Exhibit 10.3

 

OPTION EXERCISE PERIOD EXTENSION AGREEMENT

 

This Option Exercise Period Extension Agreement (“Agreement”) is entered into by
and between Sally Beauty Holdings, Inc. (“Employer”) and Gary Winterhalter
(“Employee”) (collectively, the “Parties”).

 

WHEREAS, Employee is a participant in the Sally Beauty Holdings, Inc. 2007
Omnibus Incentive Plan (the “2007 Plan”) and the Sally Beauty Holdings, Inc.
2010 Omnibus Incentive Plan (the “2010 Plan”), as well as the Sally Beauty’s
Founder’s Grant of December 2006, as amended as of the date of this Agreement
(collectively, “Plans”), and has been awarded certain stock options under the
terms of the Plans (the “Stock Options”); and,

 

WHEREAS, Employee is separating from Employer and wishes to agree to the terms
of this Agreement in order to extend the period under which the Stock Options
continue to vest (and correspondingly, the period he has to exercise the Stock
Options) under the Plans; and,

 

WHEREAS, the sum of Employee’s age and years of service exceeds 75, and Employee
has attained at least the age of 55, and thus Employee’s separation is deemed to
be a “retirement” under the terms of the Plans, and Employee is otherwise
eligible to enter into this Agreement;

 

NOW THEREFORE, the parties agree as follows:

 

1.             Separation Agreement Necessary.  Employee can only sign and
receive the consideration/benefits provided for in this Agreement if Employee
has also signed, and not revoked, the Separation Agreement provided to Employee
on or after his Separation Date.  If that Separation Agreement is not effective,
this Agreement is null and void.

 

2.             Extension Of Exercise Period.  In return for executing and
thereafter abiding by the terms of this Agreement, including specifically the
covenants in Sections 2 and 3 hereof, as well as the terms of the relevant stock
option agreements and the Plans, Employee is eligible for the option exercise
period extension benefits as set forth in Paragraph 5.3(b)(ii) of the 2007 Plan
and Paragraph 10.2(a)(i) of the 2010 Plan.  The Plans and the relevant stock
option agreements are incorporated herein by reference.  Specifically, and
without limiting the terms of the Plans or such agreements, during the
three-year period following Employee’s retirement, all of his unvested Stock
Options shall continue to become exercisable in accordance with their respective
terms during such three-year period as if Employee’s employment had not
terminated, and all of Employee’s exercisable Stock Options (including those
that become exercisable pursuant to the immediately preceding clause) may be
exercised by Employee (or his beneficiary or legal representative) until the
earlier of (A) (i) the third anniversary of Employee’s retirement or (ii) if
Employee dies prior to such third anniversary of his retirement, the
twelve-month anniversary of his death, or (B) the expiration of the term of such
Stock Options. Upon the expiration of such period, all Stock Options not
previously exercised by Employee shall be forfeited and canceled.

 

Initial:

Employee

/s/ GW

 

 

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3.             Employer Confidential Information.

 

i.              Employee agrees that Employee received and had access to
materials and information regarding Employer’s technologies, know-how, products,
services and sales that are proprietary and confidential to Employer, and that
would give Employee an unfair competitive advantage in competing with Employer
if Employee’s activities are not restricted as provided for in this Agreement. 
Employee recognizes that these materials and information are an important and
valuable asset to Employer and that Employer has a legitimate interest in
protecting the confidential and proprietary nature of these materials and
information.

 

ii.             Employee agrees that the information, observations and data
obtained by Employee during the course of Employee’s employment with Employer
and relevant Employer Affiliate(1) are the sole property of the Employer. 
Employee agrees that from the date of this Agreement and thereafter, without the
express written consent of the Employer’s President, Employee will not disclose
to any person or entity (collectively, “Entity”) or use for Employee’s own
account or for the benefit of any third party any Confidential Information(2),
unless and only to the extent that such Confidential Information becomes
generally known to and available for use by the public or in the trade other
than as a result of the Employee’s acts or inaction or the wrongful act of any
third party.  The parties agree that Confidential Information and all elements
of it are important, material, confidential and gravely affect the successful
conduct of the Employer and any relevant Employer Affiliate.

 

iii.            Employee states that, except as expressly permitted by Employer
in writing to retain such items, Employee has delivered to Employer all
memoranda, notes, plans, records, reports, computer disks and memory, and other
documentation and copies thereof (however stored or recorded) relating to the
business of Employer and any relevant Employer Affiliate, and/or which contain
Confidential Information, which Employee possesses or has custody or control
of.  Employee has not retained copies.  Employee has also returned all of
Employer’s and any relevant Employer Affiliates’ property within Employee’s
custody or control.  Employee and Employer acknowledge that Employee may
continue to have access to Confidential Information pursuant to the separate
Consulting Agreement between the Parties.

 

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(1)   “Employer Affiliate” for purposes of this agreement shall mean any
division, affiliate, subsidiary or other entity which has Sally Beauty
Holdings, Inc. (or its predecessor or successor) as the ultimate parent
company.  The list of Employer Affiliates currently includes, but is not limited
to:  Sally Beauty Supply LLC, Beauty Systems Group LLC and Armstrong-McCall L.P.

 

(2)    “Confidential Information” for purposes of this Agreement shall mean
information (whether gained before or after his separation from Employer)
relating to the Employer or any Employer Affiliate that is generally not
disclosed outside of the company, and shall include but not be limited to: 
Employer’s or any Employer Affiliate’s business plans and future product or
market developments, all financial information, information regarding suppliers
and costs of products and other supplies, financing programs, and any other
information regarding personnel, operations,  overhead, distribution; present or
future plans related to real estate and leaseholds (including site selection);
and information regarding computer and communication systems, software operating
systems, source codes, lawsuits, legal documents, legal strategies and the like.

 

Initial:

Employee

/s/ GW

 

 

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4.             Unfair Competition.

 

i.              Beginning on the day after Employee’s final date of employment
with Employer and any relevant Employer Affiliate if earlier (the “Separation
Date”), and ending on the day one (1) year thereafter, Employee agrees he shall
remain loyal to Employer and shall not, directly or indirectly, engage in
“Unfair Competition”.  Employee agrees that it shall be considered “Unfair
Competition” for him to:

 

a.             be employed in, participate in, provide, supervise, or manage (as
an employee, consultant, contractor, officer, owner, director, or otherwise) any
activities or services for an entity that competes with Employer or any Employer
affiliate in any geographic area where Employer does business (the “Territory”)
where the position or activity would (a) involve services that are the same as
or similar in function or purpose to those Employee performed, supervised, or
managed for Employer or any Employer affiliate in the two (2) year period
preceding Employee’s separation from Employer or (b) would be likely to involve
the use Confidential Information.

 

b.             either directly or indirectly, solicit for employment or
otherwise interfere with the relationship of Employer or any Employer Affiliate
with any natural person who is then-currently employed by or otherwise engaged
to perform services for Employer or any Employer Affiliate within the Territory;
or,

 

c.             interfere with the business relationship between any Employer
Affiliate and one of its customers, suppliers or vendors operating within the
Territory by soliciting, inducing, or otherwise encouraging a customer, supplier
or vendor to reduce or stop doing business with any Employer Affiliate, or
engaging any such Employer Affiliate customer or supplier to do business with or
on Employee’s (or Employee’s employer’s) behalf for the purpose of selling to
such customer beauty supply business products or services; or,

 

d.             disparage the business or interests of Employer or any Employer
Affiliate (provided however, it shall not be deemed “disparagement” for Employee
to comply with his obligations in any written agreement with Employer or any
Employer Affiliate); or,

 

e.             supervise of any of the foregoing activities.

 

ii.             Employee will give Employer written notice of any offer that he
receives from a competing business before accepting it. Employee will also
provide Employer at least thirty (30) days’ notice before performing any
personal services for a competing business (such as a retail, professional or
online seller or distributor of beauty products) doing business within the
Territory and meet with an Employer representative to discuss the nature of his
new position if Employer requests such a meeting to help avoid unnecessary
disputes.  Employee understands that Employer is not required to request such a
meeting and that a failure to resolve disputes through such a meeting will not
be considered a waiver of any rights by either Party.

 

iii.            Employer may notify any future or prospective employer or third
party of the existence of this Agreement.  Employee stipulates that the harm
caused by a violation of this Agreement by him would be irreparable, cannot be
readily and fully remedied through monetary

 

Initial:

Employee

/s/ GW

 

 

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damages, and shall warrant injunctive relief in addition to, and not in place
of, any other legal remedies available for any breach, including reasonable
attorney’s fees and costs.  Employee acknowledges and agrees that his violation
of any of the restrictive covenants in Section 2 or 3 above would constitute a
failure of consideration, as those covenants are consideration for Employer’s
agreements herein, including, without limitation, the extension of the Stock
Option Exercise Period set forth in Section 1 above.  Employee agrees that, in
addition to all other remedies or rights, in the event Employee violates any of
the restrictive covenants in Section 2 or 3, as determined by Employer in its
sole discretion, then (i) all Stock Options granted to Employee, whether or not
then exercisable, shall be immediately forfeited and canceled as of the date of
such violation, and (ii) Employee shall, within 30 days after such determination
of a violation, pay an amount to Employer equal to the sum of any gain received
by Employee that is attributable to the exercise after the date of his
retirement of Stock Options the terms of which have been extended pursuant to
this Agreement.  Employee understands and agrees that if he is found to have
violated one of the time-limited, post-employment-termination restrictions on
his conduct created by this Agreement, the time period for that restriction will
be extended by one day for each day that he is found to have been in violation
of the restriction up to a maximum period of nine (9) months.  If there is a
dispute over this Agreement, Employee agrees that if Employer prevails, Employer
shall be entitled to recover from Employee all reasonable costs and expenses
including reasonable attorneys’ fees and costs; provided, however, that Employer
need not get all relief that it requests in order to be considered a prevailing
party.

 

5.             Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Texas, without reference to
principles of conflict of laws which would require application of the law of
another jurisdiction, except to the extent that the corporate law of the State
of Delaware specifically and mandatorily applies.

 

6.             Notice.  Any notice to be given to Employer hereunder will be
deemed sufficient if addressed to Employer in writing and hand-delivered or
mailed by certified mail to General Counsel, Sally Beauty Holdings, Inc., 3001
Colorado Boulevard, Denton, Texas 76210.  Any notice to be given to Employee
hereunder will be deemed sufficient if addressed to Employee in writing and
hand-delivered or mailed by certified mail to Employee at Employee’s last known
address as shown on Employer’s records.  Either party may designate a different
address or addresses by giving notice according to this Section.

 

7.             Severability; Reformation; Right To Revoke/Terminate.  In the
event that any one or more of the provisions of this Agreement shall become
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.  If, in the opinion of any court of competent jurisdiction
such covenants are not reasonable in any respect, such court shall have the
right, power and authority to delete, reform or modify such provision or
provisions of these covenants as to the court shall appear not reasonable and
enforce these covenants as so amended.  Any Employer remedies set forth in this
Agreement are in addition to the rights as set forth in the Plans, such as for
revocation, termination, forfeiture and/or cancellation.  Provided however,
that: (i) as a result of the  provisions of this Agreement being declared
illegal or unenforceable or their being substantially modified; or, (ii) if
Employee claims, through a lawsuit or otherwise that provisions of this
Agreement are illegal, unenforceable or subject to substantial modification; and
as a result

 

Initial:

Employee

/s/ GW

 

 

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of such declaration, or if in the event of such claim of Employee being
enforced, Employer loses the benefit of its bargain (such as, without
limitation, a compromise of Employer’s rights of confidentiality or protection
against Employee engaging in Unfair Competition), Employer shall have no further
obligation under this Agreement and the Agreement shall at the option of
Employer be declared void, whereupon (i) all Stock Options granted to Employee,
whether or not then exercisable, shall be immediately forfeited and canceled,
and (ii) Employee shall pay an amount to Employer equal to the sum of any gain
received by Employee that is attributable to the exercise after the date of his
retirement of Stock Options the terms of which have been extended pursuant to
this Agreement.

 

8.             Headings and Captions.  The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
this Agreement, and shall not be employed in the construction of this Agreement.

 

9.             Entire Agreement.  This Agreement contains all the terms and
conditions agreed upon by the parties with respect to the subject matter hereof
and no provision expressed in this Agreement may be altered, modified and/or
cancelled except upon the express written consent of the parties.  The terms and
conditions contained in this Agreement supersede any previous agreement or
arrangement between the parties other than sections of any agreement addressing
Unfair Competition or Employee’s use/treatment of Confidential Information,
which are supplemented by this Agreement.  This Agreement and all rights and
benefits are personal to Employee, and neither this Agreement, nor any Employee
right or interest arising in this Agreement, shall be voluntarily sold,
transferred or assigned by Employee, except as expressly set forth in the Plans
and any related documents.

 

The parties have signed this Agreement on the dates written by the signatures
below, to be effective on the day Employee signs the Agreement.  Notwithstanding
any other provision in this Agreement, if Employee does not sign and deliver
this Agreement to Employer at the address shown in the subsection under
“Miscellaneous” entitled “Notice” on or before 45 days following Employee’s
receipt of this Agreement from Employer, then this Agreement will be null and
void and Employee will not be entitled to the consideration described above.

 

WHEREFORE, the parties have agreed as hereinbefore set forth.

 

EMPLOYER:

 

EMPLOYEE:

 

 

 

SALLY BEAUTY HOLDINGS, INC.

 

 

 

 

 

 

By:

/s/ Matthew Haltom

 

/s/ Gary Winterhalter

 

 

 

Gary Winterhalter

Title:

SVP, General Counsel & Sec.

 

 

 

 

 

 

 

Date:

Feb. 18, 2016

 

Date:

2-18-16

 

Initial:

Employee

/s/ GW

 

 

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