incorporated by reference. Subject to Section 14(c) of the
Plan, in the event of a conflict between the terms and
conditions of the Plan and this Option Agreement, the terms
and conditions of the Plan will prevail.
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If designated in the Notice of Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the extent that it exceeds the $100,000 rule
of Code Section 422(d), this Option will be treated as a
Non-statutory Stock Option ("NSO").
2. Exercise of Option.
(i) Right to Exercise. This Option will be exercisable during
its term under the Vesting Schedule set out in the Notice of
Grant and with the applicable provisions of the Plan and
this Option Agreement.
(ii) Method of Exercise. This Option will be exercisable by
delivery of an exercise notice in the form attached as
Exhibit A (the "Exercise Notice") which will state the
election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and any
other representations and agreements as may be required by
the Company. The Exercise Notice will be accompanied by
payment of the aggregate Exercise Price as to all Exercised
Shares. This Option will be considered to be exercised on
receipt by the Company of a fully executed Exercise Notice
accompanied by the aggregate Exercise Price.
No Shares will be issued pursuant to the exercise of an Option
unless the issuance and exercise complies with Applicable
Laws. Assuming compliance, for income tax purposes the Shares
will be considered transferred to the Optionee on the date on
which the Option is exercised with respect to the Shares.
3. Method of Payment. Payment of the aggregate Exercise Price will be by any of
the following, or a combination of the following, at the election of the
Optionee:
(a) cash or check;
(b) consideration received by the Company under a formal cashless exercise
program adopted by the Company in connection with the Plan; or
(c) surrender of other Shares which:
(i) in the case of Shares acquired on exercise of an option, have
been owned by the Optionee for more than six (6) months on the
date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the
aggregate Exercise Price of the Exercised Shares.
4. Restrictions on Exercise. This Option may not be exercised until such time as
the Plan has been approved by the shareholders of the Company, or if the
issuance of the Shares on the exercise or the method of payment of consideration
for the shares would constitute a violation of any Applicable Law.
5. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of the
Plan and this Option Agreement will be binding on the executors, administrators,
heirs, successors and assigns of the Optionee.
6. Term of Option. This Option may be exercised only within the term set out in
the Notice of Grant, and may be exercised during the term only under the Plan
and the terms of this Option.
7. Tax Consequences. Set forth below is a brief summary as of the date of this
Option of some of the federal tax consequences of exercise of this Option and
disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE
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SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(a) Exercise of NSO. There may be a regular federal income tax
liability on the exercise of an NSO. The Optionee will be treated
as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise
Price. If Optionee is an Employee or a former Employee, the
Company will be required to withhold from Optionee's compensation
or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to
honor the exercise and refuse to deliver Shares if the
withholding amounts are not delivered at the time of exercise.
(b) Exercise of ISO. If this Option qualifies as an ISO, there will
be no regular federal income tax liability on the exercise of the
Option, although the excess, if any, of the Fair Market Value of
the Shares on the date of exercise over the Exercise Price will
be treated as an adjustment to the alternative minimum tax for
federal tax purposes and may subject the Optionee to the
alternative minimum tax in the year of exercise.
(c) Disposition of Shares. In the case of an NSO, if Shares are held
for not less than one year, any gain realized on disposition of
the Shares will be treated as long-term capital gain for federal
income tax purposes. In the case of an ISO, if Shares transferred
pursuant to the Option are held for not less than one year after
exercise and of not less than two years after the Date of Grant,
any gain realized on disposition of the Shares will also be
treated as long-term capital gain for federal income tax
purposes. If Shares purchased under an ISO are disposed of within
one year after exercise or two years after the Date of Grant, any
gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of:
(i) the Fair Market Value of the Shares on the date of exercise,
or
(ii) the sale price of the Shares. Any additional gain will be
taxed as capital gain, short-term or long-term depending on
the period that the ISO Shares were held.
(d) Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee is an ISO, and if Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to
the ISO on or before the later of:
(i) the date two years after the Date of Grant, or
(ii) the date one year after the date of exercise, the Optionee
will immediately notify the Company in writing of such
disposition.
Optionee agrees that Optionee may be subject to income tax
withholding by the Company on the compensation income
recognized by the Optionee.
8. Entire Agreement; Governing Law. The Plan is incorporated by reference. The
Plan and this Option Agreement constitute the entire agreement of the parties
and supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to Options and Stock Purchase Rights, and may
not be modified adversely to the Optionee's interest except by means of a
writing signed by the Company and Optionee. This agreement is governed by the
internal substantive laws but not the choice of law rules of Nevada.
9. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE APPLICABLE VESTING SCHEDULE IS EARNED ONLY BY
CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT
OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE ATTACHED VESTING SCHEDULE DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE
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VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY
WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S
RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he or
she is familiar with the terms and provisions of the Plan, and accepts this
Option subject to all of the terms and provisions of the Plan. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator on
any questions arising under the Plan or this Option. Optionee further agrees to
notify the Company on any change in the residence address indicated below.
OPTIONEE: MERILUS, INC.
--------------------------------- ---------------------------------
Signature By:_______________________
--------------------------------- ---------------------------------
Print Name Title
---------------------------------
Social Security Number
Residential Address:
---------------------------------
---------------------------------
--------------------------------------------------------------------------------
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and approves the terms and
conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned agrees to be irrevocably
bound by the terms and conditions of the Plan and this Option Agreement and
further agrees that any community property interest shall be similarly bound.
The undersigned appoints the undersigned's spouse as attorney-in-fact for the
undersigned with respect to any amendment or exercise of rights under the Plan
or this Option Agreement.
---------------------------------
Spouse of Optionee
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EXHIBIT A
2000 STOCK PLAN
EXERCISE NOTICE
Merilus, Inc.
721 E. Madison
Villa Park, Illinois 60181
1. Exercise of Option. Effective as of today, ___________, 20__, the
undersigned ("Optionee") elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Merilus, Inc. (the
"Company") under and pursuant to the 2000 stock plan (the "Plan") and the stock
option agreement dated ________, 20__ (the "Option Agreement"). The purchase
price for the Shares shall be $________, as required by the Option Agreement.
2. Delivery of Payment. Purchaser has delivered to the Company the full
purchase price of the Shares.
3. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder will exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares will be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date of issuance except as provided in Section 12 of the Plan.
5. Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee considers advisable in connection with the purchase or disposition of
the Shares and that Optionee is not relying on the Company for any tax advice.
6. Interpretation. Any dispute regarding the interpretation of this
Exercise Notice will be submitted by Optionee or by the Company immediately to
the Administrator which will review the dispute at its next regular meeting. The
resolution of a dispute by the Administrator will be final and binding on all
parties.
7. Entire Agreement/Governing Law. The Plan and Option Agreement are
incorporated by reference. This Exercise Notice, the Plan, the Option Agreement
and the Investment Representation Statement constitute the entire agreement of
the parties concerning Options and Stock Purchase Rights and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee
concerning Options and Stock Purchase Rights, and may not be modified adversely
to the Optionee's interest except by means of a writing signed by the Company
and Optionee. This Exercise Notice is governed by the internal substantive laws
but not the choice of law rules, of Nevada.
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Submitted By: Accepted By:
OPTIONEE: MERILUS, INC.
--------------------------------- ---------------------------------
Signature By:_______________________
--------------------------------- ---------------------------------
Print Name Title
---------------------------------
Social Security Number
Date Received: ____________________
