Exhibit 10.1


 


February
24, 2010


 


Clayton,
Dubilier & Rice LLC


375
Park Avenue


18th
Floor


New
York, New York 10152


Attn.:   Kevin J. Conway


 


Dear
Mr. Conway:


 


This
letter memorializes the agreement between Clayton, Dubilier & Rice, LLC (“CD&R”)
and Sally Beauty Holdings, Inc. (“SBH”) with respect to the provision of
services by CD&R to the SBH Board of Directors (the “Board”).


 


Professional
employees of CD&R serve as, and may in the future serve as, members of the
Board (each a “CD&R Designee” and, collectively, the “CD&R Designees”).


 


As
compensation for the services of the CD&R Designees (the “Services”),
CD&R shall receive thirty-seven thousand five hundred dollars ($37,500) per
calendar quarter, paid quarterly in advance, for each CD&R Designee serving
as a member of the Board.  In
consideration of this Services payment, CD&R on behalf of the current and
future CD&R Designees, irrevocably waives and disclaims any right to the
payment of other compensation of any kind for serving as a member of the Board
(and any of its committees), including but expressly not limited to the receipt
of retainers, meeting fees and equity-based compensation.


 


In
addition, beginning January 26, 2010, CD&R Designees shall receive
reimbursement for travel and other out-of-pocket expenses in the same manner
and to the same extent as other members of the Board under the then-applicable
independent director compensation policy, except that to the extent that the
Chairman of the Board remains a CD&R Designee, such Chairman (or any other
CD&R Designee) will be entitled to up to one hundred fifty thousand dollars
($150,000) per calendar year as reimbursement for actual private air travel
expenses in lieu of any reimbursement based on the cost of commercial air
travel.


 


This
agreement has been approved by a majority of the members of the Board who are
not employees of CD&R or SBH (the “Disinterested Directors”).


 


Payments
under this letter agreement shall continue until the first of (i) the tenth
anniversary of November 16, 2006, or (ii) such a time as there are no longer
CD&R Designees.


 


1

















 


The
parties acknowledge and agree that CD&R shall perform the Services as an
independent contractor, retaining control over and responsibility for its own
operations and personnel and those of its affiliates.


 


In
the course of CD&R’s providing Services, SBH may disclose and deliver to
CD&R certain information.  All such
information furnished directly or indirectly by SBH, whether oral or written,
and regardless of the manner in which it is furnished, together with any notes,
reports, summaries, analyses, compilations, studies, interpretations, memoranda
or other material (in any format, including, without limitation, electronic)
prepared by CD&R that contain, are derived from, refer to, rely upon or
use, in whole or in part, any information so furnished to CD&R pursuant
hereto is referred to in this letter agreement as “Proprietary Information”.  Proprietary Information does not include,
however, information that CD&R demonstrates (i) is or becomes generally
available to the public other than as a result of a disclosure directly or
indirectly by CD&R in breach of the terms of this letter agreement, (ii) was
available to CD&R on a nonconfidential basis prior to its disclosure by
SBH, (iii) becomes available to CD&R on a nonconfidential basis from a
person or entity other than SBH which CD&R has no reason to believe is
bound by a confidentiality agreement with SBH or is otherwise under an
obligation to SBH not to transmit the information to CD&R, or (iv) is
independently developed by CD&R without derivation from, reference to or
reliance upon, or using in any manner the Proprietary Information.


 


Subject
to the immediately preceding paragraph, unless otherwise agreed to in writing
by SBH and except as required by applicable law, regulation, stock exchange
rule, or by legal process, CD&R agrees (i) to keep all Proprietary
Information confidential and not to disclose or reveal any Proprietary
Information to any other person or entity, and (ii) not to use Proprietary
Information for any purpose other than in connection with providing Services.


 


This
letter agreement (i) contains the complete and entire understanding and
agreement between CD&R and SBH with respect to the subject matter hereof,
and (ii) supersedes all prior and contemporaneous understandings, conditions
and agreements, whether written or oral, express or implied, in respect of the
subject matter hereof.  SBH acknowledges
and agrees that CD&R makes no representations or warranties in connection
with this letter agreement or its provision of the Services.  This letter agreement may not be amended,
restated, supplemented or otherwise modified, and no provision of this letter
agreement may be waived, other than in a writing duly executed by the parties
hereto and approved by a majority of the Disinterested Directors.  This letter agreement and any dispute or
controversy arising hereunder shall be governed by the laws of the state of
Delaware to the same extent as agreements entered into and fully performed in
the state of Delaware.  The parties agree
that the courts serving Wilmington, Delaware shall be the sole and exclusive
forum for any lawsuit arising out of this letter agreement and any dispute or
controversy arising hereunder, and the parties expressly waive and disclaim any
right to bring a lawsuit or other adversarial proceeding in any other court or
forum.


 


Please
acknowledge your agreement with the terms of this letter agreement by signing
where shown below, returning an original copy to me.


 


2

















 


	
  Sincerely,

  	
   

  
	
   

  	
   

  
	
  /s/
  Gary Winterhalter

  	
   

  
	
   

  	
   

  
	
  Gary
  Winterhalter

  	
   

  
	
  President
  and Chief Executive Officer

  	
   

  
	
  Sally
  Beauty Holdings, Inc.

  	
   

  



 


Acknowledged
and agreed:


 


	
  /s/
  Kevin J. Conway

  	
   

  	
  4/21/10

  
	
  Kevin
  J. Conway

  	
   

  	
  Date

  
	
  Vice
  President, Secretary, and Assistant Treasurer

  	
   

  	
   

  
	
  Clayton,
  Dubilier & Rice, LLC

  	
   

  	
   

  



 


3