Exhibit 10.3

 

OPTION EXERCISE PERIOD EXTENSION AND

RESTRICTED STOCK VESTING EXTENSION AGREEMENT

 

This Option Exercise Period Extension And Restricted Stock Vesting Extension
Agreement (“Agreement”) is entered into as of the        day of                
by and between Sally Beauty Holdings, Inc. (“Employer”) and
                                               (“Employee”) (collectively, the
“Parties”).

 

WHEREAS, Employee is a “Participant,” as the term is defined, 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
amended as of the date of this Agreement and hereby incorporated by reference
(collectively, “Plans”), and has been awarded certain stock options under the
terms of the Plans and a restricted stock grant under the terms of the 2007 Plan
and retains rights to certain unexercised options and unvested restricted stock
(collectively, the “Rights”); and,

 

WHEREAS, Employee 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 options), and the period
under which the restricted stock vests, all under the Plans; and,

 

WHEREAS, the sum of Employee’s age and years of service to “Company” and any
“Subsidiary” (as defined in the Plans) exceeds 75, and Employee has at least
attained 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 believed to
be eligible to enter into this Agreement;

 

NOW THEREFORE, the parties agree as follows:

 

1.                                       Extension Of Exercise Period.  In
return for executing and thereafter abiding by the terms of this Agreement and
the relevant Stock Option Agreements For Employees, the relevant Non-Statutory
Stock Option Award Agreement 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.  In return for executing
and thereafter abiding by the terms of this Agreement and the relevant
Restricted Stock Agreement For Employees and the 2007 Plan, Employee is eligible
for the extended restricted stock vesting benefits as set forth in Paragraph
7.5(b) of the 2007 Plan.  The Plans, the relevant Stock Option Agreement For
Employees, the relevant Non-Statutory Stock Option Award Agreements and the
relevant Restricted Stock Agreement For Employees are incorporated by reference.

 

Initial:

Employer:

 

 

 

 

 

 

 

Employee:

 

 

 

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2.             Employer Confidential Information.

 

i.              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.

 

ii.             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.

 

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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:

Employer:

 

 

 

 

 

 

 

Employee:

 

 

 

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3.             Unfair Competition.

 

i.              Beginning on                      or the day after Employee’s
final date of employment with Employer and any relevant Employer Affiliate if
earlier (the “Termination Date”), and ending on the day three (3) years
thereafter, Employee agrees he shall not, directly or indirectly, engage in
“Unfair Competition”.  Employee agrees that it shall be considered “Unfair
Competition” for him to:

 

a.  own any interest in, operate, join, control, or participate as a partner,
director, principal, officer or agent; enter into the employment of, act as a
consultant to, or perform services, or the supervision or management of
services, that are similar in nature, function, or character to those Employee
provided to Employer or any Employer Affiliate in the last two years (including
but expressly not limited to inventory control or management, development of
beauty supply products, merchandising and marketing of beauty supply products,
and the like), or that would be likely to involve the use or disclosure of
Confidential Information, for an Entity which competes within the Beauty Supply
Business(3) within the Territory(4), except where: (x) Employee’s role,
responsibility or association is unrelated to the Beauty Supply Business;
(y) such Entity’s annual gross revenue from the Beauty Supply Business is less
than 10% of the Entity’s total annual gross revenue; and, (z) Employee’s
ownership or participation interest is directly or indirectly less than 2% of
that of the Entity (if a legal entity).  Given the high level and nature and
scope of Employee’s position, it shall be presumed that any services rendered by
Employee to an entity engaged in the Beauty Supply Business other than manual
labor would fall within the scope of the foregoing restriction unless Employee
can show otherwise as to a particular service or position through clear and
compelling evidence; or,

 

b.  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 operating within the Territory or suppliers operating
within the Territory, by soliciting, inducing, or otherwise encouraging a
customer operating within the Territory

 

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(3)    “Beauty Supply Business” for purposes of this Agreement shall mean the
distribution and/or sale of beauty supplies (including but not limited to such
items as shampoos, conditioners, hair color, straighteners, salon accessories,
electricals, salon furniture, incidental cosmetic and personal ornamentation
items and the like) to individual consumers, salons, subdistributors or
franchisees, beauty schools and/or individual beauty professionals through
stores and/or inside/outside salespeople.

 

(4)  The “Territory” shall include the continental United States.  The parties
agree that in the event Employee should have a question regarding the breadth of
the Territory, Employee shall, in writing delivered to and received by the
General Counsel of Employer, 3001 Colorado Boulevard, Denton, Texas, 76210, seek
clarification.

 

Initial:

Employer:

 

 

 

 

 

 

 

Employee:

 

 

 

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or supplier operating within the Territory of the Employer Affiliate 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; 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 Beauty Supply Business) 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 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 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.

 

4.             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.

 

5.             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

 

Initial:

Employer:

 

 

 

 

 

 

 

Employee:

 

 

 

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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 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 Unfair Competition), Employer shall have no further obligation under
this Agreement and the Agreement shall at the option of Employer be declared
void.

 

6.             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.

 

7.             Entire Agreement.  This Agreement contains all the terms and
conditions agreed upon by the parties with respect to the subject matter hereof
other than in that certain Release and Separation Agreement between Employee and
Employer (the “Separation Agreement”) and the Consulting Agreement between
Diversely Specialized, Inc. and Employer (the “Consulting Agreement”), to the
extent these other two agreements are executed, 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 the Separation Agreement and the Consulting 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.

 

WHEREFORE, the parties have agreed as hereinbefore set forth.

 

SALLY BEAUTY HOLDINGS, INC.:

 

 

:

 

 

 

 

by

 

 

 

 

Gary Winterhalter, President and

 

 

Chief Executive Officer

 

 

 

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