Exhibit 4.3
BOSTON ACOUSTICS, INC.
INCENTIVE STOCK OPTION AGREEMENT
1. Grant of Option. Boston Acoustics, Inc., a Massachusetts corporation,
whose principal place of business is at 300 Jubilee Drive, Peabody,
Massachusetts 01960 (the "Company") hereby grants to [Optionee], an individual
whose address is set forth below the optionee signature line (the "Optionee"),
an option, pursuant to the Company's 1997 Stock Plan (the "Plan"), to purchase
an aggregate of [#] shares of common stock, without par value, of the Company
("Common Stock") at a price of $[#] per share, purchasable as set forth in and
subject to the terms and conditions of this option and the Plan. Except where
the context otherwise requires, the term "Company" shall include the parent and
all present and future subsidiaries of the Company as defined in Sections 424(e)
and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from
time to time (the "Code"). The Plan has been approved by the stockholders of the
Company. All rights and obligations of the parties pursuant to this Option
Agreement are conditional and subject to such approval.
2. Incentive Stock Option. This option is intended to qualify as an
incentive stock option ("Incentive Stock Option") within the meaning of Section
422 of the Code. Any provision of this Agreement or the Plan which conflicts
with the Code is null and void and any ambiguities shall be resolved so that
this option qualifies as an Incentive Stock Option.
3. Exercise of Option and Provisions for Termination.
(a) Vesting Schedule. Except as otherwise provided in this Agreement,
this option may be exercised as to twenty percent (20%) of the total number of
shares from and after one year from the date of grant, as to forty percent (40%)
of the total number of shares from and after two years from the date of grant,
and as to sixty percent (60%) of the total number of shares from and after three
years from the date of grant, as to eighty percent (80%) of the total number of
shares from and after four years from date of grant, and as to the whole number
of shares from and after five years from the date of grant and prior to the
tenth anniversary of the date of grant (hereinafter the "Expiration Date").
(b) Exercise Procedure. Subject to the conditions set forth in this
Agreement, this option shall be exercised by the Optionee's delivery of written
notice of exercise to the Company, specifying the number of shares to be
purchased and the purchase price to be paid therefor and accompanied by payment
in full in accordance with Section 4. Such exercise shall be effective upon
receipt by the Company of such written notice together with the required
payment. The Optionee may purchase less than the number of shares covered
hereby, provided that no partial exercise of this option may be for any
fractional share or for less than one whole share.
(c) Continuous Employment Required. Except as otherwise provided in
this Section 3, this option may not be exercised unless the Optionee, at the
time he or she exercises this option, is, and has been at all times since the
date of grant of this option, an employee of the Company. For all purposes of
this option, (i) "employment" shall be defined
in accordance with the provisions of Section 1.421-7(h) of the Income Tax
Regulations or any successor regulations, and (ii) if this option shall be
assumed or a new option substituted therefor in a transaction to which Section
424(a) of the Code applies, employment by such assuming or substituting
corporation (hereinafter called the "Successor Corporation") shall be considered
for all purposes of this option to be employment by the Company.
(d) Exercise Period Upon Termination of Employment. If the Optionee
ceases to be employed by the Company for any reason, then, except as provided in
paragraphs (e) and (f) below, the right to exercise this option shall terminate
three months after such cessation (but in no event after the Expiration Date),
provided that this option shall be exercisable only to the extent that the
Optionee was entitled to exercise this option on the date of such cessation.
(e) Exercise Period Upon Death or Disability. If the Optionee dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to
the Expiration Date while he or she is an employee of the Company, or if the
Optionee dies within three months after the Optionee ceases to be an employee of
the Company (other than as the result of a discharge for "cause" as specified in
paragraph (f) below), this option shall be exercisable, within the period of one
year following the date of death or disability of the Optionee (but in no event
after the Expiration Date), by the Optionee or by the person to whom this option
is transferred by will or the laws of descent and distribution, provided that
this option shall be exercisable only to the extent that this option was
exercisable by the Optionee on the date of his or her death or disability.
Except as otherwise indicated by the context, the term "Optionee", as used in
this option, shall be deemed to include the estate of the Optionee or any person
who acquires the right to exercise this option by bequest or inheritance or
otherwise by reason of the death of the Optionee.
(f) Discharge for Cause. If the Optionee, prior to the Expiration
Date, ceases his or her employment with the Company because he or she is
discharged for "cause" (as defined below), the right to exercise this option
shall terminate immediately upon such cessation of employment. "Cause" shall
mean willful misconduct in connection with the Optionee's employment or willful
failure to perform his or her employment responsibilities in the best interests
of the Company (including, without limitation, breach by the Optionee of any
provision of any employment, nondisclosure, non-competition or other similar
agreement between the Optionee and the Company), as determined by the Company,
which determination shall be conclusive.
4. Payment of Purchase Price
(a) Method of Payment. Payment of the purchase price for shares
purchased upon exercise of this option shall be made (i) by delivery to the
Company of cash or a certified or bank check to the order of the Company in an
amount equal to the purchase price of such shares, (ii) subject to the consent
of the Company, by delivery to the Company of shares of Common Stock of the
Company then owned by the Optionee having a fair market value equal in amount to
the purchase price of such shares, (iii) by any other means which the Board of
Directors determines are consistent with the purpose of the Plan and with
applicable laws and regulations (including, without limitation, the provisions
of Rule 16b-3 under the Securities Exchange Act of 1934 and Regulation T
promulgated by the Federal Reserve Board), or (iv) by any combination of such
methods of payment.
(b) Valuation of Shares or Other Non-Cash Consideration Tendered in
Payment of Purchase Price. For the purposes hereof, unless a recognized market
value is available, the fair market value of any share of the Company's Common
Stock or other non-cash consideration which may be delivered to the Company in
exercise of this option shall be determined in good faith by the Board of
Directors of the Company.
(c) Delivery of Shares Tendered in Payment of Purchase Price. If the
Optionee exercises this option by delivery of shares of Common Stock of the
Company, the certificate or certificates representing the shares of Common Stock
of the Company to be delivered shall be duly executed in blank by the Optionee
or shall be accompanied by a stock power duly executed in blank suitable for
purposes of transferring such shares to the Company. Fractional shares of Common
Stock of the Company will not be accepted in payment of the purchase price of
shares acquired upon exercise of this option.
(d) Restrictions on Use of Option Stock. Notwithstanding the
foregoing, no shares of Common Stock of the Company may be tendered in payment
of the purchase price of shares purchased upon exercise of this option if the
shares to be so tendered were acquired within twelve (12) months before the date
of such tender through the exercise of an option granted under the Plan or any
other stock option or restricted stock plan of the Company.
5. Delivery of Shares; Compliance With Securities Laws, Etc.
(a) General. The Company shall, upon payment of the option price for
the number of shares purchased and paid for, make prompt delivery of such shares
to the Optionee, provided that if any law or regulation requires the Company to
take any action with respect to such shares before the issuance thereof, then
the date of delivery of such shares shall be extended for the period necessary
to complete such action.
(b) Listing, Qualification, Etc. This option 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 subject hereto upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board of Directors. Nothing herein shall be deemed to
require the Company to apply for, effect or obtain such listing, registration,
qualification, or disclosure, or to satisfy such other condition.
6. Nontransferability of Option. This option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by
operation of law or otherwise) nor shall any such rights be subject to
execution, attachment or similar process except that this option may be
transferred (i) as provided in paragraph (e) of Section 3 above or (ii) pursuant
to a qualified domestic relations order as defined in Section 414(p) of the
Code. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this option or of such rights contrary to the provisions hereof, or
upon the levy of any attachment or similar process upon this option or such
rights, this option and such rights shall, at the election of the Company,
become null and void.
7. No Special Employment Rights. Nothing contained in the Plan or this
option shall be construed or deemed by any person under any circumstances to
bind the Company to continue the employment of the Optionee for the period
within which this option may be exercised, or for any other period.
8. Rights as a Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares which may be purchased by exercise of
this option (including, without limitation, any rights to receive dividends or
non-cash distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.
9. Adjustment Provisions
(a) General. If, through, or as a result of, any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, (i) the outstanding shares of
Common Stock are increased or decreased or are exchanged for a different number
or kind of shares or other securities of the Company, or (ii) additional shares
or new or different shares or other securities of the Company or other non-cash
assets are distributed with respect to such shares of Common Stock or other
securities, the Optionee shall, with respect to this option or any unexercised
portion hereof, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Section 15(a) of the Plan.
(b) Board Authority to Make Adjustments. Any adjustments under this
Section 9 will be made by the Board of Directors, whose determination as to what
adjustments, if any, will be made and the extent thereof will be final, binding
and conclusive. No fractional shares will be issued pursuant to this option on
account of any such adjustments.
(c) Limits on Adjustments. No adjustment shall be made under this
Section 9 which would, within the meaning of any applicable provision of the
Code, constitute a modification, extension or renewal of this option or a grant
of additional benefits to the Optionee.
10. Mergers, Consolidation, Distributions, Liquidations Etc. In the event
of a consolidation or merger or sale of all or substantially all of the assets
of the Company in which outstanding shares of Common Stock are exchanged for
securities, cash or other
property of any other corporation or business entity, or in the event of a
liquidation of the Company, prior to the Expiration Date or termination of this
option, the Optionee shall, with respect to this option or any unexercised
portion hereof, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Section 16 of the Plan.
11. Withholding Taxes. The Company's obligation to deliver shares of Common
Stock upon the exercise of this option shall be subject to the Optionee's
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements. If the Company, in its discretion, determines that
it must or should withhold or pay over tax with respect to the exercise of an
option or a Disqualifying Disposition (as defined in Section 12 below) of shares
of Common Stock acquired by the Optionee on exercise of this option, the
Optionee hereby agrees that, at the option of the Company, Optionee will pay to
the Company or the Company may withhold from the Optionee's wages the
appropriate amount of federal, state and local withholding taxes attributable to
such Disqualifying Disposition. If any portion of this option is treated as a
non-qualified option, the Optionee hereby agrees that, at the option of the
Company, Optionee will pay to the Company or the Company may withhold from the
Optionee's wages the appropriate amount of federal, state and local withholding
taxes attributable to the Optionee's exercise of such non-qualified option. At
the Company's discretion, the amount required to be withheld may be withheld in
cash from such wages, or (with respect to compensation income attributable to
the exercise of this option) in kind from the Common Stock otherwise deliverable
to the Optionee on exercise of this Option. The Optionee further agrees that, if
the Company does not withhold an amount from the Optionee's wages sufficient to
satisfy the Company's withholding obligation, the Optionee will reimburse the
Company on demand, in cash, for the amount under withheld.
12. Disqualifying Disposition. Although the parties intend that this option
shall qualify as an Incentive Stock Option, if this option is determined not to
be an Incentive Stock Option, the Optionee understands that the Company is not
responsible to compensate the Optionee or otherwise make up for the treatment of
this option as a non-qualified stock option. The Optionee should consult with
the Optionee's own tax advisors regarding the tax effects of this option and the
requirements necessary to obtain favorable treatment under the Code, including,
but not limited to, holding period requirements. The Optionee agrees to notify
the Company in writing immediately after the Optionee makes a Disqualifying
Disposition of any shares of Common Stock acquired pursuant to the exercise of
this option. A Disqualifying Disposition is any disposition (whether by sale,
exchange, gift, transfer, or otherwise) of such shares before the later of (a)
two years after the date the Optionee was granted this option or (b) one year
after the date the Optionee acquired shares by exercising this option. If the
Optionee dies before such shares are sold, these holding period requirements do
not apply and no Disqualifying Disposition would occur. The Optionee also agrees
to provide the Company with any information which it shall request concerning
any such disposition. The Optionee acknowledges that he or she will forfeit the
favorable income tax treatment otherwise available with respect to the exercise
of this Incentive Stock Option if he or she makes a Disqualifying Disposition of
the shares acquired on exercise of this option.
13. Investment Representations; Legends
(a) Representations. The Optionee represents, warrants and covenants
that:
(i) Any shares purchased upon exercise of this option shall be
acquired for the Optionee's account for investment only and not with a view to,
or for sale in connection with, any distribution of the shares in violation of
the Securities Act of 1933 (the "Securities Act") or any rule or regulation
under the Securities Act.
(ii) The Optionee has had such opportunity as he or she has
deemed adequate to obtain from representatives of the Company such information
as is necessary to permit the Optionee to evaluate the merits and risks of his
or her investment in the Company.
(iii) The Optionee is able to bear the economic risk of holding
shares acquired pursuant to the exercise of this option for an indefinite
period.
(iv) The Optionee understands that (A) the shares acquired
pursuant to the exercise of this option will not be registered under the
Securities Act and are "restricted securities" within the meaning of Rule 144
under the Securities Act; (B) such shares cannot be sold, transferred or
otherwise disposed of unless they are subsequently registered under the
Securities Act or an exemption from registration is then available; (C) in any
event, an exemption from registration under Rule 144 or otherwise under the
Securities Act may not be available for at least two years and even then will
not be available unless a public market then exists for the Common Stock,
adequate information concerning the Company is then available to the public and
other terms and conditions of Rule 144 are complied with; and (D) there is now
no registration statement on file with the Securities and Exchange Commission
with respect to any stock of the Company and the Company has no obligation or
current intention to register any shares acquired pursuant to the exercise of
this option under the Securities Act.
(v) The Optionee agrees that if the Company offers any of its
Common Stock for sale pursuant to a registration statement under the Securities
Act, the Optionee will not, without the prior written consent of the Company,
offer, sell, contract to sell or otherwise dispose of, directly or indirectly,
any shares purchased upon exercise of this option for a period of 90 days after
the effective date of such registration statement.
By making payment upon exercise of this option, the Optionee shall be
deemed to have reaffirmed, as of the date of such payment, the representations
made in this Section 13.
(b) Legends on Stock Certificates. All stock certificates representing
shares of Common Stock issued to the Optionee upon exercise of this option shall
have affixed thereto legends substantially in the following forms, in addition
to any other legends required by applicable law:
"The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 and may not be
transferred, sold or otherwise disposed of in the absence of an
effective registration statement with respect to the shares
evidenced by this certificate, filed and made effective under the
Securities Act of 1933, or an opinion of counsel satisfactory to
the Company to the effect that registration under such Act is not
required."
14. Interpretation of this Agreement. All decisions and interpretations
made by the Committee, as defined in Section 2 of the Plan, with regard to any
question arising under the Plan or this Agreement shall be binding and
conclusive on the Company and the Optionee and any other person entitled to
exercise this option as provided herein. In the event there is any inconsistency
between the provisions of this Agreement and of the Plan, the provisions of the
Plan shall govern, except as provided in section 2 above.
15. Miscellaneous
(a) Except as provided herein, this option may not be amended or
otherwise modified unless evidenced in writing and signed by the Company and the
Optionee.
(b) All notices under this option shall be mailed or delivered by hand
to the parties at their respective addresses set forth beneath their names below
or at such other address as may be designated in writing by either of the
parties to one another.
(c) This option shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.
Date of Grant:
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BOSTON ACOUSTICS, INC.
By:
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OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms
and conditions thereof. The undersigned hereby acknowledges receipt of a copy of
the Company's 1997 Stock Plan.
OPTIONEE
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[Optionee]
Address: --------------------------------
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Alternative Vesting Provisions - Section 3(a)
Vesting in equal installments over four years:
3. Exercise of Option and Provisions for Termination.
(a) Vesting Schedule. Except as otherwise provided in this Agreement,
this option may be exercised as to twenty-five percent (25%) of the total number
of shares from and after one year from the date of grant, as to fifty percent
(50%) of the total number of shares from and after two years from the date of
grant, and as to seventy-five percent (75%) of the total number of shares from
and after three years from the date of grant, and as to the whole number of
shares from and after four years from the date of grant and prior to the tenth
anniversary of the date of grant (hereinafter the "Expiration Date").
Vesting in equal installments over three years:
3. Exercise of Option and Provisions for Termination.
(a) Vesting Schedule. Except as otherwise provided in this Agreement,
this option may be exercised as to thirty-three percent (33%) of the total
number of shares from and after one year from the date of grant, as to sixty-six
percent (66%) of the total number of shares from and after two years from the
date of grant, and as to the whole number of shares from and after three years
from the date of grant and prior to the tenth anniversary of the date of grant
(hereinafter the "Expiration Date").
Vesting in equal installments over two years:
3. Exercise of Option and Provisions for Termination.
(a) Vesting Schedule. Except as otherwise provided in this Agreement,
this option may be exercised as to fifty percent (50%) of the total number of
shares from and after one year from the date of grant, and as to the whole
number of shares from and after two years from the date of grant and prior to
the tenth anniversary of the date of grant (hereinafter the "Expiration Date").
Alternative Vesting Provisions - Section 10
Acceleration according to formula:
10. Merger, Consolidation, Asset Sale, Liquidation, etc.
Upon any merger, consolidation, sale of all (or substantially all) of the
assets of the Company, or other business combination involving the sale or
transfer of all (or substantially all) of the capital stock or assets of the
Company in which the Company is not the surviving entity, does not survive as an
operating going concern in substantially the same line of business (an
"Acquisition"), prior to the Expiration Date or termination of this option, the
Optionee shall, with respect to this option or any unexercised portion hereof,
be entitled to the rights and benefits, and be subject to the limitations, set
forth in Section 16 of the Plan.