Document:

Exhibit 10.3

 

 

 

EXECUTION COPY

 

 

EQUINOX HOLDINGS, INC.

 

 

REGISTRATION RIGHTS AGREEMENT

 

 

Dated as of December 15, 2000

 

 

Table of Contents

(Not Part of Agreement)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Background.

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Registration.

  	
  6

  
	
  3.1

  	
  Registration on Request.

  	
  6

  
	
   

  	
  (a)

  	
  Requests

  	
  6

  
	
   

  	
  (b)

  	
  Obligation to Effect Registration

  	
  7

  
	
   

  	
  (c)

  	
  Registration Statement Form

  	
  8

  
	
   

  	
  (d)

  	
  Expenses

  	
  8

  
	
   

  	
  (e)

  	
  Inclusion of Other Securities

  	
  9

  
	
   

  	
  (f)

  	
  Effective Registration Statement

  	
  9

  
	
   

  	
  (g)

  	
  Pro Rata Allocation

  	
  9

  
	
  3.2

  	
  Piggyback Registration

  	
  10

  
	
  3.3

  	
  Sub-Debt S-3 Registrations

  	
  12

  
	
  3.4

  	
  Registration Procedures

  	
  12

  
	
  3.5

  	
  Underwritten Offerings

  	
  17

  
	
   

  	
  (a)

  	
  Underwritten Offerings Exclusive

  	
  17

  
	
   

  	
  (b)

  	
  Underwriting Agreement

  	
  17

  
	
   

  	
  (c)

  	
  Selection of Underwriters

  	
  18

  
	
   

  	
  (d)

  	
  Incidental Underwritten Offerings

  	
  18

  
	
   

  	
  (e)

  	
  Hold Back Agreements

  	
  19

  
	
  3.6

  	
  Preparation; Reasonable Investigation

  	
  19

  
	
  3.7

  	
  Other Registrations

  	
  20

  
	
  3.8

  	
  Indemnification.

  	
  20

  
	
   

  	
  (a)

  	
  Indemnification by the Company

  	
  20

  
	
   

  	
  (b)

  	
  Indemnification by the Sellers

  	
  21

  
	
   

  	
  (c)

  	
  Notices of Claims, etc

  	
  22

  
	
   

  	
  (d)

  	
  Other Indemnification

  	
  23

  
	
   

  	
  (e)

  	
  Other Remedies

  	
  23

  
	
   

  	
  (f)

  	
  Officers and Directors

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Miscellaneous.

  	
  24

  
	
  4.1

  	
  Rule 144; Legended Securities; etc.

  	
  24

  
	
  4.2

  	
  Amendments and Waivers

  	
  25

  
	
  4.3

  	
  Nominees for Beneficial Owners

  	
  25

  
	
  4.4

  	
  Successors,
  Assigns and Transferees

  	
  25

  
	
  4.5

  	
  Notices

  	
  25

  
	
  4.6

  	
  No Inconsistent Agreements

  	
  27

  
	
  4.7

  	
  Remedies; Attorneys’ Fees

  	
  27

  
	
  4.8

  	
  Stock
  Splits, etc

  	
  28

  

 

i

 

 

Table of Contents

(Not Part of Agreement)

(Continued)

 

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  4.9

  	
  Severability

  	
  28

  
	
  4.10

  	
  Headings

  	
  28

  
	
  4.11

  	
  Counterparts

  	
  28

  
	
  4.12

  	
  Governing Law

  	
  28

  
	
  4.13

  	
  No Third Party Beneficiaries

  	
  28

  
	
  4.14

  	
  Consent to Jurisdiction

  	
  28

  
	
  4.15

  	
  Waiver of Jury Trial

  	
  29

  
	
  4.16

  	
  Action by Co-Investment Fund

  	
  29

  

 

ii

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (the “Agreement”),
dated as of December 15, 2000, among Equinox Holdings, Inc., a Delaware
corporation (the “Company”), NCP-EH, L.P., a Delaware limited
partnership (“NCP”), NCP Co-Investment Fund, L.P., a Delaware limited
partnership (the “NCP Co-Fund” and, together with NCP, “NCP-EH”),
Albion Alliance Mezzanine Fund, L.P., a Delaware limited partnership (“Albion
I”), Albion Alliance Mezzanine Fund II, L.P., a Delaware limited
partnership (“Albion II”), Deutsche Bank Securities Inc. (“DB”),
Exeter Capital Partners IV, L.P. (“Exeter Capital”), Exeter Equity
Partners, L.P. (“Exeter Equity”), Bill and Melinda Gates Foundation (“Gates”),
Arrow Investment Partners (“Arrow”) and together with DB, Exeter
Capital, Exeter Equity, Gates, Arrow, Albion I and Albion II and each of
their respective successors and permitted assigns, solely in their capacity of
holders of Warrants or Warrant Shares, the “Sub-Debt Warrantholders”),
and the individuals set forth on the signature page hereto (collectively, the “Individual
Stockholders”).  Capitalized terms
used in this Agreement have the meanings indicated in Section 2.

 

1.  Background.

 

(a)  The Company is a party to a Merger and Stock
Purchase Agreement, dated as of October 16, 2000 and as amended on
December 14, 2000 (the “Recapitalization Agreement”), with NCP-EH,
NCP-EH Recapitalization Corp., a Delaware corporation, and the other parties
thereto, pursuant to which, NCP-EH shall purchase shares of Common Stock.  In order to induce NCP-EH to enter into the
Recapitalization Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement for the benefit of NCP-EH, each Individual
Stockholder and each Holder.  The
execution and delivery of this Agreement is a condition to NCP-EH’s obligations
pursuant to the Recapitalization Agreement.

 

(b)  Pursuant to the Senior Subordinated Note and Warrant Purchase
Agreement, dated as of December 15, 2000 (the “Senior Subordinated Loan
Agreement”), between the Company and each of the Sub-Debt Warrantholders,
the Company has issued to the Sub-Debt Warrantholders warrants (the “Warrants”) to purchase
an aggregate of 783,020 shares of Common Stock (as such number may be adjusted
pursuant to the terms thereof).  In
order to induce the Sub-Debt Warrantholders to enter into the Senior
Subordinated Loan Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement for the benefit of the Sub-Debt
Warrantholders.

 

(c)  The Company may in the future issue or sell
(either directly or pursuant to options or other rights) additional shares of
Common Stock to (i) certain stockholders of businesses acquired by the
Company or one of its Subsidiaries, (ii) certain directors, executive
officers and key employees of the Company or one of its Subsidiaries, and (iii) certain
other purchasers, in each case pursuant to stock subscription, merger,

1

 

acquisition or purchase agreements or stock
option or rights agreements, plans or arrangements, the terms of which are not
inconsistent with the terms of this Agreement or any Stockholders Agreement
(collectively, the “Stock Subscription Agreements”).

 

(d)  This Agreement shall become effective, with
respect to any securities  issued
pursuant to any Stock Subscription Agreement that provides that such securities
shall constitute Registrable Securities, upon the issuance or sale of such
securities pursuant to such Stock Subscription Agreement, it being understood
that, with respect to Registrable Securities to be issued in the future, any
such Stock Subscription Agreement will provide that the securities issued or
sold thereunder are entitled to the rights and subject to the obligations
created hereunder, provided that such issuance or sale shall
have been consented to in writing by the Board of Directors of the Company (the
“Board”) and the Board shall have determined that such Securities shall
be Registrable Securities.

 

2.  Definitions.  For
purposes of this Agreement, the following terms have the following respective
meanings:

 

Affiliate: with respect to any
Person, any other Person directly or indirectly Controlling, Controlled by or
under common Control with such first Person. 
“Control” means the power to direct or cause the direction of
management or policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise.  Any director, member of management or other
employee of the Company or any of its Subsidiaries who would not otherwise be
an Affiliate of NCP-EH shall not be deemed to be an Affiliate of NCP-EH and no
Sub-Debt Warrantholder shall be deemed to be an Affiliate of the Company.

 

Agreement:  as defined in the first paragraph of this Agreement.

 

Board: as defined in Section 1(d).

 

Business Day:  a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required to
close.

 

Common Stock:  the common stock, par value $.01 per share,
of the Company outstanding immediately after the consummation of the
transactions contemplated by the Recapitalization Agreement or issued
thereafter.

 

Company:  as defined in the first paragraph of this Agreement.

 

DTC:  the Depository Trust Company.

 

Escrowed Shares:  as defined in the Recapitalization
Agreement.

 

2

 

Exchange Act:  the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations
thereunder which shall be in effect at the time.  Any reference to a particular section thereof shall include
a reference to the corresponding section, if any, of any such successor federal
statute, and the rules and regulations thereunder.

 

Holder:  any holder of Registrable Securities from time to time.

 

Individual Stockholders:  as defined in the first paragraph of this
Agreement.

 

NASD:  the National Association of Securities Dealers, Inc.

 

NCP-EH:  as defined in the first paragraph of this Agreement.

 

Person:  any natural person, firm, partnership, association, corporation,
limited liability company, company, trust, business trust, governmental entity
or other entity.

 

Prospectus:  the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration Statement
and all other amendments and supplements to the prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such prospectus.

 

Public Offering:  as defined in the Stockholders Agreement.

 

Recapitalization Agreement:  as defined in Section 1(a).

 

Registrable Securities:  (a) (i) shares of Common
Stock, other than the Escrowed Shares, issued by the Company pursuant to the
Recapitalization Agreement to NCP-EH, NCP Co-Fund, the Individual Stockholders,
or any of their Affiliates, (ii) shares of Common Stock issuable
pursuant to any Stock Subscription Agreement (including upon exercise of
options or warrants) that provides that such Common Stock shall constitute
Registrable Securities, except for any such Common Stock issued pursuant
to an effective registration statement under the Securities Act on Form S-8,
Form S-4, Form S-1 or any successor form to any thereof (unless such Common
Stock is held by a Stockholder who is an affiliate (within the meaning of Rule
144) of the Company), and (iii) shares of Common Stock issued or
issuable upon exercise of the Warrants; and (b) any securities
issued or issuable with respect to any shares of Common Stock referred to in
the foregoing clauses (x) upon any conversion or exchange thereof,
(y) by way of stock dividend or other distribution, stock split or
reverse stock split or (z) in connection with a combination of
shares, recapitalization, merger, consolidation, exchange offer or other

 

3

 

reorganization.  As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable
Securities when (A) a Registration Statement with respect to the
sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
Registration Statement, unless such securities are acquired and held by a
Stockholder who is an affiliate (within the meaning of Rule 144), (B) such
securities shall have been distributed to the public in reliance upon
Rule 144, (C) such securities have been held, or deemed, by
virtue of tacking holding periods as contemplated by Rule 144, to be held for a
period of two years by a Person who obtained such securities pursuant to any
Stock Subscription Agreement or the Recapitalization Agreement and who has not
been an affiliate (within the meaning of Rule 144) of the Company within the
three months preceding any proposed disposition of such securities, (D)
subject to the provisions of Section 4.1(b)(ii), such securities shall
have been otherwise transferred, new certificates for such securities not
bearing a legend restricting further transfer shall have been delivered by the
Company and subsequent disposition of such securities shall not require
registration or qualification of such securities under the Securities Act, (E) such
securities shall have been acquired by the Company, or (F) with
respect to any such securities acquired by a Stockholder pursuant to the
exemption from the registration requirements of the Securities Act contained in
Rule 701 (or any successor provision) thereunder, at any time 90 days following
the date the Company registers a class of equity securities under Section 12 of
the Exchange Act.

 

Registration Expenses:  all fees and expenses incident to the
performance of or compliance with the provisions of this Agreement, whether or
not any registration statement is filed or becomes effective, including,
without limitation, all (i) registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made
with the NASD in connection with an underwritten offering and (B) fees
and expenses of compliance with state securities or blue sky laws (including,
without limitation, fees and disbursements of counsel for the underwriter or
underwriters in connection with blue sky qualifications of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as provided in Section
3.4(e)), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities in a form eligible for
deposit with DTC and of printing prospectuses), (iii) fees and
disbursements of all independent certified public accountants referred to in
Section 3.4(f) (including, without limitation, the reasonable expenses of any
special audit and “comfort” letters required by or incident to such
performance), (iv) the fees and expenses of any “qualified independent
underwriter” or other independent appraiser participating in an offering
pursuant to Rule 2720 of the NASD Rules of Conduct, (v) liability
insurance under the Securities Act or any other securities laws, if the Company
desires such insurance, (vi) fees and expenses of all attorneys,
advisers, appraisers and other persons retained by the Company or any
Subsidiary of the Company, (vii) internal expenses of the Company and
its Subsidiaries (including, without limitation, all salaries and expenses of
officers and employees of the Company and its Subsidiaries performing legal or
accounting duties),

 

4

 

(viii)
the expense of any annual audit, (ix) the expenses relating to printing,
word processing and distributing all registration statements, underwriting
agreements, securities sales agreements and any other documents necessary in
order to comply with this Agreement and (x) the reasonable out-of-pocket
expenses of the Holders of the Registrable Securities being registered in such
registration incurred in connection therewith including, without limitation,
the reasonable fees and disbursements of not more than one counsel (together
with appropriate local counsel) chosen by the holders of a majority of
Registrable Securities included in such registration, provided, however, in the
event that representation of the Sub-Debt Warrantholders and the other holders
of Registrable Securities by the same counsel would in the opinion of such
counsel be inappropriate under applicable standards of professional conduct,
the reasonable expenses of separate counsel for the Sub-Debt Warrantholders
shall be paid by the Company in a registration pursuant to Section 3.1.  Registration Expenses shall not include any
underwriting discounts or commissions or any transfer taxes payable in respect
of the sale of Registrable Securities by the Holders thereof.

 

Registration Statement:  any registration statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of
this Agreement, and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the
Prospectus, all exhibits and all material incorporated by reference or deemed to
be incorporated by reference in such registration statement.

 

Rule 144:  Rule 144 (or any successor provision) under the Securities Act.

 

Rule 144A:  Rule 144A (or any successor provision) under the Securities Act.

 

Rule 145:  Rule 145 (or any successor provision) under the Securities Act.

 

Securities Act:  the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations thereunder which
shall be in effect at the time.  Any
reference to a particular section thereof shall include a reference to the
corresponding section, if any, of any such successor federal statute, and the
rules and regulations thereunder.

 

SEC:  the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.

 

Special Registration:  the registration of shares of equity
securities and/or options or other rights in respect thereof to be offered
solely to directors, members of management, employees, consultants or sales
agents, distributors or similar representatives of the Company or its direct or
indirect Subsidiaries, solely on Form S-8 or any successor form.

 

5

 

Stock Subscription Agreements:  as defined in Section 1(c).

 

Stockholders Agreement:  the Stockholders Agreement, dated as of
December 15, 2000, among the Company, NCP, the Sub-Debt Warrantholders and
the other parties named therein, as such agreement may be amended, supplemented
or modified from time to time.

 

Subsidiary:  with respect to any Person, any corporation
or Person, a majority of the outstanding voting stock or other equity interests
of which is owned, directly or indirectly, by that Person.

 

“underwritten registration” or “underwritten
offering” means a registration in which securities of the Company
(including Registrable Securities) are sold to an underwriter for reoffering to
the public.

 

Warrant Shares:  shares of Common Stock issued and
outstanding upon exercise of a Warrant.

 

Warrants:  as defined in Section 1(b).

 

Any reference 
in this Agreement to a statute shall be to such statute, as amended from
time to time, and to the rules and regulations promulgated thereunder.

 

3.  Registration.

 

3.1  Registration on Request.

 

(a)  Requests.  Subject to the provisions of
Section 3.7, at any time or from time to time after the date hereof,
NCP-EH shall have the right to make written requests that the Company effect
one or more registrations under the Securities Act of all or part of the
Registrable Securities of NCP-EH.  Subject
to the provisions of Section 3.7, at any time after the initial Public
Offering, the Sub-Debt Warrantholders holding at least a majority of the
Warrants or Warrant Shares then outstanding shall have the right, on two
occasions,  to make a written request
that the Company effect a registration (each, a “Sub-Debt Registration”)
under the Securities Act of part or all of the Registrable Securities held by
all Sub-Debt Warrantholders; provided, however, that unless the
Sub-Debt Warrantholders requesting registration are able to include in such
registration at least 60% of the Registrable Securities requested by them to be
included in such registration, such Sub-Debt Warrantholders shall be entitled
to require an additional registration pursuant to this Section 3.1.  If so requested by any Sub-Debt
Warrantholder in connection with a registration under this paragraph, the
Company shall take such steps as are required to register the Sub-Debt
Warrantholders’ Registrable Securities for sale on a delayed or continuous
basis under Rule 415, and also take such steps as are required to keep any
registration effective until all of the Registrable Securities registered
thereunder

 

6

 

are sold. 
Notwithstanding the foregoing, the Company shall have no obligation to
keep any Sub-Debt Registration pursuant to this Section 3.1 effective more than
one hundred eighty (180) days after the initial date of effectiveness of such
registration.  Any requests for
registration made pursuant to this Section 3.1 shall specify the intended
method of disposition thereof, including whether the registration requested is
for an underwritten offering.

 

(b)  Obligation to Effect
Registration. 
Within 20 days after receipt by the Company of any request for
registration pursuant to Section 3.1(a), the Company shall promptly give
written notice of such requested registration to all Holders, and thereupon
will use its reasonable best efforts to effect the registration under the
Securities Act of:

 

(i)  the Registrable Securities
which the Company has been so requested to register pursuant to
Section 3.1(a), and

 

(ii)  all other Registrable
Securities which the Company has been requested to register by the Holders
thereof by written request given to the Company within 20 days after the
Company has given such written notice (which request shall specify the intended
method of disposition of such Registrable Securities),

 

all to the
extent required to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be
registered.  Notwithstanding the
preceding sentence:

 

(x)  the
Company shall not be required to effect a registration requested pursuant to
Section 3.1 (other than a Sub-Debt Registration) if the aggregate number
of Registrable Securities referred to in clauses (i) and (ii) of this
Section 3.1(b) included in such registration shall be less than 20% of the
Registrable Securities at the time outstanding;

 

(y)  if the
Board determines in its good faith judgment, after consultation with a firm of
nationally recognized underwriters, that there will be an adverse effect on a
then contemplated public offering of the Common Stock that is expected to
become effective within 180 days of the date of such determination, the holder
or holders making a request pursuant to Section 3.1(a) shall be given notice of
such fact and shall be deemed to have withdrawn such request and such
registration shall not be deemed to have been effected or requested pursuant to
this Section 3.1; and

 

(z)  the
Company shall be entitled to postpone for a reasonable period of time not to
exceed 180 days from the date a request pursuant to Section 3.1(a) is received,
the filing of any registration statement otherwise required to be prepared

 

7

 

and filed by it pursuant to this Section 3.1, if
the Board of Directors of the Company (i) in good faith determines
at such time that such registration and offering would materially adversely
affect or interfere with any proposed or pending financing, acquisition,
corporate reorganization or other material transaction or the conduct or
outcome of any material litigation involving the Company and any of its
subsidiaries, and (ii) as promptly as practicable gives Holders
written notice of such postponement, setting forth the duration of and reasons
for such postponement; provided, however,
that the Company shall not effect such a postponement more than once in any
360-day period.  If the Company shall so
postpone the filing of a registration statement, the holders or holders making
the request pursuant to Section 3.1(a) shall within 10 days after receipt of
the notice of postponement advise the Company in writing whether or not it has
determined to withdraw its request for registration.  Failure by such holder or holders to timely notify the Company of
its determination shall for all purposes be treated as a withdrawal of its
request for registration.  In the event
of a withdrawal, such request for registration shall not be deemed exercised
for purposes of determining whether such holder or holders still have the right
to make a request for registration pursuant to this Section 3.1.  In the event that the holder or holders
making the request under Section 3.1(a) have not withdrawn their request for
registration, the Company shall use its reasonable best efforts to achieve such
effectiveness promptly following such 180-day period if the request for
registration pursuant to this Section 3.1 was made prior to the expiration of
such 180-day period.

 

(c)  Registration Statement
Form.  Each
registration requested pursuant to this Section 3.1 shall be effected by
the filing of a registration statement on Form S-1, Form S-2 or Form S-3
(or any other form which includes substantially the same information as would
be required to be included in a registration statement on such forms as
presently constituted), unless the use of a different form is (i) required
by law or (ii) permitted by law and agreed to in writing by Holders
of at least a majority of the shares of Registrable Securities as to which
registration has been requested pursuant to this Section 3.1.  At any time after the Company has issued and
sold any shares of its capital stock registered under an effective registration
statement under the Securities Act, or after the Company shall have registered
any class of equity securities pursuant to Section 12 of the Exchange Act,
it will use its reasonable best efforts to qualify for registration on Form S-2
or Form S-3 (or any other comparable form hereinafter adopted).

 

(d)  Expenses.  The Company will pay all Registration
Expenses in connection with the first four registrations which are effected by
NCP-EH as requested pursuant to Section 3.1(a) and for up to two registrations
which are effected by the Sub-Debt Warrantholders pursuant to Section 3.1(a)
and any registration which is effected by the Sub-Debt Warrantholders under
Section 3.3.  The Registration Expenses
in connection with each other registration, if any, requested under this
Section 3.1 shall be apportioned

 

8

 

among the Holders whose Registrable
Securities are then being registered, on the basis of the respective amounts of
Registrable Securities then being registered by them or on their behalf.  However, in the case of all registrations
requested under Section 3.1(a), the Company shall pay all amounts in respect of
(i) any allocation of salaries of personnel of the Company and its
Subsidiaries or other general overhead expenses of the Company and its
Subsidiaries or other expenses for the preparation of financial statements or
other data normally prepared by the Company and its Subsidiaries in the
ordinary course of its business, (ii) the expenses of any officers’ and
directors’ liability insurance, (iii) the expenses and fees for listing
the securities to be registered on each exchange on which similar securities
issued by the Company are then listed or, if no such securities are then listed
on an exchange selected by the Company and (iv) all fees associated with
filings required to be made with the NASD (including, if applicable, the fees
and expenses of any “qualified independent underwriter” and its counsel as may
be required by the rules and regulations of the NASD).  Notwithstanding the provisions of this
Section 3.1(d) or of Section 3.2, each seller of Registrable Securities shall
pay all Registration Expenses to the extent required to be paid by such seller
under applicable law; provided, however that nothing in this
Section 3.1(d) shall require a Sub-Debt Warrantholder to pay Registration
Expenses in connection with a Sub-Debt Registration.

 

(e)  Inclusion of Other
Securities. 
The Company shall not register securities (other than Registrable
Securities) for sale for the account of any Person other than the Company in
any registration requested pursuant to Section 3.1(a) unless permitted to
do so by the written consent of Holders holding at least a majority of the
shares of Registrable Securities proposed to be sold in such registration.

 

(f)  Effective Registration
Statement.  A registration requested pursuant to Section 3.1(a) shall not
be deemed to have been effected unless it is declared effective by the SEC and
remains effective for the period specified in Section 3.4(b).  Notwithstanding the preceding sentence, a
registration requested pursuant to Section 3.1(a) that does not become
effective after the Company has filed a Registration Statement with respect
thereto by reason of the refusal to proceed of the Holder or Holders of the
Registrable Securities requesting registration shall be deemed to have been
effected by the Company at the request of such Holder or Holders.

 

(g)  Pro Rata Allocation.  If the managing underwriters or, in an offering
which is not underwritten, a nationally recognized investment banker,
determines that the number of securities to be sold in any such offering should
be limited due to market conditions or otherwise, Holders of Registrable
Securities proposing to sell their securities in such registration shall share
pro rata in the number of securities being offered (as determined by the
Holders holding a majority of the Registrable Securities for which registration
is being requested in consultation with the managing underwriters or investment
banker, as the case may be) and registered for their account, such sharing to
be based on the number of Registrable Securities as to which registration was
requested by such Holders.

 

9

 

3.2  Piggyback Registration.  If the Company at any time proposes to
register any of its equity securities (as defined in the Exchange Act) under
the Securities Act (other than pursuant to Section 3.1 or pursuant to a
Special Registration), whether or not for sale for its own account, and the
registration form to be used may be used for the registration of Registrable
Securities, it shall each such time give prompt written notice to all Holders
of its intention to do so and, upon the written request of any Holder given to
the Company within 30 days after the Company has given any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such Holder and the intended method of disposition thereof), the Company will
use its reasonable best efforts to effect the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the Holders thereof, to the extent required to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered, provided
that:

 

(a)  if such registration shall be in connection
with the initial public offering of Common Stock, the Company shall not include
any Registrable Securities in such proposed registration if the Board shall
have determined, after consultation with the managing underwriters for such
offering, that it is not in the best interests of the Company to include any
Registrable Securities in such registration, provided
that, if the Board makes such a determination, the Company shall not include in
such registration any securities not being sold for the account of the Company;

 

(b)  if, at any time after giving written notice
of its intention to register any securities and prior to the effective date of
the Registration Statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities, the
Company may, at its election, give written notice of such determination to each
Holder that was previously notified of such registration and, thereupon, shall
not register any Registrable Securities in connection with such registration
(but shall nevertheless pay the Registration Expenses in connection therewith),
without prejudice, however, to the rights of any Holders to request that a
registration be effected under Section 3.1; and

 

(c)  if the Company shall be advised in writing
by the managing underwriters (or, in connection with an offering which is not
underwritten, by a nationally recognized investment banker) that in their or
its opinion the number of securities requested to be included in such
registration (whether by the Company, pursuant to this Section 3.2 or
pursuant to any other rights granted by the Company to a holder or holders of
its securities to request or demand such registration or inclusion of any such
securities in any such registration) exceeds the number of such securities
which can be sold in such offering

 

10

 

(i)  the Company shall include in such
registration the number (if any) of Registrable Securities so requested to be
included which in the opinion of such underwriters or investment banker, as the
case may be, can be sold and subject to subclause (ii) below, shall not include
in such registration any securities (other than securities being sold by the
Company, which shall have priority in being included in such registration) so
requested to be included other than Registrable Securities unless all
Registrable Securities requested to be so included are included therein, and

 

(ii)  if in the opinion of such underwriters or
investment banker, as the case may be, some but not all of the Registrable
Securities may be so included, all holders of Registrable Securities requested
to be included therein shall share pro rata in the number of shares of
Registrable Securities included in such public offering on the basis of the
number of Registrable Securities requested to be included therein by such
holders, provided that, in the
case of a registration initially requested or demanded by a holder or holders
of securities other than Registrable Securities, the Holders of the Registrable
Securities requested to be included therein and the holders of such other
securities shall share pro rata (based on the number of shares if the requested
or demanded registration is to cover only Common Stock and, if not, based on
the proposed offering price of the total number of securities included in such
public offering requested to be included therein),

 

and the Company shall so provide in any registration
agreement hereinafter entered into with respect to any of its securities; and

 

(d)  if prior to the effective date of the
registration statement filed in connection with such registration, the Company
is informed by the managing underwriter (or, in connection with an offering
which is not underwritten, by an investment banker) that the price at which
such securities are to be sold is a price below that price which the requesting
Holders shall have indicated to be acceptable, the Company shall promptly
notify the requesting Holders of such fact, and each such requesting Holder
shall have the right to withdraw its request to have its Registrable Securities
included in such registration statement.

 

The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 3.2.  No registration
effected under this Section 3.2 shall relieve the Company from its
obligation to effect registrations upon request under Section 3.1.  The Company shall not be obligated to cause
any registration that includes Registrable Securities pursuant to this
Section 3.2 to be underwritten.

 

11

 

3.3  Sub-Debt S-3
Registrations. 
If the Company becomes eligible to use Form S-3 under the Securities Act
or a comparable successor form, (a) the Company shall use its reasonable
best efforts to continue to qualify at all times for registration of its
capital stock on Form S-3 or any successor form, and (b) Sub-Debt
Warrantholders holding Registrable Securities anticipated to have an aggregate
sale price (net of underwriting discounts and commissions, if any) in excess of
$10,000,000 shall have the right on one (1) or more occasions (not to
exceed two (2) occasions in any consecutive twelve (12) month period), to
request and have effected the registration of their Registrable Securities on
Form S-3 or such successor form (such requests shall be in writing and shall
state the number of Registrable Securities to be disposed of and the intended
method of disposition of such Registrable Securities by the Sub-Debt
Warrantholder(s)).  The Company will use
its reasonable best efforts to effect promptly the registration of all
Registrable Securities on Form S-3 or such successor form to the extent
requested by such Sub-Debt Warrantholder(s). 
If so requested by such Sub-Debt Warrantholder(s) in connection with a
registration under this Section 3.3, the Company shall take such steps as are
required to register such Sub-Debt Warrantholder’s Registrable Securities for
sale on a delayed or continuous basis under Rule 415, and to keep such
registration effective until all of such Sub-Debt Warrantholder’s Registrable
Securities registered thereunder are sold. 
Notwithstanding the foregoing, the Company shall have no obligation to
keep any registration effective more than one hundred eighty (180) days after
the initial date of effectiveness of such registration.  The Company may postpone the filing of any
registration statement required hereunder for a reasonable period of time, not
to exceed one hundred eighty (180) days during any twelve (12) month period, (i)
if the Company determines in good faith that such filing would require the
disclosure of a material transaction or other matter and the Company determines
reasonably and in good faith that such disclosure would have a material adverse
effect on the Company or otherwise would not be in the best interest of the
Company or (ii) any of the reasons contemplated in Section
3.1(b)(z).  The Company shall not be
required to cause a registration statement requested pursuant to this
Section 3.3 to become effective prior to ninety (90) days following the effective
date of a registration statement pursuant to Section 3.1 or Section 3.2,
if the request for registration has been received by the Company subsequent to
the giving of written notice by the Company, made in good faith, to the
Sub-Debt Warrantholders to the effect that the Company is commencing to prepare
a Company-initiated registration statement (other than a registration effected
solely to implement an employee benefit plan or a transaction to which Rule 145
or any other similar rule of the Commission under the Securities Act is
applicable); provided, however, that the Company shall use its
reasonable best efforts to achieve such effectiveness promptly following such
90-day period if the request pursuant to this Section 3.3 has been made prior
to the expiration of such 90-day period.

 

3.4  Registration Procedures.  If and whenever the Company is required to
use its reasonable best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 3.1, 3.2 and
3.3, the Company shall:

 

12

 

(a)  subject to clauses (x) and (y) of Section
3.1(b), prepare and file with the SEC, as soon as practicable, a Registration
Statement with respect to such securities, make all required filings with the
NASD and use its reasonable best efforts to cause such Registration Statement
to become effective as soon as practicable;

 

(b)  prepare and file with the SEC such
amendments and supplements to such Registration Statement and the Prospectus
used in connection therewith and such other documents as may be necessary to
keep such Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such Registration Statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such Registration Statement, but in no
event for a period of more than six months after such Registration Statement
becomes effective;

 

(c)  at least five Business Days before filing
with the SEC, furnish to counsel (if any) selected by the Holders of a majority
of the shares of Registrable Securities covered by such registration statement
and to counsel for the underwriters in any underwritten offering copies of all
documents proposed to be filed with the SEC in connection with such
registration, which documents will be subject to the review of such counsel;

 

(d)  furnish to each seller of Registrable
Securities, without charge, such number of conformed copies of such
Registration Statement and of each such amendment and supplement thereto (in
each case, including all exhibits and documents required to be filed therewith (other
than those filed on a confidential basis), except that the Company shall not be
obligated to furnish any seller of securities with more than two copies of such
exhibits and documents), such number of copies of the Prospectus included in
such Registration Statement (including each preliminary prospectus and any
summary prospectus) in conformity with the requirements of the Securities Act,
and such other documents, as such seller may reasonably request in order to
facilitate the disposition of the securities owned by such seller;

 

(e)  use its reasonable best efforts (x)
to register or qualify the securities covered by such Registration Statement
under such other securities or blue sky laws of such jurisdictions as each
seller shall request, (y) to keep such registration or qualification in
effect for so long as such Registration Statement remains in effect and (z)
to do any and all other acts and things which may be necessary or advisable to
enable such seller to consummate the disposition in such jurisdictions of the
securities owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign

 

13

 

corporation in any jurisdiction wherein it is not so
qualified, subject itself to taxation in any jurisdiction wherein it is not so
subject, or take any action which would subject it to general service of
process in any jurisdiction wherein it is not so subject;

 

(f)  in connection with an underwritten public
offering only, use its reasonable best efforts to furnish to each seller of
Registrable Securities a signed counterpart, addressed to the sellers, copies
of:

 

(i)  an opinion of counsel for the Company
experienced in securities law matters, dated the effective date of the
Registration Statement, and

 

(ii)  a “comfort” letter signed by the independent
public accountants who have issued an audit report on the Company’s financial
statements included in the Registration Statement,

 

each covering substantially the same matters with respect to the
Registration Statement (and the Prospectus included therein) and, in the case
of such accountants’ letter, with respect to events subsequent to the date of
such financial statements, as are customarily covered in opinions of issuer’s
counsel and in accountants’ letters delivered to the underwriters in
underwritten public offerings of securities;

 

(g)  (i) notify each Holder of Registrable
Securities subject to such Registration Statement if such Registration
Statement, at the time it or any amendment thereto became effective, (x)
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading upon discovery by the Company of such material misstatement or
omission or (y) upon discovery by the Company of the occurrence of any
event as a result of which the Company believes that (1) there would be such a
material misstatement or omission or (2) the Registration Statement would
no longer be in compliance in all material respects with the applicable rules
and regulations of the SEC, and, as promptly as practicable, prepare and file
with the SEC a post-effective amendment to such Registration Statement and use
its reasonable best efforts to cause such post-effective amendment to become
effective such that such Registration Statement, as so amended, shall not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or otherwise fail to be in compliance in all material respects with
all applicable rules and regulations of the SEC, and (ii) notify
each Holder of Registrable Securities subject to such Registration Statement,
at any time when a Prospectus relating thereto is required to be

 

14

 

delivered under the Securities Act, if the Prospectus
included in such Registration Statement, as then in effect, (1) includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading or (2) or
otherwise fail to be in compliance in all material respects with all applicable
rules and regulations of the SEC upon discovery by the Company of such material
misstatement or omission or upon discovery by the Company of the happening of
any event as a result of which the Company believes there would be a material
misstatement or omission or upon discovery of an event as a result of which the
Prospectus would no longer be in compliance in all material respects with
applicable rules and regulations of the SEC, and, as promptly as is
practicable, prepare and furnish to such Holder a reasonable number of copies
of a supplement to or an amendment of such Prospectus as may be necessary so
that, as thereafter delivered to purchasers of such securities, such Prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or otherwise fail to be in compliance in all material respects with
all applicable rules and regulations of the SEC;

 

(h)  otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement of the Company complying with the provisions of Section 11(a) of the
Securities Act and Rule 158 under the Securities Act;

 

(i)  notify each Holder of any Registrable
Securities covered by such Registration Statement (i) when such
Registration Statement, or any post-effective amendment to such Registration
Statement, shall have become effective, or any amendment of or supplement to
the Prospectus used in connection therewith shall have been filed, (ii) of
any request by the SEC to amend such Registration Statement or to amend or
supplement such Prospectus or for additional information, (iii) of
the issuance by the SEC of any stop order suspending the effectiveness of such
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation or threatening of any proceedings for
any of such purposes, (iv) of the suspension of the qualification
of such securities for offering or sale in any jurisdiction, or of the
institution of any proceedings for any of such purposes and (v) if
at any time when a Prospectus is to be required by the Securities Act to be
delivered in connection with the sale of the Registrable Securities, the
representations and warranties of the Company contained in any agreement
(including the underwriting agreement contemplated in Section 3.5(b) below), to
the knowledge of the Company, cease to be true and correct in any material
respect;

 

15

 

(j)  use its reasonable best efforts (i) (A) to
list such securities on any securities exchange on which the Common Stock is
then listed or, if no Common Stock is then listed, on an exchange selected by
the Company, if such listing is then permitted under the rules of such exchange
or (B) if such listing is not practicable or the Board determines
that quotation as a NASDAQ National Market System security is preferable, to
secure designation of such securities as a NASDAQ “national market system
security” within the meaning of Rule 11Aa2-1 under the Exchange Act and (ii) to
provide and cause to be maintained a transfer agent and registrar for such
Registrable Securities not later than the effective date of such registration
statement; and

 

(k)  use its reasonable best efforts to obtain
the lifting of any stop order that might be issued suspending the effectiveness
of such Registration Statement or any order preventing or suspending the use of
any preliminary prospectus, provided
that if the Company is unable to obtain the lifting of any such stop order in
connection with a registration pursuant to Section 3.1(a) or Section 3.3, the
request for registration shall not be deemed exercised for purposes of
determining whether such registration has been effected for purposes of Section
3.1(a) or (d) or Section 3.3.

 

The Company may require each Holder of any Registrable
Securities as to which any registration is being effected to furnish to the
Company such information regarding such Holder and the distribution of such securities
as the Company may from time to time reasonably request in writing and as shall
be required by law in connection therewith. 
Each such Holder agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.

 

The Company agrees not to file or make any amendment
to any Registration Statement with respect to any Registrable Securities, or
any amendment of or supplement to the Prospectus used in connection therewith,
which refers to any seller of any securities covered thereby by name, or
otherwise identifies such seller as the holder of any securities of the
Company, without the consent of such seller, such consent not to be unreasonably
withheld, except that no such consent shall be required for any disclosure
that is required by law.

 

By the acquisition of Registrable Securities, each
Holder shall be deemed to have agreed that upon receipt of any notice from the
Company pursuant to Section 3.4(g), such Holder will promptly discontinue
such Holder’s disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such Holder
shall have received, in the case of clause (i) of Section 3.4(g), notice from
the Company that such Registration Statement has been amended, as contemplated
by Section 3.4(g); or, in the case of clause (ii) of Section 3.4(g), copies of
the supplemented

 

16

 

or amended Prospectus contemplated by
Section 3.4(g).  If so directed by
the Company, each Holder will deliver to the Company (at the Company’s expense)
all copies, other than permanent file copies, in such Holder’s possession of
the Prospectus covering such Registrable Securities at the time of receipt of
such notice.  In the event that the
Company shall give any such notice, the period mentioned in Section 3.4(b)
shall be extended by the number of days during the period from and including
the date of the giving of such notice to and including the date when each
seller of any Registrable Securities covered by such Registration Statement
shall have received the copies of the supplemented or amended Prospectus
contemplated by Section 3.4(g).

 

Although shares of Common Stock issuable upon the
exercise of options and Warrants are included in the definition of Registrable
Securities, the Company shall, in respect of any such Registrable Securities
requested to be registered pursuant hereto, be required to include in any
registration statement only shares of Common Stock issuable upon exercise of
such options and Warrants and only if the Company has received assurances,
reasonably satisfactory to it, that such options and Warrants will be exercised
promptly after such registration statement has become effective or the sale to
an underwriter has been consummated so that only Common Stock shall be
distributed to the public under such registration statement.

 

3.5  Underwritten Offerings.  The provisions of this Section 3.5 do
not establish additional registration rights but instead set forth procedures
applicable, in addition to those set forth in Sections 3.1 through 3.4, to
any registration that is an underwritten offering.

 

(a)  Underwritten Offerings
Exclusive. 
Whenever a registration requested pursuant to Section 3.1 or 3.3 is
for an underwritten offering, only securities that are to be distributed by the
underwriters may be included in the registration.

 

(b)  Underwriting Agreement.  If requested by the underwriters for any
underwritten offering by Holders pursuant to a registration requested under
Section 3.1 or 3.3, the Company shall enter into an underwriting agreement
with such underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the Holders of a majority of the shares
of Registrable Securities to be covered by such registration and to the
underwriters and to contain such representations and warranties by the Company
and such other terms and provisions as are customarily contained in agreements
of this type, including, but not limited to, indemnities to the effect and to
the extent provided in Section 3.8, provisions for the delivery of
officers’ certificates, opinions of counsel and accountants’ “comfort” letters
and hold-back arrangements.  The Holders
of Registrable Securities to be distributed by such underwriters shall be
parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the agreements on the
part of, the Company to and for the benefit of such underwriters be made to and
for the benefit of such Holders and

 

17

 

that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement shall
also be conditions precedent to the obligations of such Holders.  If any condition to the obligations under
such underwriting agreement are not met or waived, and such failure to be met
or waived is not attributable to the fault of the  Holders requesting registration pursuant to Section 3.1(a) or
Section 3.3, such request for registration shall not be deemed exercised for
purposes of determining whether such registration has been effected for purposes
of Section 3.1(a) or (d) or Section 3.3. 
Notwithstanding anything in this Agreement to the contrary, no such
Holder shall be required by the Company to make any representations or
warranties to, or agreements with, or provide indemnities for the benefit of
the Company or the underwriters other than as set forth in Sections 3.5(e) and
3.8(b), and representations, warranties or agreements regarding such Holder and
such Holder’s intended method of distribution and any other representations
required by applicable law.

 

(c)  Selection of
Underwriters. 
Whenever a registration requested pursuant to Section 3.1(a) or
Section 3.3 is for an underwritten offering, the Company shall have the right
to select one or more underwriters to administer the offering at least one of
which shall be an underwriter of nationally recognized standing satisfactory to
the Holders of a majority of shares of Registrable Securities to be included in
such registration.  If the Company at
any time proposes to register any of its securities under the Securities Act
for sale for its own account and such securities are to be distributed by or
through one or more underwriters, the Company shall have the right to select
one or more underwriters to administer the offering at least one of which shall
be an underwriter of nationally recognized standing.  In all cases in this Section 3.5(c), at least one of the
underwriters chosen by the Holders or the Company shall be an underwriter of
nationally recognized standing.

 

(d)  Incidental Underwritten Offerings.  Subject to the provisions of the proviso to
the first sentence of Section 3.2, if the Company at any time proposes to
register any of its equity securities under the Securities Act (other than
pursuant to Sections 3.1 or 3.3 or pursuant to a Special Registration),
whether or not for its own account, and such securities are to be distributed
by or through one or more underwriters, the Company will give prompt written
notice to all Holders of its intention to do so and, if requested by any Holder,
will use its reasonable best efforts to arrange for such underwriters to
include the Registrable Securities to be offered and sold by such holder among
those to be distributed by such underwriters. 
The Holders of Registrable Securities to be distributed by such
underwriters shall be parties to the underwriting agreement between the Company
and such underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such Holders and that any or all of the conditions precedent
to the obligations of the underwriters under such underwriting agreement shall
also be conditions precedent to the obligations of such Holders.  Notwithstanding anything in this Agreement
to the contrary, no such Holder

 

18

 

shall be required by the Company to make any
representations or warranties to, or agreements with, the Company or the
underwriters other than as set forth in Sections 3.5(e) and 3.8(b),
representations, warranties or agreements regarding such Holder and such
Holder’s intended method of distribution and any other representations required
by applicable law.

 

(e)  Hold Back Agreements.  If and whenever the Company proposes to
register any of its equity securities under the Securities Act, whether or not
for its own account (other than pursuant to a Special Registration), or is
required to use its reasonable best efforts to effect the registration of any
Registrable Securities under the Securities Act pursuant to Section 3.1,
3.2 or 3.3, each Holder, if required by the managing underwriter in an
underwritten offering, agrees by acquisition of such Registrable Securities not
to effect (other than pursuant to such registration) any public sale or
distribution, including, but not limited to, any sale pursuant to Rule 144 or
Rule 144A, of any Registrable Securities, any other equity securities of the Company
or any securities convertible into or exchangeable or exercisable for any
equity securities of the Company during the 20 days prior to, and for 180 days
(or such lesser number of days that the managing underwriter may require of any
such Holder) after, the effective date of such registration, to the extent
timely notified in writing by the Company or the managing underwriter, and the
Company agrees to cause each holder of any equity security, or of any security
convertible into or exchangeable or exercisable for any equity security, of the
Company purchased from the Company at any time other than in a public offering
to enter into a similar agreement with the Company.  The Company further agrees not to effect (other than pursuant to
such registration or pursuant to a Special Registration) any public sale or
distribution, or to file any Registration Statement (other than such
registration or a Special Registration) covering any, of its equity securities,
or any securities convertible into or exchangeable or exercisable for such
securities, during the 20 days prior to, and for 180 days (or such lesser
number of days that the managing underwriter may require) after, the effective
date of such registration if required by the managing underwriter.

 

3.6  Preparation; Reasonable
Investigation. 
In connection with the preparation and filing of each Registration
Statement registering Registrable Securities under the Securities Act, the
Company shall give the Holders of such Registrable Securities to be registered
and their underwriters, if any, and their respective counsel and accountants,
the opportunity to participate in the preparation of such Registration
Statement, each Prospectus included therein or filed with the SEC, and each
amendment thereof or supplement thereto, and following the execution of a
confidentiality agreement with the Company, shall give each of them such access
to all pertinent financial, corporate and other documents and properties of the
Company and its Subsidiaries, and such opportunities to discuss the business of
the Company with its officers, directors, employees and the independent public
accountants who have issued audit reports on its financial statements as shall
be necessary, in the opinion of such Holders’ and such

 

19

 

underwriters’ respective counsel, to conduct
a reasonable investigation within the meaning of the Securities Act.

 

3.7  Other Registrations.  Notwithstanding any other provision of this
Agreement to the contrary, if and whenever the Company is required to use its
reasonable best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 3.1, 3.2 or 3.3,
and if such registration shall not have been withdrawn or abandoned, the
Company shall not be obligated to and shall not file any Registration Statement
with respect to any of its securities (including Registrable Securities) under
the Securities Act (other than a Special Registration or a registration
statement under the Securities Act on Form S-4), whether of its own accord or
at the request or demand of any holder or holders of such securities, until a
period of 180 days shall have elapsed from the effective date of its most
recent prior effective registration, and the Company shall so provide in any
registration rights agreement with respect to any of its equity securities.

 

3.8  Indemnification.

 

(a)  Indemnification by the
Company. 
In the event of any registration of any Registrable Securities under the
Securities Act pursuant to Section 3.1, 3.2 or 3.3, the Company shall
indemnify and hold harmless each seller of such securities, its directors,
officers, partners (including partners of partners and stockholders and members
of any such partners), managers or members or employees or agents of any of
them, each other person who participates as an underwriter, broker or dealer in
the offering or sale of such securities and each other person, if any, who
controls such seller or any such participating person within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each a “Company Indemnified Party” and collectively, the “Company
Indemnified Parties”), against any and all losses, claims, damages or
liabilities, joint or several, to which any Company Indemnified Party may
become subject under the Securities Act or otherwise (including, without
limitation, the reasonable fees of legal counsel incurred in connection with
any claim for indemnity hereunder), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement under which such
securities were registered under the Securities Act, any Prospectus or
preliminary prospectus included therein, or any amendment or supplement
thereto, or (ii) any omission or alleged omission to state a material
fact required to be stated in any such Registration Statement, Prospectus,
preliminary prospectus, amendment or supplement or necessary to make the
statements therein not misleading; and the Company shall reimburse each Company
Indemnified Party for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding as such expenses are incurred; provided that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based

 

20

 

upon an untrue statement or omission made in
any such Registration Statement, Prospectus, preliminary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such seller or participating person expressly for
use in the preparation thereof and provided,
further, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Prospectus, if
such untrue statement or alleged untrue statement or omission or alleged
omission is completely corrected in an amendment or supplement to the
Prospectus and the seller of Registrable Securities thereafter fails to deliver
such Prospectus as so amended or supplemented prior to or concurrently with the
sale of Registrable Securities to the person asserting such loss, claim,
damage, liability or expense after the Company had furnished such seller within
a reasonable period of time prior to such sale with a sufficient number of
copies of the same or if the seller received notice from the Company within a
reasonable period of time prior to such sale of the existence of such untrue
statement or alleged untrue statement or omission or alleged omission and the
seller continued to dispose of Registrable Securities prior to the time of the
receipt of either (A) an amended or supplemented prospectus which
completely corrected such untrue statement or omission or (B) a
notice from the Company that the use of the existing Prospectus may be
resumed.  Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
any Company Indemnified Party shall survive the transfer of such securities by
such seller.

 

(b)  Indemnification by the
Sellers. 
In the event of any registration of any Registrable Securities under the
Securities Act pursuant to Section 3.1, 3.2 or 3.3, each of the prospective
sellers of such securities, severally and not jointly, will indemnify and hold
harmless the Company, each director of the Company, each officer of the Company
who shall sign such Registration Statement, and each other person, if any, who
controls the Company or any such participating person within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
and all losses, claims, damages or liabilities, joint or several, to which the
Company or any such director, officer, employee, participating person or
controlling person may become subject under the Securities Act or otherwise
(including, without limitation, the reasonable fees of legal counsel incurred
in connection with any claim for indemnity hereunder), insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact with respect to such seller contained in any Registration
Statement under which such securities were registered under the Securities Act,
any Prospectus or preliminary prospectus included therein, or any amendment or
supplement thereto, or any omission or alleged omission to state a material
fact with respect to such seller required to be stated in any such Registration
Statement, Prospectus, preliminary prospectus, amendment or supplement or
necessary to make the statements therein not misleading if such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company by such seller expressly for use in the preparation of any such

 

21

 

Registration Statement, Prospectus, preliminary
prospectus, amendment or supplement.  In
no event, however, shall the liability of any seller of Registrable Securities
for indemnification in its capacity as such exceed the lesser of (i) that
proportion of the total of such losses, claims, damages or liabilities
indemnified against that is equal to the proportion of the total securities
sold under such registration statement which is being sold by such seller of
Registrable Securities or (ii) the net proceeds received by such seller from
its sale of Registrable Securities under such registration statement.  Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such seller
or any such director, officer, employee, participating person or controlling
person and shall survive the transfer of such securities by such seller.

 

(c)  Notices of Claims,
etc.  Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this
Section 3.8, such indemnified party shall, if a claim in respect thereof
is to be made against an indemnifying party hereunder, give written notice to
the latter of the commencement of such action, provided
that the failure of any indemnified party to give notice as provided therein
shall not relieve the indemnifying party of its obligations under the preceding
paragraphs of this Section 3.8 unless and to the extent that the failure
to provide prompt written notice shall cause actual prejudice to the
indemnifying party.  In case any such
action is brought against an indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party shall have the right to
retain counsel reasonably satisfactory to such indemnified party to defend
against such proceeding and shall pay the reasonable fees and disbursements of
such counsel related to such proceeding. 
In case any such action is brought against an indemnified party, the
indemnifying party will be entitled to participate therein and to assume the
defense thereof, jointly with any other indemnifying party similarly notified
to the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof, provided that if
such indemnified party and the indemnifying party reasonably determine, based
upon advice of their respective independent counsel, that a conflict of
interest may exist between the indemnified party and the indemnifying party
with respect to such action and that it is advisable for such indemnified party
to be represented by separate counsel, such indemnified party may retain other
counsel, reasonably satisfactory to the indemnifying party, to represent such
indemnified party, and the indemnifying party shall pay all reasonable fees and
expenses of such counsel. 
Notwithstanding the foregoing, the indemnified party shall be entitled
to participate in (but not direct) the defense of such action with counsel of
its own choice and at its own expense, and the parties agree to cooperate fully
with one another in connection with the defense and/or settlement thereof; provided, however, that subject to the
next sentence, any decision to settle any such claim or litigation shall be at
the indemnifying party’s sole discretion. 
No indemnifying party,

 

22

 

in the defense of any such claim or
litigation, shall, except with the consent of such indemnified party, which
consent shall not be unreasonably withheld, consent to entry of any judgment or
enter into any settlement which (i) does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation or (ii)
includes any admission of wrongdoing on the part of the indemnified party or
any material restriction on the indemnified party or its officers or directors.

 

(d)  Other Indemnification.  Indemnification similar to that specified in
the preceding paragraphs of this Section 3.8 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
such Registrable Securities under any federal or state law or regulation of
governmental authority other than the Securities Act.

 

(e)  Other Remedies.  If for any reason the foregoing indemnity
under Section 3.8(a) or (b) is unavailable, or is insufficient to hold harmless
an indemnified party, other than by reason of the exceptions provided therein,
then the indemnifying party and the indemnified party under Section 3.8(a) or
(b) shall contribute to the amount paid or payable by the indemnified party as
a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, or provides a lesser sum to the indemnified party than the amount
hereinafter calculated, in such proportion as is appropriate to reflect not
only the relative fault of the indemnifying party on the one hand and the
indemnified party on the other but also the relative benefits received by the
indemnifying party and the indemnified party from the offering of Registrable
Securities (taking into account the portion of the proceeds of the offering
realized by each such party) as well as any other relevant equitable
considerations.  The relative benefits
received by the Company, the sellers and the underwriters shall be deemed to be
in the same respective proportions that the net proceeds from the offering (before
deducting expenses) received by the Company and the sellers and the
underwriting discount received by the underwriters, in each case as set forth
in the table on the cover page of the applicable prospectus, bear to the
aggregate public offering price of the Registrable Shares.  The relative fault of the Company, the
sellers and the underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information
supplied by the Company, the sellers or the underwriters and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.  No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.  Any party’s obligation to contribute
pursuant to this Section 3.8(e) is several (in proportion to the relative value
of their Registrable Securities covered by a

 

23

 

registration statement) and not joint with
the obligations of any other party.  No
party shall be liable for contribution under this Section 3.8(e) except to
the extent and under such circumstances as such party would have been liable to
indemnify under this Section 3.8 if such indemnification were enforceable
under applicable law.  Notwithstanding
anything in this Section 3.8(e) to the contrary, no indemnifying party (other
than the Company) shall be required pursuant to this Section 3.8(e) to
contribute any amount in excess of the amount by which the net proceeds
received by such indemnifying party from the sale of Registrable Securities in
the offering to which the losses, claims, damages or liabilities of the
indemnified parties relate exceeds the amount of any damages which such
indemnifying party has otherwise been required to pay by reason of such untrue
statement omission.

 

(f)  Officers and Directors.  As used in this Section 3.8, the terms
“officers” and “directors” shall include the partners of Holders which are
partnerships and the members of Holders which are limited liability companies.

 

4.  Miscellaneous.

 

4.1  Rule 144; Legended
Securities; etc.

 

(a)  If the Company shall have filed a
registration statement pursuant to Section 12 of the Exchange Act or a
registration statement pursuant to the Securities Act relating to any class of
equity securities (other than a registration statement pursuant to a Special
Registration), the Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder (or, if the Company is not required to file such
reports, it will, upon the request of any Holder of Registrable Securities,
make publicly available such information as necessary to permit sales pursuant
to Rule 144 or Rule 145), and shall take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Holder to sell shares of Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by
Rule 144 or Rule 145.  Upon the
request of any Holder, the Company shall deliver to such Holder a written
statement as to whether it has complied with such requirements.

 

(b)  The Company shall issue new certificates for
Registrable Securities without a legend restricting further transfer if (i)
such securities have been sold to the public pursuant to an effective
Registration Statement under the Securities Act (other than on Form S-8 if the
Holder of such Registrable Securities is an affiliate of the Company) or
Rule 144, or (ii) (x) such issuance is otherwise
permitted under the Securities Act, (y) the Holder of such shares has
delivered to the Company an opinion of counsel, which opinion and counsel shall
be reasonably satisfactory to the Company, to such effect and (z) the
Holder of such shares expressly requests the issuance of such certificates in
writing.

 

24

 

4.2  Amendments and Waivers.  This Agreement may be amended, modified or
supplemented, and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such amendment, action or omission
to act, of NCP-EH and the Holder or Holders of at least a majority of the
Registrable Securities provided, however,
that this Agreement may not be amended, modified or supplemented in a manner
that discriminates against any class of Registrable Securities without the
written consent of a majority of such class and the last sentence of Sections
3.5(b) and (d) shall not be amended, modified or supplemented without the
written consent of each class of Registrable Securities affected thereby.  Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders may be given by
Holders of at least a majority of the Registrable Securities being sold by such
Holders pursuant to such Registration Statement; provided,
however, that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence.  No amendment, modification or discharge of this Agreement, and no
waiver hereunder, shall be valid or binding unless set forth in writing.  Any such waiver shall constitute a waiver
only with respect to the specific matter described in such writing and shall in
no way impair the rights of the party or parties granting such waiver in any
other respect or at any other time.

 

4.3  Nominees for Beneficial
Owners.  In
the event that any Registrable Securities are held by a nominee for the
beneficial owner thereof, the beneficial owner thereof may, at its election and
unless notice is otherwise given to the Company by the record owner, be treated
as the holder of such Registrable Securities for purposes of any request or other
action by any Holder or Holders pursuant to this Agreement or any determination
of any number or percentage of shares of Registrable Securities held by any
Holder or Holders contemplated by this Agreement.  If the beneficial owner of any Registrable Securities so elects,
the Company may require assurances reasonably satisfactory to it of such
owner’s beneficial ownership of such Registrable Securities.

 

4.4  Successors,
Assigns and Transferees.  This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns and transferees.

 

4.5  Notices.  All notices and other communications in
connection with this Agreement shall be in writing.  Any notice or other communication in connection herewith shall be
deemed duly given to any party (a) two Business Days after it is
sent by express, registered or certified mail, return receipt requested,
postage prepaid, (b) one Business Day after it is sent by overnight
courier, (c) when delivered by hand, if personally delivered or (d) when
receipt is acknowledged by the addressee, if telecopied.

 

25

 

Notices shall be addressed, if to any Holder,
to the address of such Holder in the record books of the Company, and if to the
Company to the following address:

 

	
  Equinox
  Holdings, Inc.

  
	
  895
  Broadway

  
	
  New
  York, NY  10003

  
	
  Telephone:

  	
  (212)
  254-0437

  
	
  Facsimile:

  	
  (212)
  777-9510

  
	
  Attention:

  	
  Chief
  Executive Officer

  
	
   

  
	
  with
  a copy to:

  
	
   

  
	
  Debevoise
  & Plimpton

  
	
  875
  Third Avenue

  
	
  New
  York, NY  10022

  
	
  Telephone:

  	
  (212)
  909-6000

  
	
  Facsimile:

  	
  (212)
  909-6836

  
	
  Attention:

  	
  Franci
  J. Blassberg, Esq.

  

 

or at such
other address or addresses as the Company may have designated in writing to
each Holder of Registrable Securities at the time outstanding.  Copies of any notice or other communication
given under the Agreement shall also be given to:

 

	
  North
  Castle Partners, L.L.C.

  
	
  60
  Arch Street, First Floor

  
	
  Greenwich,
  CT  06830

  
	
  Telephone:

  	
  (203)
  618-1700

  
	
  Facsimile:

  	
  (203)
  618-1860

  
	
  Attention:

  	
  Peter
  J. Shabecoff

  
	
   

  
	
  Albion
  Alliance LLC

  
	
  1345
  Avenue of the Americas – 37th Floor

  
	
  New
  York, NY  10105

  
	
  Facsimile:

  	
  (212)
  969-6659

  
	
  Attention:

  	
  Andrew
  H. Steuerman

  
	
   

  
	
  J.W.
  Childs Associates, L.P.

  
	
  One
  Federal Street

  
	
  Boston,
  MA  02110

  
	
  Telephone:

  	
  (617)
  753-1100

  
	
  Facsimile:

  	
  (617)
  753-1101

  
	
  Attention:

  	
  Glenn
  A. Hopkins

  

 

26

 

with copies to:

 

	
  Debevoise
  & Plimpton

  
	
  875
  Third Avenue

  
	
  New
  York, NY  10022

  
	
  Telephone:

  	
  (212)
  909-6000

  
	
  Facsimile:

  	
  (212)
  909-6836

  
	
  Attention:

  	
  Franci
  J. Blassberg, Esq.

  
	
   

  
	
  Kaye,
  Scholer, Fierman, Hays & Handler, LLP

  
	
  425
  Park Avenue

  
	
  New
  York, New York 10022

  
	
  Telephone:

  	
  (212)
  836-8000

  
	
  Facsimile:

  	
  (212)
  836-8689

  
	
  Attention:

  	
  Stephen
  C. Koval, Esq.

  
	
   

  
	
  Goodwin
  Procter & Hoar LLP

  
	
  Exchange
  Place

  
	
  53
  State Street

  
	
  Boston,
  MA  02109

  
	
  Facsimile:

  	
  (617)
  523-1231

  
	
  Attention:

  	
  Kevin
  M. Dennis, Esq.

  

 

Any party may
give any notice or other communication in connection herewith using any other
means (including, but not limited to, messenger service, telex or ordinary
mail), but no such notice or other communication shall be deemed to have been
duly given unless and until it is actually received by the individual for whom
it is intended.

 

4.6  No Inconsistent
Agreements. 
The Company shall not hereafter enter into any agreement, or amend any
existing agreement, with respect to its securities if such agreement would be
inconsistent with the rights granted to the Holders by this Agreement.

 

4.7  Remedies; Attorneys’
Fees.  Each
Holder in addition to being entitled to exercise all rights provided herein or
granted by law, including recovery of damages, shall be entitled to specific
performance of its rights under this Agreement.  The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any provision
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.  As between the parties to this Agreement, in
any action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover

 

27

 

reasonable attorney’s fees in addition to its
costs and expenses and any other available remedy.

 

4.8  Stock Splits,
etc.  Each party hereto or
beneficiary hereof agrees that it will vote to effect a stock split (forward or
reverse, as the case may be) with respect to any Registrable Securities in
connection with any registration of such Registrable Securities hereunder, or
otherwise, if the managing underwriter shall advise the Company in writing (or,
in connection with an offering that is not underwritten, if an investment
banker shall advise the Company in writing) that in their or its opinion such a
stock split would facilitate or increase the likelihood of success of the
offering.  Each party hereto agrees that
any number of shares of Common Stock referred to in this Agreement shall be
equitably adjusted to reflect any stock split, stock dividend, stock
combination, recapitalization or similar transaction.

 

4.9  Severability.  If any clause, provision or section of this
Agreement shall be invalid, illegal or unenforceable, the invalidity,
illegality or unenforceability of such clause, provision or section shall not
affect the enforceability or validity of any of the remaining clauses,
provisions or sections hereof to the extent permitted by applicable law.  The invalidity of any one or more phrases,
sentences, clauses, Sections or subsections of this Agreement shall not affect
the remaining portions of this Agreement.

 

4.10  Headings.  The headings contained in this Agreement are
for purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.

 

4.11  Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
together constitute one and the same instrument.

 

4.12  Governing Law.  This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without giving effect to its principles or rules of conflict of laws that
would require the application of the laws of any other jurisdiction.

 

4.13  No Third Party
Beneficiaries. 
Except as provided in Sections 3.8 and 4.4, nothing in this Agreement
shall confer any rights upon any person or entity other than the parties
hereto, each such party’s respective successors and permitted assigns.

 

4.14  Consent to Jurisdiction.  Each party irrevocably submits to the
personal exclusive jurisdiction of the United States District Court for the
Southern District of New York for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby (and, to the extent permitted under applicable rules of procedure,
agrees not to commence any action, suit or proceeding relating hereto except in
such court).  Each party further agrees that
service of any

 

28

 

process, summons, notice or document hand
delivered or sent by registered mail to such party’s respective address set
forth in Section 4.5 will be effective service of process for any action,
suit or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction as set forth in the immediately preceding
sentence.  Each party irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in the United States District Court for the Southern District of New
York, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in such court that any such action, suit or proceeding
brought in such court has been brought in an inconvenient forum.

 

4.15  Waiver of Jury Trial.  EACH PARTY HERETO AND EACH PERSON CLAIMING
THE BENEFITS OF ANY PROVISION HEREOF HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

4.16  Action by Co-Investment
Fund.  The
Co-Investment Fund will not take any action under this Agreement unless such
action is consistent with the actions of NCP and will act in concert with NCP
with respect to all actions taken by NCP hereunder, including, without
limitation, approving amendments to this Agreement.

 

29

 

IN WITNESS WHEREOF, each of the undersigned has
executed this Agreement or caused this Agreement to be executed on its behalf
as of the date first written above.

 

	
   

  	
  EQUINOX HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Adam Saltzman

  	
   

  
	
   

  	
   

  	
  Name: Adam Saltzman

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NCP-EH, L.P.

  
	
   

  	
  By:

  	
  NCP-EH GP, L.L.C.,

  
	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/  Adam Saltzman

  	
   

  
	
   

  	
   

  	
  Name: Adam Saltzman

  
	
   

  	
   

  	
  Title: Executive Vice President

  
					

 

30

 

	
   

  	
  ALBION ALLIANCE MEZZANINE FUND,

  L.P.

  
	
   

  	
   

  
	
   

  	
  By:  Albion Alliance LLC, its
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Andrew H. Steuerman

  	
   

  
	
   

  	
   

  	
  Name:  Andrew H. Steuerman

  
	
   

  	
   

  	
  Title:  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALBION ALLIANCE MEZZANINE FUND, II,

  L.P.

  
	
   

  	
   

  
	
   

  	
  By:  AA MEZZ II GP, LLC, its
  General Partner

  
	
   

  	
  By:  Albion Alliance LLC, its
  Sole Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Andrew H. Steuerman

  	
   

  
	
   

  	
   

  	
  Name:  Andrew H. Steuerman

  
	
   

  	
   

  	
  Title:  Senior Vice President

  

 

31

 

	
   

  	
  DEUTSCHE BANK SECURITIES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Edwin E. Roland, Jr.

  	
   

  
	
   

  	
   

  	
  Name: Edwin E. Roland, Jr.

  
	
   

  	
   

  	
  Title:  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Flannery

  	
   

  
	
   

  	
   

  	
  Name:  David J. Flannery

  
	
   

  	
   

  	
  Title:  Managing Director

  

 

32

 

	
   

  	
  EXETER CAPITAL PARTNERS IV, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Exeter IV Advisors, L.P., its

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
  By:

  	
  Exeter IV Advisors, Inc., its

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Authorized Signatory

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXETER EQUITY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Exeter Equity Advisors, L.P., its

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
  By:

  	
  Exeter Equity Advisors, Inc., its

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Authorized Signatory

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

33

 

	
   

  	
  BILL AND MELINDA GATES

  FOUNDATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Robert Sydow

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert Sydow

  
	
   

  	
   

  	
  Title:

  	
  Authorized Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARROW INVESTMENT PARTNERS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Robert Sydow

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert Sydow

  
	
   

  	
   

  	
  Title:

  	
  Authorized Agent

  
					

 

34

 

 

	
   

  	
  DONATO ERRICO, JR.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  Donato
  Errico, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VITO ERRICO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  Vito
  Errico

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LAVINIA ERRICO (JR.)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ 
  Lavinia Errico Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DONATO ERRICO, SR.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  Donato
  Errico, Sr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LAVINIA ERRICO (SR.)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ 
  Lavinia Errico Sr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARVEY SPEVAK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  Harvey
  Spevak

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RAKESH AHUJA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  Rakesh
  Ahuja

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TERRI BIALSKY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  Terri
  Bialsky

  	
   

  

 

35

 

	
   

  	
  FRANCES ERRICO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ 
  Frances Errico

  	
   

  

 

36

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Paul Boardman

  
	
   

  	
  Paul Boardman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Catherine Cassidy

  
	
   

  	
  Catherine Cassidy

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Matthew Colello

  
	
   

  	
  Matthew Colello

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Robert Condon

  
	
   

  	
  Robert Condon

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Rocco Greco

  
	
   

  	
  Rocco Greco

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Ken Fleischer

  
	
   

  	
  Ken Fleischer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Judy Taylor

  
	
   

  	
  Judy Taylor

  

 

 

 

37Exhibit 10.4

 

CONSULTING AGREEMENT

 

This CONSULTING AGREEMENT, dated as of December 15, 2000 (the “Agreement”),
by and between Equinox Holdings, Inc., a Delaware corporation (the “Company”),
North Castle Partners, L.L.C., a Delaware limited liability company (“North
Castle”), and J.W. Childs Associates, L.P., a Delaware limited partnership
(“JWC Associates”) and J.W. Childs Advisors II, L.P., a Delaware limited
partnership (“JWC Advisors” and, together with JWC Associates, “Childs”).

 

W I T N E S S E T H:

 

WHEREAS, the Company, NCP-EH, L.P., a Delaware limited partnership, (“NCP-EH”)
and NCP-EH Recapitalization Corp., a Delaware corporation (the “MergerCo”),
have entered into an Amended and Restated Stock Purchase Agreement and Plan of
Merger, dated as of October 16, 2000 and amended as of December 14, 2000 (the “Recapitalization
Agreement”), pursuant to which (i) NCP-EH will purchase (the “Stock
Purchase”) up to 7,043,213 shares of common stock, par value $.01 per
share, of the Company (the “Common Stock”) and (ii) MergerCo
shall merge with and into the Company (the “Merger” and, collectively
with the Stock Purchase, the “Transactions”), and

 

WHEREAS, immediately following the Transactions, NCP-EH will be the
largest stockholder of the Company and NCP Co-Investment Fund, L.P. (the “Co-Investment
Fund”) will be a stockholder of the Company;

 

WHEREAS, one of the two general partners of NCP-EH is NCP-EH GP, L.L.C.
(“NCP-EH GP”), the sole member of NCP-EH GP is North Castle Partners II,
L.P. (the “North Castle Fund”), the North Castle Fund is managed by
North Castle, the general partner of the North Castle Fund is NCP-GP II, L.P.
(“NCP-GP II”), the general partner of NCP-GP II is North Castle GP II,
L.L.C. (“NCP-GP LLC”) and the general partner of the Co-Investment Fund
is NCP Co-Investment GP, LLC (“Co-Investment GP”);

 

WHEREAS, one of the two general partners of NCP-EH is JWC-EH, LLC (“JWC
GP”), the sole member of JWC GP is J.W. Childs Equity Partners II, L.P.
(the “JWC Fund”), the general partner of the JWC Fund is JWC Advisors
and the JWC Fund is managed by JWC Associates;

 

WHEREAS, in order to finance the Transactions, the Company has entered
into (i) the Credit Agreement, dated as of December 15, 2000, among
Company, the various lenders from time to time party thereto and Bankers Trust
Company, as Administrative Agent, and (ii) the Senior Subordinated Note
and Warrant Purchase Agreement, dated as of December 15, 2000, among the
Company, various purchasers named therein, Albion Alliance Mezzanine Fund LP,
Albion Alliance Mezzanine Fund II LP, Deutsche Bank 

 

 

Securities Inc., Exeter Capital Partners IV, L.P., Exeter Equity
Partners, L.P., Bill and Melinda Gates Foundation and Arrow Investment Partners
(each as amended from time to time, collectively, the “Financing”);

 

WHEREAS, North Castle and Childs have performed financial, management
advisory and other services (the “Transaction Services”) for the Company
and MergerCo in connection with the Transactions, including but not limited to
services in connection with (i) the preparation, negotiation, execution
and delivery of the Recapitalization Agreement and the other agreements,
instruments and documents contemplated by the Recapitalization Agreement, (ii)
the retention of various financial and other advisors and consultants in
connection with the Merger and the Stock Purchase, (iii) the
preparation, negotiation, execution and delivery of the commitment, fee and
engagement letters, and credit agreements, guarantees, mortgages, pledge
agreements and other security agreements, and other agreements, instruments and
documents, relating to the Financing, (iv) the preparation and
circulation of materials in connection with the Financing and (v) the
structuring, implementation and consummation of the foregoing Transactions;

 

WHEREAS, the Company and its affiliates from time to time in the future
(a)  may offer and sell or cause
to be offered and sold equity or debt securities (such offerings, collectively,
the “Subsequent Offerings”), including without limitation (i)
offerings of shares of common stock and/or options to purchase such shares to
employees, directors, managers and consultants of and to the Company (“Management
Offerings”), and (ii) offerings of debt securities to refinance any
indebtedness of the Company and its affiliates or for other corporate purposes,
and (b) may repurchase, redeem or otherwise acquire securities of the
Company and its affiliates (any such repurchase or redemption being referred to
herein as a “Redemption”);

 

WHEREAS, the Company desires to receive financial and managerial
advisory services from North Castle and Childs, and North Castle and Childs
desire to provide such services to the Company;

 

WHEREAS, the parties hereto recognize that claims might be made against
and liabilities incurred by North Castle, NCP-EH, NCP-EH GP, the North Castle
Fund, the Co-Investment Fund, NCP-GP II, NCP-GP LLC, Co-Investment GP, JWC
Advisors, JWC Associates, JWC Fund and JWC GP or related persons or affiliates,
under applicable securities laws or otherwise, in connection with the
Transactions, the Financing or any Securities Offerings, or relating to other
actions or omissions of or by the Company, or relating to the provision by
North Castle of services to the Company and its affiliates, and the parties hereto
accordingly wish to provide for North Castle, NCP-EH, NCP-EH GP, the North
Castle Fund, the Co-Investment Fund, NCP-GP II, NCP-GP LLC, Co-Investment GP,
JWC Advisors, JWC Associates, JWC Fund and JWC GP and related persons and
affiliates to be indemnified in respect of any such claims and liabilities;

 

2

 

WHEREAS, the parties hereto recognize that claims might be made against
and liabilities incurred by directors and officers of the Company and its subsidiaries
in connection with their acting in such capacity, and accordingly wish to
provide for such directors and officers to be indemnified to the fullest extent
permitted by law in respect of such claims and liabilities; and

 

NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth and the mutual benefits to be derived
herefrom, the parties hereto hereby agree as follows:

 

1.                                       Definitions.

 

“Agreement” shall have the meaning as set forth in the preamble.

 

“Recapitalization Agreement” shall have the meaning as set forth
in the recitals.

 

“Childs” shall have the meaning as set forth in the preamble.

 

“Claim” means, with respect to any Indemnitee, any claim against
such Indemnitee involving any Obligation with respect to which such Indemnitee
may be entitled to be defended and indemnified by the Company under this
Agreement.

 

“Company” shall have the meaning as set forth in the preamble.

 

“Indemnitee” means each of North Castle, NCP-EH, NCP-EH GP, the
North Castle Fund, the Co-Investment Fund, NCP-GP II, NCP-GP LLC, Co-Investment
GP, JWC Associates, JWC Advisors, JWC GP and JWC Fund, their respective
successors and assigns, and each of their respective directors, officers,
partners, members, managers, employees, agents, advisors, representatives and
controlling persons (within the meaning of the Securities Act of 1933, as
amended (the “Securities Act”)).

 

“Financing” shall have the meaning as set forth in the recitals.

 

“Management Offerings” shall have the meaning as set forth in
the recitals.

 

“Merger” shall have the meaning as set forth in the recitals.

 

“NCP-EH” shall have the meaning as set forth in the recitals.

 

“NCP-EH GP” shall have the meaning as set forth in the recitals.

 

“NCP-GP II” shall have the meaning as set forth in the recitals.

 

“NCP-GP LLC” shall have the meaning as set forth in the
recitals.

 

3

 

“North Castle” shall have the meaning as set forth in the
preamble.

 

“North Castle Fund” shall have the meaning as set forth in the
recitals.

 

“Obligations” means, collectively, any and all claims,
obligations, liabilities, causes of actions, actions, suits, proceedings,
investigations, judgments, decrees, losses, damages, fees, costs and expenses
(including without limitation interest, penalties and reasonable fees and
disbursements of attorneys, accountants, investment bankers and other
professional advisors), in each case whether incurred, arising or existing with
respect to third parties or otherwise at any time or from time to time.

 

“Person” means any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization or
other entity.

 

“Related Document” means any agreement, certificate, instrument
or other document to which the Company or any subsidiary thereof may be a party
or by which it or any of its properties or assets may be bound or affected from
time to time relating in any way to the Transactions, the Financing, any
Securities Offering or any of the transactions contemplated thereby.

 

“Redemption” shall have the meaning as set forth in the
recitals.

 

“Securities Offerings” means any Redemption, any Management
Offering and any other Subsequent Offering, in each case as approved by the
Board of Directors of the Company.

 

“Subsequent Offerings” shall have the meaning as set forth in
the recitals.

 

“Subsidiary or Subsidiaries” 
means each corporation or other Person in which a Person owns or
controls, directly or indirectly, capital stock or other equity interests
representing more than 50% of the outstanding voting stock or other equity
interests.

 

“Stock Purchase” shall have the meaning as set forth in the
recitals.

 

“Transactions” shall have the meaning as set forth in the
recitals.

 

“Transaction Services” shall have the meaning as set forth in
the recitals.

 

2.                                       Engagement.  The Company hereby engages North Castle and
Childs as consultants, and North Castle and Childs hereby agree to provide
financial and managerial advisory services to the Company, all on the terms and
subject to the conditions set forth below.

 

4

 

3.                                       Services,
etc.

 

(a)                                  North
Castle and Childs hereby agree during the term of this Agreement to assist,
advise and consult with the Board of Directors and management of the Company in
such manner and on such business, management and financial matters, and provide
such other financial and other advisory services (collectively, the “Continuing
Services”), as may be reasonably requested from time to time by the Board
of Directors of the Company, including but not limited to assistance, advice or
consultation in:

 

(i)                  establishing and maintaining banking,
legal and other business relationships for the Company;

 

(ii)               developing and implementing corporate and
business strategy and planning for the Company, including plans and programs
for improving operating, marketing and financial performance, budgeting of
future corporate investments, acquisition and divestiture strategies, and
reorganizational programs;

 

(iii)            arranging future debt and equity financings
and refinancings; and

 

(iv)           providing professional employees to serve as
directors or officers of the Company.

 

(b)                                 The
Company will furnish North Castle and Childs with such information as North
Castle and Childs reasonably believe appropriate to their engagement hereunder
(all such information so furnished being referred to herein as the “Information”).  The Company recognizes and confirms that (i)
North Castle and Childs will use and rely primarily on the Information and on
information available from generally recognized public sources in performing
the services to be performed hereunder and (ii) North Castle and Childs
do not assume responsibility for the accuracy or completeness of the
Information and such other information.

 

4.                                       Compensation;
Expenses.

 

(a)                                  The
Company agrees to pay to North Castle and Childs (i) concurrent with the
execution of this Agreement, as compensation for the Transaction Services, a
fee of $2,700,000 in the aggregate, two-thirds of which shall be delivered to
North Castle and the balance to Childs and (ii) upon the closing date of
each acquisition (by merger, asset acquisition or otherwise) by the Company or
any of its Subsidiaries subsequent to the Transactions (a “Subsequent Acquisition”),
for services in connection with any such Subsequent Acquisition, a fee of 1% of
the aggregate Transaction Value (as defined below) of each such Subsequent
Acquisition.

 

5

 

(b)                                 The
Company agrees to pay North Castle and Childs a fee of $200,000 in the
aggregate, one-half of which shall be delivered to North Castle and the balance
to Childs (50% of such balance to be paid to JWC Advisors and 50% of such
balance to be paid to JWC Associates) in the event that any Escrowed Shares (as
defined in the Recapitalization Agreement) are distributed in accordance with
Section 2.11(i) of the Recapitalization Agreement.

 

(c)                                  The
Company agrees to pay to North Castle and Childs, as compensation for the
Continuing Services rendered and to be rendered by North Castle and Childs
Associates hereunder, an annual fee (the “Continuing Services Fee”),
equal to $800,000 in the aggregate payable semi-annually in advance (not to
exceed $400,000 for each semi-annual period) on the date hereof and on each
January 31 and July 31 thereafter during the term of this Agreement, commencing
on July 31, 2001, provided that the amount payable on the date hereof
shall be pro rated through July 31, 2001 and shall be $500,000.  Such Continuing Service Fee shall be
delivered to North Castle and Childs on a pro rata basis in accordance with the
Percentage Interests of the Investor associated with North Castle or Childs (as
defined in the Amended and Restated Limited Partnership Agreement of NCP-EH,
L.P. dated as of December 15, 2000) (with respect to Childs’ portion of the
Continuing Services Fee, the first $240,000 ($120,000 on a semi-annual basis)
of such portion shall be paid to JWC Associates and the remaining amount (on a
semi-annual basis) shall be paid to JWC Advisors).  Such Continuing Services Fee may be increased but may not be
decreased without the prior written consent of North Castle and Childs.  If any employee of North Castle or Childs
shall be elected to serve on the Board of Directors or as an officer of the
Company (a “Designated Director”), in consideration of the Continuing
Services Fee being paid to North Castle or Childs, North Castle and Childs
shall cause such Designated Director to waive any and all fees and other compensation
(including stock options) to which such director or officer would otherwise be
entitled as a director or officer for any period for which the Continuing
Services Fee or any installment thereof is paid and for which such Designated
Director continues to be employed by North Castle or Childs.

 

(d)                                 The
Company agrees to reimburse North Castle and Childs for such travel and other
reasonable out-of-pocket expenses (“Expenses”) incurred by North Castle
and Childs and their respective employees, agents and advisors in the course or
on account of the rendering of Continuing Services, including but not limited
to any reasonable fees and expenses of legal, accounting, consulting or other
professional advisors to North Castle and Childs engaged in connection with the
Continuing Services and any reasonable expenses incurred by any Designated
Director in connection with the performance of his duties as a director or
officer of the Company or any Subsidiary thereof.  North Castle and Childs may submit monthly expense statements,
which shall be payable within thirty days from the date of such submission.

 

6

 

(e)                                  “Transaction
Value” means the total consideration paid in any Subsequent Acquisition
(and not subsequently returned) in any combination of (without duplication)
cash, notes, stock or other property, including deferred payments, and the face
value of any indebtedness (including any deferred purchase price or capital
lease obligation) assumed, issued or exchanged in connection therewith.

 

5.                                       Term,
etc.

 

(a)                                  This
Agreement shall be in effect until, and shall terminate upon, the earlier of
(i) the tenth anniversary of the date hereof and (ii) an authorization by the
board of directors of the Company to terminate this Agreement.  The provisions of this Agreement shall
survive any termination of this Agreement, except for the provisions of
Sections 2, 3 and 4.

 

(b)                                 Upon
any consolidation, reorganization, merger, recapitalization of the Company or
any conveyance, transfer or lease of all or substantially all of the assets of
the Company, the successor corporation formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall, if NCP-EH or its designee shall own at least one-third of the
outstanding voting capital stock of such successor entity, succeed to, and be
substituted for, the Company under this Agreement with the same effect as if
such successor entity had been a party hereto. 
Any other consolidation, merger or conveyance, transfer or lease or all
or substantially all of the assets of the Company shall have the effect of
terminating this Agreement to the same effect as set forth in the second
sentence of Section 5(a).

 

6.                                       Independent
Contractor Status.  The parties
agree that North Castle and Childs shall perform services hereunder as an
independent contractor, retaining control over and responsibility for its own
operations and personnel.  Neither North
Castle nor Childs nor any of their respective employees or agents shall, solely
by virtue of this Agreement or the arrangements hereunder, be considered
employees or agents of the Company nor shall any of them have authority to
contract in the name of or bind the Company, except (a) to the extent that any
professional employee of North Castle or Childs may be serving as a director or
officer of the Company pursuant to Section 3(a)(iv) hereof or (b) as expressly
agreed to in writing by the Company.

 

7.                                       Indemnification.  The Company agrees to indemnify, defend and
hold harmless each Indemnitee:

 

(a)                                  from
and against any and all Obligations, whether incurred with respect to third
parties or otherwise, in any way resulting from, arising out of or in
connection with, based upon or relating to (i) the Securities Act, the
Securities Exchange Act of 1934, as amended, or any other applicable securities
or other laws, in connection with any Securities Offering, any Related Document
or any of the transactions contemplated

 

7

 

thereby, (ii)
any other action or failure to act of the Company and its subsidiaries or any
of its predecessors, whether such action or failure has occurred or is yet to
occur or (iii) except to the extent that any such Obligation is found in
a final judgment by a court of competent jurisdiction to have resulted from the
gross negligence or intentional misconduct of North Castle and Childs, the
performance by North Castle and Childs of management consulting, monitoring,
financial advisory or other services for the Company (whether performed prior
to the date hereof, hereafter, pursuant hereto or otherwise); and

 

(b)                                 to
the fullest extent permitted by applicable law, from and against any and all
Obligations in any way resulting from, arising out of or in connection with,
based upon or relating to (i) the fact that such Indemnitee is or was a
shareholder, director or officer of the Company or is or was serving at the
request of the Company as a director, officer, employee or agent of or advisor
or consultant to another corporation, partnership, joint venture, trust or
other enterprise, or (ii) any breach or alleged breach by such
Indemnitee of his or her fiduciary duty as a shareholder, director or officer
of the Company;

 

in each case including but not limited to any and all fees, costs and
expenses (including without limitation reasonable fees and disbursements of
attorneys) incurred by or on behalf of any Indemnitee in asserting, exercising
or enforcing any of its rights, powers, privileges or remedies in respect of
this Agreement.

 

8.                                       Contribution.

 

(a)                                  If
for any reason the indemnity provided for in Section 7 is unavailable or is
insufficient to hold harmless any Indemnitee from any of the Obligations
covered by such indemnity, then the Company shall contribute to the amount paid
or payable by such Indemnitee as a result of such Obligation in such proportion
as is appropriate to reflect (i) the relative fault of the Company, on
the one hand, and such Indemnitee, on the other, in connection with the state
of facts giving rise to such Obligation, (ii) if such Obligation results
from, arises out of, is based upon or relates to the Transactions, the
Financing or any Securities Offering, the relative benefits received by the
Company, on the one hand, and such Indemnitee, on the other, from the
Transactions, the Financing or Securities Offering, and (iii) if
required by applicable law, any other relevant equitable considerations.

 

(b)                                 For
purposes of Section 8(a), the relative fault of the Company, on the one hand,
and of the Indemnitee, on the other, shall be determined by reference to, among
other things, their respective relative intent, knowledge, access to
information and opportunity to correct the state of facts giving rise to such
Obligation.  For purposes of Section
8(a), the relative benefits received by the Company, on the one hand, and the
Indemnitee, on the other, shall be determined by weighing the direct monetary
proceeds

 

8

 

to the
Company, on the one hand, and such Indemnitee, on the other, from the
Transactions, the Financing or Securities Offering.

 

(c)                                  The
parties hereto acknowledge and agree that it would not be just and equitable if
contributions pursuant to Section 8(a) were determined by pro rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in such Section.  The Company shall not be liable under Section 8(a) for
contribution to the amount paid or payable by any Indemnitee except to the
extent and under such circumstances that the Company would have been liable to
indemnify, defend and hold harmless such Indemnitee under Section 7, if such
indemnity were enforceable under applicable law.  No Indemnitee shall be entitled to contribution from the Company
with respect to any Obligation in the event that such Indemnitee is finally
determined to be guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) in connection with such Obligation and the
Company is not guilty of such fraudulent misrepresentation.

 

9.                                       Indemnification
Procedures.

 

(a)                                  Whenever
any Indemnitee shall have actual knowledge of the reasonable likelihood of the
assertion of a Claim, North Castle and Childs (acting on their own behalf or,
if requested in writing by any such Indemnitee other than itself, on behalf of
such Indemnitee) or such Indemnitee shall notify the Company in writing of the
Claim (the “Notice of Claim”) with reasonable promptness after such
Indemnitee has such knowledge relating to such Claim and has notified North
Castle and Childs thereof.  The Notice
of Claim shall specify all material facts known to North Castle and Childs (or
if given by such Indemnitee, such Indemnitee) that may give rise to such Claim
and the monetary amount or an estimate of the monetary amount of the Obligation
involved if North Castle and Childs (or if given by such Indemnitee, such
Indemnitee) has knowledge of such amount or a reasonable basis for making such
an estimate.  The failure of North
Castle and Childs or such Indemnitee to give such Notice of Claim shall not
relieve the Company of its indemnification obligations under this Agreement
unless such omission results in a failure of actual notice to the Company and
then only to the extent that the Company is prejudiced as a result of the
failure to give such Notice of Claim. 
The Company shall, at its expense, undertake the defense of such Claim
with attorneys of its own choosing reasonably satisfactory both to North Castle
and Childs and to any Indemnitee that, in the exercise of such Indemnitee’s
good faith judgment, reasonably determines that the Claim presents no actual or
potential conflict of interest with North Castle and Childs.  North Castle and Childs may participate in
such defense with counsel of North Castle’s and Childs’ choosing at the expense
of the Company.  If in the exercise of
their good faith judgment any one or more other Indemnitee reasonably
determines that the Claim presents no actual or potential conflict of interest
with North Castle and Childs, such Indemnitee or Indemnitees may participate in
the defense of the Claim with one counsel for all such Indemnitees, at the
choosing of such Indemnitees and

 

9

 

at the expense of the Company.  In the event that the Company does not
undertake the defense of the Claim within a reasonable time after North Castle
and Childs have given the Notice of Claim, or in the event that North Castle
and Childs shall in good faith determine that the defense of any claim by the
Company is inadequate or may conflict with the interests of any Indemnitee,
North Castle and Childs may, at the expense of the Company and after giving
notice to the Company of such action, undertake the defense of the Claim and
compromise or settle the Claim, all for the account of and at the risk of the
Company.  In the defense of any Claim,
the Company shall not, except with the consent of North Castle and Childs (or,
in the case of any entry of any judgment or settlement that is binding on any
other Indemnitee, such other Indemnitee), consent to entry of any judgment or
enter into any settlement that includes any injunctive or other non-monetary
relief, or that does not include as an unconditional term thereof the giving by
the person or persons asserting such Claim to such Indemnitee of a release from
all liability with respect to such Claim. 
In each case, North Castle and Childs and each other Indemnitee seeking indemnification
hereunder will cooperate with the Company, so long as the Company is conducting
the defense of the Claim, in the preparation for and the prosecution of the
defense of such Claim, including making available evidence within the control
of North Castle and Childs or such Indemnitee, as the case may be, and persons
needed as witnesses who are employed by North Castle and Childs or such
Indemnitee, as the case may be, in each case as reasonably needed for such
defense and at cost, which cost, to the extent reasonably incurred, shall be paid
by the Company.

 

(b)                                 The
Company hereby agrees to advance costs and expenses, including reasonable
attorney’s fees, incurred by North Castle and Childs (acting on their own
behalf or, if requested by any such Indemnitee other than themselves, on behalf
of such Indemnitee) or any Indemnitee in defending any Claim in advance of the
final disposition of such Claim upon receipt of an undertaking by or on behalf
of North Castle and Childs or such Indemnitee to repay amounts so advanced if
it shall ultimately be determined that North Castle and Childs or such
Indemnitee is not entitled to be indemnified by the Company as authorized by
this Agreement.

 

(c)                                  Each
Indemnitee shall notify the Company in writing of the amount of any Claim
actually paid by such Indemnitee (the “Notice of Payment”).  The amount of any Claim actually paid by an
Indemnitee shall bear simple interest at the rate equal to the Banker’s Trust
prime rate as of the date of such payment plus 2% per annum, from the date the
Company receives the Notice of Payment to the date on which the Company shall
repay the amount of such Claim plus interest thereon to such Indemnitee.

 

10.                                 Certain
Covenants.  The Company agrees to
perform its obligations under this Agreement. 
The rights of each Indemnitee to be indemnified under any other
agreement, document, certificate or instrument or applicable law are
independent of and in addition to any rights of such Indemnitee to be
indemnified under this Agreement.  The
rights of each Indemnitee and the obligations of the Company hereunder shall
remain in

 

10

 

full force and
effect regardless of any investigation made by or on behalf of such
Indemnitee.  The Company shall implement
and maintain in full force and effect any and all corporate articles or charter
and by-law provisions that may be necessary or appropriate to enable it to
carry out its obligations hereunder to the fullest extent permitted by
applicable law, including without limitation a provision of its articles or
certificate of incorporation eliminating liability of a director for breach of
fiduciary duty to the fullest extent permitted by applicable law, as it may be
amended from time to time.

 

11.                                 Third-Party
Beneficiaries.  All Indemnitees not
signatories to this Agreement are intended third-party beneficiaries of this
Agreement.

 

12.                                 Severability.  If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby.

 

13.                                 Notices.
All notices, requests, demands, waivers and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if (a) delivered personally, (b)
mailed, certified or registered mail with postage prepaid, (c) sent by
next-day or overnight mail or delivery or (d) sent by fax, with a copy
sent by (a), (b), or (c) above, or telegram, as follows:

 

	
  If to the Company, to:

  
	
   

  
	
  Equinox Holdings, Inc.

  	
   

  
	
  895 Broadway

  	
   

  
	
  New York, NY 10003

  	
   

  
	
  Telephone: (212) 677-0180

  	
   

  
	
  Fax:

  	
  (212) 777-9510

  	
   

  
	
  Attention:
  President

  	
   

  
	
   

  	
   

  
	
  If to North Castle or any other Indemnitee that is an affiliate of
  North Castle, to:

  
	
   

  
	
  North Castle Partners, L.L.C.

  	
   

  
	
  60 Arch Street

  	
   

  
	
  Greenwich, CT  06830

  	
   

  
	
  Telephone: (203) 862-3200

  	
   

  
	
  Fax:

  	
  (203) 618-1860

  	
   

  
	
  Attention:  Peter J. Shabecoff

  	
   

  
	
   

  
	
  with a copy to:

  
	
   

  	
   

  
	
  Debevoise & Plimpton

  	
   

  
	
  875 Third Avenue

  	
   

  

 

11

 

	
  New York, New York  10022

  	
   

  
	
  Telephone: (212) 909-6000

  	
   

  
	
  Facsimile:  (212) 909-6836

  	
   

  
	
  Attention:  Franci J. Blassberg, Esq.

  	
   

  
	
   

  	
   

  
	
  If to Childs or any Indemnitee that is an affiliate of Childs, to:

  	
   

  
	
   

  	
   

  
	
  J.W. Childs Associates, L.P.

  	
   

  
	
  One Federal Street

  	
   

  
	
  Boston, MA 02110

  	
   

  
	
  Telephone: (617) 753-1100

  	
   

  
	
  Facsimile:  (617) 753-1101

  	
   

  
	
  Attention:  Glenn A. Hopkins

  	
   

  
	
   

  	
   

  
	
  with a copy to:

  	
   

  
	
   

  	
   

  
	
  Kaye, Scholer, Fierman, Hays & Handler, LLP

  	
   

  
	
  425 Park Avenue

  	
   

  
	
  New York, New York 10022

  	
   

  
	
  Telephone: (212) 836-8000

  	
   

  
	
  Facsimile:  (212) 836-8689

  	
   

  
	
  Attention:  Stephen C. Koval, Esq.

  	
   

  

 

or, in each case, at such other address as may be specified in writing
to the other parties hereto.

 

All such notices, requests, demands, waivers and other communications
shall be deemed to have been received (w) if by personal delivery on the
day after such delivery, (x) if by certified or registered mail, on the
seventh business day after the mailing thereof, (y) if by next-day or
overnight mail or delivery, on the day delivered, (z) if by telecopy, on
the next day following the day on which such telecopy was sent, provided that a
copy is also sent by certified or registered mail.

 

14.                                 Entire
Agreement.  This Agreement (a)
contains the complete and entire understanding and agreement of North Castle,
Childs and the Company with respect to the subject matter hereof and (b)
supersedes all prior and contemporaneous understandings, conditions and
agreements, oral or written, express or implied, in respect of the subject
matter hereof, including but not limited to in respect of the engagement of
North Castle and Childs in connection with the subject matter hereof.  There are no representations or warranties
of North Castle and Childs in connection with this Agreement or the services to
be provided hereunder, except as expressly made and contained in this
Agreement.

 

12

 

15.                                 Headings.  The headings contained in this Agreement are
for purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.

 

16.                                 Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.

 

17.                                 Binding
Effect; Assignment.  This Agreement
shall be binding upon and inure to the benefit of the parties to this Agreement
and their respective successors and permitted assigns and to each Indemnitee
and their respective successors, heirs and permitted assigns, provided that,
neither North Castle, nor Childs nor the Company may assign any of its rights
or obligations under this Agreement without the express written consent of the
other parties hereto.  Subject to
Sections 11 and 21, this Agreement is not intended to confer any right or remedy
upon any person other than the parties to this Agreement, each Indemnitee and
their respective successors and permitted assigns.

 

18.                                 Governing
Law.  This Agreement shall be
governed in all respects including as to validity, interpretations and effects
by the laws of the State of New York, without giving effect to its principles
or rules of conflict of laws to the extent such principles or rules would
require or permit the application of the laws of another jurisdiction.  Each of the Company, Childs and North Castle
hereby irrevocably submit to the jurisdiction of the courts of the State of New
York and the Federal courts of the United States of America, in each case
located in the State, City and County of New York, solely in respect of the
interpretation and enforcement of the provisions of this Agreement, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in such courts or that the venue thereof may not be appropriate or that this
Agreement may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a New York State or Federal court.  The Company, Childs and North Castle hereby
consent to and grant any such court jurisdiction over the person of such parties
and over the subject matter of any such dispute and agree that mailing of
process or other papers in connection with any such action or proceeding in the
manner provided in Section 13, or in such other manner as may be permitted by
law, shall be valid and sufficient service thereof.

 

19.                                 Waiver
of Jury Trial.  EACH PARTY HERETO
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT, OR THE BREACH,

 

13

 

TERMINATION OR
VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.  EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) IT MAKES
THIS WAIVER VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
CONTAINED IN THIS SECTION 19.

 

20.                                 Amendment;
Waivers.  No amendment,
modification, supplement or discharge of this Agreement, and no waiver
hereunder, shall be valid or binding unless set forth in writing and duly
executed by the party against whom enforcement of the amendment, modification,
supplement, discharge or waiver is sought (and in the case of the Company,
approved by resolution of the Board of Directors of the Company).  Any such waiver shall constitute a waiver
only with respect to the specific matter described in such writing and shall in
no way impair the rights of the party or Indemnitee granting such waiver in any
other respect or at any other time. 
Neither the waiver by any of the parties hereto or any Indemnitee of a
breach of or a default under any of the provisions of this Agreement, nor the
failure by any party hereto or any Indemnitee on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right,
powers or privilege hereunder, shall be construed as a waiver of any other
breach or default of a similar nature, or as a waiver of any of such
provisions, rights, power or privileges hereunder.  The rights and remedies herein provided are cumulative and are
not exclusive of any rights or remedies that any party or Indemnitee may
otherwise have at law or in equity or otherwise.

 

21.                                 Subordination
to Financings.  Each of North Castle
and Childs hereby covenants and agrees, for itself and its successors and
assigns, (i) that all obligations and liabilities of the Company under this
Agreement (the “Junior Obligations”) shall be subordinated and junior in right
of payment to the prior payment in full in cash of all obligations,
indebtedness and liabilities of the Company in respect of the Financing
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the respective documentation with
respect to the Financing, whether or not such interest is an allowed claim
under applicable law) (all such obligations, indebtedness and liabilities,
including all such post-petition interest, shall be referred to as the “Senior
Obligations”), and (ii) that this subordination is for the benefit of, and
shall be enforceable directly by, the holders of the Senior Obligations and
that each such holder shall be deemed to have acquired such Senior Obligations
in reliance upon the covenants and provisions contained in this Section.  Upon any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any total or partial liquidation, dissolution,
winding-up, reorganization,

 

14

 

assignment for
the benefit of creditors or marshaling of assets of the Company or in any bankruptcy,
reorganization, insolvency, receivership or other similar proceeding relating
to the Company or its property, whether voluntary or involuntary, all Senior
Obligations shall first be paid in full in cash before any payment or
distribution of any kind or character is made on account of any Junior
Obligations.  In addition, to the extent
that any payment by the Company under this Agreement is prohibited at such time
pursuant to the terms of any Financing, the Company shall not be required to
make such payment (and may defer same) until such time as such payment is
permitted to be made pursuant to the terms of the Financing.  In the event that, notwithstanding the
foregoing, any payment shall be received by North Castle, Childs at a time when
such payment is prohibited by this Section, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of the
Senior Obligations (pro rata to such holders on the basis of the respective
amount of Senior Obligations held by such holders), as their respective
interests my appear (taking into account any intercreditor or subordination
arrangements with respect thereto).  The
provisions of this Section may not be amended, modified or waived in any
respect without the consent of the holders of the Senior Obligations.

 

15

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.

 

	
   

  	
  EQUINOX HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Adam Saltzman

  	
   

  
	
   

  	
   

  	
  Name:  Adam Saltzman

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  NORTH CASTLE PARTNERS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Benjamin James

  	
   

  
	
   

  	
   

  	
  Name:  Benjamin James

  
	
   

  	
   

  	
  Title:  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  J.W. CHILDS ADVISORS II, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Glenn Hopkins

  	
   

  
	
   

  	
   

  	
  Name:  Glenn Hopkins

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  J.W. CHILDS ASSOCIATES, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Glenn Hopkins

  	
   

  
	
   

  	
   

  	
  Name:  Glenn Hopkins

  
	
   

  	
   

  	
  Title:

  

 

16

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