Exhibit 10.31

 

SALLY BEAUTY HOLDINGS 2007 OMNIBUS INCENTIVE PLAN

 

STOCK OPTION AGREEMENT

FOR EMPLOYEES

 

Optionee:

 

 

 

 

 

Total Shares Subject to Option:

 

 

 

 

 

Option Exercise Price Per Share:

 

 

 

 

 

Date of Grant:

October 21, 2009

 

 

 

 

Vesting Commencement Date:

October 21, 2009

 

 

 

 

Expiration Date:

October 21, 2019

 

 

 

 

Type of Stock Option:

Non-Statutory Stock Option

 

 

1.             GRANT OF OPTION.  SALLY BEAUTY HOLDINGS, INC., A DELAWARE
CORPORATION (THE “COMPANY”), HEREBY GRANTS TO THE OPTIONEE NAMED ABOVE (THE
“OPTIONEE”) AN OPTION (THE “OPTION”) TO PURCHASE THE TOTAL NUMBER OF SHARES OF
COMMON STOCK SET FORTH ABOVE (THE “SHARES”) AT THE EXERCISE PRICE PER SHARE SET
FORTH ABOVE (THE “EXERCISE PRICE”), IN ACCORDANCE WITH THIS STOCK OPTION
AGREEMENT (“OPTION AGREEMENT”) AND SUBJECT TO THE TERMS AND CONDITIONS OF THE
SALLY BEAUTY HOLDINGS 2007 OMNIBUS INCENTIVE PLAN, AS AMENDED FROM TIME TO TIME
(THE “PLAN”), WHICH ARE INCORPORATED HEREIN BY REFERENCE.  UNLESS OTHERWISE
DEFINED HEREIN, CAPITALIZED TERMS USED HEREIN SHALL HAVE THE SAME MEANINGS
ASCRIBED TO THEM IN THE PLAN.

 

2.             VESTING; TIME OF EXERCISE.  SUBJECT TO THE TERMS AND CONDITIONS
OF THE PLAN AND THIS OPTION AGREEMENT, THE OPTION SHALL VEST AND BECOME
EXERCISABLE IN THE FOLLOWING CUMULATIVE INSTALLMENTS, AS FOLLOWS:

 

(A)           TWENTY-FIVE PERCENT (25%) OF THE SHARES SHALL BE EXERCISABLE AT
ANY TIME ON OR AFTER THE DAY IMMEDIATELY PRECEDING THE FIRST ANNIVERSARY OF THE
VESTING COMMENCEMENT DATE SET FORTH ABOVE (THE “VESTING COMMENCEMENT DATE”);

 

(B)           UP TO AN ADDITIONAL TWENTY-FIVE PERCENT (25%) OF THE SHARES SHALL
BECOME EXERCISABLE AT ANY TIME ON OR AFTER THE DAY IMMEDIATELY PRECEDING THE
SECOND ANNIVERSARY OF THE VESTING COMMENCEMENT DATE;

 

(C)           UP TO AN ADDITIONAL TWENTY-FIVE PERCENT (25%) OF THE SHARES SHALL
BECOME EXERCISABLE AT ANY TIME ON OR AFTER THE DAY IMMEDIATELY PRECEDING THE
THIRD ANNIVERSARY OF THE VESTING COMMENCEMENT DATE; AND

 

(D)           THE REMAINING SHARES SHALL BECOME EXERCISABLE AT ANY TIME ON OR
AFTER THE DAY IMMEDIATELY PRECEDING THE FOURTH ANNIVERSARY OF THE VESTING
COMMENCEMENT DATE.

 

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If an installment covers a fractional Share, such installment will be rounded to
the next highest Share, except the final installment, which will be for the
balance of the total Shares; provided, that, absent the occurrence of an
Adjustment Event as described in Section 4.4 of the Plan, the Optionee shall in
no event be entitled under the Option to purchase a number of shares of Common
Stock greater than the “Total Shares Subject to Option” indicated above.  Unless
otherwise provided in the Plan or this Option Agreement, the Option shall expire
on the Expiration Date set forth above and must be exercised, if at all, on or
before the Expiration Date.  Unless otherwise provided below, upon the effective
date of an Optionee’s termination of service the unvested portion of the
Optionee’s Option under this Option Agreement shall be forfeited.

 

If the Optionee’s service with the Company or any Subsidiary is terminated as a
result of the Optionee’s Retirement and the Optionee does not agree to be bound
by the restrictions of Section 5.5 of the Plan, then the Option shall be
exercisable only to the extent that the Optionee could exercise it on the date
of his or her Retirement.  If the Optionee’s service with the Company or any
Subsidiary is terminated as a result of the Optionee’s Retirement and the
Optionee agrees to be bound by the restrictive covenants of Section 5.5 of the
Plan for the three-year period following Optionee’s Retirement then Optionee
will continue to vest in the portion of the Option that was not vested and
exercisable as of the date of the Optionee’s Retirement for the three-year
period following Optionee’s Retirement as if the Optionee’s service had not
terminated, unless Optionee violates the any of the restrictive covenants of
Section 5.5 of the Plan during such three-year period.  If, in the sole
discretion of the Committee, the Optionee violates one of the restrictive
covenants of Section 5.5 of the Plan during the three-year period following
Optionee’s Retirement, then all Options, whether or not vested, shall be
immediately forfeited and cancelled as of the date of such violation.  If the
Optionee’s service with the Company or any Subsidiary is terminated as a result
of the Optionee’s death or Disability then the Optionee shall, in addition to
the portion of the Option in which the Optionee was vested as of the effective
date of any such termination of service, vest in that portion of the Option that
becomes vested and exercisable on the next vesting date following the effective
date of the Optionee’s termination of service as a result of the Optionee’s
death or Disability.  If the Optionee voluntarily terminates service for any
other reason the Option shall be exercisable only to the extent the Optionee was
vested on the effective date of such termination of service.  Unless, as
described in Section 9.2 of the Plan, an Alternative Award replaces this Option,
this Option shall become fully vested and exercisable upon the occurrence during
the term of this Option Agreement of a Change in Control.  If the Optionee’s
service is terminated for Cause (or if, following the date of termination of the
Optionee’s service for any reason, the Compensation Committee determines that
circumstances exist that the Optionee’s service could have been terminated for
Cause) then all Options shall be immediately forfeited and cancelled as of the
date of such termination.

 

3.             EXERCISE OF OPTION.

 

(A)           RIGHT TO EXERCISE.  THE OPTION SHALL BE EXERCISABLE IN ACCORDANCE
WITH THE VESTING PROVISIONS CONTAINED IN SECTION 2 OF THIS OPTION AGREEMENT AND
WITH THE OTHER APPLICABLE PROVISIONS OF THE PLAN AND THIS OPTION AGREEMENT.  THE
OPTION SHALL BE SUBJECT TO THE PROVISIONS OF ARTICLE IX OF THE PLAN RELATING TO
THE EXERCISABILITY OR TERMINATION OF THE OPTION IN THE EVENT OF A CHANGE IN
CONTROL.

 

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(B)           METHOD OF EXERCISE.  THE OPTION SHALL BE EXERCISABLE ONLY BY
DELIVERY TO THE COMPANY OF AN EXECUTED STOCK OPTION EXERCISE NOTICE (THE
“EXERCISE NOTICE”) IN THE FORM ATTACHED HERETO AS EXHIBIT A, OR IN SUCH OTHER
FORM APPROVED BY THE COMMITTEE, WHICH SHALL STATE THE OPTIONEE’S ELECTION TO
EXERCISE THE OPTION, THE WHOLE NUMBER OF SHARES IN RESPECT OF WHICH THE OPTION
IS BEING EXERCISED, AND SUCH OTHER PROVISIONS AS MAY BE REQUIRED BY THE
COMMITTEE OR NECESSARY TO COMPLY WITH SECURITIES AND OTHER APPLICABLE LAWS. THE
EXERCISE NOTICE SHALL BE SIGNED BY THE OPTIONEE AND SHALL BE DELIVERED TO THE
COMPANY BY SUCH METHOD AS MAY BE PERMITTED BY THE COMMITTEE, ACCOMPANIED (IN ANY
CASE) BY PAYMENT OF, OR PROVISION FOR THE PAYMENT OF, THE EXERCISE PRICE FOR
EACH SHARE COVERED BY THE EXERCISE NOTICE, AS DESCRIBED IN SECTION 4 OF THIS
OPTION AGREEMENT.  THE OPTION SHALL BE DEEMED TO BE EXERCISED TO THE EXTENT
PROVIDED IN THE EXERCISE NOTICE UPON RECEIPT BY THE COMPANY OF SUCH WRITTEN
EXERCISE NOTICE AND THE EXERCISE PRICE.

 

(C)           ISSUANCE OF SHARES.  IF THE EXERCISE NOTICE AND PAYMENT ARE IN A
FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY (OR ITS COUNSEL), AND THE
OPTIONEE OR ANY OTHER PERSON PERMITTED TO EXERCISE THE OPTION HAS COMPLIED WITH
SECTION 5 OF THIS OPTION AGREEMENT, THE COMPANY SHALL ISSUE OR CAUSE THE
ISSUANCE OF, IN THE NAME OF THE OPTIONEE OR OPTIONEE’S LEGAL REPRESENTATIVE, THE
SHARES PURCHASED BY SUCH EXERCISE OF THE OPTION.

 

4.             METHOD OF PAYMENT. THE OPTIONEE’S DELIVERY OF THE SIGNED EXERCISE
NOTICE TO EXERCISE THE OPTION (IN WHOLE OR IN PART) SHALL BE ACCOMPANIED BY FULL
PAYMENT OF THE EXERCISE PRICE FOR THE SHARES BEING PURCHASED.  PAYMENT FOR THE
SHARES MAY BE MADE IN CASH (BY CHECK) OR AT THE ELECTION OF THE OPTIONEE AND
WHERE PERMITTED BY LAW IN ONE OR MORE OF THE FOLLOWING METHODS: (I) IF A PUBLIC
MARKET FOR THE COMMON STOCK EXISTS, THROUGH A “SAME DAY SALE” ARRANGEMENT
BETWEEN THE OPTIONEE AND A BROKER-DEALER THAT IS A MEMBER OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. (AN “NASD DEALER”) WHEREBY THE OPTIONEE
ELECTS TO EXERCISE THE STOCK OPTION AND TO SELL A PORTION OF THE SHARES OF
COMMON STOCK SO PURCHASED TO PAY FOR THE EXERCISE PRICE AND WHEREBY THE NASD
DEALER COMMITS UPON RECEIPT OF SUCH SHARES OF COMMON STOCK TO FORWARD THE
EXERCISE PRICE DIRECTLY TO THE COMPANY; (II) IF A PUBLIC MARKET FOR THE COMMON
STOCK EXISTS, THROUGH A “MARGIN” COMMITMENT FROM THE OPTIONEE AND AN NASD DEALER
WHEREBY THE OPTIONEE ELECTS TO EXERCISE THE STOCK OPTION AND TO PLEDGE THE
SHARES OF COMMON STOCK SO PURCHASED TO THE NASD DEALER IN A MARGIN ACCOUNT AS
SECURITY FOR A LOAN FROM THE NASD DEALER IN THE AMOUNT OF THE EXERCISE PRICE,
AND WHEREBY THE NASD DEALER COMMITS UPON RECEIPT OF SUCH SHARES OF COMMON STOCK
TO FORWARD THE EXERCISE PRICE DIRECTLY TO THE COMPANY; (III) IN ANY OTHER FORM
OF VALID CONSIDERATION THAT IS ACCEPTABLE TO THE COMMITTEE IN ITS SOLE
DISCRETION; PROVIDED, HOWEVER, THAT SUCH OTHER FORM OF CONSIDERATION IS NOT
OTHERWISE PROHIBITED BY THE PLAN OR THIS OPTION AGREEMENT; OR (IV) BY ANY
COMBINATION OF THE FOREGOING.  NOTWITHSTANDING THE FOREGOING, THE FORMS OF
PAYMENT PROVIDED IN (I) OR (II) ABOVE SHALL NOT BE AVAILABLE TO ANY OPTIONEE WHO
IS A MEMBER OF THE BOARD OR AN EXECUTIVE OFFICER OF THE COMPANY IF ANY SUCH FORM
OF PAYMENT WOULD BE TREATED AS A PERSONAL LOAN PROHIBITED UNDER SECTION 13(K) OF
THE EXCHANGE ACT, AND OPTIONEE SHALL NOT PROVIDE FOR PAYMENT OF THE EXERCISE
PRICE FOR THE SHARES BEING PURCHASED BY SURRENDERING FOR CANCELLATION SHARES OF
COMMON STOCK OWNED BY THE OPTIONEE AT THE FAIR MARKET VALUE PER SHARE AT THE
TIME OF EXERCISE.

 

5.             TAX WITHHOLDING OBLIGATIONS.  NO SHARES SHALL BE DELIVERED TO THE
OPTIONEE, OR ANY OTHER PERSON PERMITTED TO EXERCISE THE OPTION, PURSUANT TO THE
EXERCISE OF THE OPTION UNTIL THE OPTIONEE OR SUCH OTHER PERSON HAS MADE
ARRANGEMENTS ACCEPTABLE TO THE COMMITTEE OR ITS

 

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DESIGNEE FOR THE SATISFACTION OF ALL APPLICABLE INCOME TAX, EMPLOYMENT TAX, AND
SOCIAL SECURITY TAX WITHHOLDING OBLIGATIONS, INCLUDING OBLIGATIONS INCIDENT TO
THE RECEIPT OF SHARES.  UPON EXERCISE OF THE OPTION, THE COMPANY OR THE
OPTIONEE’S EMPLOYER MAY OFFSET OR WITHHOLD (FROM ANY AMOUNT OWED BY THE COMPANY
OR THE OPTIONEE’S EMPLOYER TO THE OPTIONEE) OR COLLECT FROM THE OPTIONEE, OR
SUCH OTHER PERSON, AN AMOUNT SUFFICIENT TO SATISFY SUCH TAX OBLIGATIONS AND/OR
THE EMPLOYER’S WITHHOLDING OBLIGATIONS.

 

6.             TERMINATION OR CHANGE OF SERVICE.

 

(A)           POST-TERMINATION EXERCISE.  SUBJECT TO THE PROVISIONS OF SECTIONS
7 AND 8 OF THIS OPTION AGREEMENT, IF THE OPTIONEE’S SERVICE WITH THE COMPANY OR
ANY SUBSIDIARY TERMINATES, OTHER THAN AS DESCRIBED IN SECTION 6(B) OF THIS
OPTION AGREEMENT, THE OPTIONEE MAY, TO THE EXTENT OTHERWISE SO ENTITLED AT THE
DATE OF OPTIONEE’S TERMINATION OF SERVICE (THE “TERMINATION DATE”), EXERCISE THE
OPTION UNTIL THE 60TH DAY FOLLOWING THE OPTIONEE’S TERMINATION DATE (THE
“POST-TERMINATION EXERCISE PERIOD”).  UPON TERMINATION OF THE OPTIONEE’S SERVICE
WITH THE COMPANY OR ANY SUBSIDIARY AS DESCRIBED IN SECTION 6(B) OF THIS OPTION
AGREEMENT, THE OPTIONEE’S RIGHT TO EXERCISE THE OPTION SHALL, EXCEPT AS
OTHERWISE DETERMINED BY THE COMMITTEE, TERMINATE CONCURRENTLY WITH THE
TERMINATION OF THE OPTIONEE’S SERVICE WITH THE COMPANY OR SUBSIDIARY.  IN NO
EVENT MAY THE OPTION BE EXERCISED LATER THAN THE EXPIRATION DATE SET FORTH ON
THE FIRST PAGE OF THIS OPTION AGREEMENT.  IN THE EVENT OF THE OPTIONEE’S CHANGE
IN STATUS FROM EMPLOYEE, NON-EMPLOYEE DIRECTOR OR CONSULTANT TO ANY OTHER STATUS
OF EMPLOYEE, NON-EMPLOYEE DIRECTOR OR CONSULTANT, THE OPTION SHALL REMAIN IN
EFFECT AND, EXCEPT TO THE EXTENT OTHERWISE DETERMINED BY THE COMMITTEE, CONTINUE
TO VEST.  EXCEPT AS PROVIDED IN SECTIONS 7 AND 8 OF THIS OPTION AGREEMENT, TO
THE EXTENT THAT THE OPTIONEE IS NOT ENTITLED TO EXERCISE THE OPTION ON THE
TERMINATION DATE, OR IF THE OPTIONEE DOES NOT EXERCISE THE OPTION WITHIN THE
POST-TERMINATION EXERCISE PERIOD, THE OPTION SHALL TERMINATE.

 

(B)           NO POST-TERMINATION EXERCISE.  UNLESS THE COMMITTEE OTHERWISE
DETERMINES, IF THE OPTIONEE’S SERVICE WITH THE COMPANY OR ANY SUBSIDIARY IS
TERMINATED EITHER (I) BY THE COMPANY OR A SUBSIDIARY FOR CAUSE, OR (II) IF
OPTIONEE’S EMPLOYMENT IS SUBJECT TO THE TERMS OF A THEN-EFFECTIVE WRITTEN
EMPLOYMENT AGREEMENT BETWEEN THE OPTIONEE AND THE COMPANY OR AN AFFILIATE, BY
THE OPTIONEE WITHOUT COMPLIANCE WITH, OR WITHOUT “GOOD REASON” OR WORDS OF
SIMILAR IMPORT UNDER, THE TERMS OF SUCH EMPLOYMENT AGREEMENT, THEN THE
OPTIONEE’S RIGHT TO EXERCISE THE OPTION SHALL IMMEDIATELY TERMINATE.  FOR
PURPOSES OF THIS OPTION AGREEMENT, THE TERM “CAUSE” FOR TERMINATION BY THE
COMPANY OR A SUBSIDIARY OF THE OPTIONEE’S SERVICE WITH THE COMPANY OR ANY
SUBSIDIARY SHALL HAVE THE MEANING SET FORTH IN A THEN-EFFECTIVE WRITTEN
EMPLOYMENT AGREEMENT BETWEEN THE OPTIONEE AND THE COMPANY OR SUCH SUBSIDIARY OR,
IN THE ABSENCE OF SUCH A DEFINITION IN A THEN-EFFECTIVE WRITTEN EMPLOYMENT
AGREEMENT (IN THE DETERMINATION OF THE COMMITTEE), SHALL MEAN CAUSE AS OTHERWISE
PROVIDED IN THE PLAN.  THE COMMITTEE SHALL HAVE DISCRETION FOR THE PURPOSES OF
THIS OPTION AGREEMENT TO DETERMINE WHETHER ANY TERMINATION OF SERVICE BY THE
OPTIONEE IS IN COMPLIANCE WITH, OR IS FOR “GOOD REASON” OR WORDS OF SIMILAR
IMPORT, UNDER THE TERMS OF A THEN-EFFECTIVE WRITTEN EMPLOYMENT AGREEMENT.

 

7.             RETIREMENT. IF THE OPTIONEE’S SERVICE WITH THE COMPANY OR ANY
SUBSIDIARY TERMINATES AS A RESULT OF THE OPTIONEE’S RETIREMENT AND THE OPTIONEE
DOES NOT AGREE TO BE BOUND BY THE RESTRICTIVE COVENANTS OF SECTION 5.5 OF THE
PLAN THEN THE OPTIONEE MAY EXERCISE THE OPTION UNTIL THE EARLIER OF (I) THE
TWELVE-MONTH ANNIVERSARY OF THE EFFECTIVE DATE OF THE OPTIONEE’S TERMINATION OF
SERVICE AS A RESULT OF THE OPTIONEE’S RETIREMENT, OR (II) THE EXPIRATION DATE. 
IF THE

 

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OPTIONEE’S SERVICE WITH THE COMPANY OR ANY SUBSIDIARY TERMINATES AS A RESULT OF
THE OPTIONEE’S RETIREMENT AND THE OPTIONEE AGREES TO BE BOUND BY THE RESTRICTIVE
COVENANTS OF SECTION 5.5 OF THE PLAN THEN THE OPTIONEE WILL CONTINUE TO VEST IN
THE OPTIONS PURSUANT TO THE PROVISIONS OF SECTION 2(D) OF THIS OPTION AGREEMENT
AND THE OPTIONEE MAY EXERCISE THE OPTION UNTIL THE EARLIER OF (I) 60 DAYS
FOLLOWING THE EARLIER OF (A) THE THIRD ANNIVERSARY OF THE OPTIONEE’S RETIREMENT,
OR (B) THE TWELVE-MONTH ANNIVERSARY FOLLOWING THE OPTIONEE’S DEATH, OR (II) THE
EXPIRATION DATE.

 

8.             DEATH OR DISABILITY.  IN THE EVENT OF THE TERMINATION OF THE
OPTIONEE’S SERVICE WITH THE COMPANY OR ANY SUBSIDIARY AS A RESULT OF THE
OPTIONEE’S DEATH OR DISABILITY THE OPTIONEE, THE OPTIONEE’S ESTATE, OR ANY
PERSON WHO ACQUIRED THE RIGHT TO EXERCISE THE OPTION BY BEQUEST OR INHERITANCE,
AS APPLICABLE, MAY, TO THE EXTENT THE OPTION WAS VESTED ON THE EFFECTIVE DATE OF
THE OPTIONEE’S DEATH OR DISABILITY, INCLUDING ANY ADDITIONAL OPTIONS WHICH
VESTED PURSUANT TO THE TERMS OF SECTION 2(D) OF THIS OPTION AGREEMENT AS A
RESULT OF THE OPTIONEE’S DEATH OR DISABILITY, EXERCISE THE OPTION UNTIL THE
EARLIER OF (I) THE TWELVE-MONTH ANNIVERSARY OF THE EFFECTIVE DATE OF THE
OPTIONEE’S TERMINATION OF SERVICE AS A RESULT OF THE OPTIONEE’S DEATH OR
DISABILITY, OR (II) THE EXPIRATION DATE.

 

9.             TRANSFERABILITY OF OPTION.  NEITHER THE OPTION NOR ANY OF THE
OPTIONEE’S RIGHTS UNDER THIS OPTION AGREEMENT MAY BE TRANSFERRED OR ASSIGNED IN
ANY MANNER OTHER THAN BY WILL OR BY THE LAW OF DESCENT AND DISTRIBUTION OR AS
MAY OTHERWISE BE PERMITTED BY THE COMMITTEE OR BY THE TERMS OF THE PLAN.  THE
OPTION AND THOSE RIGHTS MAY BE EXERCISED DURING THE LIFETIME OF THE OPTIONEE
ONLY BY THE OPTIONEE.

 

10.          TAX CONSEQUENCES.  SET FORTH BELOW IS A BRIEF SUMMARY, AS OF THE
DATE OF GRANT, OF SOME OF THE FEDERAL TAX CONSEQUENCES OF EXERCISE OF THE OPTION
AND DISPOSITION OF THE SHARES.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  THE OPTIONEE SHOULD CONSULT A
TAX ADVISOR BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

 

(A)           EXERCISE OF NON-QUALIFIED STOCK OPTION.  THERE MAY BE A REGULAR
FEDERAL INCOME TAX LIABILITY UPON THE EXERCISE OF THE OPTION.  THE OPTIONEE WILL
BE TREATED AS HAVING RECEIVED COMPENSATION INCOME (TAXABLE AT ORDINARY INCOME
TAX RATES) EQUAL TO THE EXCESS, IF ANY, OF THE FAIR MARKET VALUE OF THE SHARES
ON THE DATE OF EXERCISE OVER THE EXERCISE PRICE.  IF THE OPTIONEE IS AN EMPLOYEE
OR FORMER EMPLOYEE, THE COMPANY WILL BE REQUIRED TO WITHHOLD FROM THE OPTIONEE’S
COMPENSATION OR COLLECT FROM THE OPTIONEE AND PAY TO THE APPLICABLE TAXING
AUTHORITIES AN AMOUNT EQUAL TO A PERCENTAGE OF THIS COMPENSATION INCOME AT THE
TIME OF EXERCISE.

 

(B)           DISPOSITION OF SHARES.  IF THE SHARES ARE HELD FOR AT LEAST ONE
YEAR BEFORE DISPOSITION, ANY GAIN ON DISPOSITION OF THE SHARES WILL BE TREATED
AS LONG-TERM CAPITAL GAIN FOR FEDERAL INCOME TAX PURPOSES.

 

11.          TERM OF OPTION.  THE OPTION MAY BE EXERCISED NO LATER THAN THE
EXPIRATION DATE OR SUCH EARLIER DATE AS OTHERWISE PROVIDED IN THIS OPTION
AGREEMENT.

 

12.          ENTIRE AGREEMENT; GOVERNING LAW.  THE PLAN AND THIS OPTION
AGREEMENT (WITH THE EXERCISE NOTICE, IF THE OPTION IS EXERCISED) CONSTITUTE THE
ENTIRE AGREEMENT OF THE COMPANY AND THE OPTIONEE (COLLECTIVELY THE “PARTIES”)
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE IN THEIR ENTIRETY ALL
PRIOR UNDERTAKINGS AND AGREEMENTS OF THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF, AND MAY NOT BE MODIFIED ADVERSELY TO THE OPTIONEE’S INTEREST
EXCEPT BY MEANS OF A WRITING SIGNED BY THE PARTIES.  NOTWITHSTANDING ANY
LANGUAGE IN THIS AGREEMENT TO THE

 

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CONTRARY, TO THE EXTENT OF ANY CONFLICT BETWEEN THIS AGREEMENT AND ANY WRITTEN
EMPLOYMENT AGREEMENT WITH OPTIONEE, THE TERMS OF SUCH EMPLOYMENT AGREEMENT SHALL
CONTROL.  NOTHING IN THE PLAN AND THIS OPTION AGREEMENT (EXCEPT AS EXPRESSLY
PROVIDED THEREIN OR HEREIN) IS INTENDED TO CONFER ANY RIGHTS OR REMEDIES ON ANY
PERSON OTHER THAN THE PARTIES.  THE PLAN AND THIS OPTION AGREEMENT ARE TO BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE-OF-LAW RULE THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE INTERNAL LAWS OF THE
STATE OF DELAWARE, TO THE RIGHTS AND DUTIES OF THE PARTIES.  SHOULD ANY
PROVISION OF THE PLAN OR THIS OPTION AGREEMENT BE DETERMINED BY A COURT OF LAW
TO BE ILLEGAL OR UNENFORCEABLE, SUCH PROVISION SHALL BE ENFORCED TO THE FULLEST
EXTENT ALLOWED BY LAW AND THE OTHER PROVISIONS SHALL NEVERTHELESS REMAIN
EFFECTIVE AND SHALL REMAIN ENFORCEABLE.

 

13.          INTERPRETIVE MATTERS.  WHENEVER REQUIRED BY THE CONTEXT, PRONOUNS
AND ANY VARIATION THEREOF SHALL BE DEEMED TO REFER TO THE MASCULINE, FEMININE,
OR NEUTER, AND THE SINGULAR SHALL INCLUDE THE PLURAL, AND VICE VERSA.  THE TERM
“INCLUDE” OR “INCLUDING” DOES NOT DENOTE OR IMPLY ANY LIMITATION.  THE CAPTIONS
AND HEADINGS USED IN THIS OPTION AGREEMENT ARE INSERTED FOR CONVENIENCE AND
SHALL NOT BE DEEMED A PART OF THE OPTION OR THIS OPTION AGREEMENT FOR
CONSTRUCTION OR INTERPRETATION.

 

14.          NOTICE.  ANY NOTICE OR OTHER COMMUNICATION REQUIRED OR PERMITTED
HEREUNDER SHALL BE GIVEN IN WRITING AND SHALL BE DEEMED GIVEN, EFFECTIVE, AND
RECEIVED UPON PREPAID DELIVERY IN PERSON OR BY COURIER OR UPON THE EARLIEST OF
DELIVERY OR THE THIRD BUSINESS DAY AFTER DEPOSIT IN THE UNITED STATES MAIL IF
SENT BY CERTIFIED MAIL, WITH POSTAGE AND FEES PREPAID, ADDRESSED TO THE OTHER
PARTY AT ITS ADDRESS AS SHOWN BENEATH ITS SIGNATURE IN THIS OPTION AGREEMENT, OR
TO SUCH OTHER ADDRESS AS SUCH PARTY MAY DESIGNATE IN WRITING FROM TIME TO TIME
BY NOTICE TO THE OTHER PARTY IN ACCORDANCE WITH THIS SECTION 14.

 

 

 

SALLY BEAUTY HOLDINGS, INC.

 

By:

 

 

Title:

 

 

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THE OPTIONEE ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED
OTHERWISE HEREIN, THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY
DURING THE PERIOD OF THE OPTIONEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF
BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER).  THE
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS OPTION AGREEMENT
OR THE PLAN SHALL CONFER UPON THE OPTIONEE ANY RIGHT WITH RESPECT TO FUTURE
GRANTS OR CONTINUATION OF THE OPTIONEE’S CONTINUOUS SERVICE, NOR SHALL IT
INTERFERE IN ANY WAY WITH THE OPTIONEE’S RIGHT OR THE RIGHT OF THE OPTIONEE’S
EMPLOYER TO TERMINATE OPTIONEE’S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND
WITH OR WITHOUT NOTICE.  THE OPTIONEE ACKNOWLEDGES THAT UNLESS THE OPTIONEE HAS
A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE OPTIONEE’S
STATUS IS AT-WILL.

 

The Optionee acknowledges receipt of a copy of the Plan, represents that he or
she is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions hereof and thereof.  The
Optionee has reviewed this Option Agreement, the Plan, and the Exercise Notice
in their entirety, has had an opportunity to obtain the advice of counsel prior
to executing this Option Agreement, and fully understands all provisions of this
Option Agreement, the Plan and the Exercise Notice.  The Optionee further agrees
to provide the Company with such information as the Company considers necessary
for the administration of this Option Agreement.

 

 

 

OPTIONEE:

 

 

 

 

 

(Print Name)

 

 

 

 

 

(Signature)

 

 

 

 

 

Dated:

 

 

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EXHIBIT A

 

SALLY BEAUTY HOLDINGS 2007 OMNIBUS INCENTIVE PLAN

 

STOCK OPTION EXERCISE NOTICE

 

This Stock Option Exercise Notice (“Exercise Notice”) is made this         day
of                         , 20       between Sally Beauty Holdings, Inc. (the
“Company”), and the optionee named below (the “Optionee”) pursuant to the Sally
Beauty Holdings 2007 Omnibus Incentive Plan (the “Plan”).  Unless otherwise
defined herein, the capitalized terms used in this Exercise Notice shall have
the meaning ascribed to them in the Plan and in the Stock Option Agreement
(“Option Agreement”) to which this Exercise Notice relates.

 

Award Number:

 

 

 

Optionee:

 

 

 

Number of Shares Purchased:

 

 

 

Option Exercise Price Per Share:

 

 

 

Aggregate Purchase Price:

 

 

 

Date of Grant:

 

 

 

Vesting Commencement Date:

 

 

 

Type of Stock Option:

Non-Qualified Stock Option

 

The Optionee hereby delivers to the Company the Aggregate Purchase Price set
forth above (“Aggregate Purchase Price”) in cash as indicated below or to the
extent provided for in the Option Agreement and approved by the Committee by
accepting this Exercise Notice, as follows (as applicable, check and complete):

 

o

in cash in the amount of $                        , receipt of which is
acknowledged by the Company;

 

 

o

through a “same-day-sale” commitment, delivered herewith, from the Optionee and
the NASD Dealer named therein in the amount of
$                                      ;

 

 

o

through a “margin” commitment, delivered herewith, from the Optionee and the
NASD Dealer named therein in the amount of
$                                    ;

 

The Company and the Optionee (the “Parties”) hereby agree as follows:

 

1.             PURCHASE OF SHARES.  ON THIS DATE AND SUBJECT TO THE TERMS AND
CONDITIONS OF THIS EXERCISE NOTICE, THE OPTIONEE HEREBY EXERCISES THE OPTION
GRANTED IN THE OPTION AGREEMENT BETWEEN THE PARTIES, DATED AS OF THE DATE OF
GRANT SET FORTH ABOVE, WITH RESPECT TO THE NUMBER OF SHARES PURCHASED SET FORTH
ABOVE OF THE COMMON STOCK (THE “SHARES”) AT THE AGGREGATE

 

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PURCHASE PRICE EQUAL TO THE OPTION EXERCISE PRICE PER SHARE SET FORTH ABOVE
MULTIPLIED BY THE NUMBER OF SHARES PURCHASED SET FORTH ABOVE.  THE TERM “SHARES”
REFERS TO THE SHARES PURCHASED UNDER THIS EXERCISE NOTICE AND INCLUDES ALL
SECURITIES RECEIVED (A) IN REPLACEMENT OF THE SHARES, AND (B) AS A RESULT OF
STOCK DIVIDENDS OR STOCK SPLITS IN RESPECT OF THE SHARES.

 

2.             REPRESENTATIONS OF THE OPTIONEE.  THE OPTIONEE REPRESENTS AND
WARRANTS TO THE COMPANY THAT THE OPTIONEE HAS RECEIVED, READ AND UNDERSTOOD THE
PLAN, THE OPTION AGREEMENT AND THIS EXERCISE NOTICE AND AGREES TO ABIDE BY AND
BE BOUND BY THEIR TERMS AND CONDITIONS.

 

3.             RIGHTS AS STOCKHOLDER.  UNTIL OPTIONEE RECEIVES EVIDENCE OF THE
ISSUANCE OF THE SHARES, NO RIGHT TO VOTE OR RECEIVE DIVIDENDS OR ANY OTHER
RIGHTS AS A SHAREHOLDER SHALL EXIST WITH RESPECT TO THE SHARES, NOTWITHSTANDING
THE EXERCISE OF THE OPTION.  TO THE EXTENT THE OPTIONEE EXERCISES THE OPTION
PURSUANT TO THE EXECUTION AND DELIVERY OF THIS EXERCISE NOTICE, THE COMPANY
SHALL ISSUE TO OPTIONEE THE SHARES OF COMMON STOCK COVERED BY THIS EXERCISE
NOTICE.  EVIDENCE OF THE ISSUANCE OF THE SHARES OF COMMON STOCK PURCHASED
PURSUANT TO THE EXERCISE OF THE OPTION MAY BE ACCOMPLISHED IN SUCH MANNER AS THE
COMPANY OR ITS AUTHORIZED REPRESENTATIVES SHALL DEEM APPROPRIATE INCLUDING,
WITHOUT LIMITATION, ELECTRONIC REGISTRATION, BOOK-ENTRY REGISTRATION OR ISSUANCE
OF A CERTIFICATE OR CERTIFICATES IN THE NAME OF THE OPTIONEE OR IN THE NAME OF
SUCH OTHER PARTY OR PARTIES AS THE COMPANY AND ITS AUTHORIZED REPRESENTATIVES
SHALL DEEM APPROPRIATE.  NO ADJUSTMENT WILL BE MADE FOR A DIVIDEND OR OTHER
RIGHT FOR WHICH THE RECORD DATE IS PRIOR TO THE DATE THE OPTIONEE RECEIVES
EVIDENCE OF THE ISSUANCE OF THE SHARES.

 

IN THE EVENT THE SHARES OF COMMON STOCK ISSUED PURSUANT TO THE EXERCISE OF THIS
OPTION REMAIN SUBJECT TO ANY ADDITIONAL RESTRICTIONS, THE COMPANY AND ITS
AUTHORIZED REPRESENTATIVES SHALL TAKE SUCH ACTIONS AS THE COMPANY, OR ITS
AUTHORIZED REPRESENTATIVE, DEEMS APPROPRIATE TO ENSURE THAT THE OPTIONEE IS
PROHIBITED FROM ENTERING INTO ANY TRANSACTION WHICH WOULD VIOLATE ANY SUCH
RESTRICTIONS, UNTIL SUCH RESTRICTIONS LAPSE.

 

4.             TAX WITHHOLDING OBLIGATIONS.  THE OPTIONEE AGREES TO SATISFY ALL
APPLICABLE FEDERAL, STATE AND LOCAL INCOME, EMPLOYMENT AND OTHER TAX WITHHOLDING
OBLIGATIONS AND HEREWITH DELIVERS TO THE COMPANY THE AMOUNT NECESSARY, OR HAS
MADE ARRANGEMENTS ACCEPTABLE TO THE COMPANY, TO SATISFY SUCH OBLIGATIONS AS
PROVIDED IN THE PLAN AND THE OPTION AGREEMENT.

 

5.             TAX CONSEQUENCES.  THE OPTIONEE UNDERSTANDS THAT HE OR SHE MAY
SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF THE OPTIONEE’S PURCHASE OR
DISPOSITION OF THE SHARES.  THE OPTIONEE REPRESENTS THAT THE OPTIONEE HAS
CONSULTED WITH ANY TAX CONSULTANT(S) HE OR SHE DEEMS ADVISABLE IN CONNECTION
WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING
ON THE COMPANY FOR ANY TAX ADVICE.

 

6.             SUCCESSORS AND ASSIGNS.  THE COMPANY MAY ASSIGN ANY OF ITS RIGHTS
UNDER THIS EXERCISE NOTICE, AND THIS EXERCISE NOTICE SHALL INURE TO THE BENEFIT
OF THE SUCCESSORS AND ASSIGNS OF THE COMPANY.  SUBJECT TO THE RESTRICTIONS ON
TRANSFER HEREIN SET FORTH, THIS EXERCISE NOTICE SHALL BE BINDING UPON THE
OPTIONEE AND HIS OR HER HEIRS, EXECUTORS, ADMINISTRATORS, SUCCESSORS AND
PERMITTED ASSIGNS.

 

7.             INTERPRETIVE MATTERS.  WHENEVER REQUIRED BY THE CONTEXT, PRONOUNS
AND ANY VARIATION THEREOF SHALL BE DEEMED TO REFER TO THE MASCULINE, FEMININE,
OR NEUTER, AND THE SINGULAR SHALL INCLUDE THE PLURAL, AND VICE VERSA.  THE TERM
“INCLUDE” OR “INCLUDING” DOES NOT DENOTE OR IMPLY ANY LIMITATION.  THE CAPTIONS
AND HEADINGS USED IN THIS EXERCISE NOTICE ARE INSERTED FOR

 

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CONVENIENCE AND SHALL NOT BE DEEMED A PART OF THIS EXERCISE NOTICE FOR
CONSTRUCTION OR INTERPRETATION.

 

8.             ENTIRE AGREEMENT; GOVERNING LAW.  THIS EXERCISE NOTICE, WITH THE
PLAN AND THE OPTION AGREEMENT, CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE IN THEIR ENTIRETY ALL
PRIOR UNDERTAKINGS AND AGREEMENTS OF THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF, AND MAY NOT BE MODIFIED ADVERSELY TO THE OPTIONEE’S INTEREST
EXCEPT BY MEANS OF A WRITING SIGNED BY THE PARTIES.  NOTHING IN THIS EXERCISE
NOTICE OR IN THE PLAN OR THE OPTION AGREEMENT (EXCEPT AS EXPRESSLY PROVIDED
HEREIN OR THEREIN) IS INTENDED TO CONFER ANY RIGHTS OR REMEDIES ON ANY PERSON
OTHER THAN THE PARTIES.  THIS EXERCISE NOTICE (LIKE THE PLAN AND THE OPTION
AGREEMENT) IS TO BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE-OF-LAW
RULE THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN
THE INTERNAL LAWS OF THE STATE OF TEXAS TO THE RIGHTS AND DUTIES OF THE
PARTIES.  SHOULD ANY PROVISION OF THE PLAN, THE OPTION AGREEMENT, OR THIS
EXERCISE NOTICE BE DETERMINED BY A COURT OF LAW TO BE ILLEGAL OR UNENFORCEABLE,
SUCH PROVISION SHALL BE ENFORCED TO THE FULLEST EXTENT ALLOWED BY LAW, AND THE
OTHER PROVISIONS SHALL NEVERTHELESS REMAIN EFFECTIVE AND SHALL REMAIN
ENFORCEABLE.

 

9.             NOTICE.  ANY NOTICE OR OTHER COMMUNICATION REQUIRED OR PERMITTED
HEREUNDER SHALL BE GIVEN IN WRITING AND SHALL BE DEEMED GIVEN, EFFECTIVE, AND
RECEIVED UPON PREPAID DELIVERY IN PERSON OR BY COURIER OR UPON THE EARLIER OF
DELIVERY OR THE THIRD BUSINESS DAY AFTER DEPOSIT IN THE UNITED STATES MAIL IF
SENT BY CERTIFIED MAIL, WITH POSTAGE AND FEES PREPAID, ADDRESSED TO THE OTHER
PARTY AT ITS ADDRESS AS SHOWN BENEATH ITS SIGNATURE IN THE OPTION AGREEMENT, OR
TO SUCH OTHER ADDRESS AS SUCH PARTY MAY DESIGNATE IN WRITING FROM TIME TO TIME
BY NOTICE TO THE OTHER PARTY IN ACCORDANCE WITH THIS SECTION 9.

 

10.          FURTHER INSTRUMENTS.  EACH PARTY AGREES TO EXECUTE SUCH FURTHER
INSTRUMENTS AND TO TAKE SUCH FURTHER ACTION AS MAY BE NECESSARY OR REASONABLY
APPROPRIATE TO CARRY OUT THE PURPOSES AND INTENT OF THIS EXERCISE NOTICE.

 

 

Submitted by:

 

Accepted by:

 

 

 

OPTIONEE:

 

SALLY BEAUTY HOLDINGS, INC.

 

 

 

 

 

 

(Print Name)

 

 

 

 

By:

 

 

 

 

 

 

 

Its:

 

(Signature)

 

 

 

 

 

 

 

Dated:

 

 

Dated:

 

 

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