Exhibit 99.1
SAUCONY, INC.
2003 Stock Incentive Plan
1. Purpose
The purpose of this 2003 Stock Incentive Plan (this "Plan") of Saucony,
Inc., a Massachusetts corporation (the "Company"), is to advance the interests
of the Company's stockholders by enhancing the Company's ability to attract,
retain and motivate persons who make (or are expected to make) important
contributions to the Company by providing such persons with equity ownership
opportunities and performance-based incentives and thereby better aligning the
interests of such persons with those of the Company's stockholders. Except where
the context otherwise requires, the term "Company" shall include any of the
Company's present or future parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a controlling interest, as determined by the Board of
Directors of the Company (the "Board").
2. Eligibility
All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options or restricted stock awards (each, an
"Award") under this Plan. Each person who has been granted an Award under this
Plan shall be deemed a "Participant".
3. Administration and Delegation
(a) Administration by Board of Directors. This Plan will be administered by
the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to this
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in this Plan or any Award in the manner
and to the extent it shall deem expedient to carry this Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in this Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under this Plan made in
good faith.
(b) Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under this Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in this
Plan to the "Board" shall mean the Board or a Committee of the Board to the
extent that the Board's powers or authority under this Plan have been delegated
to such Committee.
4. Stock Available for Awards
(a) Number of Shares. Subject to adjustment under Section 7 of this Plan,
Awards may be made under this Plan for up to an aggregate of 1,750,000 shares of
Class A Common Stock, $.331/3 par value per share ("Class A Common Stock"), and
Class B Common Stock, $.331/3 par value per share ("Class B Common Stock"; and
together with the Class A Common Stock, the "Common Stock"), of the Company. If
any Award expires or is terminated, surrendered or canceled without having been
fully exercised or is forfeited in whole or in part (including as the result of
shares of Common Stock subject to such Award being repurchased by the Company at
the original issuance price pursuant to a contractual repurchase right) or
results in any Common Stock not being issued, the unused Common Stock covered by
such Award shall again be available for the grant of Awards under this Plan,
subject, however, in the case of Incentive Stock Options (as hereinafter
defined), to any limitations under the Code. Shares issued under this Plan may
consist in whole or in part of authorized but unissued shares or treasury
shares.
(b) Per-Participant Limit. Subject to adjustment under Section 7 of this
Plan, the maximum number of shares of Common Stock with respect to which Awards
may be granted to any Participant under this Plan shall be 150,000 per calendar
year. The per-Participant limit described in this Section 4(b) shall be
construed and applied consistently with Section 162(m) of the Code ("Section
162(m)").
5. Stock Options
(a) General. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company, any of the
Company's present or future parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Code and any other entities the employees of which
are eligible to receive Incentive Stock Options under the Code, and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
(c) Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement,
provided, however, that the exercise price shall be not less than 100% of the
fair market value of the applicable class of Common Stock, as determined by the
Board, at the time the Option is granted.
(d) Duration of Options. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement, provided, however, that no Option will be granted for a term
in excess of 10 years.
(e) Exercise of Option. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Board together with
payment in full as specified in Section 5(f) of this Plan for the number of
shares for which the Option is exercised.
(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under this Plan shall, unless otherwise prohibited by applicable
law, be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by (i) delivery of an irrevocable
and unconditional undertaking by a creditworthy broker to deliver
promptly to the Company sufficient funds to pay the exercise
price and any required tax withholding or (ii) delivery by the
Participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the
exercise price and any required tax withholding;
(3) when the applicable class of Common Stock is registered under the
Securities Exchange Act of 1934 (the "Exchange Act"), by delivery
of shares of such class of Common Stock owned by the Participant
valued at their fair market value as determined by (or in a
manner approved by) the Board in good faith ("Fair Market
Value"), provided such Common Stock, if acquired directly from
the Company was owned by the Participant at least six months
prior to such delivery; or
(4) by any combination of the above permitted forms of payment.
(g) Substitute Options. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2 of this Plan.
6. Restricted Stock.
(a) Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").
Subject to adjustment under Section 7 of this Plan, Restricted Stock Awards may
be made under this Plan for no more than an aggregate of 500,000 shares of
Common Stock.
(b) Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any.
(c) Stock Certificates. Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the
expiration of the applicable restriction periods, the Company (or such designee)
shall deliver the certificates no longer subject to such restrictions to the
Participant or if the Participant has died, to the beneficiary designated, in a
manner determined by the Board, by a Participant to receive amounts due or
exercise rights of the Participant in the event of the Participant's death (the
"Designated Beneficiary"). In the absence of an effective designation by a
Participant, Designated Beneficiary shall mean the Participant's estate.
7. Adjustments for Changes in Common Stock and Certain Other Events
(a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b) of this Plan, (iii) the
number and class of securities and exercise price per share subject to each
outstanding Option, (iv) the repurchase price per share subject to each
outstanding Restricted Stock Award and (v) the limit on the aggregate number of
shares which may be made subject to Restricted Stock Awards set forth in Section
6(a) of this Plan, shall be appropriately adjusted by the Company (or
substituted Awards may be made, if applicable) to the extent the Board shall
determine, in good faith, that such an adjustment (or substitution) is necessary
and appropriate. If this Section 7(a) applies and Section 7(b) of this Plan also
applies to any event, Section 7(b) shall be applicable to such event, and this
Section 7(a) shall not be applicable.
(b) Reorganization Events
(1) Definition. A "Reorganization Event" shall mean: (a) any merger
or consolidation of the Company with or into another entity as a
result of which all of the Common Stock of the Company is
converted into or exchanged for the right to receive cash,
securities or other property, (b) any exchange of all of the
Common Stock of the Company for cash, securities or other
property pursuant to a share exchange transaction, or (c) a
liquidation or dissolution of the Company.
(2) Consequences of a Reorganization Event on Options. Upon the
occurrence of a Reorganization Event, or the execution by the
Company of any agreement with respect to a Reorganization Event,
the Board shall in its discretion, take any one or more of the
following actions with respect to outstanding Options:
(a) provide that all outstanding Options shall be assumed, or
equivalent options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof). For
purposes hereof, an Option shall be considered to be assumed
if, following consummation of the Reorganization Event, the
Option confers the right to purchase, for each share of
Common Stock subject to the Option immediately prior to the
consummation of the Reorganization Event, the consideration
(whether cash, securities or other property) received as a
result of the Reorganization Event by holders of such class
of Common Stock for each share of such class of Common Stock
held immediately prior to the consummation of the
Reorganization Event (and if holders were offered a choice
of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of such
class of Common Stock); provided, however, that if the
consideration received as a result of the Reorganization
Event is not solely common stock of the acquiring or
succeeding corporation (or an affiliate thereof), the
Company may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be received
upon the exercise of Options to consist solely of common
stock of the acquiring or succeeding corporation (or an
affiliate thereof) equivalent in fair market value to the
per share consideration received by holders of outstanding
shares of such class of Common Stock as a result of the
Reorganization Event;
(b) upon written notice to the Participants, provide that all
then unexercised Options will become exercisable in full as
of a specified time prior to the Reorganization Event and
will terminate immediately prior to the consummation of such
Reorganization Event, except to the extent exercised by the
Participants before the consummation of such Reorganization
Event; and
(c) in the event of a Reorganization Event under the terms of
which holders of a class of Common Stock will receive upon
consummation thereof a cash payment for each share of such
class of Common Stock surrendered pursuant to such
Reorganization Event (the "Acquisition Price"), provide that
all outstanding Options shall terminate upon consummation of
such Reorganization Event and that each Participant shall
receive, in exchange therefor, a cash payment equal to the
amount (if any) by which (A) the Acquisition Price for the
class of Common Stock subject to the applicable Options
multiplied by the number of shares of Common Stock subject
to such outstanding Options (whether or not then
exercisable), exceeds (B) the aggregate exercise price of
such Options.
If any Option provides that it may be exercised for shares of Common Stock
which remain subject to a repurchase right in favor of the Company, upon the
occurrence of a Reorganization Event, any shares of restricted stock received
upon exercise of such Option shall be treated in accordance with Section 7(b)(3)
as if they were a Restricted Stock Award.
(3) Consequences of a Reorganization Event on Restricted Stock Awards.
Upon the occurrence of a Reorganization Event, the repurchase and
other rights of the Company under each outstanding Restricted Stock
Award shall inure to the benefit of the Company's successor and shall
apply to the cash, securities or other property which the Common Stock
was converted into or exchanged for pursuant to such Reorganization
Event in the same manner and to the same extent as they applied to the
Common Stock subject to such Restricted Stock Award.
8. General Provisions Applicable to Awards
(a) Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.
(b) Documentation. Each Award shall be evidenced in such form (written,
electronic or otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in this Plan.
(c) Board Discretion. Except as otherwise provided by this Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.
(d) Termination of Status. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the applicable class of Common Stock is registered
under the Exchange Act, Participants may satisfy such tax obligations in whole
or in part by delivery of shares of such class of Common Stock, including shares
retained from the Award creating the tax obligation, valued at their Fair Market
Value; provided, however, that the total tax withholding where stock is being
used to satisfy such tax obligations cannot exceed the Company's minimum
statutory withholding obligations (based on minimum statutory withholding rates
for federal and state tax purposes, including payroll taxes, that are applicable
to such supplemental taxable income). The Company may, to the extent permitted
by law, deduct any such tax obligations from any payment of any kind otherwise
due to a Participant.
(f) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(g) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to this Plan or to remove
restrictions from shares previously delivered under this Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(h) Acceleration. The Board may at any time provide that any Award shall
become immediately exercisable in full or in part, free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.
9. Miscellaneous
(a) No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under this Plan, except as expressly provided in the
applicable Award.
(b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(c) Effective Date and Term of Plan. This Plan shall become effective on
the date on which it is adopted by the Board, but no Award granted to a
Participant that is intended to comply with Section 162(m) shall become
exercisable, vested or realizable, as applicable to such Award, unless and until
this Plan has been approved by the Company's stockholders to the extent
stockholder approval is required by Section 162(m) in the manner required under
Section 162(m) (including the vote required under Section 162(m)). No Awards
shall be granted under this Plan after the completion of ten years from the
earlier of (i) the date on which this Plan was adopted by the Board or (ii) the
date this Plan was approved by the Company's stockholders, but Awards previously
granted may extend beyond that date.
(d) Amendment of Plan. The Board may amend, suspend or terminate this Plan
or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's stockholders if required by
Section 162(m) (including the vote required under Section 162(m)).
(e) Governing Law. The provisions of this Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the Commonwealth of Massachusetts, without regard to any applicable conflicts of
law.