Exhibit 10.3

                                  HSBC Bank USA
                           99 High Street, 16th Floor
                                Boston, MA 02110

                                                 January 26, 2004

Mr. Michael Umana
Chief Financial Officer
Saucony, Inc.
13 Centennial Drive
Peabody, MA 01960

Re:  Amended and Restated Credit Agreement dated August 30, 2002, by and between
     Saucony,  Inc. (the "Borrower"),  as borrower and, as successor in interest
     to State  Street Bank and Trust  Company,  HSBC Bank USA (the  "Bank"),  as
     agent for the  lenders  from time to time party  thereto (as  amended,  the
     "Credit Agreement")

Dear Michael:

The Borrower and the Bank hereby agree as follows:

1.   Section 9.8 of the Credit Agreement is hereby amended to state as follows:

     Section 9.8. Distributions. Make any Distribution or make any other payment
     on account of the purchase, acquisition, redemption, or other retirement of
     any shares of stock, whether now or hereafter  outstanding,  other than (i)
     cash dividends and repurchase or redemption of Borrower's capital stock not
     to exceed  $5,000,000  in the  aggregate  in any  fiscal  year and (ii) any
     Subsidiary may make a Distribution to the Borrower.

2.   Notwithstanding anything to the contrary contained in the Credit Agreement,
     in addition to any  Distributions  and other payments  permitted by Section
     9.8 of the Credit  Agreement,  Borrower  may pay a special,  one-time  cash
     dividend of up to $30,000,000 at any time on or before August 30, 2004.

     This Letter  Agreement may be executed in any number of counterparts and by
the parties  hereto on separate  counterparts,  each of which  counterpart  when
executed and delivered  shall be an original,  but all of which  together  shall
constitute one and the same instrument.

     This Letter Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.

     The Borrower agrees that the Credit Agreement and all documents executed in
connection  therewith or pursuant  thereto remain in full force and effect after
giving effect to this Letter Agreement.

     Please  confirm that the  foregoing  correctly  sets forth our agreement by
signing and  returning  the  duplicate  copy of this Letter  Agreement  enclosed
herewith.

                                                Very truly yours,

                                                HSBC Bank USA

                                                By:   /s/  Patrick J. Doulin
                                                Name:    Patrick J. Doulin
                                                Title:   Senior Vice President


ACCEPTED AND AGREED:

SAUCONY, INC.

By:  /s/ Michael Umana
     Name:        Michael Umana
     Title:       Chief Financial Officer