Exhibit 10.14

 

OPTION AGREEMENT

 

OPTION AGREEMENT (this “Agreement”), dated as of «Grant_Date», by and between
the Company and the grantee, the individual’s whose name appears on the
signature page hereof (the “Grantee”).

 

W I T N E S S E T H:

 

WHEREAS, the Board has determined that it is in the best interests of the
Company and its shareholders for the Company to grant from time to time options
to purchase Common Stock to executive officers or key employees of, or
consultants to, or any key employees of any entity which provides services to,
the Company or its Subsidiaries in order to motivate and align the interests of
such individuals with those of the Company’s shareholders, and in connection
therewith, the Board has established the Equinox Holdings, Inc. 2000 Stock
Incentive Plan (as the same may be amended from time to time, the “Plan”);

 

WHEREAS, pursuant to the Plan, the Board has authorized the grant to the Grantee
of non-qualified stock options to purchase shares of Common Stock pursuant to
the Plan; and

 

WHEREAS, the Grantee and the Company desire to enter into an agreement to
evidence and confirm the grant of such stock options on the terms and conditions
set forth herein;

 

NOW, THEREFORE, to evidence the stock options so granted, and to set forth the
terms and conditions governing such stock options, the Company and the Grantee
hereby agree as follows:

 

1.                                       CERTAIN DEFINITIONS.  CAPITALIZED TERMS
USED HEREIN WITHOUT DEFINITION SHALL HAVE THE MEANING ASSIGNED TO THEM IN THE
PLAN, PROVIDED HOWEVER, THAT WHENEVER THE TERM “PARTICIPANT” APPEARS IN THE PLAN
SUCH TERM SHALL BE SUBSTITUTED WITH THE TERM “GRANTEE” (AS DEFINED IN THE
INTRODUCTORY PARAGRAPH HEREOF).  AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS
SHALL HAVE THE FOLLOWING MEANINGS:

 

(A)                                  “AFFILIATE” SHALL MEAN, WITH RESPECT TO ANY
PERSON, ANY OTHER PERSON THAT, DIRECTLY OR INDIRECTLY THROUGH ONE OR MORE
INTERMEDIARIES, CONTROLS, IS CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH THE
FIRST PERSON, INCLUDING BUT NOT LIMITED TO A SUBSIDIARY OF THE FIRST PERSON,
A PERSON OF WHICH THE FIRST PERSON IS A SUBSIDIARY, OR ANOTHER SUBSIDIARY OF
A PERSON OF WHICH THE FIRST PERSON IS ALSO A SUBSIDIARY.

 

(B)                                 “CONTROL” (INCLUDING THE TERMS “CONTROLLED
BY” AND “UNDER COMMON CONTROL WITH”) SHALL MEAN, WITH RESPECT TO ANY PERSON, THE
POSSESSION, DIRECTLY OR INDIRECTLY, SEVERALLY OR JOINTLY, OF THE POWER TO DIRECT
OR CAUSE THE DIRECTION OF THE

 

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MANAGEMENT POLICIES OF SUCH PERSON, WHETHER THROUGH THE OWNERSHIP OF VOTING
SECURITIES, BY CONTRACT OR CREDIT ARRANGEMENT, AS TRUSTEE OR EXECUTOR, OR
OTHERWISE.

 

(C)                                  “EXERCISE DATE” SHALL HAVE THE MEANING SET
FORTH IN SECTION 6 HEREOF.

 

(D)                                 “EXERCISE PRICE” SHALL HAVE THE MEANING SET
FORTH IN SECTION 6 HEREOF.

 

(E)                                  “EXERCISE SHARES” SHALL HAVE THE MEANING
SET FORTH IN SECTION 6 HEREOF.

 

(F)                                    “GRANT DATE” SHALL MEAN THE DATE HEREOF,
WHICH IS THE DATE ON WHICH THE OPTIONS ARE GRANTED TO THE GRANTEE.

 

(G)                                 “GRANTEE” SHALL HAVE THE MEANING SET FORTH
IN THE INTRODUCTORY PARAGRAPH HERETO.

 

(H)                                 “NORMAL TERMINATION DATE” SHALL MEAN THE
TENTH ANNIVERSARY OF THE DATE HEREOF.

 

(I)                                     “OPTION PRICE” SHALL MEAN, WITH RESPECT
TO EACH SHARE COVERED BY AN OPTION, THE EXERCISE PRICE AT WHICH THE GRANTEE MAY
PURCHASE SUCH SHARE PURSUANT TO SUCH OPTION AS DETERMINED IN
SECTION 2(B) HEREOF.

 

(J)                                     “PERSON” SHALL MEAN ANY NATURAL PERSON,
FIRM, PARTNERSHIP, LIMITED LIABILITY COMPANY, ASSOCIATION, CORPORATION, COMPANY,
TRUST, BUSINESS TRUST, GOVERNMENTAL AUTHORITY OR OTHER ENTITY.

 

(K)                                  “PLAN” SHALL HAVE THE MEANING SET FORTH IN
THE RECITALS TO THIS AGREEMENT.

 

(L)                                     “RULE 144” SHALL MEAN RULE 144
PROMULGATED UNDER THE SECURITIES ACT.

 

(M)                               “SHARES” SHALL MEAN THE SHARES OF COMMON STOCK
SUBJECT TO THE OPTIONS.

 

(N)                                 “SPONSORS” SHALL MEAN THE NORTH CASTLE
PARTNERS, L.L.C., AND CHILDS.

 

(O)                                 “SUCCESSOR” SHALL MEAN, WITH RESPECT TO ANY
PERSON, A PERSON THAT SUCCEEDS TO THE FIRST PERSON’S ASSETS AND LIABILITIES BY
MERGER, LIQUIDATION, DISSOLUTION OR OTHERWISE BY OPERATION OF LAW, OR A PERSON
TO WHICH ALL OR SUBSTANTIALLY ALL THE ASSETS AND/OR BUSINESS OF THE FIRST PERSON
ARE TRANSFERRED.

 

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2.                                       GRANT OF OPTIONS.

 

(A)                                  CONFIRMATION OF GRANT.  THE COMPANY HEREBY
EVIDENCES AND CONFIRMS ITS GRANT TO THE GRANTEE, EFFECTIVE AS OF THE DATE
HEREOF, OF «TOTAL_OPTIONS» OPTIONS.  THE OPTIONS ARE NOT INTENDED TO BE
INCENTIVE STOCK OPTIONS UNDER THE U.S. INTERNAL REVENUE CODE OF 1986, AS
AMENDED.  THIS AGREEMENT IS SUBORDINATE TO, AND THE TERMS AND CONDITIONS OF THE
OPTIONS GRANTED HEREUNDER ARE SUBJECT TO, THE TERMS AND CONDITIONS OF THE PLAN. 
IF THERE IS ANY INCONSISTENCY BETWEEN THE TERMS HEREOF AND THE TERMS OF THE
PLAN, THE TERMS OF THE PLAN SHALL GOVERN.

 

(B)                                 OPTION PRICE.  EACH OPTION GRANTED HEREUNDER
SHALL HAVE THE OPTION PRICE PER SHARE SET FORTH OPPOSITE THE NUMBER OF OPTIONS
ON SCHEDULE A ATTACHED HERETO, WHICH IN EACH CASE IS NOT LESS THAN THE FAIR
MARKET VALUE ON THE GRANT DATE.

 

3.                                       VESTING AND EXERCISABILITY.

 

(A)                                  OPTIONS.  UPON THE OCCURRENCE OF A CHANGE
OF CONTROL OR PUBLIC OFFERING, IF THE SPONSORS REALIZE AN INTERNAL RATE OF
RETURN OF AT LEAST TWENTY PERCENT (20%), THIRTY-THREE AND ONE THIRD (331/3%) OF
THE OPTIONS SHALL BECOME VESTED AND EXERCISABLE; PROVIDED, THAT, FOR EACH ONE
PERCENT (1%) (OR PORTION THEREOF) INCREASE IN SUCH RETURN (ABOVE 20%) REALIZED
BY THE SPONSORS UPON THE OCCURRENCE OF SUCH EVENT, AN ADDITIONAL SIX AND
TWO-THIRDS PERCENT (62/3%) (OR PORTION THEREOF) OF THE OPTIONS SHALL BECOME
VESTED AND EXERCISABLE; PROVIDED, FURTHER, THAT, ONE HUNDRED PERCENT (100%) OF
THE OPTIONS SHALL BECOME VESTED AND EXERCISABLE UPON THE OCCURRENCE OF SUCH
EVENT IF THE RETURN REALIZED BY THE SPONSORS EQUALS OR EXCEEDS THIRTY PERCENT
(30%).  THE SPONSORS’ REALIZED INTERNAL RATE OF RETURN WILL BE CALCULATED AFTER
GIVING FULL EFFECT TO THE DILUTION OF THE SPONSORS’ INTEREST IN THE COMPANY BY
THE VALUE OF THE OUTSTANDING OPTIONS THAT CAN BE EXERCISED UPON SUCH CHANGE OF
CONTROL OR PUBLIC OFFERING.  IN THE EVENT LESS THAN 100% OF THE OPTIONS GRANTED
HEREUNDER BECOME VESTED AS A RESULT OF THE FIRST CHANGE IN CONTROL OR PUBLIC
OFFERING, UPON ANY AND ALL SUBSEQUENT PUBLIC OFFERINGS OR DIVESTITURES OF THE
SPONSOR’S INTERESTS (UNTIL THE SPONSORS BENEFICIALLY OWN LESS THAT 5% OF THE
TOTAL OUTSTANDING EQUITY INTERESTS IN THE COMPANY), THE FOREGOING INTERNAL RATES
OF RETURNS SHALL BE RECALCULATED IN THE SAME MANNER AS PROVIDED ABOVE AND, TO
THE EXTENT SUCH RECALCULATION RESULTS IN AN INCREASED INTERNAL RATE OF RETURN
THAT WOULD RESULT IN MORE OPTIONS BECOMING VESTED AND EXERCISABLE, SUCH
ADDITIONAL OPTIONS SHALL BECOME VESTED AND EXERCISABLE.

 

(B)                                 CONDITIONS.  THE BOARD, IN ITS SOLE
DISCRETION, MAY ACCELERATE THE VESTING AND EXERCISABILITY OF ANY OPTION, ALL
OPTIONS OR ANY CLASS OF OPTIONS, AT ANY TIME AND FROM TIME TO TIME.  SHARES
COVERED BY OPTIONS WHICH ARE VESTED AND EXERCISABLE MAY, SUBJECT TO THE
PROVISIONS HEREOF, BE PURCHASED AT ANY TIME AND FROM TIME TO TIME ON OR AFTER
THE DATE THE CORRESPONDING OPTIONS BECOME EXERCISABLE IN ACCORDANCE WITH THE
PROVISIONS OF THIS SECTION 3 UNTIL THE DATE ONE DAY PRIOR TO THE DATE ON WHICH
SUCH OPTIONS TERMINATE, PROVIDED THAT ANY SUCH PURCHASE SHALL BE EFFECTED
PURSUANT AND SUBJECT TO

 

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SECTIONS 5 AND 6 HEREOF AND THE PROVISIONS CONTAINED IN THE SHAREHOLDERS
AGREEMENT AND THE STOCK SUBSCRIPTION AGREEMENT RELATED TO THE PURCHASE OF SUCH
SHARES.

 

4.                                       TERMINATION OF OPTIONS.

 

(A)                                  NORMAL TERMINATION DATE.  SUBJECT TO
SECTIONS 4(B) AND 8 HEREOF, THE OPTIONS SHALL TERMINATE AND BE CANCELED ON THE
NORMAL TERMINATION DATE.

 

(B)                                 EARLY TERMINATION.

 

(I)                                     TERMINATION OTHER THAN FOR CAUSE.  IF
THE GRANTEE’S EMPLOYMENT WITH A MEMBER OF THE COMPANY GROUP TERMINATES FOR ANY
REASON OTHER THAN FOR CAUSE, THEN A PERCENTAGE OF OPTIONS GRANTED HEREUNDER THAT
HAS NOT BECOME VESTED AND EXERCISABLE PURSUANT TO SECTION 3 SHALL TERMINATE AND
BE CANCELLED IMMEDIATELY UPON SUCH TERMINATION OF EMPLOYMENT IN ACCORDANCE WITH
THE FOLLOWING TABLE:

 

Length of time from Grant
Date to date of termination

 

% of Options granted
hereunder terminated

 

Less than 1 year

 

100

%

1 year but less than 2 years

 

75

%

2 years but less than 3 years

 

50

%

3 years but less than 4 years

 

25

%

4 years or more

 

0

%

 

With respect to any Options that are not terminated and canceled upon the
Grantee’s termination of employment in accordance with the above table (the
“Remaining Options”), the Company shall have the option to (A) permit the
Grantee to exercise such Remaining Options (whether or not then vested or
exercisable) until the first to occur of (x) the 90th day after the effective
date of the Grantee’s termination of employment or, in the case of a termination
for death or Disability, the twelve month anniversary of such effective date;
and (y) the Normal Termination Date, (B) permit such Remaining Options to remain
outstanding and subject to provisions contained herein without modification,
except that the provisions of the first sentence of this Section 4(b)(i),
Section 4(b)(iii) hereof and Section 6 of the Plan shall no longer apply or
(C) purchase all or any portion of the Remaining Options in accordance with
Section 5(c).  Any Options held by a Participant for which the Company has
selected the Option provided in clause (A) above that are not exercised within
the applicable periods described in this paragraph shall terminate and be
canceled upon the expiration of such period.

 

(II)                                  NOTIFICATION.  THE COMPANY SHALL NOTIFY
THE GRANTEE OF ITS ELECTION UNDER SECTION 4(B)(I) WITHIN TEN BUSINESS DAYS AFTER
THE EFFECTIVE DATE OF THE GRANTEE’S TERMINATION OF EMPLOYMENT; PROVIDED THAT, IN
THE CASE OF A TERMINATION FOR ANY REASON OTHER THAN DEATH, DISABILITY OR FOR
CAUSE, A FAILURE BY THE COMPANY

 

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TO TIMELY NOTIFY SUCH GRANTEE SHALL BE DEEMED TO BE AN ELECTION BY THE COMPANY
OF THE OPTION DESCRIBED IN CLAUSE (A) OF SECTION 4(B)(I); PROVIDED FURTHER THAT,
IN THE CASE OF A TERMINATION FOR DEATH OR DISABILITY, A FAILURE TO TIMELY NOTIFY
SUCH GRANTEE SHALL BE DEEMED TO BE AN ELECTION BY THE COMPANY OF THE OPTION
DESCRIBED IN CLAUSE (B) OF SECTION 4(B)(I).

 

(III)                               TERMINATION FOR CAUSE.  NOTWITHSTANDING
ANYTHING ELSE CONTAINED IN THIS AGREEMENT, IF THE GRANTEE’S EMPLOYMENT WITH A
MEMBER OF THE COMPANY GROUP IS TERMINATED FOR CAUSE, ALL OPTIONS (WHETHER OR NOT
THEN VESTED OR EXERCISABLE) SHALL AUTOMATICALLY TERMINATE AND BE CANCELED
IMMEDIATELY UPON SUCH TERMINATION.

 

5.                                       RESTRICTIONS ON EXERCISE;
NON-TRANSFERABILITY OF OPTIONS; REPURCHASE OF REMAINING OPTIONS.

 

(A)                                  RESTRICTIONS ON EXERCISE.  ONCE EXERCISABLE
IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT, THE OPTIONS MAY BE
EXERCISED ONLY WITH RESPECT TO FULL SHARES OF COMMON STOCK.  NO FRACTIONAL
SHARES OF COMMON STOCK SHALL BE ISSUED.  NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT, THE OPTIONS MAY NOT BE EXERCISED IN WHOLE OR IN PART, AND NO
CERTIFICATES REPRESENTING SHARES SHALL BE DELIVERED, (A) UNLESS ALL REQUISITE
APPROVALS AND CONSENTS OF ANY GOVERNMENTAL AUTHORITY OF ANY KIND HAVING
JURISDICTION OVER THE EXERCISE OF THE OPTIONS OR THE DELIVERY OF THE SHARES UPON
EXERCISE OF THE OPTIONS SHALL HAVE BEEN SECURED, PROVIDED THAT THE COMPANY SHALL
USE ITS REASONABLE EFFORTS TO OBTAIN ANY SUCH APPROVALS OR CONSENTS UNLESS THE
BOARD DETERMINES IN ITS SOLE DISCRETION THAT THE COMPANY WOULD INCUR MATERIAL
COSTS, FEES OR EXPENSES OR WHICH WOULD REQUIRE REGISTRATION OF THE SECURITIES
WITH SUCH GOVERNMENTAL AUTHORITY, (B) UNLESS THE PURCHASE OF THE SHARES UPON THE
EXERCISE OF THE OPTIONS SHALL BE EXEMPT FROM REGISTRATION UNDER APPLICABLE U.S.
FEDERAL AND STATE SECURITIES LAWS, OR THE PURCHASE OF THE SHARES SHALL HAVE BEEN
REGISTERED UNDER SUCH LAWS, AND (C) UNLESS ALL APPLICABLE U.S. FEDERAL, STATE
AND LOCAL TAX WITHHOLDING REQUIREMENTS SHALL HAVE BEEN SATISFIED.

 

(B)                                 NON-TRANSFERABILITY OF OPTIONS.  THE OPTIONS
MAY BE EXERCISED ONLY BY THE GRANTEE OR, FOLLOWING HIS DEATH, BY THE GRANTEE’S
ESTATE.  EACH OPTION IS NOT ASSIGNABLE OR TRANSFERABLE, IN WHOLE OR IN PART, AND
IT MAY NOT, DIRECTLY OR INDIRECTLY, BE OFFERED, TRANSFERRED, SOLD, PLEDGED,
ASSIGNED, ALIENATED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR ENCUMBERED
(INCLUDING WITHOUT LIMITATION BY GIFT, OPERATION OF LAW OR OTHERWISE) OTHER THAN
BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION TO THE ESTATE OF THE GRANTEE
UPON THE GRANTEE’S DEATH.

 

(C)                                  PURCHASE OF OPTIONS ON TERMINATION OF
EMPLOYMENT.

 

(I)                                     TERMINATION OF EMPLOYMENT.  IF THE
GRANTEE’S ACTIVE EMPLOYMENT WITH THE COMPANY OR ANY SUBSIDIARY THEREOF THAT
EMPLOYS THE GRANTEE IS, OR HAS BEEN, TERMINATED FOR ANY REASON OTHER THAN FOR
CAUSE, THE COMPANY SHALL HAVE AN OPTION TO PURCHASE ALL OR ANY PORTION OF THE
REMAINING OPTIONS AND/OR THE OPTIONS

 

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THAT HAVE BECOME VESTED AND EXERCISABLE PURSUANT TO SECTION 3 (THE “VESTED
OPTIONS”) HELD BY THE GRANTEE (OR, IF THE GRANTEE’S EMPLOYMENT WAS TERMINATED BY
THE GRANTEE’S DEATH OR THE GRANTEE DIES AFTER HIS TERMINATION OF EMPLOYMENT, THE
GRANTEE’S ESTATE) AND SHALL HAVE TEN BUSINESS DAYS FROM THE DATE OF THE
GRANTEE’S TERMINATION OF EMPLOYMENT (SUCH TEN BUSINESS DAY PERIOD BEING
HEREINAFTER REFERRED TO AS THE “FIRST PURCHASE PERIOD”) DURING WHICH TO GIVE
NOTICE IN WRITING TO THE GRANTEE OF ITS ELECTION TO EXERCISE OR NOT TO EXERCISE
SUCH RIGHT TO PURCHASE, IN WHOLE OR IN PART, THE REMAINING OPTIONS OR VESTED
OPTIONS, AS THE CASE MAY BE.  THE COMPANY HEREBY UNDERTAKES TO USE REASONABLE
EFFORTS TO ACT AS PROMPTLY AS PRACTICABLE FOLLOWING SUCH DATE OF TERMINATION TO
MAKE SUCH ELECTION.  IF THE COMPANY FAILS TO GIVE NOTICE THAT IT INTENDS TO
EXERCISE ITS RIGHT TO PURCHASE THE REMAINING OPTIONS OR VESTED OPTIONS, AS THE
CASE MAY BE, WITHIN THE FIRST PURCHASE PERIOD, OR CHOOSES TO PURCHASE NONE OR
ONLY A PORTION OF THE REMAINING OPTIONS, OR VESTED OPTIONS, AS THE CASE MAY BE,
BY GIVING SUCH NOTICE, THE NORTH CASTLE FUND SHALL HAVE THE RIGHT TO PURCHASE
ALL OR ANY PORTION OF THE REMAINING OPTIONS OR VESTED OPTIONS, AS THE CASE MAY
BE, NOT PURCHASED BY THE COMPANY, AND SHALL HAVE UNTIL THE EXPIRATION OF THE
EARLIER OF (X) FIVE BUSINESS DAYS FOLLOWING THE END OF THE FIRST PURCHASE PERIOD
OR (Y) FIVE BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE NORTH CASTLE FUND OF
WRITTEN NOTICE FROM THE COMPANY AS TO WHETHER IT INTENDS TO EXERCISE ITS RIGHT
TO PURCHASE ANY OF THE REMAINING OPTIONS OR VESTED OPTIONS, AS THE CASE MAY BE
(SUCH FIVE BUSINESS DAY PERIOD BEING HEREINAFTER REFERRED TO AS THE “SECOND
PURCHASE PERIOD”), TO GIVE NOTICE IN WRITING TO THE GRANTEE (OR THE GRANTEE’S
ESTATE) OF THE NORTH CASTLE FUND’S EXERCISE OF ITS RIGHT TO PURCHASE ALL OR ANY
PORTION OF SUCH REMAINING OPTIONS OR VESTED OPTIONS, AS THE CASE MAY BE.  THE
GRANTEE (OR THE GRANTEE’S ESTATE) SHALL BE ENTITLED TO RETAIN ANY REMAINING
OPTIONS AND VESTED OPTIONS THAT ARE NOT PURCHASED BY THE COMPANY OR THE NORTH
CASTLE FUND PURSUANT TO THIS SECTION 5(C), SUBJECT TO ALL OF THE PROVISIONS OF
THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, SECTION 3(A)) EXCEPT THAT THE
PROVISIONS OF THE FIRST SENTENCE OF SECTION 4(B)(I), SECTION 4(B)(III) HEREOF
AND SECTION 6 OF THE PLAN SHALL NO LONGER APPLY WITH RESPECT TO SUCH REMAINING
OPTIONS OR VESTED OPTIONS.  FOR ALL PURPOSES UNDER THIS AGREEMENT, THE TERMS
“EMPLOYMENT” OR “TERMINATION OF EMPLOYMENT” WITH RESPECT TO A PERSON WHO IS NOT
AN EMPLOYEE SHALL MEAN SERVICES WITH, OR THE TERMINATION OF SERVICES WITH,
(I) THE ENTITY FOR WHOM THE PARTICIPANT PROVIDES SERVICES TO, (II) THE COMPANY,
OR (III) THE COMPANY BY THE ENTITY FROM WHOM THE PARTICIPANT PROVIDES SERVICES
TO.

 

(II)                                  PURCHASE PRICE, ETC.  ALL PURCHASES
PURSUANT TO THIS SECTION 5(C) BY THE COMPANY OR THE NORTH CASTLE FUND SHALL BE
FOR A PURCHASE PRICE AND EFFECTED IN THE MANNER PRESCRIBED BY SECTIONS 5(F),
(G) AND (H).

 

(D)                                 NOTICE OF TERMINATION. THE COMPANY SHALL
GIVE WRITTEN NOTICE OF ANY TERMINATION OF THE GRANTEE’S EMPLOYMENT TO THE NORTH
CASTLE FUND, EXCEPT THAT IF SUCH TERMINATION (IF OTHER THAN AS A RESULT OF
DEATH) IS BY THE GRANTEE, THE GRANTEE SHALL

 

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GIVE WRITTEN NOTICE OF SUCH TERMINATION TO THE COMPANY AND THE COMPANY SHALL
GIVE WRITTEN NOTICE OF SUCH TERMINATION TO THE NORTH CASTLE FUND.

 

(E)                                  PUBLIC OFFERING.  IN THE EVENT THAT A
PUBLIC OFFERING HAS BEEN CONSUMMATED, NEITHER THE COMPANY NOR THE NORTH CASTLE
FUND SHALL HAVE ANY RIGHTS TO PURCHASE THE REMAINING OPTIONS OR VESTED OPTIONS
PURSUANT TO SECTION 5(C).

 

(F)                                    PURCHASE PRICE.  SUBJECT TO
SECTION 11(C) HEREOF, THE PURCHASE PRICE TO BE PAID TO THE GRANTEE (OR THE
GRANTEE’S ESTATE) FOR THE REMAINING OPTIONS OR VESTED OPTIONS, AS THE CASE MAY
BE, PURCHASED PURSUANT TO SECTION 5(C) (THE “PURCHASE PRICE”) SHALL BE EQUAL TO
THE EXCESS, IF ANY, OF (I) THE AGGREGATE FAIR MARKET VALUE, AS OF THE
DETERMINATION DATE, OF THE SHARES OF COMMON STOCK THEN COVERED BY THE REMAINING
OPTIONS OR VESTED OPTIONS, AS THE CASE MAY BE, BEING PURCHASED OVER (II) THE
AGGREGATE OPTION PRICE FOR SUCH REMAINING OPTIONS OR VESTED OPTIONS, AS THE CASE
MAY BE.

 

(G)                                 CLOSING OF PURCHASE; PAYMENT OF PURCHASE
PRICE.  SUBJECT TO SECTION 11, THE CLOSING OF A PURCHASE OF ANY REMAINING
OPTIONS OR VESTED OPTIONS, AS THE CASE MAY BE, PURSUANT TO THIS SECTION 5 SHALL
TAKE PLACE AT THE PRINCIPAL OFFICE OF THE COMPANY ON THE TENTH BUSINESS DAY
FOLLOWING THE RECEIPT BY THE GRANTEE (OR HIS OR HER ESTATE) OF THE COMPANY’S OR
THE NORTH CASTLE FUND’S, AS THE CASE MAY BE, NOTICE OF EXERCISE OF ITS RIGHT TO
PURCHASE ANY SUCH REMAINING OPTIONS OR VESTED OPTIONS, AS THE CASE MAY BE,
PURSUANT TO SECTION 5(C).  AT THE CLOSING, THE COMPANY OR THE NORTH CASTLE FUND,
AS THE CASE MAY BE, SHALL PAY THE PURCHASE PRICE TO THE GRANTEE (OR HIS OR HER
ESTATE) FOR THE REMAINING OPTIONS OR VESTED OPTIONS, AS THE CASE MAY BE, BEING
PURCHASED BY DELIVERY OF A CHECK FOR SUCH PURCHASE PRICE PAYABLE TO THE ORDER OF
THE GRANTEE (OR HIS OR HER ESTATE) AND (II) THE GRANTEE (OR HIS OR HER ESTATE)
SHALL DELIVER TO THE COMPANY SUCH INSTRUMENTS AS THE COMPANY MAY REASONABLY
REQUEST, SIGNED BY THE GRANTEE (OR HIS OR HER ESTATE), FREE AND CLEAR OF ALL
SECURITY INTERESTS, LIENS, CLAIMS, ENCUMBRANCES, CHARGES, OPTIONS, RESTRICTIONS
ON TRANSFER, PROXIES AND VOTING AND OTHER AGREEMENTS OF WHATEVER NATURE.

 

(H)                                 WITHHOLDING.  WHENEVER SHARES ARE TO BE
ISSUED PURSUANT TO THE OPTIONS, THE COMPANY MAY REQUIRE THE RECIPIENT OF THE
SHARES TO REMIT TO THE COMPANY AN AMOUNT IN CASH SUFFICIENT TO SATISFY ANY
APPLICABLE U.S. FEDERAL, STATE AND LOCAL TAX WITHHOLDING REQUIREMENTS AS A
CONDITION TO THE ISSUANCE OF SUCH SHARES.  IN THE EVENT ANY CASH IS PAID TO THE
GRANTEE PURSUANT TO THIS AGREEMENT OR THE PLAN, THE COMPANY SHALL HAVE THE RIGHT
TO WITHHOLD AN AMOUNT FROM SUCH PAYMENT SUFFICIENT TO SATISFY ANY APPLICABLE
U.S. FEDERAL, STATE AND LOCAL TAX WITHHOLDING REQUIREMENTS.  IF SHARES OF COMMON
STOCK ARE TRADED ON A NATIONAL SECURITIES EXCHANGE OR BID AND ASK PRICES FOR
SHARES OF COMMON STOCK ARE QUOTED ON THE NASDAQ, THE COMPANY MAY, IF REQUESTED
BY THE GRANTEE, WITHHOLD SHARES TO SATISFY THE MINIMUM APPLICABLE WITHHOLDING
REQUIREMENTS, SUBJECT TO THE PROVISIONS OF THE PLAN AND ANY RULES ADOPTED BY THE
BOARD REGARDING COMPLIANCE WITH APPLICABLE LAW, INCLUDING, BUT NOT LIMITED TO,
SECTION 16(B) OF THE EXCHANGE ACT.

 

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6.                                       MANNER OF EXERCISE.  OPTIONS MAY BE
EXERCISED, IN WHOLE OR IN PART, BY NOTICE TO THE SECRETARY OF THE COMPANY IN
WRITING GIVEN AT LEAST 15 BUSINESS DAYS PRIOR TO THE DATE AS OF WHICH THE
GRANTEE WILL SO EXERCISE THE OPTIONS (THE “EXERCISE DATE”), SPECIFYING THE
NUMBER OF WHOLE SHARES WITH RESPECT TO WHICH THE OPTIONS ARE BEING EXERCISED
(THE “EXERCISE SHARES”) AND THE AGGREGATE OPTION PRICE FOR SUCH EXERCISE SHARES,
PROVIDED THAT IF SHARES OF COMMON STOCK ARE TRADED ON A U.S. NATIONAL SECURITIES
EXCHANGE OR BID AND ASK PRICES FOR SHARES OF COMMON STOCK ARE QUOTED OVER
NASDAQ, NOTICE MAY BE GIVEN FIVE BUSINESS DAYS BEFORE THE EXERCISE DATE.  ON OR
BEFORE THE EXERCISE DATE, THE COMPANY AND THE GRANTEE SHALL ENTER INTO (X) A
JOINDER AGREEMENT, AND (Y) A STOCK SUBSCRIPTION AGREEMENT.  IN ACCORDANCE WITH
THE STOCK SUBSCRIPTION AGREEMENT, (I) ON OR BEFORE THE EXERCISE DATE, THE
GRANTEE SHALL DELIVER TO THE COMPANY FULL PAYMENT FOR THE EXERCISE SHARES IN
UNITED STATES DOLLARS IN CASH OR IMMEDIATELY AVAILABLE FUNDS IN AN AMOUNT EQUAL
TO THE PRODUCT OF THE NUMBER OF EXERCISE SHARES, MULTIPLIED BY THE OPTION PRICE
(THE “EXERCISE PRICE”) AND (II) THE COMPANY SHALL DELIVER TO THE GRANTEE A
CERTIFICATE OR CERTIFICATES REPRESENTING THE EXERCISE SHARES, REGISTERED IN THE
NAME OF THE GRANTEE AND BEARING APPROPRIATE LEGENDS AS PROVIDED IN
SECTION 7(B) HEREOF.  IF, AS OF THE EXERCISE DATE, SHARES OF COMMON STOCK ARE
TRADED ON A U.S. NATIONAL SECURITIES EXCHANGE OR BID AND ASK PRICES FOR SHARES
OF COMMON STOCK ARE QUOTED OVER NASDAQ, THE GRANTEE MAY, IN LIEU OF TENDERING
CASH, TENDER SHARES OF COMMON STOCK THAT HAVE AN AGGREGATE FAIR MARKET VALUE ON
THE EXERCISE DATE EQUAL TO THE EXERCISE PRICE OR MAY DELIVER A COMBINATION OF
CASH AND SUCH SHARES OF COMMON STOCK HAVING AN AGGREGATE FAIR MARKET VALUE EQUAL
TO THE DIFFERENCE BETWEEN THE EXERCISE PRICE AND THE AMOUNT OF SUCH CASH AS
PAYMENT OF THE EXERCISE PRICE, SUBJECT TO SUCH RULES AND REGULATIONS AS MAY BE
ADOPTED BY THE BOARD TO PROVIDE FOR THE COMPLIANCE OF SUCH PAYMENT PROCEDURE
WITH APPLICABLE LAW, INCLUDING SECTION 16(B) OF THE EXCHANGE ACT.  THE COMPANY
MAY REQUIRE THE GRANTEE TO FURNISH OR EXECUTE SUCH OTHER DOCUMENTS AS THE
COMPANY SHALL REASONABLY DEEM NECESSARY (I) TO EVIDENCE SUCH EXERCISE, (II) TO
DETERMINE WHETHER REGISTRATION IS THEN REQUIRED UNDER THE SECURITIES ACT AND
(III) TO COMPLY WITH OR SATISFY THE REQUIREMENTS OF THE SECURITIES ACT,
APPLICABLE STATE SECURITIES LAWS OR ANY OTHER APPLICABLE LAW.

 

7.                                       GRANTEE’S REPRESENTATIONS, WARRANTIES
AND COVENANTS.

 

(A)                                  INVESTMENT INTENTION.  THE GRANTEE
REPRESENTS AND WARRANTS THAT THE OPTIONS HAVE BEEN, AND ANY EXERCISE SHARES WILL
BE, ACQUIRED BY THE GRANTEE SOLELY FOR THE GRANTEE’S OWN ACCOUNT FOR INVESTMENT
AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. 
THE GRANTEE AGREES THAT THE GRANTEE WILL NOT, DIRECTLY OR INDIRECTLY, OFFER,
TRANSFER, SELL, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF ALL OR ANY OF THE
OPTIONS OR ANY OF THE EXERCISE SHARES (OR SOLICIT ANY OFFERS TO BUY, PURCHASE OR
OTHERWISE ACQUIRE OR TAKE A PLEDGE OF ALL OR ANY OF THE OPTIONS OR ANY OF THE
EXERCISE SHARES), EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND THE RULES AND
REGULATIONS OF THE COMMISSION THEREUNDER, AND IN COMPLIANCE WITH APPLICABLE
STATE OR FOREIGN SECURITIES OR “BLUE SKY” LAWS.  THE GRANTEE FURTHER
UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT NONE OF THE EXERCISE SHARES MAY BE
TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE

 

8

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DISPOSED OF UNLESS THE PROVISIONS OF THE SHAREHOLDERS AGREEMENT AND STOCK
SUBSCRIPTION AGREEMENT SHALL HAVE BEEN COMPLIED WITH OR HAVE EXPIRED.

 

(B)                                 LEGENDS.  THE GRANTEE ACKNOWLEDGES THAT ANY
CERTIFICATE REPRESENTING THE EXERCISE SHARES SHALL BEAR AN APPROPRIATE LEGEND,
WHICH WILL INCLUDE, WITHOUT LIMITATION, THE FOLLOWING LANGUAGE:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF (EACH, A “TRANSFER”) UNLESS
AND UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
UNLESS SUCH TRANSFER IS (A) EXEMPT FROM REGISTRATION OR IS OTHERWISE IN
COMPLIANCE WITH THE ACT AND SUCH LAWS IN THE OPINION OF COUNSEL TO THE
SHAREHOLDER, WHICH COUNSEL MUST BE, AND THE FORM AND SUBSTANCE OF WHICH OPINION
ARE, REASONABLY SATISFACTORY TO THE ISSUER AND (B) IN COMPLIANCE WITH THE
SHAREHOLDERS AGREEMENT OF THE ISSUER, DATED AS OF DECEMBER 15, 2000 AND ANY
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS THERETO (THE “SHAREHOLDERS AGREEMENT”).

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS
ON TRANSFER SET FORTH IN (I) A STOCK SUBSCRIPTION AGREEMENT, DATED AS
OF               , 200  , AND (II) A SHAREHOLDERS AGREEMENT, COPIES OF WHICH ARE
AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY.  NO TRANSFER OF SUCH
SECURITIES WILL BE MADE ON THE BOOKS OF THE COMPANY, AND SUCH TRANSFER SHALL BE
VOIDABLE, UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH
AGREEMENTS.

 

(C)                                  ABILITY TO BEAR RISK.  THE GRANTEE
COVENANTS THAT THE GRANTEE WILL NOT EXERCISE ALL OR ANY OF THE OPTIONS UNLESS
(I) THE FINANCIAL SITUATION OF THE GRANTEE IS SUCH THAT THE GRANTEE CAN AFFORD
TO BEAR THE ECONOMIC RISK OF HOLDING THE EXERCISE SHARES FOR AN INDEFINITE
PERIOD AND (II) THE GRANTEE CAN AFFORD TO SUFFER THE COMPLETE LOSS OF THE
GRANTEE’S INVESTMENT IN THE EXERCISE SHARES.

 

(D)                                 RESTRICTION ON SALE UPON PUBLIC OFFERING. 
THE GRANTEE AGREES THAT, IN THE EVENT THAT THE COMPANY FILES A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT WITH RESPECT TO AN UNDERWRITTEN PUBLIC
OFFERING OF ANY SHARES OF ITS CAPITAL STOCK, THE GRANTEE

 

9

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WILL NOT EFFECT ANY PUBLIC SALE OR DISTRIBUTION OF ANY SHARES OF THE COMMON
STOCK (OTHER THAN AS PART OF SUCH PUBLIC OFFERING), INCLUDING BUT NOT LIMITED
TO, PURSUANT TO RULE 144 OR RULE 144A UNDER THE SECURITIES ACT, DURING THE 20
DAYS PRIOR TO AND THE 180 DAYS (OR SUCH LESSER NUMBER OF DAYS THAT THE MANAGING
UNDERWRITER MAY REQUIRE) AFTER THE EFFECTIVE DATE OF SUCH REGISTRATION
STATEMENT.  THE GRANTEE FURTHER UNDERSTANDS AND ACKNOWLEDGES THAT ANY SALE,
TRANSFER OR OTHER DISPOSITION OF THE EXERCISE SHARES BY HIM FOLLOWING A PUBLIC
OFFERING WILL BE SUBJECT TO COMPLIANCE WITH, AND MAY BE LIMITED UNDER, THE
FEDERAL SECURITIES LAWS AND/OR STATE “BLUE SKY” LAWS.

 

8.                                       CHANGE IN CONTROL.  UNLESS OTHERWISE
DETERMINED BY THE COMMITTEE, IN THE EVENT OF A CHANGE IN CONTROL, EACH
OUTSTANDING OPTION EXERCISABLE PURSUANT TO SECTION 2(B) SHALL BE CANCELED IN
EXCHANGE FOR A PAYMENT IN CASH OF AN AMOUNT EQUAL TO THE EXCESS, IF ANY, OF THE
CHANGE IN CONTROL PRICE OVER THE OPTION PRICE; PROVIDED THAT IF THE HOLDERS OF
COMMON STOCK RECEIVE PROPERTY OTHER THAN CASH AS A RESULT OF A CHANGE OF
CONTROL, THEN SUCH PAYMENT SHALL BE MADE IN SUCH OTHER PROPERTY IN THE SAME
PROPORTION AS THE HOLDERS OF COMMON STOCK RECEIVE LESS THE AGGREGATE OPTION
PRICE IN CONNECTION WITH SUCH CHANGE OF CONTROL.

 

9.                                       REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.  THE COMPANY REPRESENTS AND WARRANTS TO THE GRANTEE THAT (A) THE
COMPANY HAS BEEN DULY INCORPORATED AND IS AN EXISTING CORPORATION IN GOOD
STANDING UNDER THE LAWS OF THE STATE OF ITS INCORPORATION, (B) THIS AGREEMENT
HAS BEEN DULY AUTHORIZED, EXECUTED AND DELIVERED BY THE COMPANY AND CONSTITUTES
A VALID AND LEGALLY BINDING OBLIGATION OF THE COMPANY ENFORCEABLE AGAINST THE
COMPANY IN ACCORDANCE WITH ITS TERMS, AND (C) THE EXERCISE SHARES, WHEN ISSUED,
DELIVERED AND PAID FOR, UPON EXERCISE OF THE OPTIONS IN ACCORDANCE WITH THE
TERMS HEREOF, THE JOINDER AGREEMENT AND THE STOCK SUBSCRIPTION AGREEMENT, WILL
BE DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, AND FREE AND
CLEAR OF ANY LIENS OR ENCUMBRANCES OTHER THAN THOSE CREATED PURSUANT TO THIS
AGREEMENT, THE SHAREHOLDERS AGREEMENT, THE STOCK SUBSCRIPTION AGREEMENT OR
OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY.

 

10.                                 CAPITAL ADJUSTMENTS.  THE NUMBER AND PRICE
OF THE SHARES COVERED BY THE OPTIONS SHALL BE PROPORTIONATELY ADJUSTED TO
REFLECT ANY STOCK DIVIDEND, STOCK SPLIT OR SHARE COMBINATION OF THE COMMON STOCK
OR ANY RECAPITALIZATION OF THE COMPANY.  SUBJECT TO ANY REQUIRED ACTION BY THE
SHAREHOLDERS OF THE COMPANY AND SECTION 7 OF THE PLAN, IN ANY MERGER,
CONSOLIDATION, REORGANIZATION, EXCHANGE OF SHARES, LIQUIDATION OR DISSOLUTION,
THE OPTIONS SHALL PERTAIN TO THE SECURITIES AND OTHER PROPERTY, IF ANY, THAT A
HOLDER OF THE NUMBER OF SHARES OF COMMON STOCK COVERED BY THE OPTIONS WOULD HAVE
BEEN ENTITLED TO RECEIVE IN CONNECTION WITH SUCH EVENT.

 

11.                                 CERTAIN RESTRICTIONS ON REPURCHASES.

 

(A)                                  FINANCING AGREEMENTS, ETC.  NOTWITHSTANDING
ANY OTHER PROVISION OF THIS AGREEMENT, THE COMPANY SHALL NOT BE OBLIGATED OR
PERMITTED TO PAY THE PURCHASE PRICE FOR ANY REMAINING OPTIONS OR VESTED OPTIONS,
AS THE CASE MAY BE, THAT THE

 

10

--------------------------------------------------------------------------------

 

COMPANY MAY ELECT TO PURCHASE FROM THE GRANTEE PURSUANT TO SECTION 5 IF (I) THE
PAYMENT OF SUCH PURCHASE PRICE WOULD RESULT IN A VIOLATION OF THE TERMS OR
PROVISIONS OF, OR A DEFAULT OR AN EVENT OF DEFAULT UNDER, ANY FINANCING OR
SECURITY AGREEMENT OR DOCUMENT ENTERED INTO BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES PRIOR TO THE DATE HEREOF, ANY REFUNDING THEREOF, OR IN CONNECTION
WITH THE OPERATIONS OF THE COMPANY OR THE SUBSIDIARIES FROM TIME TO TIME (SUCH
AGREEMENTS AND DOCUMENTS, AS EACH MAY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM
TIME TO TIME, ARE REFERRED TO HEREIN AS THE “FINANCING AGREEMENTS”), IN EACH
CASE AS THE SAME MAY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME,
(II) THE PAYMENT OF SUCH PURCHASE PRICE WOULD VIOLATE ANY OF THE TERMS OR
PROVISIONS OF THE CERTIFICATE OF INCORPORATION OF THE COMPANY OR (III) THE
COMPANY HAS NO FUNDS LEGALLY AVAILABLE THEREFOR UNDER THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE.

 

(B)                                 DELAY OF REPURCHASE.  IN THE EVENT THAT THE
PAYMENT OF THE PURCHASE PRICE FOR ANY REMAINING OPTIONS OR VESTED OPTIONS, AS
THE CASE MAY BE, BY THE COMPANY OTHERWISE PERMITTED UNDER SECTION 5 IS PREVENTED
SOLELY BY THE TERMS OF SECTION 11(A), (I) THE PAYMENT OF SUCH PURCHASE PRICE
WILL BE POSTPONED AND WILL BE MADE WITHOUT THE APPLICATION OF FURTHER CONDITIONS
OR IMPEDIMENTS (OTHER THAN AS SET FORTH IN SECTION 5 HEREOF OR IN THIS
SECTION 11) AT THE FIRST OPPORTUNITY THEREAFTER WHEN THE COMPANY HAS FUNDS
LEGALLY AVAILABLE THEREFOR AND WHEN THE PAYMENT OF SUCH PURCHASE PRICE WILL NOT
RESULT IN ANY DEFAULT, EVENT OF DEFAULT OR VIOLATION UNDER ANY OF THE FINANCING
AGREEMENTS OR IN A VIOLATION OF ANY TERM OR PROVISION OF THE CERTIFICATE OF
INCORPORATION OF THE COMPANY AND (II) THE GRANTEE’S RIGHT TO RECEIVE PAYMENT OF
SUCH PURCHASE PRICE SHALL RANK AGAINST OTHER SIMILAR RIGHTS WITH RESPECT TO
SHARES OF COMMON STOCK OR OPTIONS IN RESPECT THEREOF ACCORDING TO PRIORITY IN
TIME OF THE EFFECTIVE DATE OF THE EVENT GIVING RISE TO ANY SUCH RIGHT, PROVIDED
THAT ANY SUCH RIGHT AS TO WHICH A COMMON DATE DETERMINES PRIORITY SHALL BE OF
EQUAL PRIORITY AND SHALL SHARE PRO RATA IN ANY PURCHASE PAYMENTS MADE PURSUANT
TO CLAUSE (I) ABOVE.

 

(C)                                  PURCHASE PRICE ADJUSTMENT.  IN THE EVENT
THAT A REPURCHASE OF REMAINING OPTIONS OR VESTED OPTIONS, AS THE CASE MAY BE,
FROM THE GRANTEE IS DELAYED PURSUANT TO THIS SECTION 11, THE PURCHASE PRICE PER
SHARE WHEN THE REPURCHASE OF SUCH REMAINING OPTIONS OR VESTED OPTIONS, AS THE
CASE MAY BE, EVENTUALLY TAKES PLACE AS CONTEMPLATED BY SECTION 11(B) SHALL EQUAL
THE SUM OF (I) THE PURCHASE PRICE DETERMINED IN ACCORDANCE WITH SECTION 6 HEREOF
AT THE TIME THAT THE REPURCHASE OF SUCH REMAINING OPTIONS OR VESTED OPTIONS, AS
THE CASE MAY BE, WOULD HAVE OCCURRED BUT FOR THE OPERATION OF THIS SECTION 11,
PLUS (II) AN AMOUNT EQUAL TO INTEREST ON SUCH PURCHASE PRICE FOR THE PERIOD FROM
THE DATE ON WHICH THE COMPLETION OF THE REPURCHASE WOULD HAVE TAKEN PLACE BUT
FOR THE OPERATION OF THIS SECTION 11 TO THE DATE ON WHICH SUCH REPURCHASE
ACTUALLY TAKES PLACE (THE “DELAY PERIOD”) AT A RATE EQUAL TO THE AVERAGE ANNUAL
COST TO THE COMPANY OF ITS AND ITS SUBSIDIARIES BANK INDEBTEDNESS OBLIGATIONS
OUTSTANDING DURING THE DELAY PERIOD OR, IF THERE ARE NO SUCH OBLIGATIONS
OUTSTANDING, ONE PERCENTAGE POINT GREATER THAN THE AVERAGE PRIME RATE CHARGED
DURING SUCH PERIOD BY A NATIONALLY RECOGNIZED BANK DESIGNATED BY THE COMPANY.

 

11

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12.                                 MISCELLANEOUS.

 

(A)                                  NOTICES.  ALL NOTICES AND OTHER
COMMUNICATIONS REQUIRED OR PERMITTED TO BE GIVEN UNDER THIS AGREEMENT SHALL BE
IN WRITING AND SHALL BE DEEMED TO HAVE BEEN GIVEN IF DELIVERED PERSONALLY OR
SENT BY CERTIFIED OR EXPRESS MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, OR
BY ANY RECOGNIZED INTERNATIONAL EQUIVALENT OF SUCH DELIVERY, TO THE COMPANY, THE
SPONSORS OR THE GRANTEE, AS THE CASE MAY BE, AT THE FOLLOWING ADDRESSES OR TO
SUCH OTHER ADDRESS AS THE COMPANY, THE SPONSORS OR THE GRANTEE, AS THE CASE MAY
BE, SHALL SPECIFY BY NOTICE TO THE OTHERS:

 

(I)                                     IF TO THE COMPANY, TO IT AT:

 

Equinox Holdings, Inc.
895 Broadway
New York, New York  10003
Fax:  212-777-9510
Telephone:  212-677-0180
Attention:  Harvey J. Spevak

 

(II)                                  IF TO THE GRANTEE, TO THE GRANTEE AT THE
ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF:

 

(III)                               IF TO THE NORTH CASTLE FUND, TO:

 

c/o North Castle Partners, L.L.C.
183 E. Putnam Avenue
Greenwich, CT  06830
Fax:  (203) 862-3273
Telephone:  (203) 862-3259
Attention:  Adam Saltzman

 

All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof, provided that the party giving such notice or communication
shall have attempted to telephone the party or parties to which notice is being
given during regular business hours on or before the day such notice or
communication is being sent, to advise such party or parties that such notice is
being sent.  Copies of any notice or other communication given under this
Agreement shall also be given to:

 

North Castle Partners, L.L.C.
183 E. Putnam Avenue
Greenwich, CT 06830
Fax:  (203) 862-3273
Telephone:  (203) 862-3250
Attention:  Peter J. Shabecoff, Esq.

 

12

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and

 

Debevoise & Plimpton
919 Third Avenue
New York, New York  10022
Fax:  (212) 909-6836
Telephone:  (212) 909-6000
Attention:  Franci J. Blassberg, Esq.

 

and

 

J.W. Childs Equity Partners II, L.P.
c/o J.W. Childs Associates L.P.
One Federal Street
Boston, Massachusetts  02110
Fax:  617-753-1101
Telephone:  617-753-1100
Attention:  Glenn A. Hopkins

 

and

 

Kaye, Scholer, Fierman, Hays and Handler LLP
425 Park Avenue
New York, New York  10022
Fax:  212-836-6419
Telephone:  212-836-8019
Attention:  Stephen C. Koval, Esq.

 

(B)                                 NO RIGHT TO EMPLOYMENT.  NOTHING IN THIS
AGREEMENT SHALL BE DEEMED TO CONFER ON THE GRANTEE ANY RIGHT TO CONTINUE IN THE
EMPLOY OF THE COMPANY OR ANY OTHER MEMBER OF THE COMPANY GROUP, OR TO INTERFERE
WITH OR LIMIT IN ANY WAY THE RIGHT OF THE COMPANY OR ANY OTHER MEMBER OF THE
COMPANY GROUP TO TERMINATE SUCH EMPLOYMENT AT ANY TIME.

 

(C)                                  BINDING EFFECT; BENEFITS.  THIS AGREEMENT
SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES TO THIS AGREEMENT
AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.  EXCEPT AS PROVIDED IN SECTION 5,
NOTHING IN THIS AGREEMENT, EXPRESS OR IMPLIED, IS INTENDED OR SHALL BE CONSTRUED
TO GIVE ANY PERSON OTHER THAN THE PARTIES TO THIS AGREEMENT OR THEIR RESPECTIVE
SUCCESSORS OR ASSIGNS ANY LEGAL OR EQUITABLE RIGHT, REMEDY OR CLAIM UNDER OR IN
RESPECT OF ANY AGREEMENT OR ANY PROVISION CONTAINED HEREIN.

 

(D)                                 WAIVER; AMENDMENT.

 

(I)                                     WAIVER.  ANY PARTY HERETO OR BENEFICIARY
HEREOF MAY BY WRITTEN NOTICE TO THE OTHER PARTIES (A) EXTEND THE TIME FOR THE
PERFORMANCE OF ANY OF THE

 

13

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OBLIGATIONS OR OTHER ACTIONS OF THE OTHER PARTIES UNDER THIS AGREEMENT,
(B) WAIVE COMPLIANCE WITH ANY OF THE CONDITIONS OR COVENANTS OF THE OTHER
PARTIES CONTAINED IN THIS AGREEMENT AND (C) WAIVE OR MODIFY PERFORMANCE OF ANY
OF THE OBLIGATIONS OF THE OTHER PARTIES UNDER THIS AGREEMENT; PROVIDED THAT ANY
WAIVER OF THE PROVISIONS OF SECTION 4 MUST BE CONSENTED TO IN WRITING BY THE
SPONSORS.  EXCEPT AS PROVIDED IN THE PRECEDING SENTENCE, NO ACTION TAKEN
PURSUANT TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY INVESTIGATION BY
OR ON BEHALF OF ANY PARTY OR BENEFICIARY, SHALL BE DEEMED TO CONSTITUTE A WAIVER
BY THE PARTY OR BENEFICIARY TAKING SUCH ACTION OF COMPLIANCE WITH ANY
REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS CONTAINED HEREIN.  THE
WAIVER BY ANY PARTY HERETO OR BENEFICIARY HEREOF OF A BREACH OF ANY PROVISION OF
THIS AGREEMENT SHALL NOT OPERATE OR BE CONSTRUED AS A WAIVER OF ANY PRECEDING OR
SUCCEEDING BREACH AND NO FAILURE BY A PARTY OR BENEFICIARY TO EXERCISE ANY RIGHT
OR PRIVILEGE HEREUNDER SHALL BE DEEMED A WAIVER OF SUCH PARTY’S OR BENEFICIARY’S
RIGHTS OR PRIVILEGES HEREUNDER OR SHALL BE DEEMED A WAIVER OF SUCH PARTY’S OR
BENEFICIARY’S RIGHTS TO EXERCISE THE SAME AT ANY SUBSEQUENT TIME OR TIMES
HEREUNDER.

 

(II)                                  AMENDMENT.  THIS AGREEMENT MAY NOT BE
AMENDED, MODIFIED OR SUPPLEMENTED ORALLY, BUT ONLY BY A WRITTEN INSTRUMENT
EXECUTED BY THE GRANTEE AND THE COMPANY, AND (IN THE CASE OF ANY AMENDMENT,
MODIFICATION OR SUPPLEMENT THAT ADVERSELY AFFECTS THE RIGHTS OF THE SPONSORS
HEREUNDER) CONSENTED TO BY THE SPONSORS, AS THE CASE MAY BE, IN WRITING.  THE
PARTIES HERETO ACKNOWLEDGE THAT THE COMPANY’S CONSENT TO AN AMENDMENT OR
MODIFICATION OF THIS AGREEMENT MAY BE SUBJECT TO THE TERMS AND PROVISIONS OF THE
FINANCING AGREEMENTS (AS DEFINED IN THE STOCK SUBSCRIPTION AGREEMENT).

 

(E)                                  ASSIGNABILITY.  NEITHER THIS AGREEMENT NOR
ANY RIGHT, REMEDY, OBLIGATION OR LIABILITY ARISING HEREUNDER OR BY REASON HEREOF
SHALL BE ASSIGNABLE BY THE GRANTEE WITHOUT THE PRIOR WRITTEN CONSENT OF THE
OTHER PARTIES, AND THE SPONSORS.

 

(F)                                    APPLICABLE LAW.  THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS WHICH WOULD REQUIRE OR
PERMIT APPLICATION OF THE LAW OF ANOTHER JURISDICTION, EXCEPT TO THE EXTENT THAT
THE CORPORATE LAW OF THE STATE OF INCORPORATION OF THE COMPANY SPECIFICALLY AND
MANDATORILY APPLIES.

 

(G)                                 SECTION AND OTHER HEADINGS, ETC.  THE
SECTION AND OTHER HEADINGS CONTAINED IN THIS AGREEMENT ARE FOR REFERENCE
PURPOSES ONLY AND SHALL NOT AFFECT THE MEANING OR INTERPRETATION OF THIS
AGREEMENT.

 

(H)                                 COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE AN
ORIGINAL AND ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

14

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IN WITNESS WHEREOF, the Company and the Grantee have executed this Agreement as
of the date first above written.

 

 

EQUINOX HOLDINGS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

 

 

THE GRANTEE:

 

 

 

 

 

By:

 

 

 

Name: «Name»

 

 

 

 

 

Address:

 

 

 

 

 

«Address»

 

15

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Schedule A

 

Number of Options

 

Option Price

 

«Total_Options»

 

«Exercise_Price»

 

 

16

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