Document:

EXHIBIT 10.18

 

INDEMNITY AGREEMENT

 

This INDEMNITY AGREEMENT (this “Agreement”)
is effective as of July 31, 2002, and is by and among WH HOLDINGS (CAYMAN
ISLANDS) LTD. (the “Company”) and WH ACQUISITION CORP. (“WH Acquisition”, and,
together with the Company, the “Indemnifying Parties”), and WHITNEY & CO.,
LLC, WHITNEY V, L.P., WHITNEY STRATEGIC PARTNERS V, L.P., GGC ADMINISTRATION,
L.L.C., GOLDEN GATE PRIVATE EQUITY, INC., CCG INVESTMENTS (BVI), L.P., CCG
ASSOCIATES-AI, LLC, CCG INVESTMENT FUND-AI, LP, CCG AV, LLC-SERIES C, CCG AV,
LLC-SERIES E, CCG ASSOCIATES-QP, LLC and WH INVESTMENTS LTD. (collectively, the
“Indemnified Parties”).

 

WHEREAS, certain of the Indemnified Parties
have entered into a Share Purchase Agreement with the Company dated as of the
date hereof (the “Purchase Agreement”), pursuant to which such Indemnified
Parties will purchase equity securities from the Company;

 

WHEREAS, the proceeds from the sale of such
securities will be used by the Company in connection with the merger (the
“Merger”) of WH Acquisition with and into Herbalife International, Inc.
(“Herbalife”);

 

WHEREAS, it is a condition to the
obligation of such Indemnified Parties to purchase such equity securities that
the Company enter into this Agreement for the benefit of the Indemnified
Parties;

 

NOW, THEREFORE, in consideration of the
investment in the Company by the Indemnified Parties who are acquiring equity
securities of the Company, and for other good and valuable consideration, the
parties agree as follows:

 

1.                                       Indemnification.
Each Indemnifying Parties agrees, jointly and severally, to indemnify and hold
harmless each of the Indemnified Parties and each of their respective officers,
directors, agents, employees, subsidiaries, partners, members, and controlling
persons to the fullest extent permitted by law from and against any and all
losses, claims, damages, expenses (including, without limitation, reasonable
fees, disbursements and other charges of counsel and costs of investigation
incurred by an Indemnified Party in connection therewith) (collectively,
“Liabilities”) resulting from, arising out of, or in any way related to the
Merger or any other transaction or proposed transaction involving the sale or
other disposition or acquisition of Herbalife and/or the business and assets of
Herbalife, regardless of when or where such action is brought (including,
without limitation, the action pending in Superior Court of the State of
California in the County of San Francisco brought by Rosemont Associates Inc.
and Joseph P. Urso against Whitney & Co., LLC, and filed as Case No.
CGC-02-409712). If and to the extent that the foregoing indemnification is
unenforceable for any reason, Indemnifying Parties shall make the maximum
contribution to the payment and satisfaction of such Liabilities that shall be
permissible under applicable law. In connection with the obligation of
Indemnifying Parties to indemnify for expenses as set forth above, each
Indemnifying Parties further agrees, upon presentation of appropriate invoices
containing reasonable detail, to reimburse, without duplication, each
Indemnified Party for all such expenses (including, without limitation,
reasonable fees, disbursements and other charges of counsel and costs of
investigation) incurred by such Indemnified Party as they are incurred by such
Indemnified Party.

 

2.                                       Procedure.
Each Indemnified Party will, promptly after the receipt of notice of the
commencement of any action, investigation, claim or other proceeding against
such Indemnified Party in respect of which indemnity may be sought from the
Indemnifying Parties, notify the Indemnifying Parties in writing of the
commencement thereof. The omission of any Indemnified Party so to notify the
Indemnifying Parties of any such action shall not relieve the Indemnifying
Parties from any liability which it may have to such Indemnified Party unless,
and only to the extent that, such omission results in the Indemnifying Parties’
forfeiture of substantive rights or defenses. In case any such action, claim or
other proceeding shall be brought against any Indemnified Party and it shall

 

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notify the Indemnifying
Parties of the commencement thereof, the Indemnifying Parties shall, without
any reservations of rights, be entitled to assume the defense thereof at their
own expense, with counsel satisfactory to such Indemnified Party in its
reasonable judgment; provided, however, that any Indemnified Party may, at its
own expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action, claim or proceeding in which the
Indemnifying Party, on the one hand, and an Indemnified Party, on the other
hand, is, or is reasonably likely to become, a party, such Indemnified Party
shall have the right to employ separate counsel at the Indemnifying Party’s
expense and to control its own defense of such action, claim or proceeding if,
in the reasonable opinion of counsel to such Indemnified Party, a conflict or
potential conflict exists between the Indemnifying Party, on the one hand, and
such Indemnified Party, on the other hand, that would make such separate
representation advisable. The Indemnifying Party agrees that it will not,
without the prior written consent of the Indemnified Party, settle, compromise
or consent to the entry of any judgment in any pending or threatened claim,
action or proceeding relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be made
a party thereto) unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Party from all liability arising or
that may arise out of such claim, action or proceeding. The Indemnifying Party
shall not be liable for any settlement of any claim, action or proceeding
effected by an Indemnified Party without its written consent, which consent
shall not be unreasonably withheld. The rights accorded to Indemnified Parties
hereunder shall be in addition to any rights that any Indemnified Party may
have at common law, by separate agreement or otherwise.

 

3.                                       Assignability.
This Agreement may not be assigned by any party without the prior written
consent of the other parties hereto. This Agreement shall be enforceable by,
and shall inure to the benefit of, the parties hereto and their successors and
permitted assigns, and no others.

 

4.                                       Consent to
Jurisdiction and Service. Each of the parties hereby absolutely and irrevocably
consent and submit to the jurisdiction of the courts in the State of New York
and the Federal court located in New York, New York in connection with any
actions or proceedings brought against any of the parties (or each of them)
arising out of or relating to this Agreement. In any such action or proceeding,
the parties each hereby absolutely and irrevocably (i) waives any objection to
jurisdiction or venue, (ii) waives personal service of any summons, complaint,
declaration or other process, and (iii) agree that the service thereof may be
made by certified or registered first-class mail directed to such party.

 

5.                                       Modifications.
This Agreement may not be altered or modified without the express written
consent of the parties hereto. No course of conduct shall constitute a waiver
of any of the terms and conditions of this Agreement, unless

 

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such waiver is specified
in writing, and then only to the extent so specified. A waiver of any of the
terms and conditions of this Agreement on one occasion shall not constitute a
waiver of the other terms of this Agreement, or of such terms and conditions on
any other occasion.

 

6.                                       Binding
Effect. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective permitted successors and assigns.

 

7.                                       Invalid
Provisions. If any provision of this Agreement is held to be illegal, invalid
or unenforceable under present or future laws, such provision shall be fully
severable. This Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by such illegal, invalid or
unenforceable provision or by its severance from this Agreement.

 

8.                                       Effective
Date. This Agreement shall be and become effective and binding pursuant to its
terms after execution as of the date first above written. It is understood and
agreed that said date shall be the effective date even though that date may be
a date other or different than the actual date of execution.

 

9.                                       New York
Law to Govern. This Agreement shall be deemed and construction to be made under
and shall be construed and interpreted in accordance with the laws of the State
of New York. It is agreed that it is both the intent and the desire of the
parties that wherever possible each provision of this Agreement shall be given
a judicial construction and interpretation so as to be effective and valid
under New York law, but if any provision of this Agreement shall be construed
or prohibited by or determined invalid under the laws of the State of New York,
such provision shall be ineffective to the extent of such prohibition or
invalidity only, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

 

10.                                 Counterparts.
This Agreement may be executed simultaneously or otherwise in one or more
identical counterparts, each of which shall be deemed and construed as an
original, and all of which shall be construed together to constitute one and
the same document. Confidentiality. The existence, content and terms of this
Agreement are and shall remain confidential and shall not be disclosed by any
party to any third party without the prior consent of the other parties, except
to the extent required: (i) to enforce its terms in a court of law; or (ii) by
subpoena from any third party, provided, however, that Indemnified Party shall
be afforded notice of any such subpoena and an opportunity to quash it.

 

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IN WITNESS WHEREOF, the parties have
executed this Indemnity Agreement or caused the same to be executed by their
duly authorized representatives, as of the date first hereinabove.

 

	
  WH HOLDINGS (CAYMAN ISLANDS) LTD.

  	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Steven E. Rodgers

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Steven E. Rodgers

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  
	
   

  	
   

  
	
  WH ACQUISITION CORP. 

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Steven E. Rodgers

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Steven E. Rodgers

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WH INVESTMENTS LTD.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Steven E. Rodgers

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Steven E. Rodgers

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WHITNEY & CO., LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Daniel J. O’Brien

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Daniel J. O’Brien

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WHITNEY V. L.P. 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
  WHITNEY EQUITY PARTNERS V, LLC

  	
   

  
	
   

  	
  ITS GENERAL PARTNER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Daniel J. O’Brien

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Daniel J. O’Brien

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing Member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WHITNEY STRATEGIC PARTNERS V, L.P.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BY:

  	
  WHITNEY EQUITY PARTNERS V, LLC 

  	
   

  	
   

  
	
   

  	
  ITS GENERAL PARTNER

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Daniel J. O’Brien

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Daniel J.O’Brien

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Managing Member

  	
   

  	
   

  
												

 

CCG ADMINISTRATION, L.L.C.

CCG INVESTMENTS (BVI), L.P.

CCG ASSOCIATES - QP, LLC

CCG ASSOCIATES - AI, LLC

CCG INVESTMENT FUND - AI, LP

CCG AV, LLC - SERIES C

CCG AV, LLC 
- SERIES E

 

	
  By:

  	
  Golden Gate Capital Management, L.L.C.

  	
   

  
	
  Its:

  	
  Authorized Representative

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jesse Rogers

  	
   

  	
   

  
	
  Name:

  	
  Jesse Rogers

  	
   

  	
   

  
	
  Its:

  	
  Managing Director

  	
   

  	
   

  
					

 

4EXHIBIT 10.19

 

WH HOLDINGS (CAYMAN ISLANDS) LTD.

 

INDEPENDENT DIRECTORS STOCK OPTION PLAN

 

 

1.
Purpose of Plan.

 

The
WH Holdings (Cayman Islands) Ltd. Independent Directors Stock Option Plan (the
“Plan”) is designed:

 

(a)
to promote the long term financial interests and growth of WH Holdings (Cayman
Islands) Ltd. (the “Company”) and its affiliates by attracting and retaining
independent directors with the training, experience and ability to enable them
to make a substantial contribution to the success of the business of the
Company and its affiliates;

 

(b)
to motivate independent directors by means of growth-related incentives to
achieve long range goals; and

 

(c)
to further the alignment of interests of participants with those of the
equityholders of the Company through opportunities for increased ownership in
the Company.

 

2.
Definitions.

 

As
used in the Plan, the following words will have the following meanings:

 

(a)
“Affiliate” means, with respect to the Company, any corporation  directly
or indirectly controlling, controlled by, or under common control with,  the
Company or any other entity designated by the Committee in which the Company  or
an Affiliate has an interest.

 

(b)
“Board” means the Board of Directors of the Company.

 

(c)
“Change of Control” means an Organic Transaction as defined in the  Amended
and Restated Memorandum and Articles of Association of the Company.

 

(d)
“Code” means the Internal Revenue Code of 1986, as amended.

 

(e)
“Committee” means one or more committees each comprised of not less  than
three members of the Board appointed by the Board to administer the Plan or  a
specified portion thereof; provided, however, that if, at any time, there

 

 

 

 

will be
only one director serving on the Board, the Committee may be composed of  the
sole director. Unless otherwise determined by the Board, if the Common  Shares
become registered under Section 12 of the Exchange Act and if the  Committee
is authorized to grant Options subject to Section 16 of the Exchange  Act,
each member of the Committee will be a “non-employee director” within the  meaning
of applicable Rule 16b-3 under the Exchange Act.

 

(f)
“Common Shares” means the common shares, par value $0.001 per share, of  the
Company.

 

(g)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(h)
“Exercise Price” means the price at which a Participant may purchase a  Common
Share, as provided in the Option Agreement.

 

(i)
“Fair Market Value” means the fair market value of a Share as of a  particular
date. If at any such time such Shares are not listed or admitted for  trading
on any national securities exchange or quoted on NASDAQ or a similar  service,
the Fair Market Value for such Shares means the fair market value of  such
Shares at such time as determined in good faith by the Committee. However,  subsequent
to an Initial Public Offering, the Fair Market Value of a Common  Share
will be the average of high bid and low asked prices of Common Shares as  reported
on the exchange on which it is listed as of such date, or if no such  quotation
is made on such date, the immediately preceding day on which there  were
quotations as reported in The Wall Street Journal.

 

(j)
“Grant” means an award made to a Participant pursuant to the Plan and  described
in Paragraph 5.

 

(k)
“Incentive Stock Option” means an Option which satisfies all of the  applicable
requirements of Code Section 422.

 

(l)
“Independent Director” means an individual who neither is: (i) an  employee
of the Company or any of its Affiliates; or (ii) designated as a  Director
by the Affiliates of the Company or its distributors.

 

(m)
“Initial Public Offering” means the underwritten public offering by the  Company
of its Common Shares pursuant to a registration statement (other than a  registration
statement relating solely to an employee benefit plan or  transaction
covered by Rule 145 of the Securities Act) that has been filed under  the
Securities Act and declared effective by the Securities and Exchange

 

 

2

 

 

Commission,
or any other Federal agency at the time administering the Securities Act.

 

(n)
“Non-Statutory Stock Option” means an Option which does not satisfy all  of
the applicable requirements of Code Section 422 or which by its terms is
not  intended to be treated as an Incentive Stock Option.

 

(o)
“Option” means an option to purchase Common Shares.

 

(p)
“Option Agreement” means an agreement between the Company and a  Participant
that sets forth the terms, conditions and limitations applicable to  a
Grant.

 

(q)
“Participant” means an Independent Director of the Company or one of  its
Affiliates, to whom one or more Grants have been made and such Grants have  not
all been forfeited or terminated under the Plan.

 

(r)
“Preferred Shares” means Preferred Shares as defined in the Amended and  Restated
Memorandum and Articles of Association of WH Holdings (Cayman Islands)  Ltd.
and known as the “12% Series A Cumulative Convertible Preferred Shares”.

 

(s)
“Securities Act” means the Securities Act of 1933, as amended. 

 

(t)
“Share” means a share of Common Shares.

 

(u)
“Shareholders’ Agreement” means the shareholders’ agreement, dated as  of
July 31, 2002, by and among WH Holdings (Cayman Islands) Ltd., Whitney V,  L.P.,
Whitney Strategic Partners V, L.P., and WH Investments Ltd., and CCG  Investments
(BVI), L.P., CCG Associates-QP, LLC, CCG Associates-AI, LLC, CCG GP  Fund
LLC, CCG Investment Fund-AI, LP, and CCG AV, LLC, and certain other persons  who
may, from time to time, become party to the agreement.

 

(v)
“Subsidiary” means any entity in an unbroken chain of entities  beginning
with the Company if each of the entities, or group of commonly  controlled
entities, other than the last entity in the unbroken chain then owns  50%
or more of the total combined voting power of the other entities in such  chain. 

 

(w)
“Total Exercise Cost” means an amount equal to the Exercise Price  multiplied
by the number of Shares being purchased pursuant to the Option.

 

 

3

 

3.
Administration of Plan.

 

(a)
The Plan will be administered by the Committee. The Committee may adopt  its
own rules of procedure. Action of a majority of the members of the Committee  taken
at a meeting, or action taken without a meeting by unanimous written  consent,
will constitute action by the Committee. The Committee will have the  power
and authority to administer, construe and interpret the Plan, to make  rules
for carrying it out and to make changes to such rules.

 

(b)
The Committee may employ attorneys, consultants, accountants,  appraisers,
brokers or other persons. The Committee, the Company, and the  officers
of the Company will be entitled to rely upon the advice, opinions or  valuations
of any such persons. All actions taken and all interpretations and  determinations
made by the Committee in good faith will be final and binding  upon
all Participants, the Company and all other interested persons. No member  of
the Committee will be personally liable for any action, determination or  interpretation
made in good faith with respect to the Plan or the Grants, and  all
members of the Committee will be fully protected by the Company with respect  to
any such action, determination or interpretation.

 

4.
Eligibility.

 

Subject
to Paragraph 5(a), the Committee may from time to time make Grants  under
the Plan to such Independent Directors of the Company or any of its  Affiliates,
and in such form and having such terms, conditions and limitations  as
the Committee may determine. Prior to participation in the Plan, the  Committee
may require any Participant to execute a Release and Waiver to Rights  to
payments and benefits under certain plans of Herbalife International, Inc.  Grants
may be made singly, in combination or in tandem. The terms, conditions  and
limitations of each Grant under the Plan will be set forth in an Option  Agreement,
in a form or forms approved by the Committee; provided, however, that  such
Option Agreement will contain provisions dealing with the treatment of  Grants
in the event of the termination, death or disability of a Participant,  and
may also include provisions concerning the treatment of Grants in the event  of
a Change of Control of the Company.

 

5.
Grants.

 

(a)
The Plan provides for grants only to Independent Directors of  Non-Statutory
Stock Options.

 

(b)
At the time of the Grant, the Committee will determine, and will  include
in the Option Agreement or other Plan rules, the Option exercise price  and

 

4

 

 

such other
conditions and restrictions on the grant or exercise of the Option as  the
Committee deems appropriate.

 

(c)
In addition to any other restrictions contained in the Plan, an Option  granted
under the Plan may not be exercised more than 10 years after the date it  is
granted.

 

(d)
Payment of the Option price will be made in cash or, if subsequent to  an
Initial Public Offering, through the delivery of irrevocable instructions to  a
broker to deliver promptly to the Company an amount equal to the Option price,  in
accordance with the terms of the Plan, the Option Agreement and of any  applicable
guidelines of the Committee in effect at the time, and subject to  increase
for any applicable withholding requirements.

 

6.
Limitations and Conditions.

 

(a)
The number of Shares available for Grants under the Plan will be 1,000,000,
subject to adjustment in accordance with Paragraphs 7 or 8 hereof.  If
an Option expires, is canceled, forfeited or otherwise terminated without  being
exercised or settled, the Shares allocable to the unexercised portion of  such
Option shall remain available for grant under the Plan.

 

(b)
No Grants will be made under the Plan more than 10 years after the date  the
Plan is adopted by the Board or is approved by the shareholders of the  Company,
whichever is earlier, but the terms of Grants made on or before the  expiration
of the Plan may extend beyond such expiration.

 

(c)
Nothing contained herein will affect the right of the Company to  terminate
any Participant’s employment or services at any time or for any  reason.

 

(d)
Other than as specifically provided with regard to the death of a  Participant
or as hereinafter provided, no benefit under the Plan will be  subject
in any manner to anticipation, alienation, sale, transfer, assignment,  pledge,
encumbrance, or charge, and any attempt to do so will be void. No such  benefit
will, prior to receipt thereof by the Participant, be in any manner  liable
for or subject to the debts, contracts, liabilities, engagements, or  torts
of the Participant. At the time a Grant is made or amended or the terms or  conditions
of a Grant are changed, the Committee may provide for limitations or  conditions
on such Grant. Notwithstanding the preceding, the Participant may  transfer
all or part of the Option by gift to either to any member of the  Participant’s
Immediate Family, to a trust or partnership or limited liability  company
solely for the benefit of the Participant or such Participant’s  Immediate
Family Members, jointly to the Participant and one or more of the  foregoing,
or to any combination thereof, if applicable law permits and the  Option
Agreement so provides. “Immediate Family” means the Participant’s spouse,  children
and grandchildren.

 

(e)
Participants will not be, and will not have any of the rights or  privileges
of, equityholders of the Company in respect of any Shares purchasable  in
connection with any Grant unless and until certificates representing any such

 

5

 

Shares have
been issued by the Company to such Participants. Prior to an Initial  Public
Offering, each Participant will be required to enter into the  Shareholders’
Agreement with the Company, or execute a joinder to the  Shareholders’
Agreement in a form provided by the Company, upon the exercise of  any
Option under the Plan.

 

(f)
No election as to benefits or exercise of Options, or other rights may  be
made during a Participant’s lifetime by anyone other than the Participant  except
by a legal representative appointed for or by the Participant, unless  such
all or a part of such Option has been transferred either to any member of  the
Participant’s Immediate Family, to a trust or partnership or limited  liability
company solely for the benefit of the Participant or such  Participant’s
Immediate Family members, jointly to the Participant and one or  more
of the foregoing, or to any combination thereof, in which case it shall  only
be exercisable by such transferee.

 

(g)
Absent express provisions to the contrary, any Grant under the Plan will not be
deemed compensation for purposes of computing benefits or  contributions
under any retirement plan of the Company or its Subsidiaries and  will
not affect any benefits under any other benefit plan of any kind now or  subsequently
in effect under which the availability or amount of benefits is  related
to level of compensation. The Plan is not an “employee benefit plan”  under
Section 3(3) of the Employee Retirement Income Security Act of 1974, as  amended.

 

(h)
Unless the Committee determines otherwise, no benefit or promise under  the
Plan will be secured by any specific assets of the Company or any of its  Subsidiaries,
nor will any assets of the Company or any of its Subsidiaries be  designated
as attributable or allocated to the satisfaction of the Company’s  obligations
under the Plan.

 

7.
Adjustments.

 

In
the event of any change in the outstanding Shares by reason of an  acquisition,
spin-off or reclassification, recapitalization or merger,  combination
or exchange of Shares or other corporate exchange, Change of Control  or
similar event, or as required under any Option Agreement, the Committee may  adjust
appropriately the number or kind of Shares or securities subject to the  Plan
and available for or covered by Grants and Option prices related to  outstanding
Grants and make such other revisions to outstanding Grants as it  deems
are equitably required.

 

8.
Merger, Consolidation, Exchange, Acquisition, Liquidation or Dissolution.

 

In
its absolute discretion, and on such terms and conditions as it deems  appropriate,
coincident with or after the grant of any Option, the Committee may  provide,
with respect to the merger or consolidation of the Company into another  corporation,
the exchange of all or substantially all of the assets of the  Company
for the securities of

 

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another
corporation, a Change of Control or the recapitalization,  reclassification,
liquidation or dissolution of the Company, either (a) that  such
Option cannot be exercised after such event, in which case the Committee  may
also provide (but will be under no obligation to provide), either by the  terms
of such Option or by a resolution adopted prior to the occurrence of such  event,
that for some period of time prior to such event, such Option will be  exercisable
as to all Shares subject thereto which are exercisable, or, by  virtue
of the event, become exercisable, notwithstanding anything to the  contrary
herein (but subject to the provisions of Paragraph 6(b)) or that the  Option
will be repurchased by the Company at a specific price and that, upon the  occurrence
of such event, such Option will terminate and be of no further force  or
effect, or (b) that even if the Option will remain exercisable after such  event,
from and after such event, any such Option will be exercisable only for  the
kind and amount of securities and/or other property, or the cash equivalent  thereof,
receivable as a result of such event by the holder of a number of  Shares
for which such Option could have been exercised immediately prior to such  event,
or that the Option will be repurchased by the Company at a specific  price.

 

In
addition, in the event of a Change of Control, the Committee may, in its  absolute
discretion and on such terms and conditions as it deems appropriate,  provide,
either by the terms of such Option or by a resolution adopted prior to  the
occurrence of the Change of Control, that such Option will be exercisable as  to
all or any portion of the Shares subject thereto, notwithstanding anything to  the
contrary herein (but subject to the provisions of Paragraph 6(b)).

 

9.
Securities Law Requirements.

 

Shares
shall not be issued under the Plan unless the issuance and delivery  of
the Shares comply with (or are exempt from) all applicable requirements of  law,
including (without limitation) the Securities Act, the rules and  regulations
promulgated thereunder, state securities laws and regulations and  the
regulations of any stock exchange or other securities markets on which the  Company’s
securities may then be traded.

 

10.
Amendment and Termination.

 

The
Board will have the authority to make such amendments to any terms and  conditions
applicable to outstanding Grants as are consistent with the Plan  provided
that, except for adjustments under Paragraph 7 or 8, no such action  will
modify such Grant in a manner adverse to the Participant without the  Participant’s
consent except as such modification is provided for or  contemplated
in the terms of the Grant.

 

The
Board may amend, suspend or terminate the Plan except that no such  action,
other than an action under Paragraph 7 or 8, may be taken which would,  without

 

7

 

shareholder
approval (but only if such approval is necessary for exemption under  Section 16(b)
of the Exchange Act or to meet the applicable requirements of Code  Section 422),
increase the aggregate number of Shares available for Grants under  the
Plan, change the eligible class of individuals, decrease the price of  outstanding
Options, change the requirements relating to the Committee or extend  the
term of the Plan.

 

11.
Withholding Taxes.

 

The
Company will have the right to deduct from any cash payment made under  the
Plan any federal, state or local income or other taxes required by law to be  withheld
with respect to such payment. The Participant must pay to the Company  such
amount as may be requested by the Company for the purpose of satisfying any  liability
for such withholding taxes before the obligation of the Company to  deliver
certificates for the Shares upon the exercise of an Option arises. Any  Option
Agreement may provide that the Participant may elect, in accordance with  any
conditions set forth in such Option Agreement, to pay a portion or all of  such
withholding taxes in Shares.

 

12.
Governing Law.

 

The
Plan will be governed by and construed and enforced in accordance with  the
laws of the state of New York, without regard to the conflicts of laws  principles
thereof.

 

13.
Effective Date and Termination Date.

 

The
Plan will be effective on July 31, 2002 and will terminate on July 31,  2012,
subject to earlier termination pursuant to Paragraph 10.

 

8

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