INCENTIVE STOCK OPTION AGREEMENT PURSUANT TO THE TOWN SPORTS INTERNATIONAL HOLDINGS, INC. 2006 STOCK INCENTIVE PLAN
Exhibit 10.1
[ISO]
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
2006 STOCK INCENTIVE PLAN
PURSUANT TO THE
TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
2006 STOCK INCENTIVE PLAN
THIS AGREEMENT, dated as of , 200___(this “Agreement”), between Town Sports
International Holdings, Inc. (the “Company”) and (the “Participant”).
Preliminary Statement
The Compensation Committee of the Board of Directors of the Company (the “Committee”)
has authorized this grant of an incentive stock option (the “Option”) on , 200_
(the “Grant Date”) to purchase the number of shares of the Company’s common stock, par
value $0.001 per share (the “Common Stock”) set forth below to the Participant, as an
Eligible Employee of the Company, a Parent or a Subsidiary (collectively, the Company, its
Subsidiaries and its Parent (if any) shall be referred to herein as the “Employer”).
Unless otherwise indicated, any capitalized term used but not defined herein shall have the meaning
ascribed to such term in the Town Sports International Holdings, Inc. 2006 Stock Incentive Plan (as
the same may be amended from time to time, the “Plan”). A copy of the Plan as in effect on
the date hereof has been delivered to the Participant. By signing and returning this Agreement,
the Participant acknowledges having received and read a copy of the Plan as in effect on the date
hereof and agrees to comply with the Plan, this Agreement and all applicable laws and regulations.
Accordingly, the parties hereto agree as follows:
1. Tax Matters. The Option granted hereby is intended to qualify as an “incentive
stock option” under Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”). Notwithstanding the foregoing, the Option will not qualify as an “incentive stock
option,” among other events: (a) if the Participant disposes of the Common Stock acquired pursuant
to the Option at any time during the two-year period following the date of this Agreement or the
one-year period following the date of any exercise of the Option; (b) except in the event of the
Participant’s death or disability (as defined in Section 22(e)(3) of the Code), if the Participant
is not employed by the Employer at all times during the period beginning on the date of this
Agreement and ending on the day that is three months before the date of any exercise of the Option;
or (c) to the extent that the aggregate fair market value of the Common Stock subject to “incentive
stock options” held by the Participant which become exercisable for the first time in any calendar
year (under all plans of the Employer) exceeds $100,000. For purposes of clause (c) above, the
“fair market value” of the Common Stock shall be determined as of the Grant Date. To the extent
that the Option does not qualify as an “incentive stock option”, it shall not affect the validity
of the Option and shall constitute a separate non-qualified stock option.
2. Grant of Option. Subject in all respects to the Plan and the terms and conditions
set forth herein and therein, the Participant is hereby granted an Option to purchase
from the
Company shares of Common Stock (the “Option Shares”), at a price per share of $___
(the “Option Price”), which may not be less than Fair Market Value on the Grant Date.
3. Vesting and Exercise.
(a) Except as set forth below, the Option shall vest and become exercisable in installments as
provided below, which shall be cumulative. To the extent that the Option has become vested and
exercisable as provided below, the Option thereafter may be exercised by the Participant, in whole
or in part, at any time or from time to time prior to the expiration or earlier termination of the
Option as provided herein and in accordance with Section 6.3(d) of the Plan, including, without
limitation, the filing of such written form of exercise notice, if any, as may be required by the
Committee or the Company and the payment in full of the Option Price multiplied by the number of
Option Shares underlying the portion of the Option exercised. Upon expiration of the Option, the
Option shall be canceled and no longer exercisable. The following table indicates each date upon
which the Participant shall be vested and entitled to exercise the Option with respect to the
percentage of the Option Shares indicated beside such date, provided that the Participant has not
had a Termination of Employment any time prior to such date (each of the dates set forth below
being herein called a “Vesting Date”):
| Percentage of | ||
| Option Shares | ||
| Vesting Date | Vested | |
First Anniversary of Grant Date |
25% | |
Second Anniversary of Grant Date |
50% | |
Third Anniversary of Grant Date |
75% | |
Fourth Anniversary of Grant Date |
100% |
(b) There shall be no proportionate or partial vesting in the periods prior to each Vesting
Date and all vesting shall occur only on the appropriate Vesting Date, provided that the
Participant has not had a Termination of Employment at any time prior to such Vesting Date.
(c) The Option will become fully vested on a Change in Control.
(d) In consideration for the grant of the Option and in addition to any other remedies
available to the Company, the Participant acknowledges and agrees that the Option is subject to the
provisions in the Plan regarding any Detrimental Activity. If the Participant engages in any
Detrimental Activity prior to the exercise of the Option, then the Option shall terminate and
expire as of the date the Participant engaged in such Detrimental Activity. As a condition of the
exercise of the Option, the Participant shall be required to certify (or be deemed to have
certified) at the time of exercise in a manner acceptable to the Company that the Participant is in
compliance with the terms and conditions of the Plan and that the Participant has not engaged in,
and does not intend to engage in, any Detrimental Activity. If the Participant engages in any
Detrimental Activity, then the Company shall be entitled to recover from the
Participant, and the Participant shall pay over to the Company, an amount equal to any gain
realized as a result of the exercise (whether at the time of exercise or thereafter).
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4. Option Term. The term of each Option shall be 10 years after the Grant Date and
the Option shall expire at 5:00 p.m. (New York City time) on the 10th anniversary of the Grant
Date, subject to earlier termination in the event of the Participant’s Termination of Employment as
specified in Section 5.
5. Termination. Subject to Section 4 and
the terms of the Plan, the Option,
to the extent vested at the time of the Participant’s Termination of Employment, shall remain
exercisable as provided in Section 11.1(a) of the Plan. Any portion of the Option that is not
vested as of the date of the Participant’s Termination of Employment for any reason shall terminate
and expire as of the date of such Termination of Employment.
6. Restriction on Transfer of Option. No part of the Option shall be subject to
Transfer other than by will or by the laws of descent and distribution. During the lifetime of the
Participant, the Option may be exercised only by the Participant or the Participant’s guardian or
legal representative. The Option shall not be subject to levy by reason of any execution,
attachment or similar process. Upon any attempt to Transfer the Option or in the event of any levy
upon the Option by reason of any execution, attachment or similar process contrary to the
provisions hereof, the Option shall immediately and automatically become null and void.
7. Non-Compete; Nonsolicitation.
(a) (i) As an inducement to the Company to enter into this Agreement and grant the Option,
the Participant agrees that (A) during the Participant’s period of employment with the Company or
any of its Affiliates, and (B) if the Participant resigns or the Participant’s employment is
terminated by the Company or any of its Affiliates for any reason, during the period which the
Company or any of its Affiliates is paying the Participant severance compensation (which shall be
at a rate and an amount equal to the Participant’s base salary received by the Participant
immediately prior to the Participant’s Termination of Employment), such period not to exceed one
year (the “Noncompete Period”), the Participant shall not, directly or indirectly, own,
manage, control, participate in, consult with, render services for, or in any manner engage in, any
business competing directly or indirectly with the business as conducted by the Company or any of
its Affiliates during the Participant’s period of employment with the Company or any of its
Affiliates or at the time of the Participant’s Termination of Employment or with any other business
that is the logical extension of the Company’s and its Affiliates’ business during the
Participant’s period of employment with the Company or any of its Affiliates or at the time of the
Participant’s Termination of Employment, within any metropolitan area in which the Company or any
of its Affiliates engages or has definitive plans to engage in such business; provided,
however, that (1) the Participant shall not be precluded from purchasing or holding
publicly traded securities of any entity so long as the Participant shall hold less than 2% of the
outstanding units of any such class of securities and has no active participation in the business
of such entity, and (2) the Company shall have notified the Participant of its agreement to provide
(or cause to be provided) such severance compensation (x) in the event of resignation, within five
days following the date of the Participant’s
Termination of Employment, or (y) in the event of termination, on or before the date of the
Participant’s Termination of Employment. Notwithstanding anything contained herein to the
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contrary,
the Participant’s agreement set forth in clause (B) above shall not apply if the date of the
Participant’s Termination of Employment occurs after the fifth anniversary of the Grant Date.
(ii) During the Noncompete Period, the Participant shall not directly or indirectly (i) induce
or attempt to induce any employee of the Company or any of its Affiliates to leave the employ of
the Company or any of its Affiliates, or in any way interfere with the relationship between the
Company or any of its Affiliates and any employee thereof, (ii) hire any person who was an employee
of the Company or any of its Affiliates at any time during the Participant’s employment period
except for such employees who have been terminated for at least six months, or (iii) induce or
attempt to induce any customer, supplier, licensee, franchisor or other business relation of the
Company or any of its Affiliates to cease doing business with such member, or in any way interfere
with the relationship between any such customer, supplier, licensee, franchisor or business
relation, on the one hand, and the Company or any of its Affiliates, on the other hand.
(iii) The provisions of this Section 7(a) shall survive any expiration or termination
of this Agreement or the Option.
(iv) If it is determined by a court of competent jurisdiction that any of the provisions of
this Section 7(a) is excessive in duration or scope or otherwise is unenforceable, then
such provision may be modified or supplemented by the court to render it enforceable to the maximum
extent permitted by law.
(b) The Participant acknowledges that the Participant may have access to certain confidential,
non-public and proprietary information (the “Confidential Information”), concerning the
Company and its Affiliates and their respective officers, directors, stockholders, employees,
agents and representatives and agrees that: (i) unless pursuant to prior written consent by the
Company, the Participant shall not disclose any Confidential Information to any Person for any
purpose whatsoever unless compelled by court order of subpoena; (ii) the Participant shall treat as
confidential all Confidential Information and shall take reasonable precautions to prevent
unauthorized access to the Confidential Information; (iii) the Participant shall not use the
Confidential Information in any way detrimental to the Company or any of its Affiliates and shall
use the Confidential Information for the exclusive purpose of effecting the Participant’s duties of
employment with the Company or any of its Affiliates; and (iv) the Participant agrees that the
Confidential Information obtained during the Participant’s employment with the Company shall remain
the exclusive property of the Company and its Affiliates, and the Participant shall promptly return
to the Company all material which incorporates, or is derived from, all such Confidential
Information upon termination of the Participant’s employment with the Company or any of its
Affiliates. The Participant shall be responsible for any breach of the terms of this Section
7(b) by any holder of the Option Shares. It is hereby agreed that Confidential Information
does not include information generally available and known to the public other than through the
disclosure thereof by or through the Participant or obtained from a source not bound by a
confidentiality agreement with the Company or any of its Affiliates.
(c) The Participant hereby agrees that all inventions, innovations or improvements in the
method of conducting the business (including improvements, ideas and
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discoveries, whether
patentable or not) of the Company or any of its Affiliates, whether prior to the date hereof or
thereafter, in each case conceived or made by the Participant in the course of the Participant’s
employment with the Company or any of its Affiliates, belong to the Company and its Affiliates,
except for such inventions, innovations and improvements that have become part of the public domain
other than through the disclosure thereof by or through the Participant and are not entitled to
statutory or common law protection. The Participant will promptly disclose such inventions,
innovation or improvements to the Company and perform all actions reasonably requested by the
Company to establish and confirm such ownership by the Company or any of its Affiliates.
8. Rights as a Stockholder. The Participant shall have no rights as a stockholder
with respect to any Option Shares unless and until the Participant has become the holder of record
of the Option Shares. No adjustments shall be made to the Option, the Option Shares or the Option
Price for dividends in cash or other property, distributions or other rights in respect of any
Option Shares, except as otherwise may be specifically provided for in the Plan. No shares of
Common Stock shall be issued unless and until payment therefor has been made or provided and the
conditions set forth in Section 15.6 of the Plan are satisfied.
9. Provisions of Plan Control. This Agreement is subject to all the terms, conditions
and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to
such rules, regulations and interpretations relating to the Plan as may be adopted by the Committee
and as may be in effect from time to time. The Plan is incorporated herein by reference. If and
to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and
provisions of the Plan, the Plan shall control, and this Agreement shall be deemed to be modified
accordingly. This Agreement contains the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersedes any prior agreements and understandings
(whether written or oral) between the Company and the Participant with respect to the subject
matter hereof.
10. Notices. Any notice or communication given hereunder (each a “Notice”)
shall be in writing and shall be sent by personal delivery, by courier or by United States mail
(registered or certified mail, postage prepaid and return receipt requested), to the appropriate
party at the address set forth below:
If to the Company, to:
Town Sports International Holdings, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx
with a copy to:
Town Sports International Holdings, Inc.
000 Xxxxxxx Xxxxxx (00xx Xxxxx)
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx, General Counsel
000 Xxxxxxx Xxxxxx (00xx Xxxxx)
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx, General Counsel
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If to the Participant, to the address for the Participant on file with the Company
; or such other address or to the attention of such other person as a party shall have specified by
prior Notice to the other party. Each Notice will be deemed given and effective upon actual
receipt (or refusal of receipt).
11. No Obligation to Continue Employment. This Agreement is not an agreement of
employment. This Agreement does not guarantee that the Company or its Affiliates will employ,
retain or continue to, employ or retain the Participant during the entire, or any portion of the,
term of this Agreement, including but not limited to any period during which any Option is
outstanding, nor does it modify in any respect the Company’s or its Affiliates’ right to terminate
or modify the Participant’s employment or compensation.
12. Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION
OF ANY PARTY HERETO.
13. Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by, and construed in accordance with, the
domestic laws of the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New York.
14. Counterparts. This Agreement may be executed with counterpart signature pages or
in separate counterparts each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
[Remainder of Page Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above
written.
| TOWN SPORTS INTERNATIONAL | ||||||||
| HOLDINGS, INC. | ||||||||
| By: | ||||||||
| Title: | ||||||||
PARTICIPANT |
||||||||
[Name] |
||||||||
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