**Exhibit 10.14**

 

OPTIONAGREEMENT

 

OPTION AGREEMENT (this “Agreement”), dated asof «Grant_Date», by and between theCompany and the grantee, the individual’s whose name appears on the signaturepage hereof (the “Grantee”).

 

WITNESSETH:

 

WHEREAS, the Board has determined that it is in thebest interests of the Company and its shareholders for the Company to grantfrom time to time options to purchase Common Stock to executive officers or keyemployees of, or consultants to, or any key employees of any entity whichprovides services to, the Company or its Subsidiaries in order to motivate andalign the interests of such individuals with those of the Company’sshareholders, and in connection therewith, the Board has established theEquinox Holdings, Inc. 2000 Stock Incentive Plan (as the same may beamended from time to time, the “Plan”);

 

WHEREAS, pursuant to the Plan, the Board hasauthorized the grant to the Grantee of non-qualified stock options to purchaseshares of Common Stock pursuant to the Plan; and

 

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

 

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

 

# 1.                                       CertainDefinitions.  Capitalized terms usedherein without definition shall have the meaning assigned to them in the Plan,provided however, that whenever the term “Participant” appears in the Plan suchterm shall be substituted with the term “Grantee” (as defined in theintroductory paragraph hereof).  As usedin this Agreement, the following terms shall have the following meanings:

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### (a)                                  “Affiliate”shall mean, with respect to any Person, any other Person that, directly orindirectly through one or more intermediaries, Controls, is Controlled by, oris under common Control with the first Person, including but not limited toa Subsidiary of the first Person, a Person of which the first Personis a Subsidiary, or another Subsidiary of a Person of which the firstPerson is also a Subsidiary.

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### (b)                                 “Control”(including the terms “controlled by” and “under common control with”) shallmean, 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 ofvoting securities, by contract or credit arrangement, as trustee or executor,or otherwise.

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### (c)                                  “ExerciseDate” shall have the meaning set forth in Section 6 hereof.

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### (d)                                 “ExercisePrice” shall have the meaning set forth in Section 6 hereof.

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### (e)                                  “ExerciseShares” shall have the meaning set forth in Section 6 hereof.

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### (f)                                    “GrantDate” shall mean the date hereof, which is the date on which the Optionsare granted to the Grantee.

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### (g)                                 “Grantee”shall have the meaning set forth in the introductory paragraph hereto.

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### (h)                                 “NormalTermination Date” shall mean the tenth anniversary of the date hereof.

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### (i)                                     “OptionPrice” shall mean, with respect to each Share covered by an Option, theexercise price at which the Grantee may purchase such Share pursuant to suchOption as determined in Section 2(b) hereof.

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### (j)                                     “Person”shall mean any natural person, firm, partnership, limited liability company,association, corporation, company, trust, business trust, governmentalauthority or other entity.

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### (k)                                  “Plan”shall have the meaning set forth in the recitals to this Agreement.

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### (l)                                     “Rule 144”shall mean Rule 144 promulgated under the Securities Act.

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### (m)                               “Shares”shall mean the shares of Common Stock subject to the Options.

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### (n)                                 “Sponsors”shall mean the North Castle Partners, L.L.C., and Childs.

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### (o)                                 “Successor”shall mean, with respect to any Person, a Person that succeeds to thefirst Person’s assets and liabilities by merger, liquidation, dissolution orotherwise by operation of law, or a Person to which all or substantiallyall the assets and/or business of the first Person are transferred.

 

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# 2.                                       Grantof Options.

 

### (a)                                  Confirmationof Grant.  The Company herebyevidences and confirms its grant to the Grantee, effective as of the datehereof, of «Total_Options» Options.  The Options are not intended to be incentivestock options under the U.S. Internal Revenue Code of 1986, as amended.  This Agreement is subordinate to, and theterms and conditions of the Options granted hereunder are subject to, the termsand conditions of the Plan.  If there isany inconsistency between the terms hereof and the terms of the Plan, the termsof the Plan shall govern.

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### (b)                                 OptionPrice.  Each Option granted hereundershall have the option price per share set forth opposite the number of Optionson Schedule A attached hereto, which in each case is not less than theFair Market Value on the Grant Date.

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# 3.                                       Vestingand Exercisability.

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### (a)                                  Options.  Upon the occurrence of a Change of Control orPublic Offering, if the Sponsors realize an internal rate of return of at leasttwenty percent (20%), thirty-three and one third (331/3%)of the Options shall become vested and exercisable; provided, that, for eachone percent (1%) (or portion thereof) increase in such return (above 20%)realized by the Sponsors upon the occurrence of such event, an additional sixand two-thirds percent (62/3%) (or portion thereof) ofthe Options shall become vested and exercisable; provided, further, that, onehundred percent (100%) of the Options shall become vested and exercisable uponthe occurrence of such event if the return realized by the Sponsors equals orexceeds thirty percent (30%).  TheSponsors’ realized internal rate of return will be calculated after giving fulleffect to the dilution of the Sponsors’ interest in the Company by the value ofthe outstanding Options that can be exercised upon such Change of Control orPublic Offering.  In the event less than100% of the Options granted hereunder become vested as a result of the firstChange in Control or Public Offering, upon any and all subsequent PublicOfferings or divestitures of the Sponsor’s interests (until the Sponsorsbeneficially own less that 5% of the total outstanding equity interests in theCompany), the foregoing internal rates of returns shall be recalculated in thesame manner as provided above and, to the extent such recalculation results inan increased internal rate of return that would result in more Options becomingvested and exercisable, such additional Options shall become vested and exercisable.

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### (b)                                 Conditions.  The Board, in its sole discretion, mayaccelerate the vesting and exercisability of any Option, all Options or anyclass of Options, at any time and from time to time.  Shares covered by Options which are vestedand exercisable may, subject to the provisions hereof, be purchased at any timeand from time to time on or after the date the corresponding Options becomeexercisable in accordance with the provisions of this Section 3 until thedate one day prior to the date on which such Options terminate, provided thatany such purchase shall be effected pursuant and subject to

 

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### Sections 5 and 6 hereof and the provisions contained in theShareholders Agreement and the Stock Subscription Agreement related to thepurchase of such Shares.

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# 4.                                       Terminationof Options.

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### (a)                                  NormalTermination Date.  Subject toSections 4(b) and 8 hereof, the Options shall terminate and be canceled onthe Normal Termination Date.

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### (b)                                 EarlyTermination.

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#### (i)                                     TerminationOther Than For Cause.  If theGrantee’s employment with a member of the Company Group terminates for anyreason other than for Cause, then a percentage of Options granted hereunderthat has not become vested and exercisable pursuant to Section 3 shallterminate and be cancelled immediately upon such termination of employment inaccordance 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 terminatedand canceled upon the Grantee’s termination of employment in accordance withthe above table (the “Remaining Options”), the Company shall have theoption 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 terminationof employment or, in the case of a termination for death or Disability, thetwelve month anniversary of such effective date; and (y) the NormalTermination Date, (B) permit such Remaining Options to remainoutstanding 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 nolonger apply or (C) purchase all or any portion of the RemainingOptions in accordance with Section 5(c). Any Options held by a Participant for which the Company has selected theOption provided in clause (A) above that are not exercised within theapplicable periods described in this paragraph shall terminate and be canceledupon the expiration of such period.

 

#### (ii)                                  Notification.  The Company shall notify the Grantee of itselection under Section 4(b)(i) within ten business days after theeffective date of the Grantee’s termination of employment; provided that, inthe case of a termination for any reason other than death, Disability or forCause, a failure by the Company

 

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#### to timely notify suchGrantee shall be deemed to be an election by the Company of the optiondescribed in clause (A) of Section 4(b)(i); provided further that, inthe case of a termination for death or Disability, a failure to timely notifysuch Grantee shall be deemed to be an election by the Company of the optiondescribed in clause (B) of Section 4(b)(i).

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#### (iii)                               Terminationfor Cause.  Notwithstanding anythingelse contained in this Agreement, if the Grantee’s employment with a member ofthe Company Group is terminated for Cause, all Options (whether or not thenvested or exercisable) shall automatically terminate and be canceledimmediately upon such termination.

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# 5.                                       Restrictionson Exercise; Non-Transferability of Options; Repurchase of Remaining Options.

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### (a)                                  Restrictions on Exercise.  Onceexercisable in accordance with the provisions of this Agreement, the Optionsmay be exercised only with respect to full shares of Common Stock.  No fractional shares of Common Stock shall beissued.  Notwithstanding any otherprovision of this Agreement, the Options may not be exercised in whole or inpart, and no certificates representing Shares shall be delivered, (A) unlessall requisite approvals and consents of any governmental authority of any kindhaving jurisdiction over the exercise of the Options or the delivery of theShares upon exercise of the Options shall have been secured, provided that theCompany shall use its reasonable efforts to obtain any such approvals orconsents unless the Board determines in its sole discretion that the Companywould incur material costs, fees or expenses or which would require registrationof the securities with such governmental authority, (B) unless thepurchase of the Shares upon the exercise of the Options shall be exempt fromregistration under applicable U.S. federal and state securities laws, or thepurchase of the Shares shall have been registered under such laws, and (C) unlessall applicable U.S. federal, state and local tax withholding requirements shallhave been satisfied.

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### (b)                                 Non-Transferabilityof Options.  The Options may beexercised only by the Grantee or, following his death, by the Grantee’sestate.  Each Option is not assignable ortransferable, in whole or in part, and it may not, directly or indirectly, beoffered, transferred, sold, pledged, assigned, alienated, hypothecated orotherwise disposed of or encumbered (including without limitation by gift,operation of law or otherwise) other than by will or by the laws of descent anddistribution to the estate of the Grantee upon the Grantee’s death.

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### (c)                                  Purchaseof Options on Termination of Employment.

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#### (i)                                     Terminationof Employment.  If the Grantee’sactive employment with the Company or any Subsidiary thereof that employs theGrantee is, or has been, terminated for any reason other than for Cause, theCompany shall have an option to purchase all or any portion of the RemainingOptions and/or the Options

 

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#### that have become vestedand exercisable pursuant to Section 3 (the “Vested Options”) heldby the Grantee (or, if the Grantee’s employment was terminated by the Grantee’sdeath or the Grantee dies after his termination of employment, the Grantee’sestate) and shall have ten business days from the date of the Grantee’stermination of employment (such ten business day period being hereinafterreferred to as the “First Purchase Period”) during which to give noticein writing to the Grantee of its election to exercise or not to exercise suchright to purchase, in whole or in part, the Remaining Options or VestedOptions, as the case may be.  The Companyhereby undertakes to use reasonable efforts to act as promptly as practicablefollowing such date of termination to make such election.  If the Company fails to give notice that itintends to exercise its right to purchase the Remaining Options or VestedOptions, as the case may be, within the First Purchase Period, or chooses topurchase none or only a portion of the Remaining Options, or Vested Options, asthe case may be, by giving such notice, the North Castle Fund shall have theright to purchase all or any portion of the Remaining Options or VestedOptions, as the case may be, not purchased by the Company, and shall have untilthe expiration of the earlier of (x) five business days following theend of the First Purchase Period or (y) five business days from the dateof receipt by the North Castle Fund of written notice from the Company as towhether it intends to exercise its right to purchase any of the RemainingOptions or Vested Options, as the case may be (such five business day periodbeing hereinafter referred to as the “Second Purchase Period”), to givenotice in writing to the Grantee (or the Grantee’s estate) of the North CastleFund’s exercise of its right to purchase all or any portion of such RemainingOptions or Vested Options, as the case may be. The Grantee (or the Grantee’s estate) shall be entitled to retain anyRemaining Options and Vested Options that are not purchased by the Company orthe North Castle Fund pursuant to this Section 5(c), subject to all of theprovisions 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 nolonger apply with respect to such Remaining Options or Vested Options.  For all purposes under this Agreement, theterms “employment” or “termination of employment” with respect to a person whois not an employee shall mean services with, or the termination of serviceswith, (i) the entity for whom the Participant provides services to, (ii) theCompany, or (iii) the Company by the entity from whom the Participantprovides services to.

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#### (ii)                                  PurchasePrice, etc.  All purchases pursuantto this Section 5(c) by the Company or the North Castle Fund shall befor a purchase price and effected in the manner prescribed bySections 5(f), (g) and (h).

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### (d)                                 Noticeof Termination. The Company shall give written notice of any termination ofthe Grantee’s employment to the North Castle Fund, except that if suchtermination (if other than as a result of death) is by the Grantee, the Granteeshall

 

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### give written notice of such termination to the Company and the Companyshall give written notice of such termination to the North Castle Fund.

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### (e)                                  PublicOffering.  In the event that a PublicOffering has been consummated, neither the Company nor the North Castle Fundshall have any rights to purchase the Remaining Options or Vested Optionspursuant to Section 5(c).

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### (f)                                    PurchasePrice.  Subject toSection 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 thecase may be, purchased pursuant to Section 5(c) (the “PurchasePrice”) shall be equal to the excess, if any, of (i) theaggregate Fair Market Value, as of the Determination Date, of the shares ofCommon Stock then covered by the Remaining Options or Vested Options, as thecase may be, being purchased over (ii) the aggregate Option Pricefor such Remaining Options or Vested Options, as the case may be.

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### (g)                                 Closingof Purchase; Payment of Purchase Price. Subject to Section 11, the closing of a purchase of any RemainingOptions or Vested Options, as the case may be, pursuant to this Section 5shall take place at the principal office of the Company on the tenth businessday following the receipt by the Grantee (or his or her estate) of theCompany’s or the North Castle Fund’s, as the case may be, notice of exercise ofits right to purchase any such Remaining Options or Vested Options, as the casemay be, pursuant to Section 5(c). At the closing, the Company or the North Castle Fund, as the case maybe, shall pay the Purchase Price to the Grantee (or his or her estate) for theRemaining Options or Vested Options, as the case may be, being purchased bydelivery 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 reasonablyrequest, signed by the Grantee (or his or her estate), free and clear of allsecurity interests, liens, claims, encumbrances, charges, options, restrictionson transfer, proxies and voting and other agreements of whatever nature.

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### (h)                                 Withholding.  Whenever Shares are to be issued pursuant tothe Options, the Company may require the recipient of the Shares to remit tothe Company an amount in cash sufficient to satisfy any applicable U.S.federal, state and local tax withholding requirements as a condition to theissuance of such Shares.  In the eventany cash is paid to the Grantee pursuant to this Agreement or the Plan, theCompany shall have the right to withhold an amount from such payment sufficientto satisfy any applicable U.S. federal, state and local tax withholding requirements.  If shares of Common Stock are traded on anational securities exchange or bid and ask prices for shares of Common Stockare 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 Boardregarding compliance with applicable law, including, but not limited to,Section 16(b) of the Exchange Act.

 

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# 6.                                       Mannerof Exercise.  Options may beexercised, in whole or in part, by notice to the Secretary of the Company inwriting given at least 15 business days prior to the date as of which theGrantee will so exercise the Options (the “Exercise Date”), specifyingthe number of whole Shares with respect to which the Options are beingexercised (the “Exercise Shares”) and the aggregate Option Price forsuch Exercise Shares, provided that if shares of Common Stock are traded on aU.S. national securities exchange or bid and ask prices for shares of CommonStock are quoted over Nasdaq, notice may be given five business days before theExercise Date.  On or before the ExerciseDate, the Company and the Grantee shall enter into (x) a JoinderAgreement, and (y) a Stock Subscription Agreement.  In accordance with the Stock SubscriptionAgreement, (i) on or before the Exercise Date, the Grantee shalldeliver to the Company full payment for the Exercise Shares in United Statesdollars in cash or immediately available funds in an amount equal to theproduct of the number of Exercise Shares, multiplied by the Option Price (the “ExercisePrice”) and (ii) the Company shall deliver to the Grantee acertificate or certificates representing the Exercise Shares, registered in thename of the Grantee and bearing appropriate legends as provided inSection 7(b) hereof.  If, as ofthe Exercise Date, shares of Common Stock are traded on a U.S. nationalsecurities exchange or bid and ask prices for shares of Common Stock are quotedover Nasdaq, the Grantee may, in lieu of tendering cash, tender shares ofCommon Stock that have an aggregate Fair Market Value on the Exercise Dateequal to the Exercise Price or may deliver a combination of cash and suchshares of Common Stock having an aggregate Fair Market Value equal to thedifference between the Exercise Price and the amount of such cash as payment ofthe Exercise Price, subject to such rules and regulations as may beadopted by the Board to provide for the compliance of such payment procedurewith applicable law, including section 16(b) of the ExchangeAct.  The Company may require the Granteeto furnish or execute such other documents as the Company shall reasonably deemnecessary (i) to evidence such exercise, (ii) todetermine whether registration is then required under the Securities Act and (iii) tocomply with or satisfy the requirements of the Securities Act, applicable statesecurities laws or any other applicable law.

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# 7.                                       Grantee’sRepresentations, Warranties and Covenants.

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### (a)                                  InvestmentIntention.  The Grantee representsand 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 andnot with a view to or for sale in connection with any distributionthereof.  The Grantee agrees that theGrantee will not, directly or indirectly, offer, transfer, sell, pledge,hypothecate or otherwise dispose of all or any of the Options or any of theExercise Shares (or solicit any offers to buy, purchase or otherwise acquire ortake 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 regulationsof the Commission thereunder, and in compliance with applicable state orforeign securities or “blue sky” laws. The Grantee further understands, acknowledges and agrees that none ofthe Exercise Shares may be transferred, sold, pledged, hypothecated orotherwise

 

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### disposed of unless the provisions of the Shareholders Agreement andStock Subscription Agreement shall have been complied with or have expired.

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### (b)                                 Legends.  The Grantee acknowledges that any certificaterepresenting the Exercise Shares shall bear an appropriate legend, which willinclude, without limitation, the following language:

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“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVEBEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIESACT 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 STATESECURITIES LAWS OR UNLESS SUCH TRANSFER IS (A) EXEMPT FROMREGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH LAWS IN THEOPINION OF COUNSEL TO THE SHAREHOLDER, WHICH COUNSEL MUST BE, AND THEFORM AND SUBSTANCE OF WHICH OPINION ARE, REASONABLY SATISFACTORY TO THEISSUER AND (B) IN COMPLIANCE WITH THE SHAREHOLDERS AGREEMENT OF THEISSUER, DATED AS OF DECEMBER 15, 2000 AND ANY AMENDMENTS, SUPPLEMENTS ORMODIFICATIONS THERETO (THE “SHAREHOLDERS AGREEMENT”).

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARESUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN (I) A STOCK SUBSCRIPTIONAGREEMENT, DATED ASOF               ,200  , AND (II) A SHAREHOLDERS AGREEMENT, COPIES OF WHICH AREAVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY.  NO TRANSFER OF SUCH SECURITIES WILL BE MADEON THE BOOKS OF THE COMPANY, AND SUCH TRANSFER SHALL BE VOIDABLE, UNLESSACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENTS.

 

### (c)                                  Abilityto Bear Risk.  The Grantee covenantsthat the Grantee will not exercise all or any of the Options unless (i) thefinancial situation of the Grantee is such that the Grantee can afford to bearthe economic risk of holding the Exercise Shares for an indefinite period and (ii) theGrantee can afford to suffer the complete loss of the Grantee’s investment inthe Exercise Shares.

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### (d)                                 Restrictionon Sale upon Public Offering.  TheGrantee agrees that, in the event that the Company files a registrationstatement under the Securities Act with respect to an underwritten publicoffering of any shares of its capital stock,** **theGrantee

 

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### will not effect any public sale or distribution of any shares of theCommon Stock (other than as part of such public offering), including but notlimited to, pursuant to Rule 144 or Rule 144A under the SecuritiesAct, during the 20 days prior to and the 180 days (or such lesser number ofdays that the managing underwriter may require) after the effective date ofsuch registration statement.  The Granteefurther understands and acknowledges that any sale, transfer or otherdisposition of the Exercise Shares by him following a public offering will besubject to compliance with, and may be limited under, the federal securitieslaws and/or state “blue sky” laws.

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# 8.                                       Changein Control.  Unless otherwisedetermined by the Committee, in the event of a Change in Control, eachoutstanding Option exercisable pursuant to Section 2(b) shall becanceled in exchange for a payment in cash of an amount equal to the excess, ifany, of the Change in Control Price over the Option Price; provided that if theholders of Common Stock receive property other than cash as a result of aChange of Control, then such payment shall be made in such other property inthe same proportion as the holders of Common Stock receive less the aggregateOption Price in connection with such Change of Control.

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# 9.                                       Representationsand Warranties of the Company.  TheCompany represents and warrants to the Grantee that (a) the Companyhas been duly incorporated and is an existing corporation in good standingunder the laws of the state of its incorporation, (b) thisAgreement has been duly authorized, executed and delivered by the Company andconstitutes a valid and legally binding obligation of the Company enforceableagainst the Company in accordance with its terms, and (c) theExercise Shares, when issued, delivered and paid for, upon exercise of theOptions in accordance with the terms hereof, the Joinder Agreement and theStock Subscription Agreement, will be duly authorized, validly issued, fullypaid and nonassessable, and free and clear of any liens or encumbrances otherthan those created pursuant to this Agreement, the Shareholders Agreement, theStock Subscription Agreement or otherwise in connection with the transactionscontemplated hereby.

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# 10.                                 CapitalAdjustments.  The number and price ofthe Shares covered by the Options shall be proportionately adjusted to reflectany stock dividend, stock split or share combination of the Common Stock or anyrecapitalization of the Company.  Subjectto any required action by the shareholders of the Company and Section 7 ofthe Plan, in any merger, consolidation, reorganization, exchange of shares,liquidation or dissolution, the Options shall pertain to the securities andother property, if any, that a holder of the number of shares of Common Stock coveredby the Options would have been entitled to receive in connection with suchevent.

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# 11.                                 CertainRestrictions on Repurchases.

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### (a)                                  FinancingAgreements, etc.  Notwithstanding anyother provision of this Agreement, the Company shall not be obligated orpermitted to pay the purchase price for any Remaining Options or VestedOptions, as the case may be, that the

 

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### Company may elect to purchase from the Grantee pursuant toSection 5 if (i) the payment of such purchase price wouldresult in a violation of the terms or provisions of, or a default or an eventof default under, any financing or security agreement or document entered intoby the Company or any of its Subsidiaries prior to the date hereof, any refundingthereof, or in connection with the operations of the Company or theSubsidiaries from time to time (such agreements and documents, as each may beamended, modified or supplemented from time to time, are referred to herein asthe “**Financing Agreements**”),in each case as the same may be amended, modified or supplemented from time totime, (ii) the payment of such purchase price would violate any ofthe terms or provisions of the Certificate of Incorporation of the Company or (iii) theCompany has no funds legally available therefor under the General CorporationLaw of the State of Delaware.

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### (b)                                 Delayof Repurchase.  In the event that thepayment of the purchase price for any Remaining Options or Vested Options, asthe case may be, by the Company otherwise permitted under Section 5 isprevented solely by the terms of Section 11(a), (i) thepayment of such purchase price will be postponed and will be made without theapplication of further conditions or impediments (other than as set forth inSection 5 hereof or in this Section 11) at the first opportunitythereafter when the Company has funds legally available therefor and when thepayment of such purchase price will not result in any default, event of defaultor violation under any of the Financing Agreements or in a violation of anyterm or provision of the Certificate of Incorporation of the Company and (ii) theGrantee’s right to receive payment of such purchase price shall rank againstother similar rights with respect to shares of Common Stock or options inrespect thereof according to priority in time of the effective date of theevent giving rise to any such right, provided that any such right as to which acommon date determines priority shall be of equal priority and shall share prorata in any purchase payments made pursuant to clause (i) above.

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### (c)                                  PurchasePrice Adjustment.  In the event thata repurchase of Remaining Options or Vested Options, as the case may be, fromthe Grantee is delayed pursuant to this Section 11, the purchase price perShare when the repurchase of such Remaining Options or Vested Options, as thecase may be, eventually takes place as contemplated bySection 11(b) shall equal the sum of (i) the PurchasePrice determined in accordance with Section 6 hereof at the time that therepurchase 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 tointerest on such Purchase Price for the period from the date on which thecompletion of the repurchase would have taken place but for the operation ofthis Section 11 to the date on which such repurchase actually takes place(the “**Delay Period**”) at arate equal to the average annual cost to the Company of its and itsSubsidiaries bank indebtedness obligations outstanding during the Delay Periodor, if there are no such obligations outstanding, one percentage point greaterthan the average prime rate charged during such period by a nationallyrecognized bank designated by the Company.

 

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# 12.                                 Miscellaneous.

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### (a)                                  Notices.  All notices and other communications requiredor permitted to be given under this Agreement shall be in writing and shall bedeemed to have been given if delivered personally or sent by certified orexpress mail, return receipt requested, postage prepaid, or by any recognizedinternational equivalent of such delivery, to the Company, the Sponsors or theGrantee, as the case may be, at the following addresses or to such other addressas the Company, the Sponsors or the Grantee, as the case may be, shall specifyby notice to the others:

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#### (i)                                     ifto the Company, to it at:

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

 

#### (ii)                                  ifto the Grantee, to the Grantee at the address set forth on the signaturepage hereof:

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#### (iii)                               ifto the North Castle Fund, to:

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

 

All suchnotices and communications shall be deemed to have been received on the date ofdelivery if delivered personally or on the third business day after the mailingthereof, provided that the party giving such notice or communicationshall have attempted to telephone the party or parties to which notice is beinggiven during regular business hours on or before the day such notice orcommunication is being sent, to advise such party or parties that such noticeis being sent.  Copies of any notice orother communication given under this Agreement shall also be given to:

 

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

 

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and

 

Debevoise &Plimpton919 Third AvenueNew York, New York  10022Fax:  (212) 909-6836Telephone:  (212) 909-6000Attention:  Franci J.Blassberg, Esq.

 

and

 

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

 

and

 

Kaye, Scholer, Fierman, Hays and Handler LLP425 Park AvenueNew York, New York  10022Fax:  212-836-6419Telephone:  212-836-8019Attention:  Stephen C.Koval, Esq.

 

### (b)                                 NoRight to Employment.  Nothing in thisAgreement shall be deemed to confer on the Grantee any right to continue in theemploy of the Company or any other member of the Company Group, or to interferewith or limit in any way the right of the Company or any other member of theCompany Group to terminate such employment at any time.

###  

### (c)                                  BindingEffect; Benefits.  This Agreementshall be binding upon and inure to the benefit of the parties to this Agreementand their respective successors and assigns. Except as provided in Section 5, nothing in this Agreement, expressor implied, is intended or shall be construed to give any person other than theparties to this Agreement or their respective successors or assigns any legalor equitable right, remedy or claim under or in respect of any agreement or anyprovision contained herein.

###  

### (d)                                 Waiver;Amendment.

###  

#### (i)                                     Waiver.  Any party hereto or beneficiary hereof may bywritten notice to the other parties (A) extend the time for theperformance of any of the

 

13

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#### obligations or otheractions of the other parties under this Agreement, (B) waivecompliance with any of the conditions or covenants of the other partiescontained in this Agreement and (C) waive or modify performance ofany of the obligations of the other parties under this Agreement; provided thatany waiver of the provisions of Section 4 must be consented to in writing bythe Sponsors.  Except as provided in thepreceding sentence, no action taken pursuant to this Agreement, including,without limitation, any investigation by or on behalf of any party orbeneficiary, shall be deemed to constitute a waiver by the party or beneficiarytaking 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 anyprovision of this Agreement shall not operate or be construed as a waiver ofany preceding or succeeding breach and no failure by a party or beneficiary toexercise any right or privilege hereunder shall be deemed a waiver of suchparty’s or beneficiary’s rights or privileges hereunder or shall be deemed awaiver of such party’s or beneficiary’s rights to exercise the same at anysubsequent time or times hereunder.

####  

#### (ii)                                  Amendment.  This Agreement may not be amended, modifiedor supplemented orally, but only by a written instrument executed by theGrantee and the Company, and (in the case of any amendment, modification orsupplement 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 theCompany’s consent to an amendment or modification of this Agreement may besubject to the terms and provisions of the Financing Agreements (as defined inthe Stock Subscription Agreement).

####  

### (e)                                  Assignability.  Neither this Agreement nor any right, remedy,obligation or liability arising hereunder or by reason hereof shall beassignable by the Grantee without the prior written consent of the otherparties, and the Sponsors.

###  

### (f)                                    ApplicableLaw.  THIS AGREEMENT SHALL BECONSTRUED 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 ORPERMIT APPLICATION OF THE LAW OF ANOTHER JURISDICTION, EXCEPT TO THE EXTENTTHAT THE CORPORATE LAW OF THE STATE OF INCORPORATION OF THE COMPANYSPECIFICALLY AND MANDATORILY APPLIES.

###  

### (g)                                 Section andOther Headings, etc.  Thesection and other headings contained in this Agreement are for referencepurposes only and shall not affect the meaning or interpretation of thisAgreement.

###  

### (h)                                 Counterparts.  This Agreement may be executed in any numberof counterparts, each of which shall be deemed to be an original and all ofwhich together shall constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the Company and the Grantee haveexecuted 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» |       |

 

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