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EXHIBIT 10.6
FORMUS COMMUNICATIONS, INC.
EQUITY INCENTIVE PLAN
FORM OF STOCK OPTION AGREEMENT
THIS AGREEMENT made as of this ____ day of __________, _____, between
FORMUS COMMUNICATIONS, INC., a Delaware corporation (together with its
Affiliated Corporations, except where the context otherwise requires, the
"Company"), and ____________ (the "Option Holder").
1. GRANT OF OPTION. Pursuant to the Formus Communications, Inc. Equity
Incentive Plan (the "Plan") and subject to the terms and conditions of this
Agreement, the Company hereby grants to the Option Holder an option (the
"Option") to purchase ________ shares of the $0.001 par value common stock of
the Company (the "Stock") at an exercise price per share of $____, which price
shall be the "Option Price." The grant is made and the Option is effective as of
____________, (the "Effective Date"). The Option is intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
2. REQUIREMENTS FOR EXERCISE; VESTING. The Option shall become
exercisable in __% increments, with __% becoming exercisable on _______________,
an additional __% becoming exercisable on _____________, an additional __%
becoming exercisable on ________________ and the entire Option becoming
exercisable on ______________, provided the Option Holder is in the employ of
the Company on such dates.
Percentage of Option That Shall Shares
Employment Vesting Date Become Exercisable on Each Date Exercisable
----------------------- ------------------------------- -----------
------------------- % ----------
------------------- % ----------
------------------- % ----------
------------------- % ----------
If the Option Holder's service terminates other than for cause (as described in
subsection 6(a)) after _________, an additional ____ of the total number of
shares subject to the Option shall become exercisable on the date the Option
Holder's employment ends for each additional month of continuous service
completed since the most recent_________.
If at any time the number of shares of Stock that are covered by the
vested portion of the Option includes a fractional share, the number of shares
of Stock as to which the Option shall be actually exercisable shall be rounded
down to the next whole share of Stock.
Except as set forth in Section 5 hereof, the Option shall not be
exercisable as to any shares of Stock as to which the vesting requirement shall
not have been satisfied, regardless of the circumstances under which the Option
Holder's employment by the Company shall be terminated. The number of shares of
Stock as to which the Option may be exercised shall be cumulative, so that once
the Option shall become exercisable as to any shares of Stock it shall
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continue to be exercisable as to such shares until expiration or termination of
the Option as provided in Section 6 hereof.
3. METHOD FOR EXERCISING THE OPTION. The Option may be exercised only
by delivery of written notice of exercise, together with payment of the Option
Price as provided below, in person or through certified or registered mail, fax
or overnight delivery to the Company at the following address: Formus
Communications, Inc., 000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 000 Xxxxx, Xxxxxx,
Xxxxxxxx 00000, or such other address as shall be furnished in writing to the
Option Holder by the Company. Such written notice shall specify that the Option
is being exercised and the number of shares of Stock with respect to which the
Option is exercised, and shall be accompanied by payment of the Option Price.
The purchase of such Stock shall take place at the address of the
Company set forth above upon delivery of the notice of exercise, at which time
the Option Price for the Stock shall be paid in full by certified or cashier's
check payable to the Company's order, or by wire transfer to such account as may
be specified by the Company for this purpose, or by delivery to the Company of
certificates representing the number of shares of Stock then owned by the Option
Holder, the Fair Market Value of which equals the Option Price of the Stock to
be purchased pursuant to the Option, properly endorsed for transfer to the
Company; provided, however, that no Option may be exercised by delivery to the
Company of certificates representing Stock, unless such Stock has been held by
the Option Holder for more than six months. For purposes of this Option, the
Fair Market Value of any shares of Stock delivered in payment of the Option
Price upon exercise of the Option shall be the Fair Market Value as of the
exercise date; the exercise date shall be the day of delivery of the
certificates for the Stock used as payment of the Option Price.
Upon such notice to the Company and payment of the Option Price, the
exercise of the Option shall be deemed to be effective, and a properly executed
certificate or certificates representing the Stock so purchased shall be issued
by the Company and delivered to the Option Holder.
4. ADJUSTMENT OF THE OPTION.
(a) ADJUSTMENT BY STOCK SPLIT, STOCK DIVIDEND, ETC. If at any
time the Company increases or decreases the number of its outstanding shares of
Stock, or changes in any way the rights and privileges of such shares, by means
of the payment of a stock dividend or the making of any other distribution on
such shares payable in Stock, or through a Stock split or subdivision of shares,
or a consolidation or combination of shares, or through a reclassification or
recapitalization involving the Stock, the numbers, rights and privileges of the
shares of Stock included in the Option shall be increased, decreased or changed
in like manner as if such shares had been issued and outstanding, fully paid and
non-assessable at the time of such occurrence.
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(b) OTHER DISTRIBUTIONS AND CHANGES IN THE STOCK. If the
Company shall at any time distribute with respect to the Stock assets or
securities of persons other than the Company (excluding cash or distributions
referred to in subsection (a)) or grant to the holders of its Stock rights to
subscribe pro rata for additional shares thereof or for any other securities of
the Company or there shall be any other change (except as described in
subsection (a)) in the number or kind of outstanding shares of Stock or of any
stock or other securities into which the Stock shall be changed or for which it
shall have been exchanged, and if the Committee shall in its discretion
determine that the event equitably requires an adjustment in the number or kind
of shares subject to an Option, an adjustment to the Option Price, or the taking
of any other action by the Committee, including without limitation, the setting
aside of any property for delivery to the Option Holder upon the exercise of the
Option, then such adjustment shall be made, or other actions taken, by the
Compensation Committee and shall be effective for all purposes of this
Agreement. In the case of a distribution of rights to subscribe pro rata to
additional shares of Stock, any adjustments or distributions to the Option
Holder shall only apply with respect to such portion of the Option that has been
exercised on or prior to the date of the expiration of such rights or warrants.
This Section 4 shall not be construed as an anti-dilution provision, and there
shall be no adjustment in the number of shares covered under the Option in the
event of the sale of additional shares of Stock to third parties for
consideration.
(c) APPORTIONMENT OF OPTION PRICE. Upon any occurrence
described in the preceding subsections (a) and (b), the aggregate Option Price
for the shares of Stock then subject to the Option shall remain unchanged and
shall be apportioned ratably over the increased or decreased number or changed
kinds of securities or other properties subject to the Option.
5. REORGANIZATION.
(a) REORGANIZATION. Upon the occurrence of any of the
following events, if the notice required by subsection 5(b) shall have first
been given, the Option shall automatically terminate and be of no further force
and effect whatsoever, without the necessity for any additional notice or other
action by the Board or the Company: (i) the merger or consolidation of the
Company with or into another corporation (other than a consolidation or merger
in which the Company is the continuing corporation and which does not result in
any reclassification or change of outstanding shares of Stock); or (ii) the sale
or conveyance of all or substantially all of the property and assets of the
Company (other than a sale or conveyance in which the Company continues as a
holding company of an entity or entities that conduct the business or businesses
formerly conducted by the Company); or (iii) the dissolution or liquidation of
the Company.
(b) REQUIRED NOTICE. At least 30 days' prior written notice of
any event described in subsection 5(a) shall be given by the Company to the
Option Holder, unless in the case of the events described in clauses (i) or (ii)
of subsection 5(a), the Company, or the successor or purchaser, as the case may
be, shall make adequate provision for the assumption of the Option or the
substitution of new options for the Option on terms comparable to the Option
except that the Option Holder shall have the right thereafter to purchase the
kind and amount of shares of stock or other securities or property or cash
receivable upon such merger, consolidation, sale or conveyance by a holder of
the number of shares of Stock that would have been receivable upon exercise of
the Option immediately prior to such merger, consolidation, sale or conveyance
(assuming such holder of Stock failed to exercise any rights of election and
received per share the
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kind and amount received per share by a majority of the non-electing shares).
The provisions of this Section 5 shall similarly apply to successive mergers,
consolidations, sales or conveyances. Such notice shall be deemed to have been
given when delivered personally to the Option Holder or when mailed to the
Option Holder by registered or certified mail, postage prepaid, at the Option
Holder's address last known to the Company.
(c) ACCELERATION OF VESTING. Subject to subsection 5(d), if
the Option Holder is notified, in accordance with subsection 5(b), of a
transaction with a third party, he may exercise his Option at any time before
the occurrence of the event requiring the giving of notice (but subject to
occurrence of such event), regardless of whether all conditions of exercise
relating to length of service have been satisfied.
(d) CHANGE IN CONTROL. If a Change in Control (as defined
below) occurs, the Option shall become exercisable in full, regardless of
whether all conditions of exercise relating to continuous service have been
satisfied and notwithstanding any provision to the contrary in this Section 5.
A"Change in Control" is deemed to have occurred if (i) the holders of the
Company's outstanding Stock as of April 15, 1997 cease to beneficially own,
directly or indirectly, at least 51% of the Common Stock, par value $.001 per
share at any time, and (ii) individuals who constitute the directors of the
Company at the beginning of any 24-month period cease to constitute at least
two-thirds of all directors at any time during such period, excluding any new
directors, the nomination of whom was approved by a vote of at least a majority
of the members of the Company's Board of Directors in office immediately prior
to such period.
6. EXPIRATION AND TERMINATION OF THE OPTION. The Option shall expire
ten (10) years from the Effective Date (the period from the Effective Date to
the expiration date is the "Option Period") or prior to such time as follows:
(a) If the employment of the Option Holder by the Company is
terminated for "cause" within the Option Period, the Option shall terminate in
its entirety immediately upon the termination of employment of the Option
Holder. For purposes of this Agreement, cause shall be defined as either of the
following: (i) gross negligence by the Option Holder in the performance of his
duties as determined by the Company; or (ii) the Option Holder is engaging in
activities that materially adversely affect the Company or that involve illegal
or materially unethical behavior counter to the best interests of the Company
(for example, conveying trade secrets to a competitor).
(b) If the employment of the Option Holder by the Company is
terminated voluntarily by the Option Holder (without cause for such termination
existing) within the Option Period, the Option may be exercised by the Option
Holder within three months following the date of such termination (provided that
such exercise must occur within the Option Period), but not thereafter. In any
such case, the Option may be exercised only as to the shares of Stock as to
which the Option had become exercisable on or before the date of the Option
Holder's termination of employment.
(c) If the employment of the Option Holder by the Company is
terminated by the Company within the Option Period for any reason other than
cause, Disability (as defined in
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Section 22(e)(3) of the Internal Revenue Code) or death, the Option may be
exercised by the Option Holder within three months following the date of such
termination (provided that such exercise must occur within the Option Period),
but not thereafter. In any such case, the Option may be exercised only as to the
shares of Stock as to which the Option had become exercisable on or before the
date of the Option Holder's termination of employment.
(d) If the Option Holder dies within the Option Period, while
employed by the Company, the Option may be exercised by those entitled to do so
under his will or by the laws of descent and distribution within one year
following his death (provided that such exercise must occur within the Option
Period), but not thereafter. In any such case, the Option may be exercised only
as to the shares of Stock as to which the Option had become exercisable on or
before the date of the Option Holder's death.
(e) If the Option Holder becomes disabled (within the meaning
of Section 22(e)(3) of the Internal Revenue Code) within the Option Period and
while employed by the Company, the Option may be exercised within one (1) year
following his termination of employment (provided that such exercise must occur
within the Option Period), but not thereafter. In any such case the Option may
be exercised only as to the shares of Stock as to which the Option had become
exercisable on or before the date of the Option Holder's Disability.
7. TRANSFERABILITY. The Option may not be transferred except by will or
pursuant to the laws of descent and distribution, and it shall be exercisable
during the Option Holder's life only by him, or in the event of Disability or
incapacity, by his guardian or legal representative, and after his death, only
by those entitled to do so under his will or the applicable laws of descent and
distribution. Except as specifically provided herein, upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of the Option or any
right or privilege granted hereunder, or upon the levy of any attachment or
similar process upon the rights and privileges herein conferred, the Option and
the rights and privileges hereunder shall become immediately null and void.
8. AGREEMENT TO CONTINUE IN EMPLOYMENT. In consideration of the
granting of the Option, the Option Holder agrees to remain in the employ of the
Company at the pleasure of the Company for a continuous period of at least one
year from the Effective Date at the salary rate in effect at the date of this
Agreement or at such changed rate as may be fixed from time to time by the
Company. The Option Holder hereby agrees to use his best efforts to provide
services to the Company in a workmanlike manner and to promote the Company's
interests. Nothing in this Agreement shall offset or impair the Company's right
to terminate the employment of the Option Holder.
9. AGREEMENT TO RETAIN STOCK. In consideration of the granting of the
Option, the Option Holder agrees to retain, as the sole legal owner, at least
10% of the shares of Stock acquired hereunder so long as the Option Holder is
employed by the Company or by an Affiliated Corporation; provided, however, that
the Compensation Committee, in its sole discretion, may authorize the Option
Holder in a writing signed by a representative of the Compensation Committee to
transfer all or any portion of such Stock that is otherwise required to be
retained by the Option Holder to a trust for the benefit of the Option Holder or
to such other persons or entities as may be specifically approved by the
Compensation Committee. Upon request by the
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Compensation Committee, the Option Holder shall submit evidence satisfactory to
the Compensation Committee at least once each calendar year demonstrating
compliance with the requirements of this Section. In its sole discretion, the
Compensation Committee may require the Option Holder to deliver to the Company
and to leave in the custody of the Company stock certificates representing the
number of shares of Stock required to be retained by the Option Holder in
accordance with the requirements of this Section 9. In the event that the Option
Holder should violate the requirements of this Section, the Option shall
immediately terminate and become null and void.
10. NOTICE OF DISPOSITION; WITHHOLDING. The Option Holder shall notify
the Company if Stock acquired pursuant to this Option is "disposed of" (within
the meaning of Section 422 of the Code) within two (2) years after the date of
the grant of this Option, or within one year after the transfer of such Stock to
the Option Holder. If the Option Holder does "dispose of" any such Stock within
such period, the Option Holder shall make appropriate arrangements with the
Company to provide for the amount of any withholding required by Sections 3401
and 3402 of the Internal Revenue Code and applicable state income tax laws.
11. LIMITATION OF RIGHTS. The Option Holder or his successor shall have
no rights as a stockholder with respect to the shares of Stock covered by this
Option until the Option Holder or his successors become the holder of record of
such shares.
12. STOCK RESERVE. The Company shall at all times during the term of
this Agreement reserve and keep available such number of shares of Stock as will
be sufficient to satisfy the requirements of this Agreement, and the Company
shall pay all original issue taxes (if any) on the exercise of the Option, and
all other fees and expenses necessarily incurred by the Company in connection
therewith.
13. MISCELLANEOUS.
(a) NOTICES. Any notice required or permitted to be given
under this Agreement shall be in writing and shall be given by first class
registered or certified mail, postage prepaid, or by personal delivery to the
appropriate party, addressed:
(i) If to the Company, to 000 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxx 000 Xxxxx, Xxxxxx Xxxxxxxx 00000, or at such other
address as may have been furnished to the Option Holder in writing by
the Company; or
(ii) If to the Option Holder, to
_____________________________, or at such other address as may have
been furnished to the Company by the Option Holder.
Any such notice shall be deemed to have been given as of the second day after
deposit in the United States mails, postage prepaid, properly addressed as set
forth above, in the case of mailed notice, or as of the date delivered in the
case of personal delivery.
(b) AMENDMENT. Except as provided herein, this Agreement may
not be amended or otherwise modified unless evidenced in writing and signed by
the Company and the Option Holder.
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(c) DEFINED TERMS. Capitalized terms shall have the meaning
set forth in the Plan or herein, as the case may be.
(d) COMPLIANCE WITH SECURITIES LAWS. This Agreement shall be
subject to the requirement that if at any time counsel to the Company shall
determine that the listing, registration or qualification of the shares of Stock
subject to the Option upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental or regulatory body, is
necessary as a condition of, or in connection with, the issuance or purchase of
such shares thereunder, the Option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained on conditions acceptable to the Compensation
Committee. Nothing herein shall be deemed to require the Company to apply for or
obtain such listing, registration or qualification.
(e) CONSTRUCTION; SEVERABILITY. It is intended that this
Option shall qualify as an incentive stock option under Section 422 of the Code,
and all the terms and provisions of the Option shall be construed and
interpreted in a manner consistent with such provisions. The section headings
contained herein are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, and each
other provision of this Agreement shall be severable and enforceable to the
extent permitted by law.
(f) WAIVER. Any provision contained in this Agreement may be
waived, either generally or in any particular instance, by the Compensation
Committee appointed under the Plan, but only to the extent permitted under the
Plan.
(g) BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Company and the Option Holder and their respective
heirs, executors, administrators, legal representatives, successors and assigns.
(h) RIGHTS TO EMPLOYMENT. Nothing contained in this Agreement
shall be construed as giving the Option Holder any right to be retained in the
employ of the Company and this Agreement is limited solely to governing the
rights and obligations of the Option Holder with respect to the Stock and the
Option.
(i) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
FORMUS COMMUNICATIONS, INC.
By
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Chief Financial Officer
OPTION HOLDER
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