EXHIBIT 10.1
SAUCONY, INC.
Incentive Stock Option Agreement
Granted Under 2003 Stock Incentive Plan
1. Grant of Option.
This agreement evidences the grant by Saucony, Inc., a Massachusetts
corporation (the "Company"), on December 22, 2003 (the "Grant Date") to
____________, an employee of the Company (the "Participant"), of an option to
purchase, in whole or in part, on the terms provided herein and in the Company's
2003 Stock Incentive Plan (the "Plan"), a total of 100,000 shares (the "Shares")
of Class B Common Stock, $.331/3 par value per share ("Common Stock"), of the
Company at $16.25 per Share. Unless earlier terminated, this option shall expire
at 5:00 p.m., Eastern time, on December 21, 2013 (the "Final Exercise Date").
It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the "Code").
Except as otherwise indicated by the context, the term "Participant", as used in
this option, shall be deemed to include any person who acquires the right to
exercise this option validly under its terms.
2. Vesting Schedule.
This option will become exercisable ("vest") as to 20% of the original
number of Shares on the first anniversary of the Grant Date and as to an
additional 20% of the original number of Shares at the end of each successive
one year period following the first anniversary of the Grant Date until the
fifth anniversary of the Grant Date.
The right of exercise shall be cumulative so that to the extent the option
is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all Shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this option under Section 3 hereof or the Plan.
Notwithstanding the foregoing, upon the occurrence of a Change in Control
(as defined below), this option will automatically vest as to all previously
unvested Shares.
As used herein, "Change in Control" means an event or occurrence set forth
in any one or more of subsections (a) through (c) below (including an event or
occurrence that constitutes a Change in Control under one of such subsections
but is specifically exempted from another such subsection).
(a) the acquisition by an individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership of any
capital stock of the Company if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) 50% or more of either (i) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company (excluding an acquisition pursuant to the
exercise, conversion or exchange of any security exercisable for, convertible
into or exchangeable for common stock or voting securities of the Company,
unless the Person exercising, converting or exchanging such security acquired
such security directly from the Company or an underwriter or agent of the
Company), (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i) and (ii)
of subsection (c) of this Section 2, or (v) any acquisition of common stock of
the Company by Xxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxxxx or Xxxxxxx X. Xxxxxxxxx
(each, a "Significant Stockholder") or any ancestor, descendent, spouse, sibling
or spouse of a sibling of a Significant Stockholder or any entity affiliated
with any Significant Stockholder (each such individual or entity is referred to
hereunder as an "Exempt Person"); or
(b) such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board (or, if applicable, the Board of Directors of
a successor corporation to the Company), where the term "Continuing Director"
means at any date a member of the Board (i) who was a member of the Board on the
date of the execution of this Agreement or (ii) who was nominated or elected
subsequent to such date by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election or whose
election to the Board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election; provided, however, that there shall be excluded from this clause (ii)
any individual whose initial assumption of office occurred as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents, by
or on behalf of a person other than the Board; or
(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a sale or
other disposition of all or substantially all of the assets of the Company in
one or a series of transactions (a "Business Combination"), unless, immediately
following such Business Combination, each of the following two conditions is
satisfied: (i) all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns the Company or substantially all of the
Company's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the "Acquiring
Corporation") in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, respectively; and (ii)
no Person (excluding the Acquiring Corporation, any Exempt Person, or any
employee benefit plan (or related trust) maintained or sponsored by the Company
or by the Acquiring Corporation) beneficially owns, directly or indirectly, 50%
or more of the then outstanding shares of common stock of the Acquiring
Corporation, or of the combined voting power of the then-outstanding securities
of such corporation entitled to vote generally in the election of directors
(except to the extent that such ownership existed prior to the Business
Combination).
3. Exercise of Option.
(a) Form of Exercise. Each election to exercise this option shall be in
writing, signed by the Participant, and received by the Company at its principal
office, accompanied by this agreement, payment in full in the manner provided in
the Plan and a fully completed and executed notice of exercise substantially in
the form appended hereto as Annex A. The Participant 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 fewer than ten whole shares.
(b) Continuous Relationship with the Company Required. Except as otherwise
provided in this Section 3, this option may not be exercised unless the
Participant, at the time he or she exercises this option, is, and has been at
all times since the Grant Date, an employee or officer of, or consultant or
advisor to, the Company or any parent or subsidiary of the Company as defined in
Section 424(e) or (f) of the Code (an "Eligible Participant").
(c) Termination of Relationship with the Company. If the Participant ceases
to be an Eligible Participant for any reason, then, except as provided in
paragraphs (d) and (e) below, the right to exercise this option shall terminate
three months after such cessation (but in no event after the Final Exercise
Date), provided that this option shall be exercisable only to the extent that
the Participant was entitled to exercise this option on the date of such
cessation. Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates the non-competition or confidentiality provisions of any
employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon such violation.
(d) Exercise Period Upon Death or Disability. If the Participant dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to
the Final Exercise Date while he or she is an Eligible Participant and the
Company has not terminated such relationship for "cause" as specified in
paragraph (e) below, this option shall be exercisable, within the period of one
year following the date of death or disability of the Participant, by the
Participant (or in the case of death by an authorized transferee), provided that
this option shall be exercisable only to the extent that this option was
exercisable by the Participant on the date of his or her death or disability,
and further provided that this option shall not be exercisable after the Final
Exercise Date.
(e) Discharge for Cause. If the Participant, prior to the Final Exercise
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 by the Participant in connection with the Participant's
employment or willful failure by the Participant to perform his or her
employment responsibilities in the best interests of the Company (including,
without limitation, breach by the Participant of any provision of any
employment, consulting, advisory, nondisclosure, non-competition or other
similar agreement between the Participant and the Company), as determined by the
Company, which determination shall be conclusive. If the Participant resigns and
within 30 days thereafter the Company determines that the Participant's conduct
prior to his or her resignation warranted a discharge for "cause", such
resignation shall be deemed a discharge for "cause".
4. Tax Matters.
(a) Withholding. No Shares will be issued pursuant to the exercise of this
option unless and until the Participant pays to the Company, or makes provision
satisfactory to the Company for payment of, any federal, state or local
withholding taxes required by law to be withheld in respect of this option.
(b) Disqualifying Disposition. If the Participant disposes of Shares
acquired upon exercise of this option within two years from the Grant Date or
one year after such Shares were acquired pursuant to exercise of this option,
the Participant shall notify the Company in writing of such disposition.
5. Nontransferability of Option.
This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Participant, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the lifetime of the
Participant, this option shall be exercisable only by the Participant.
6. Provisions of the Plan.
This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.
IN WITNESS WHEREOF, the Company has caused this option to be executed under
its corporate seal by its duly authorized officer. This option shall take effect
as a sealed instrument.
SAUCONY, INC.
Dated: _________ By:
Name:
Title:
PARTICIPANT'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 2003 Stock Incentive Plan.
PARTICIPANT:
____________________________
Address: ___________________
___________________
Annex A
NOTICE OF STOCK OPTION EXERCISE
Date: ____________1
Saucony, Inc.
00 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Treasurer
Dear Sir or Madam:
I am the holder of an Incentive Stock Option granted to me under the
Saucony, Inc. (the "Company") 2003 Stock Incentive Plan on December 22, 2003 for
the purchase of __________2 shares of Class B Common Stock of the Company at a
purchase price of $__________3 per share.
I hereby exercise my option to purchase _________4 shares of Common Stock
(the "Shares"), for which I have enclosed __________5 in the amount of
________6. Please register my stock certificate as follows:
Name(s): _______________________7
_______________________
Address: _______________________
Tax I.D. #: _______________________8
Very truly yours,
(Signature)
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1 Enter the date of exercise.
2 Enter the total number of shares for which the option was granted.
3 Enter the option exercise price per share.
4 Enter the number of shares to be purchased upon exercise of all or part
of the option.
5 Enter "cash" or "personal check".
6 Enter the dollar amount (price per share times the number of shares to
be purchased).
7 Enter name(s) to appear on stock certificate: (a) your name only or
(b) your name and other name (i.e., Xxxx Xxx and Xxxx Xxx, Joint
Tenants With Right of Survivorship).
8 Social Security Number(s) of person(s) listed in response to note 8
above.
