Document:

Exhibit 4.4

SALLY
BEAUTY HOLDINGS

2007 OMNIBUS INCENTIVE PLAN

ARTICLE I

PURPOSES

 

The purposes of the Plan are to foster and promote
the long-term financial success of the Company and the Subsidiaries and
materially increase shareholder value by (a) motivating superior
performance by Participants, (b) providing Participants with an
ownership interest in the Company, and (c) enabling the Company and
the Subsidiaries to attract and retain the services of outstanding Employees
upon whose judgment, interest and special effort the successful conduct of its
operations is largely dependent.

ARTICLE II

DEFINITIONS

2.1           Certain
Definitions.  Capitalized terms used
herein without definition shall have the respective meanings set forth below:

“Adjustment Event” means any dividend payable
in capital stock, stock split, share combination, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares or other similar event affecting the Common Stock.

“Affiliate” means, with respect to any person,
any other person controlled by, controlling or under common control with such
person.

“Alternative Award” has the meaning given in
Section 9.2.

“Award” means any Option, Stock Appreciation
Right, Performance Stock, Performance Stock Unit, Performance Unit, Restricted
Stock, Restricted Stock Unit, or Deferred Stock granted pursuant to the Plan,
including an Award combining two or more types in a single grant.

“Award Agreement” means any written agreement,
contract, or other instrument or document evidencing any Award granted by the
Committee pursuant to the Plan.

“Business” has the meaning given in Section
5.5.

“Board” means the Board of Directors of the
Company.

“Cause” means, except as otherwise defined in
an Award Agreement, with respect to any Participant (as determined by the
Committee in its sole discretion) (i) the continued and willful
failure of the Participant substantially to perform the duties of his or her
employment for the Company or any Subsidiary (other than any such failure due
to the Participant’s Disability); (ii) the Participant’s engaging
in willful or serious misconduct that has caused or could reasonably be
expected to result in material injury to the Company or any of its Subsidiaries
or 

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Affiliates, including,
but not limited to by way of damage to the Company’s or a Subsidiary’s
reputation or public standing; (iii) the Participant’s conviction
of, or entering a plea of guilty or nolo  contendere to, a crime
constituting a felony; or (iv) the Participant’s material violation or
breach of the Company’s or any Subsidiary’s code of conduct or ethics or other
Company policy or rule or the material breach by the Participant of any of his
or her obligations under any written covenant or agreement with the Company or
any of its Subsidiaries or Affiliates; provided that, with respect to any
Participant who is a party to an employment agreement with the Company or any
Subsidiary, “Cause” shall have the meaning specified in such Participant’s
employment agreement.

“CD&R Fund” means the Clayton, Dubilier
& Rice Fund VII Limited Partnership, a Cayman Islands exempted limited
partnership, and any successor or other investment vehicle managed by Clayton,
Dubilier & Rice, Inc.

“Change in Control” means the first occurrence
of any of the following events after the effective date of the Plan:

(a)  the acquisition by any person, entity or “group”
(as defined in Section 13(d) of the Exchange Act), other than the Company,
the Subsidiaries, any employee benefit plan of the Company or the Subsidiaries,
the CD&R Fund or any Affiliate of the CD&R Fund, of 50% or more of the
combined voting power of the Company’s then outstanding voting securities;

(b)  within any twenty-four (24) month period, the
Incumbent Directors  shall cease to
constitute at least a majority of the Board or the board of directors of any
successor to the Company; provided, however, that any director elected to the
Board, or nominated for election, by a majority of the Incumbent Directors then
still in office shall be deemed to be an Incumbent Director for purposes of
this clause (b);

(c)  the merger or consolidation of the Company as
a result of which persons who were owners of the voting securities of the
Company, immediately prior to such merger or consolidation, do not, immediately
thereafter, own, directly or indirectly, more than 50% of the combined voting
power entitled to vote generally in the election of directors of the merged or
consolidated company;

(d)  the approval by the Company’s shareholders of
the liquidation or dissolution of the Company other than a liquidation of the
Company into any Subsidiary or a liquidation a result of which persons who were
stockholders of the Company immediately prior to such liquidation own, directly
or indirectly, more than 50% of the combined voting power entitled to vote
generally in the election of directors of the entity that holds substantially
all of the assets of the Company following such event; and

(e)  the sale, transfer or other disposition of all
or substantially all of the assets of the Company to one or more persons or
entities that are not, immediately prior to such sale, transfer or other
disposition, Affiliates of the Company or the CD&R Fund.

Notwithstanding the
foregoing, a “Change in Control” shall not be deemed to occur if the Company
files for bankruptcy, liquidation or reorganization under the United States
Bankruptcy Code.

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“Change in Control Price” means the price per
share on a fully-diluted basis offered in conjunction with any transaction
resulting in a Change in Control, as determined in good faith by the Committee
as constituted before the Change in Control, if any part of the offered price
is payable other than in cash.

“Code” means the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder.

“Committee” means the Compensation Committee of
the Board which is intended to consist solely of two or more (i) “outside
directors” within the meaning of Treas. Reg. Sec. 1.162-27
promulgated under section 162(m) of the Code and any successor regulation,
(ii) “Non-Employee Directors” within the meaning of Rule 16b-3
promulgated under the Exchange Act and, and (iii) independent directors
under the rules of the New York Stock Exchange.

“Common Stock” means the common stock, par
value $0.01 per share, of the Company.

“Company” means Sally Beauty Holdings, Inc., a
Delaware corporation, and any successor thereto.

“Deferred Annual Amount” has the meaning given
in Section 8.1.

“Deferred Stock” means a Participant’s contractual
right to receive a stated number of shares of Common Stock or, if provided by
the Committee on the grant date, cash equal to the Fair Market Value of such
shares of Common Stock, under the Plan at the end of a specified period of
time.

“Dividend Equivalents” means an amount equal to
any dividends and distributions paid by the Company with respect to the number
of shares of Common Stock subject to an Award.

“Disability” means, unless otherwise provided
in an Award Agreement, a physical or mental disability or infirmity that
prevents or is reasonably expected to prevent the performance of a Participant’s
employment-related duties for a period of six months or longer and, within 30
days after the Company notifies the Participant in writing that it intends to
terminate his employment, the Participant shall not have returned to the
performance of his employment-related duties on a full-time basis; provided
that for purposes of Section 5.5(a) in respect of ISOs, the term “Disability”
shall have meaning assigned to the term “Permanent and Total Disability” by
section 22(e)(3) of the Code (i.e., physical or mental disability
or infirmity lasting not less than 12 months). 
The Committee’s reasoned and good faith judgment of Disability shall be
final, binding and conclusive, and shall be based on such competent medical
evidence as shall be presented to it by such Participant and/or by any
physician or group of physicians or other competent medical expert employed by
the Participant or the Company to advise the Committee.  Notwithstanding the foregoing (but except in
the case of ISOs), with respect to any Participant who is a party to an
employment agreement with the Company or any Subsidiary, “Disability” shall
have the meaning, if any, specified in such Participant’s employment agreement.

“Employee” means any non-employee
director, officer or employee of, or any natural person who is a consultant or
advisor to, the Company or any Subsidiary.

“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules promulgated thereunder.

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“Executive Officer” means each person who is an
officer of the Company or any Subsidiary and who is subject to the reporting
requirements under Section 16(a) of the Exchange Act.

“Fair Market Value” means, unless otherwise
defined in an Award Agreement, as of any date, the closing price of one share
of Common Stock on the New York Stock Exchange (or on such other recognized
market or quotation system on which the trading prices of Common Stock are
traded or quoted at the relevant time) on the date as of which such Fair Market
Value is determined.  If there are no
Common Stock transactions reported the New York Stock Exchange (or on such
other exchange or system as described above) on such date, Fair Market Value
shall mean closing price for a share of Common Stock on the immediately
preceding day on which Common Stock transactions were so reported.

“Financial Gain” has the meaning given in
Section 5.5.

“Incumbent Director” means with respect to any
period of time specified under the Plan for purposes of determining a Change in
Control, the persons who were members of the Board at the beginning of such
period; provided, that a director elected, or nominated for election, to the
Board in connection with a proxy contest shall not be considered an Incumbent
Director.

“ISOs” has the meaning given in Section 5.1(a).

“New Employer” means a Participant’s employer,
or the parent or a subsidiary of such employer, immediately following a Change
in Control.

“NSOs” has the meaning given in Section 5.1(a).

“One-Year Date” has the meaning given in
Section 5.5.

“Option” means the right granted to a
Participant pursuant to the Plan to purchase a stated number of shares of
Common Stock at a stated price for a specified period of time.

“Participant” means any Employee or prospective
Employee designated by the Committee to receive an Award under the Plan.

“Performance Period” means the period, as
determined by the Committee, during which the performance of the Company, any
Subsidiary, any business unit and any individual is measured to determine
whether and the extent to which the applicable performance measures have been
achieved.

“Performance Stock” means a grant of a stated
number of shares of Common Stock to a Participant under the Plan that is forfeitable
by the Participant until the attainment of specified performance goals, or
until otherwise determined by the Committee or in accordance with the Plan,
subject to the continuous employment of the Participant through the applicable
Performance Period.

“Performance Stock Unit” means a Participant’s
contractual right to receive a stated number of shares of Common Stock or, if
provided by the Committee on or after the grant date, cash equal to the Fair
Market Value of such shares of Common Stock, under the Plan at a specified time
that is forfeitable by the Participant until the attainment of specified
performance 

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goals, or until otherwise
determined by the Committee or in accordance with the Plan, subject to the
continuous employment of the Participant through the applicable Performance
Period.

“Performance Unit” means a Participant’s
contractual right to receive a cash-denominated award, payable in cash or
shares of Common Stock, under the Plan at a specified time that is forfeitable
by the Participant until the attainment of specified performance goals, or
until otherwise determined by the Committee or in accordance with the Plan,
subject to the continuous employment of the Participant through the applicable
Performance Period.

“Permitted Transferee” has the meaning given in
Section 12.1.

“Plan” means this Sally Beauty Holdings, Inc.
Omnibus Stock Incentive Plan, as the same may be amended from time to time.

“Prior Plan” means the Alberto-Culver Company
Employee Stock Option Plan of 2003 and the Alberto-Culver Company 2003
Restricted Stock Plan.

“Replacement Award” means an Award made to
employees of companies acquired by the Company to replace incentive awards and
opportunities held by such employees prior to such acquisition.

“Restricted Stock” means a grant of a stated
number of shares of Common Stock to a Participant under the Plan that is
forfeitable by the Participant until the completion of a specified period of
future service, or until otherwise determined by the Committee or in accordance
with the Plan.

“Restricted Stock Unit” means a Participant’s
contractual right to receive a stated number of shares of Common Stock or, if
provided by the Committee on the grant date, cash equal to the Fair Market
Value of such shares of Common Stock, under the Plan at the end of a specified
period of time that is forfeitable by the Participant until the completion of a
specified period of future service, or until otherwise determined by the
Committee or in accordance with the Plan.

“Restriction Period” means the period during
which any Performance Stock, Performance Stock Units, Performance Units,
Restricted Stock, Restricted Stock Units or freestanding Deferred Stock, as the
case may be, are subject to forfeiture and/or restriction on transfer pursuant
to the terms of the Plan.

“Retained Awards” has the meaning given in
Section 6.6.

“Retirement” shall be reached when a
Participant’s employment terminates from Company and any Subsidiary and at the
time of such termination the sum of such Participant’s age and years of service
as an employee of the Company or any Subsidiary equals or exceeds 75 years, and
the Participant has at least attained the age of 55.

“Stock Appreciation Right” means, with respect
to shares of Common Stock, the right to receive a payment from the Company in
cash and/or shares of Common Stock equal to the product of (i) the
excess, if any, of the Fair Market Value of one share of Common Stock on the
exercise date over a specified base price fixed by the Committee on the grant
date, multiplied by (ii) a stated number of shares of Common Stock.

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“Subsidiary” means any corporation in which the
Company owns, directly or indirectly, stock representing 50% or more of the
combined voting power of all classes of stock entitled to vote, and any other business
organization, regardless of form, in which the Company possesses, directly or
indirectly, 50% or more of the total combined equity interests in such
organization.

“Wrongful Conduct” has the meaning given in
Section 5.5.

“Wrongful Conduct Period” has the meaning given
in Section 5.5.

2.2           Gender and Number.  Except when otherwise indicated by the
context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.

ARTICLE
III

POWERS OF
THE COMMITTEE

3.1           Eligibility and Participation.  Participants in the Plan shall be those
Employees designated by the affirmative action of the Committee (or its
delegate) to participate in the Plan.

3.2           Power to Grant and Establish Terms of
Options.  The Committee shall have
the authority, subject to the terms of the Plan, to determine the Employees to
whom Awards shall be granted, the type or types of Awards to be granted and the
terms and conditions of any and all Awards including, but not limited to, the
number of shares of Common Stock subject to an Award, the time or times at
which Awards shall be granted, and the terms and conditions of applicable Award
Agreements.  The Committee may establish
different terms and conditions for different types of Awards, for different
Participants receiving the same type of Award, and for the same Participant for
each type of Award such Participant may receive, whether or not granted at the
same or different times.

3.3           Administration.  The Committee shall be responsible for the
administration of the Plan.  Any Awards
granted by the Committee may be subject to such conditions, not inconsistent
with the terms of the Plan, as the Committee shall determine.  The Committee shall have authority to
prescribe, amend and rescind rules and regulations relating to the Plan, to
provide for conditions deemed necessary or advisable to protect the interests
of the Company, to interpret the Plan and to make all other determinations
necessary or advisable for the administration and interpretation of the Plan
and to carry out its provisions and purposes. 
Any determination, interpretation or other action made or taken
(including any failure to make any determination or interpretation, or take any
other action) by the Committee pursuant to the provisions of the Plan, shall,
to the greatest extent permitted by law, be within its sole and absolute
discretion and shall be final, binding and conclusive for all purposes and upon
all persons and shall be given deference in any proceeding with respect
thereto.

3.4           Delegation by the Committee.  The Committee may delegate, subject to such
terms or conditions or guidelines as it shall determine, to any officer or
group of officers of the Company or its affiliates any portion of its authority
and powers under the Plan with respect to Participants who are not Executive
Officers.  Only the Committee may select,
grant, administer, or exercise any other discretionary authority under the Plan
in respect of Awards granted to such Participants who are Executive Officers.

3.5           Participants Based Outside the United
States.  In order to conform with
provisions of local laws and regulations in foreign countries in which the
Company or its Subsidiaries operate, the Committee may (i) modify the
terms and conditions of Awards granted to Participants employed outside 

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the United States, (ii) establish subplans with modified
exercise procedures and such other modifications as may be necessary or
advisable under the circumstances presented by local laws and regulations, and
(iii) take any action which it deems advisable to obtain, comply with or
otherwise reflect any necessary governmental regulatory procedures, exemptions
or approvals with respect to the Plan or any subplan established hereunder.

ARTICLE
IV

STOCK
SUBJECT TO PLAN

4.1           Number.  Subject to the provisions of this Article IV,
the maximum number of shares of Common Stock available for Awards under the
Plan shall not exceed 10,000,000 shares of Common Stock.  The shares of Common Stock to be delivered
under the Plan may consist, in whole or in part, of Common Stock held in
treasury or authorized but unissued shares of Common Stock, not reserved for
any other purpose.

4.2           Canceled, Terminated, or Forfeited
Awards, etc.  Shares subject to any
Award granted hereunder or under any Prior Plan that for any reason are
canceled, terminated, forfeited, or otherwise settled without the issuance of
Common Stock after the effective date of the Plan shall be available for grant
under the Plan, subject to the maximum limitation specified in Section
4.1.  Without limiting the generality of
Section 4.1 hereof, (i) shares of Common Stock tendered by a
Participant to pay the exercise price of any Options or to satisfy any tax
withholding obligations pursuant to Section 12.4 shall be available for grant
under the Plan, (ii) shares of common stock withheld by the company to
satisfy any tax withholding obligations pursuant to Section 12.4 or to pay the
exercise price of any Options shall again be available for grant under the Plan
and, (iii) shares of Common Stock issued in connection with Awards
that are assumed, converted or substituted pursuant to an Adjustment Event or
Change in Control (i.e., Alternative Awards), or issued in connection
with Replacement Awards, shall not reduce the maximum limitation specified in
Section 4.1.  For purposes of this
Article IV, if a Stock Appreciation Right is granted in tandem with an Option
so that only one may be exercised with the other being surrendered on such exercise
in accordance with Section 5.4, the number of Shares subject to the tandem
Option and Stock Appreciation Right award shall only be taken into account once
(and not as to both awards).

4.3           Individual Award Limitations.  Subject to the provisions of Sections 4.2 and
4.4, the following individual Award limits shall apply:

(a)           During the term of the Plan, the maximum
number of shares of Common Stock available for grant as ISOs pursuant to the
Plan shall not exceed the maximum limitation specified in Section 4.1;

(b)           During any 36-month period, no Participant
shall receive Options or Stock Appreciation Rights covering more than 4,500,000
shares of Common Stock;

(c)           During any 36-month period, no Participant
shall receive any Awards that are subject to performance measures covering more
than 2,000,000 shares of Common Stock; provided that this number of
shares of Common Stock shall be proportionately adjusted on a straight-line
basis for Performance Periods of shorter or longer duration, not to exceed five
years; and

(d)           During any 36-month Performance Period, no
Participant shall receive any Awards that are payable in cash of more than
$7,000,000; provided that this dollar amount shall be proportionately
adjusted on a straight-line basis for Performance Periods of shorter or longer
duration, not to exceed five years.

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4.4           Adjustment in Capitalization.  In the event of any Adjustment Event
affecting the Common Stock, the Committee shall adjust to reflect such
Adjustment Event any or all of (a) the number and kind of shares of
Common Stock which thereafter may be awarded or optioned and sold under the
Plan (including, but not limited to, adjusting any limits on the number and
types of Awards that may be made under the Plan), (b) the number
and kind of shares of Common Stock subject to outstanding Awards, and (c) the
grant, exercise or conversion price with respect to any Award.  In addition, the Committee may make
provisions for a cash payment to a Participant or a person who has an
outstanding Award.  The number of shares
of Common Stock subject to any Award shall be rounded to the nearest whole
number.

4.5           Prohibition Against Repricing.  Except to the extent (i) approved
in advance by holders of a majority of the shares of the Company entitled to
vote generally in the election of directors or (ii) as a result of
any Adjustment Event, the Committee shall not have the power or authority to
reduce, whether through amendment or otherwise, the exercise price of any
outstanding Option or base price of any outstanding Stock Appreciation Right or
to grant any new Award, or make any cash payment, in substitution for or upon
the cancellation of Options or Stock Appreciation Rights previously granted.

ARTICLE V

STOCK
OPTIONS AND STOCK APPRECIATION RIGHTS

5.1           Options

(a)           Grant.  Options may be granted to Participants at
such time or times as shall be determined by the Committee.  Options pursuant to this Plan may be of two
types:  (i) ”incentive stock
options” within the meaning of section 422 of the Code (“ISOs”) and (ii) non-statutory
stock options (“NSOs”), which are not ISOs.  The grant date of an Option under the Plan
will be the date on which the Option is awarded by the Committee or such other
future date as the Committee shall determine in its sole discretion.  Each Option shall be evidenced by an Award
Agreement that shall specify the type of Option granted, the exercise price,
the duration of the Option, the number of shares of Common Stock to which the
Option pertains, the conditions upon which the Option or any portion thereof
shall become vested or exercisable, and such other terms and conditions not
inconsistent with the Plan as the Committee shall determine, including
customary representations, warranties and covenants with respect to securities
law matters.  For the avoidance of doubt,
ISOs may only be granted to Employees who are treated as common law employees
of the Company or any Subsidiary Corporation (as defined in section 424(f) of
the Code).

(b)           Exercise Price.  Each Option granted pursuant to the Plan shall
have an exercise price per share of Common Stock determined by the Committee; provided
that, except in the case of Replacement Awards, such per share exercise price
may not be less than the Fair Market Value of one share of Common Stock on the
Option grant date.

(c)           Exercisability.  Each Option awarded to a Participant under
the Plan shall become exercisable based on the performance of a minimum period
of service or the occurrence of any event or events, including a Change in
Control, as the Committee shall determine, either at or after the grant date; provided
that, except as otherwise provided in this Plan, no Option shall become
exercisable prior to a Participant’s completion of one year of service to the
Company or any Subsidiary.  No Option
shall be exercisable on or after the tenth anniversary of its grant date.  Except as otherwise provided in the Plan, the
applicable Award Agreement or as determined by the Committee at or after the
grant date, after becoming exercisable each installment of an Option shall
remain exercisable until expiration, 

 8
 

termination or cancellation of the Option
and, until such time, may be exercised from time to time in whole or in part,
up to the total number of shares of Common Stock with respect to which it is
then exercisable.

(d)           Payment.  The Committee shall establish procedures
governing the exercise of Options, which procedures shall generally require
that written notice of exercise thereof be given and that the exercise price
thereof be paid in full at the time of exercise (i) in cash or cash
equivalents, including by personal check, or (ii) in accordance
with such other procedures or in such other forms as the Committee shall from
time to time determine.  The exercise
price of any Options exercised may be paid in full or in part in the form of
shares of Common Stock, based upon the Fair Market Value of such shares of
Common Stock on the date of exercise, subject to such rules and procedures as
may be adopted by the Committee.

5.2           Stock Appreciation Rights.

(a)           Grant.  Stock Appreciation Rights may be granted to
Participants at such time or times as shall be determined by the
Committee.  Stock Appreciation Rights may
be granted in tandem with Options which, unless otherwise determined by the
Committee at or after the grant date, shall have substantially similar terms
and conditions to such Options to the extent applicable, or may granted on a
freestanding basis, not related to any Option. 
The grant date of any Stock Appreciation Right under the Plan will be
the date on which the Stock Appreciation Right is awarded by the Committee or
such other future date as the Committee shall determine in its sole
discretion.  No Stock Appreciation Right
shall be exercisable on or after the tenth anniversary of its grant date.  Stock Appreciation Rights shall be evidenced
in writing, whether as part of the Award Agreement governing the terms of the
Options, if any, to which such Stock Appreciation Right relates or pursuant to
a separate Award Agreement with respect to freestanding Stock Appreciation
Rights, in each case, containing such provisions not inconsistent with the Plan
as the Committee shall determine, including customary representations,
warranties and covenants with respect to securities law matters.

(b)           Exercise.  Stock Appreciation Rights awarded to a
Participant under the Plan shall become exercisable based on the performance of
a minimum period of service or the occurrence of any event or events, including
a Change in Control, as the Committee shall determine, either at or after the
grant date; provided that, except as otherwise provided in this Plan, no Stock
Appreciation Right shall become exercisable prior to a Participant’s completion
of one year of service to the Company or any Subsidiary.  Stock Appreciation Rights that are granted in
tandem with an Option may only be exercised upon the surrender of the right to
exercise such Option for an equivalent number of shares of Common Stock, and
may be exercised only with respect to the shares of Common Stock for which the
related Option is then exercisable.

(c)           Settlement.  Subject to Section 12.4, upon exercise of a
Stock Appreciation Right, the Participant shall be entitled to receive payment
in the form, determined by the Committee, of cash or shares of Common Stock
having a Fair Market Value equal to such cash amount, or a combination of
shares of Common Stock and cash having an aggregate value equal to such amount,
determined by multiplying:

(i)            any
increase in the Fair Market Value of one share of Common Stock on the exercise
date over the price fixed by the Committee on the grant date of such Stock
Appreciation Right, which may not be less than the Fair Market Value of a share
of Common Stock on the grant date of such Stock Appreciation Right (except if
awarded in 

 9
 

tandem with a
NSO but after the grant date of such NSO, then not less than the exercise price
of such NSO), by

(ii)           the
number of shares of Common Stock with respect to which the Stock Appreciation
Right is exercised;

provided
that on the grant date, the Committee may establish, in its sole discretion, a
maximum amount per share which will be payable upon exercise of a Stock
Appreciation Right.  Upon such terms and
conditions as the Committee may establish from time to time, a Participant may
be permitted to defer the receipt of cash and/or shares of Common Stock
otherwise deliverable upon exercise of a Stock Appreciation Right.

5.3           Termination of Employment.

(a)           Death or Disability.  Unless otherwise determined by the Committee
at or after the grant date, if a Participant’s employment terminates by reason
of such Participant’s death or Disability:

(i)            the
portion of any Award of ISOs granted to such Participant that becomes
exercisable on the next vesting date after the date of such Participant’s
termination shall become immediately exercisable in full and may be exercised
by the Participant (or the Participant’s beneficiary or legal representative)
until the earlier of (A) the twelve-month anniversary of the date
of such termination, and (B) the expiration of the term of such
Options, and any additional portion of such Award that is not then exercisable
shall be forfeited and canceled as of the date of such termination; and

(ii)           the
portion of any Awards of NSOs and Stock Appreciation Rights granted to such
Participant (including any ISOs that fail to retain their ISO status for any
reason) that becomes exercisable on the next vesting date after the date of
such Participant’s termination shall become immediately exercisable in full
and, notwithstanding anything in the Plan to the contrary, may be exercised by
the Participant (or the Participant’s beneficiary or legal representative)
until the twelve-month anniversary of the date of such termination of
employment (even if such anniversary falls after the date on which such NSOs or
Stock Appreciation Rights would otherwise expire but for the operation of this
Section 5.5), and any additional portion of such Awards that is not then
exercisable shall be forfeited and canceled as of the date of such termination.

(b)           Retirement.

(i)            In
General.  Unless otherwise determined
by the Committee at or after the grant date, and subject to the restrictions
provided in Section 5.5, if a Participant’s employment terminates due to his or
her Retirement, the Participant (or the Participant’s beneficiary or legal
representative) may exercise any Options and Stock Appreciation Rights that are
exercisable on the date of his or her Retirement until the earlier of (i) the
twelve-month anniversary following the date of the Participant’s Retirement,
and (ii) the expiration of the term of such Options or Stock
Appreciation Rights.  Any Options and
Stock Appreciation Rights that are not then exercisable shall be forfeited and
canceled as of the date of such termination.

(ii)           Extension
of Exercise Period.  Notwithstanding
the forgoing provisions of Section 5.3(b), unless otherwise determined by the
Committee at or after the grant date, if 

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the
Participant agrees to be bound by certain restrictive covenants, including non-competition,
non-solicitation, non-disclosure and non-disparagement
covenants, during the three-year period following the Participant’s Retirement,
(i) the Options and Stock Appreciation Rights granted to such
Participant that are not exercisable on the date of his or her Retirement shall
continue to become exercisable in accordance with their respective terms during
such three-year period as if such Participant’s employment had not terminated
due to his or her Retirement, and (ii) the Options and Stock
Appreciation Rights that are exercisable on the date of the Participant’s
Retirement plus those Options and Stock Appreciation Rights that become
exercisable pursuant to the immediately preceding clause may be exercised by
the Participant (or the Participant’s beneficiary or legal representative)
until the earlier of (A) (i) the third anniversary of
the Participant’s Retirement or (ii) if the Participant dies prior
to the third anniversary of the Participant’s Retirement, the twelve-month
anniversary following the date of the Participant’s death, and (B) the
expiration of the term of such Options or Stock Appreciation Rights.  Upon the expiration of such period, all
Options and Stock Appreciation Rights not previously exercised by the
Participant shall be forfeited and canceled. 
If the Participant violates any such restrictive covenants during such
three-year period, as determined by the Committee in its sole discretion, all
Options and Stock Appreciation Rights granted to such Participant, whether or
not then exercisable, shall be immediately forfeited and canceled as of the
date of such violation.

(c)           For Cause.  If a Participant’s employment is terminated
by the Company or any Subsidiary for Cause (or if, following the date of
termination of the Participant’s employment for any reason, the Committee
determines that circumstances exist such that the Participant’s employment
could have been terminated for Cause), any Options and Stock Appreciation
Rights granted to such Participant, whether or not then exercisable, shall be
immediately forfeited and canceled as of the date of such termination.

(d)           Any Other Reason.  Unless otherwise determined by the Committee
at or after the grant date, if a Participant’s employment is terminated for any
reason other than one described in Section 5.3(a), (b) or (c), the Participant
may exercise any Options and Stock Appreciation Rights that are exercisable on
the date of such termination until the earlier of (i) the 60th day following the date of such termination,
and (ii) the expiration of the term of such Options or Stock
Appreciation Rights.  Any Options and
Stock Appreciation Rights that are not exercisable upon termination of a
Participant’s employment shall be forfeited and canceled as of the date of such
termination.

5.4           Committee Discretion.  Notwithstanding anything to the contrary
contained in this Article V, the Committee may, at or after the date of grant,
accelerate or waive any conditions to the exercisability of any Option or Stock
Appreciation Right granted under the Plan, and may permit all or any portion of
any such Option or Stock Appreciation Right to be exercised following a
Participant’s termination of employment for any reason on such terms and
subject to such conditions as the Board shall determine for a period up to and
including, but not beyond, the expiration of the term of such Options or Stock
Appreciation Rights.

5.5           Forfeiture.  Unless otherwise determined by the Committee
at or after the grant date, notwithstanding anything contained in this Plan to
the contrary, if, (i) during Participant’s employment with the Company
or any Subsidiary, (ii) during any post-termination exercise period, or
(iii) during the period ending one (1) year after the expiration of any
post-termination exercise period (the date such 

 11
 

period expires, the “One-Year Date”),
the Participant, except with the prior written consent of the Committee,

(a)           directly or indirectly, owns any interest
in, operates, joins, controls or participates as a partner, director,
principal, officer, or agent of, enters into the employment of, acts as a
consultant to, or performs any services for any entity which has operations
that compete with any business of the Company and the Subsidiaries in which the
Participant was employed (in any capacity) in any jurisdiction in which such
business is engaged, or in which any of the Company and the Subsidiaries have
documented plans to become engaged of which the Participant has knowledge at
the time of the Participant’s termination of employment (the “Business”),
except where (x) the Participant’s interest or association with such
entity is unrelated to the Business, (y) such entity’s gross revenue
from the Business is less than 10% of such entity’s total gross revenue, and (z)
the Participant’s interest is directly or indirectly less than two percent (2%)
of the Business;

(b)           directly or indirectly, solicits for
employment, employs or otherwise interferes with the relationship of the
Company or any of its Affiliates with any natural person throughout the world
who is or was employed by or otherwise engaged to perform services for the
Company or any of its Affiliates at any time during the Participant’s
employment with the Company or any Subsidiary (in the case of any such activity
during such time) or during the twelve-month period preceding such
solicitation, employment or interference (in the case of any such activity
after the termination of the Participant’s employment); or

(c)           directly or indirectly, discloses or misuses
any confidential information of the Company or any of its Affiliate (such
activities to be collectively referred to as “Wrongful Conduct”), then
any Options and Stock Appreciation Rights granted to the Participant hereunder,
to the extent they remain unexercised, shall automatically terminate and be
canceled upon the date on which the Participant first engaged in such Wrongful
Conduct and, in such case and in the case of the Participant’s termination for
Cause, the Participant shall pay to the Company in cash any Financial Gain the
Participant realized from exercising all or a portion of the Options and Stock
Appreciation Rights granted hereunder within the period commencing six (6)
months prior to the termination of the Participant’s employment and ending on
the One-Year Date (such period, the “Wrongful Conduct Period”).  For purposes of this Section 5.5, “Financial
Gain” shall equal, on each date of exercise during the Wrongful Conduct
Period, (I) with respect to Options, the excess of (A) the
greater of (i) the Fair Market Value on the date of exercise and (ii)
the Fair Market Value on the date of sale of the Option shares, over (B)
the exercise price, multiplied by the number of shares of Common Stock subject
to such Award (without reduction for any shares of Common Stock surrendered or
attested to), and (II) with respect to Stock Appreciation Rights, the excess of
(A) the Fair Market Value on the date of exercise, over (B) the
exercise price, multiplied by the number of shares of Common Stock subject to
such Award.  Unless otherwise determined
by the Committee at or after the grant date, each Award Agreement evidencing
the grant of Options and/or Stock Appreciation Rights shall provide for the
Participant’s consent to and authorization of the Company and the Subsidiaries
to deduct from any amounts payable by such entities to such Participant any
amounts the Participant owes to the Company under this Section 5.5.  This right of set-off is in addition to any
other remedies the Company may have against the Participant for the Participant’s
breach of this Section 5.5.  The Participant’s
obligations under this Section 5.5 shall be cumulative (but not duplicative) of
any similar obligations the Participant has under this Plan, any Award
Agreement or any other agreement with the Company or any Subsidiary.

 12

ARTICLE VI

PERFORMANCE STOCK, PERFORMANCE STOCK UNITS

AND
PERFORMANCE UNITS

6.1           Grant.  Performance Stock, Performance Stock Units
and Performance Units may be granted to Participants at such time or times as
shall be determined by the Committee. 
The grant date of any Performance Stock, Performance Stock Units or
Performance Units under the Plan will be the date on which such Performance
Stock, Performance Stock Units or Performance Units are awarded by the
Committee or on such other future date as the Committee shall determine in its
sole discretion.  Performance Stock,
Performance Stock Units and Performance Units shall be evidenced by an Award
Agreement that shall specify the number of shares of Common Stock or number of
Performance Units, as the case may be, to which the Performance Stock,
Performance Stock Units and the Performance Units pertain, the Restriction
Period, and such terms and conditions not inconsistent with the Plan as the
Committee shall determine, including customary representations, warranties and
covenants with respect to securities law matters.  No shares of Common Stock will be issued at
the time an Award of Performance Stock Units or Performance Units is made, and
the Company shall not be required to set aside a fund for the payment of any
such Award.

6.2           Vesting.

(a)           In
General.  Performance Stock,
Performance Stock Units and Performance Units granted to a Participant under
the Plan shall be subject to a Restriction Period, which shall lapse upon the
attainment of specified performance objectives or the occurrence of any event
or events, including a Change in Control, as the Committee shall determine,
either at or after the grant date.  The
Committee shall establish the performance objectives upon which the Restriction
Period shall lapse, which, in the case of any such Award intended to qualify as
“performance-based” compensation under Section 162(m) of the Code and the
regulations thereunder, shall be established no later than the 90th day after the applicable Performance Period
begins (or such other date as may be required or permitted under
section 162(m) of the Code.

(b)           Performance
Objectives. The performance objectives for any grant of Performance Stock,
Performance Stock Units or Performance Units will be based upon the relative or
comparative achievement of one or more of the following criteria, or such other
criteria, as may be determined by the Committee: [net sales; revenue; revenue
growth or product revenue growth; operating income (before or after taxes);
pre- or after-tax income (before or after allocation of corporate overhead and
bonus); net earnings; earnings per share; net income (before or after taxes);
return on equity; total shareholder return; return on assets or net assets;
appreciation in and/or maintenance of share price; market share; gross profits;
earnings (including earnings before taxes, earnings before interest and taxes
or earnings before interest, taxes, depreciation and amortization); economic
value-added models or equivalent metrics; comparisons with various stock market
indices; reductions in costs; cash flow or cash flow per share (before or after
dividends); return on capital (including return on total capital or return on
invested capital); cash flow return on investment; improvement in or attainment
of expense levels or working capital levels; operating margins, gross margins
or cash margin; year-end cash; debt reductions; shareholder equity; market
share; regulatory achievements; and implementation, completion or attainment of
measurable objectives with respect to research, development, products or
projects and recruiting and maintaining personnel]

(c)           Special
Rules Relating to Performance Objectives. 
Performance objectives may be established on a Company-wide basis or
with respect to one or more Company business units or 

 13
 

divisions, or Subsidiaries; and either in absolute terms, relative to
the performance of one or more similarly situated companies, or relative to the
performance of an index covering a peer group of companies.  When establishing performance objectives for
the applicable Performance Period, the Committee may exclude any or all “extraordinary
items” as determined under U.S. generally acceptable accounting principals
including, without limitation, the charges or costs associated with restructurings
of the Company, discontinued operations, other unusual or non-recurring
items, and the cumulative effects of accounting changes, and as identified in
the Company’s financial statements, notes to the Company’s financial statements
or management’s discussion and analysis of financial condition and results of
operations contained in the Company’s most recent annual report filed with the
U.S. Securities and Exchange Commission pursuant to the Exchange Act.

(d)           Certification
of Attainment of Performance Objectives. 
The Restriction Period with respect to any Performance Stock,
Performance Stock Units or Performance Units shall lapse upon the written
certification by the Committee that the performance objective or objectives for
the applicable Performance Period have been attained.  The Committee may provide at the time of
grant that if the performance objective or objectives are attained in part, the
Restriction Period with respect to a specified portion (which may be zero) of
the any Performance Stock, Performance Stock Units or Performance Units will
lapse.

(e)           Newly
Eligible Participants. 
Notwithstanding anything in this Article VI to the contrary, the
Committee shall be entitled to make such rules, determinations and adjustments
as it deems appropriate with respect to any Participant who becomes eligible to
receive an Award of Performance Stock, Performance Stock Units or Performance
Units after the commencement of a Performance Period.

6.3           Additional
Provisions Relating to Performance Stock.

(a)           Restrictions
on Transferability.  Except as
provided in Section 12.1 or in an Award Agreement, no Performance Stock may be
sold, transferred, pledged, assigned, or other­wise alienated or hypothecated
until the lapse of the Restricted Period. 
Thereafter, Performance Stock may only be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated in compliance with all
applicable securities laws, the Award Agreement, and any other agreement to
which the Performance Stock is subject. 
The Committee shall require that any stock certificates evidencing any
Performance Stock be held in the custody of the Secretary of the Company until
the applicable Restriction Period lapses, and that, as a condition of any grant
of Performance Stock, the Participant shall have delivered a stock power,
endorsed in blank, relating to the shares of Common Stock covered by such
Award.  Any attempt by a Participant,
directly or indirectly, to offer, transfer, sell, pledge, hypothecate or
otherwise dispose of any Performance Stock or any interest therein or any
rights relating thereto without complying with the provisions of the Plan,
including this Section 6.3, shall be void and of no effect.

(b)           Legend.  Each certificate evidencing shares of Common
Stock subject to an Award of Performance Stock shall be registered in the name
of the Participant holding such Performance Stock and shall bear the following
(or similar) legend:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) CONTAINED IN THE
SALLY BEAUTY HOLDINGS 2007 STOCK INCENTIVE PLAN AND THE RELATED AWARD AGREEMENT
AND NEITHER THIS CERTIFICATE NOR THE SHARES REPRESENTED BY IT ARE ASSIGNABLE OR
OTHERWISE TRANSFERABLE EXCEPT IN 

 14
 

ACCORDANCE WITH SUCH
PLAN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.”

(c)           Rights
as a Stockholder.  The Committee
shall determine whether and to what extent dividends and distributions will be
credited to the account of, or to paid currently to, a Participant receiving an
Award of Performance Stock.  Unless
otherwise determined by the Committee at or after the grant date (i) any
cash dividends or distributions credited to the Participant’s account shall be
deemed to have been invested in additional Performance Stock on the record date
established for the related dividend or distribution in an amount equal to the
greatest whole number which may be obtained by dividing (A) the
value of such dividend or distribution on the record date by (B) the
Fair Market Value of one share of Common Stock on such date.  Any additional Performance Stock shall be
subject to the same terms and conditions as are applicable in respect of the
Performance Stock with respect to which such dividends or distributions were
payable, and, (ii) if any such dividends or distributions are paid
in shares of Common Stock or other securities, such shares and other securities
shall be subject to the same Restriction Period and other restrictions as apply
to the Performance with respect to which they were paid.  A Participant holding outstanding Performance
Stock shall be entitled to exercise full voting rights and other rights as a
stockholder with respect to the shares of Common Stock underlying such Award
during the period in which such shares remain subject to the Restriction
Period.

6.4           Additional
Provisions Relating to Performance Stock Units.

(a)           Restrictions
on Transferability.  Unless and until
the Company issues a certificate or certificates to a Participant for shares of
Common Stock in respect of his or her Award of Performance Stock Units, no
Performance Stock Units may be sold, transferred, pledged, assigned, or other­wise
alienated or hypothecated.  Upon issuance
of such certificate or certificates and if such shares of Common Stock remain
subject to the Restriction Period, such shares shall be subject to the
provisions of Section 6.3 until the lapse of the Restriction Period.  Any attempt by a Participant, directly or
indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose
of any Performance Stock Units or any interest therein or any rights relating
thereto without complying with the provisions of the Plan, including this
Section 6.4, shall be void and of no effect.

(b)           Rights
as a Stockholder.  The Committee
shall determine whether and to what extent Dividend Equivalents will be
credited to the account of, or to paid currently to, a Participant receiving an
Award of Performance Stock Units.  Unless
otherwise determined by the Committee at or after the grant date, (i) any
cash dividends or distributions credited to the Participant’s account shall be
deemed to have been invested in additional Performance Stock Units on the
record date established for the related dividend or distribution in an amount
equal to the greatest whole number which may be obtained by dividing (A) the
value of such dividend or distribution on the record date by (B) the
Fair Market Value of one share of Common Stock on such date.  Any additional Performance Stock Units shall
be subject to the same terms and conditions as are applicable in respect of the
Performance Stock Units with respect to which such dividends or distributions
were payable, and (ii) if any such dividends or distributions are
paid in shares of Common Stock or other securities, such shares of Common Stock
and other securities shall be subject to the same Restriction Period and other
restrictions as apply to the Performance with respect to which they were
paid.  Unless and until the Company
issues a certificate or certificates to a Participant for shares of Common
Stock in respect of his or her Award of Performance Stock Units, or otherwise
determined by the Committee at or after the grant date, a Participant holding
outstanding Performance Stock Units shall not be entitled to exercise any
voting rights and any other rights as a stockholder with respect to the shares
of Common Stock underlying such Award.

 15
 

(c)           Settlement
of Performance Stock Units.  Unless
the Committee determines otherwise at or after the grant date, as soon as
reasonably practicable after the lapse of the Restriction Period with respect
to any Performance Stock Units then held by a Participant, the Company shall
issue to the Participant the shares of Common Stock underlying such Performance
Stock Units (plus additional shares of Common Stock for each Performance Stock
Unit credited in respect of dividends or distributions) or, if the Committee so
determines in its sole discretion, an amount in cash equal to the Fair Market
Value of such shares of Common Stock. 
Upon such terms and conditions as the Committee may establish from time
to time, a Participant may be permitted to defer the receipt of the shares of
Common Stock or cash otherwise deliverable upon settlement of Performance Stock
Units.

6.5           Additional
Provisions Relating to Performance Units.

(a)           Restrictions
on Transferability.  No Performance
Units may be sold, transferred, pledged, assigned, or other­wise alienated or
hypothecated.  Any attempt by a
Participant, directly or indirectly, to offer, transfer, sell, pledge, hypothecate
or otherwise dispose of any Performance Units or any interest therein or any
rights relating thereto shall be void and of no effect.

(b)           Settlement
of Performance Units.  Unless the
Committee determines otherwise at or after the grant date, as soon as
reasonably practicable after the lapse of the Restriction Period with respect
to any Performance Units then held by a Participant, the Company shall deliver
to the Participant a cash payment equal to the value of such Award or, if the
Committee has so determined, a number of shares of Common Stock, which shares
shall have a Fair Market Value equal to the value of such Award.  Upon such terms and conditions as the
Committee may establish from time to time, a Participant may be permitted to
defer the receipt of cash or the shares of Common Stock otherwise deliverable
upon settlement of Performance Units.

6.6           Termination
of Employment.

(a)           Death
or Disability.  Unless otherwise
determined by the Committee at or after the grant date, if a Participant’s
employment terminates by reason of such Participant’s death or Disability, the
Participant or, as the case may be, the Participant’s estate, shall retain
a  portion of his or her Performance
Stock, Performance Stock Units and Performance Units equal to the number of
shares or units underlying each Award multiplied by a fraction, the numerator
of which is the number of days elapsed from the commencement of the applicable
Performance Period through the date of termination, and the denominator of
which is the number of days in such Performance Period (each a “Retained
Award”), and the remainder of each Award shall be forfeited and canceled as
of the date of such termination. The Restriction Period on a Retained Award
shall lapse upon completion of the applicable Performance Period to the extent
that applicable performance objectives are attained.

(b)           Retirement.  Unless otherwise determined by the Committee
at or after the grant date, if a Participant’s employment terminates due to his
or her Retirement, any Performance Stock, Performance Stock Units and
Performance Units for which the Restriction Period has not then lapsed shall be
forfeited and canceled as of the date of such termination of employment.  Notwithstanding the foregoing provisions of
this Section 6.6(b), if the Participant agrees to be bound by certain
restrictive covenants, including non-competition, non-solicitation,
non-disclosure and non-disparagement covenants, the Participant
shall retain a  portion of his or her
Performance Stock, Performance Stock Units and Performance Units equal to the
number of shares or units underlying each Award multiplied by a fraction, the
numerator of which is the number of days elapsed from the commencement of the
applicable Performance Period through the date of his or her Retirement, and
the denominator of which 

 16
 

is the number of days in such Performance Period (each a “Retained
Retirement Award”), and the remainder of each Award shall be forfeited and
canceled as of the date of such Retirement. 
Subject to the Participant’s compliance with such covenants, the
Restriction Period on the Retained Retirement Awards shall lapse upon
completion of the applicable Performance Period for such Retained Retirement
Award.  If (I) the Participant
violates any restrictive covenants during the remaining Performance Period, or
(II) if, following the date of the Participant’s Retirement,
circumstances exist such that the Participant’s employment could have been
terminated for cause, in each case, as determined by the Committee in its sole
discretion, all Performance Stock, Performance Stock Units and Performance
Units for which the Restriction Period has not then lapsed shall be immediately
forfeited and canceled as of the date of such violation or termination.

(c)           Any
Other Reason.  Unless otherwise
determined by the Committee at or after the grant date, if a Participant’s
employment is terminated for any reason other than one described in
Sections 6.6(a) and (b), any Performance Stock, Performance Stock Units
and Performance Units granted to such Participant shall be immediately
forfeited and canceled as of the date of such termination of employment.

ARTICLE VII

RESTRICTED
STOCK AND RESTRICTED STOCK UNITS

7.1           Grant.  Restricted Stock and Restricted Stock Units
may be granted to Participants at such time or times as shall be determined by
the Committee.  The grant date of any
Restricted Stock or Restricted Stock Units under the Plan will be the date on
which such Restricted Stock or Restricted Stock Units are awarded by the
Committee or on such other future date as the Committee shall determine in its
sole discretion.  Restricted Stock and
Restricted Stock Units shall be evidenced by an Award Agreement that shall
specify the number of shares of Common Stock to which the Restricted Stock and the
Restricted Stock Units pertain (and, if applicable, whether such Award may be
payable in cash), the Restriction Period, and such terms and conditions not
inconsistent with the Plan as the Committee shall determine, including
customary representations, warranties and covenants with respect to securities
law matters.  No shares of Common Stock
will be issued at the time an Award of Restricted Stock Units is made and the
Company shall not be required to set aside a fund for the payment of any such
Award.

7.2           Vesting.  Restricted Stock and Restricted Stock Units
granted to a Participant under the Plan shall be subject to a Restriction
Period, which shall lapse upon the performance of a minimum period of service,
or the occurrence of any event or events, including a Change in Control, as the
Committee shall determine, either at or after the grant date; provided that,
except as otherwise provided in this Plan or in connection with newly hired
individual or a Replacement Award, the Restriction Period on any Restricted
Stock or Restricted Stock Units shall not lapse prior to a Participant’s
completion of one year of service to the Company or any Subsidiary.

7.3           Additional
Provisions Relating to Restricted Stock.

(a)           Restrictions
on Transferability.  Except as provided
in Section 12.1 or in an Award Agreement, no Restricted Stock may be sold,
transferred, pledged, assigned, or other­wise alienated or hypothecated until
the lapse of the Restricted Period. 
Thereafter, Restricted Stock may only be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated in compliance with all
applicable securities laws, the Award Agreement, and any other agreement to
which the Restricted Stock is subject. 
The Committee shall require that any stock certificates evidencing any
Restricted Stock be held in the 

 17
 

custody of the Secretary of the Company until the applicable
Restriction Period lapses, and that, as a condition of any grant of Restricted
Stock, the Participant shall have delivered a stock power, endorsed in blank,
relating to the share covered by such Award. 
Any attempt by a Participant, directly or indirectly, to offer,
transfer, sell, pledge, hypothecate or otherwise dispose of any Restricted
Stock or any interest therein or any rights relating thereto without complying
with the provisions of the Plan, including this Section 7.3, shall be void
and of no effect.

(b)           Legend.  Each certificate evidencing shares of Common
Stock subject to an Award of Restricted Stock shall be registered in the name
of the Participant holding such Restricted Stock and shall bear the legend (or
similar legend) as specified in Section 6.3(b).

(c)           Rights
as a Stockholder.  Unless otherwise
determined by the Committee at or after the grant date, a Participant holding
outstanding Restricted Stock shall be entitled to (i) receive all
dividends and distributions paid in respect of shares of Common Stock
underlying such Award; provided that, if any such dividends or distributions
are paid in shares of Common Stock or other securities, such shares and other
securities shall be subject to the same Restriction Period and other
restrictions as apply to the Restricted Stock with respect to which they were
paid, and (ii) exercise full voting rights and other rights as a
stockholder with respect to the shares of Common Stock underlying such Award
during the period in which such shares remain subject to the Restriction
Period.

7.4           Additional
Provisions Relating to Restricted Stock Units.

(a)           Restrictions
on Transferability.  Unless and until
the Company issues a certificate or certificates to a Participant for shares of
Common Stock in respect of his or her Award of Restricted Stock Units, no
Restricted Stock Units may be sold, transferred, pledged, assigned, or other­wise
alienated or hypothecated.  Upon issuance
of such certificate or certificates and if such shares of Common Stock remain
subject to the Restriction Period, such shares shall be subject to the
provisions of Section 7.3 until the lapse of the Restriction Period.  Any attempt by a Participant, directly or
indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose
of any Restricted Stock Units or any interest therein or any rights relating
thereto without complying with the provisions of the Plan, including this Section
7.4, shall be void and of no effect.

(b)           Rights
as a Stockholder.  The Committee
shall determine whether and to what extent Dividend Equivalents will be
credited to the account of, or to paid currently to, a Participant receiving an
Award of Restricted Stock Units.  Unless
otherwise determined by the Committee at or after the grant date, (i) any
cash dividends or distributions credited to the Participant’s account shall be
deemed to have been invested in additional Restricted Stock Units on the record
date established for the related dividend or distribution in an amount equal to
the greatest whole number which may be obtained by dividing (A) the
value of such dividend or distribution on the record date by (B) the
Fair Market Value of one share of Common Stock on such date, and such
additional Restricted Stock Units shall be subject to the same terms and
conditions as are applicable in respect of the Restricted Stock Units with
respect to which such dividends or distributions were payable, and (ii) if
any such dividends or distributions are paid in shares of Common Stock or other
securities, such shares and other securities shall be subject to the same
Restriction Period and other restrictions as apply to the Restricted Stock with
respect to which they were paid.  Unless
and until the Company issues a certificate or certificates to a Participant for
shares of Common Stock in respect of his or her Award of Restricted Stock
Units, or otherwise determined by the Committee at or after the grant date, a
Participant holding outstanding Restricted Stock Units shall not be entitled to
exercise any voting rights and any other rights as a stockholder with respect
to the shares of Common Stock underlying such Award.

 18
 

(c)           Settlement
of Restricted Stock Units.  Unless
the Committee determines otherwise at or after the grant date, as soon as
reasonably practicable after the lapse of the Restriction Period with respect
to any Restricted Stock Units, the Company shall issue the shares of Common
Stock underlying such Restricted Stock Unit (plus additional shares of Common
Stock for each Restricted Stock Units credited in respect of dividends or
distributions) or, if the Committee so determines in its sole discretion, an
amount in cash equal to the Fair Market Value of such shares of Common
Stock.  Upon such terms and conditions as
the Committee may establish from time to time, a Participant may be permitted
to defer the receipt of the shares of Common Stock or cash otherwise
deliverable upon settlement of Restricted Stock Units.

7.5           Termination
of Employment.

(a)           Death
or disability.  Unless otherwise
determined by the Committee at or after the grant date, if a Participant’s
employment is terminated due to his or her death or Disability during the
Restriction Period, the portion of the shares of Common Stock underlying any
Awards of Restricted Stock and Restricted Stock Units then held by such
Participant that vests on the next vesting date after the date of such
Participant’s termination shall no longer be subject to the Restriction Period,
and all Restricted Shares and Restricted Stock Units for which the Restriction
Period has not then lapsed shall be forfeited and canceled as of the date of
such termination.

(b)           Retirement.  Unless otherwise determined by the Committee
at or after the grant date, if a Participant’s employment terminates due to the
Participant’s Retirement, any Restricted Stock and Restricted Stock Units held
by such Participant for which the Restriction Period has not then expired shall
be forfeited and canceled as of the date of such termination. Notwithstanding
the foregoing, if the Participant agrees to be bound by certain restrictive
covenants, including non-competition, non-solicitation, non-disclosure
and non-disparagement covenants, the Participant’s Restricted Stock and
Restricted Stock Units shall, for a period of 
36 months following the date of such Retirement, continue to vest in
accordance with their respective terms during such three-year period as if such
Participant’s employment had not terminated due to his or her Retirement.  If the Participant violates any such
restrictive covenants during such three-year period, as determined by the
Committee in its sole discretion, all unvested Restricted Stock and Restricted
Stock Units held by the Participant shall be immediately forfeited and canceled
as of the date of such violation.

(c)           Any
Other Reason.  Unless otherwise
determined by the Committee at or after the grant date, if a Participant’s
employment is terminated for any other reason during the Restriction Period,
any Restricted Stock and Restricted Stock Units held by such Participant for
which the Restriction Period has not then expired shall be forfeited and
canceled as of the date of such termination.

ARTICLE VIII

DEFERRED
STOCK

8.1           In
General.  Freestanding Deferred Stock
may be granted to Participants at such time or times as shall be determined by
the Committee without regard to any election by the Participant to defer
receipt of any compensation or bonus amount payable to him.  The grant date of any freestanding Deferred
Stock under the Plan will be the date on which such freestanding Deferred Stock
is awarded by the Committee or on such other future date as the Committee shall
determine in its sole discretion.  In
addition, on fixed dates established by the Committee and subject to such terms
and conditions as the Committee shall determine, the Committee may permit a
Participant to elect to defer receipt of all or a portion of his annual
compensation and/or annual incentive bonus (“Deferred Annual Amount”)
payable 

 19
 

by the Company
or a Subsidiary and receive in lieu thereof an Award of elective Deferred Stock
equal to the greatest whole number which may be obtained by dividing (i) the
amount of the Deferred Annual Amount, by (ii) the Fair Market Value
of one share of Common Stock on the date of payment of such compensation and/or
annual bonus.  Deferred Stock shall be
evidenced by an Award Agreement that shall specify the number of shares of
Common Stock to which the Deferred Stock pertains, and such terms and
conditions not inconsistent with the Plan as the Committee shall determine,
including customary representations, warranties and covenants with respect to
securities law matters.  Upon the grant
of Deferred Stock pursuant to the Plan, the Company shall establish a notional
account for the Participant and will record in such account the number of
shares of Deferred Stock awarded to the Participant.  No shares of Common Stock will be issued to
the Participant at the time an award of Deferred Stock Units is granted.

8.2           Rights
as a Stockholder.  The Committee
shall determine whether and to what extent Dividend Equivalents will be
credited to the account of, or paid currently to, a Participant receiving an
Award of Deferred Stock.  Unless
otherwise provided by the Committee at or after the grant date, (i) any
cash dividends or distributions credited to the Participant’s account shall be
deemed to have been invested in additional Deferred Stock on the record date
established for the related dividend or distribution in an amount equal to the
greatest whole number which may be obtained by dividing (A) the
value of such dividend or distribution on the record date by (B) the
Fair Market Value of one share of Common Stock on such date, and such
additional Deferred Stock shall be subject to the same terms and conditions as
are applicable in respect of the Deferred Stock with respect to which such
dividends or distributions were payable, and (ii) if any such
dividends or distributions are paid in shares of Common Stock or other
securities, such shares and other securities shall be subject to the same
Restriction Period and other restrictions as apply to the Deferred Stock with
respect to which they were paid.  A
Participant shall not have any rights as a stockholder in respect of Deferred
Stock awarded pursuant to the Plan (including, without limitation, the right to
vote on any matter submitted to the Company’s stockholders) until such time as
the shares of Common Stock attributable to such Deferred Stock have been issued
to such Participant or his beneficiary.

8.3           Restrictions
on Transferability.  Unless and until
the Company issues a certificate or certificates to a Participant for shares of
Common Stock in respect of his or her Award of Deferred Stock, no Deferred
Stock may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated.  Any attempt by a
Participant, directly or indirectly, to offer, transfer, sell, pledge,
hypothecate or otherwise dispose of any Deferred Stock or any interest therein
or any rights relating thereto without complying with the provisions of the
Plan, including this Section 8.3, shall be void and of no effect.

8.4           Vesting.  Unless the Committee provides otherwise at or
after the grant date, the portion of each Award of Deferred Stock that consists
of freestanding Deferred Stock, together with any Dividend Equivalents credited
with respect thereto, will be subject to a Restriction Period that shall lapse
based on the performance of a minimum period of service or the occurrence of
any event or events, including a Change in Control, as the Committee shall
determine, either at or after the grant date. 
Notwithstanding the immediately preceding sentence, the Board may
accelerate the lapse of the Restriction Period of any freestanding Deferred
Stock at or after the grant date.  The
portion of each Award of Deferred Stock that consists of elective Deferred
Stock, together with any Dividend Equivalents credited with respect thereto,
shall not be subject to any Restriction Period and shall be non-forfeitable
at all times.

 20
 

8.5           Settlement.  Subject to Articles Article IX and
Article XII, and the last sentence of Section 8.1, unless the Committee
determines otherwise at or after the grant date, the Company shall issue the
shares of Common Stock underlying any of a Participant’s freestanding Deferred
Stock (and related Dividend Equivalents) for which the Restriction Period shall
have lapsed on or prior to the date of such Participant’s termination of
employment with the Company and any Subsidiary, other than a termination for
Cause, as soon as administratively practicable, but not later than 90 days,
following the date of such termination of employment (or on such earlier date
as the Committee shall permit or such later date as may be elected by the
Participant in accordance with the rules and procedures of the Board).  In the event of the termination of a
Participant’s employment with the Company and the Subsidiaries for Cause, the
Participant shall immediately forfeit all rights with respect to any shares of
freestanding Deferred Stock (and related Dividend Equivalents) credited to his
account, whether or not the Restriction Period shall have then lapsed.  Subject to Articles Article IX and
Article XII, and the last sentence of Section 8.1, unless the Committee
determines otherwise at or after the grant date, the Company shall issue the
shares of Common Stock underlying any of a Participant’s elective Deferred
Stock (and related Dividend Equivalents) credited to such Participant’s account
under the Plan as soon as administratively practicable, but not later than 90
days, following the date of such Participant’s termination of employment (or
such later date as may be elected by the Participant in accordance with the
rules and procedures of the Committee). 
The Committee may provide in the Award Agreement applicable to any Award
of Deferred Stock that, in lieu of issuing shares of Common Stock in settlement
of any Deferred Stock, the Committee may direct the Company to pay to the
Participant the Fair Market Value of the shares of Common Stock corresponding
to such Deferred Stock in cash.  For each
share of Common Stock received in settlement of Deferred Stock, the Company
shall deliver to the Participant a certificate representing such share of
Common Stock, bearing appropriate legends, if applicable.  Notwithstanding anything to the contrary in
this Section 8.5, the Committee may accelerate the distribution of any and
all shares of Common Stock subject to any Award of Deferred Stock prior to the
time otherwise specified in this Section 8.5.

8.6           Further
Deferral Elections.  A Participant
may elect to further defer receipt of shares of Common Stock issuable in
respect of Deferred Stock (or an installment of an Award) for a specified
period or until a specified event, subject in each case to the Committee’s
approval and to such terms as are determined by the Committee, all in its sole
discretion.

ARTICLE IX

CHANGE IN
CONTROL

9.1           Accelerated
Vesting and Payment.

(a)           In
General.  Unless the Committee
otherwise determines in the manner set forth in Section 9.2, upon the
occurrence of a Change in Control, (i) all Options and Stock
Appreciation Rights shall become exercisable, (ii) the Restriction
Period on all Restricted Stock, Restricted Stock Units and freestanding
Deferred Stock shall lapse immediately prior to such Change of Control, (iii)
shares of Common Stock underlying Awards of Restricted Stock Units and Deferred
Stock shall be issued to each Participant then holding such Award immediately prior
to such Change in Control or, at the discretion of the Committee (as
constituted immediately prior to the Change in Control) (iv) each such
Option, SAR, Restricted Stock Unit and/or Deferred Stock award shall be
canceled in exchange for an amount equal to the product of (A)(I) in
the case of Options and Stock Appreciation Rights, the excess, if any, of the
product of the Change in Control Price over the exercise price for such Award,
and (II) in the case of other such Awards, the Change in Control
Price, multiplied by (B) the aggregate number of shares of Common
Stock covered by such Award.

 21
 

(b)           Performance
Stock, Performance Stock Units and Performance Units.  Unless the Committee otherwise determines at
the time of grant of Performance Stock, Performance Stock Units or Performance
Units, in the event of a Change in Control, (A) any Performance Period
in progress at the time of the Change in Control for which Performance Stock,
Performance Stock Units or Performance Units are outstanding shall end effective
upon the occurrence of such Change in Control and (B) all Participants
granted such Awards shall be deemed to have earned a pro rata award equal to
the product of (I) such Participant’s target award opportunity with
respect to such Award for the Performance Period in question and (II) the
percentage of performance objectives achieved as of the date on which the
Change in Control occurs or, at the discretion of the Committee (as constituted
immediately prior to the Change in Control) (C) each such Performance
Stock Unit shall be canceled in exchange for an amount equal to the product of
(I) the Change in Control Price, multiplied by (II) the
aggregate number of shares of Common Stock covered by such Performance Stock
Unit.  Any Performance Stock, Performance
Stock Unit and Performance Units for which the applicable pro rated performance
objectives have not been achieved shall be forfeited and canceled as of the
date of such Change in Control.

(c)           Timing
of Payments.  Payment of any amounts
calculated in accordance with Sections 9.1(a) and (b) shall be made in cash or,
if determined by the Committee (as constituted immediately prior to the Change
in Control), in shares of the common stock of the New Employer having an
aggregate fair market value equal to such amount and shall be payable in full,
as soon as reasonably practicable, but in no event later than 30 days,
following the Change in Control.  For
purposes hereof, the fair market value of one share of common stock of the New
Employer shall be determined by the Committee (as constituted immediately prior
to the consummation of the transaction constituting the Change in Control), in
good faith.

9.2           Alternative
Awards.  Notwithstanding Section 9.1,
no cancellation, termination, acceleration of exercisability or vesting, lapse
of any Restriction Period or settlement or other payment shall occur with
respect to any outstanding Award (other than an award of Performance Stock,
Performance Stock Units or Performance Units), if the Committee (as constituted
immediately prior to the consummation of the transaction constituting the
Change in Control) reasonably determines, in good faith, prior to the Change in
Control that such outstanding Awards shall be honored or assumed, or new rights
substituted therefor (such honored, assumed or substituted Award being
hereinafter referred to as an “Alternative Award”) by the New Employer,
provided that any Alternative Award must:

(i)            be based on shares of
Common Stock that are traded on an established U.S. securities market;

(ii)            provide the
Participant (or each Participant in a class of Participants) with rights and
entitlements substantially equivalent to or better than the rights, terms and
conditions applicable under such Award, including, but not limited to, an
identical or better exercise or vesting schedule and identical or better timing
and methods of payment;

(iii)          have substantially
equivalent economic value to such Award (determined at the time of the Change
in Control); and

(iv)          have terms and
conditions which provide that in the event that the Participant suffers an
involuntary termination within two years following the Change in Control any
conditions on the Participant’s rights under, or any restrictions on transfer
or exercisability applicable to, each such Award held by such Participant shall
be waived or shall lapse, as the case may be.

 22
 

9.3           Termination
of Employment Prior to Change in Control. 
In the event that any Change in Control occurs as a result of any
transaction described in clause (c) or (e) of the definition of such term,
any Participant whose employment is terminated due to death or Disability on or
after the date, if any, on which the shareholders of the Company approve such
Change in Control transaction, but prior to the consummation thereof, may be
treated, solely for purposes of this Plan (including, without limitation, this
Article IX), as continuing in the Company’s employment until the occurrence of
such Change in Control, and to have been terminated immediately thereafter.

ARTICLE X

STOCKHOLDER
RIGHTS

Notwithstanding anything to the contrary in the Plan,
no Participant or Permitted Transferee shall have any voting or other rights as
a stockholder of the Company with respect to any Common Stock covered by any
Award until the issuance of a certificate or certificates to the Participant
for such Common Stock.  No adjustment
shall be made for dividends or other rights for which the record date is prior
to the issuance of such certificate or certificates.

ARTICLE XI

EFFECTIVE DATE, AMENDMENT, MODIFICATION,

AND
TERMINATION OF PLAN

The Plan shall be effective upon its adoption by the
Board and approval by a majority of the stockholders of the Company, and shall
continue in effect, unless sooner terminated pursuant to this Article XI, until
the tenth anniversary of the date on which it is adopted by the Board (except
as to Awards outstanding on that date). 
The Board or the Committee may at any time terminate or suspend the
Plan, and from time to time may amend or modify the Plan; provided that without
the approval by a majority of the votes cast at a meeting of shareholders at
which a quorum representing a majority of the shares of the Company entitled to
vote generally in the election of Directors is present in person or by proxy,
no amendment or modification to the Plan may (i) materially
increase the benefits accruing to participants under the Plan, (ii) except
as otherwise expressly provided in Section 4.4, materially increase the
number of shares of Common Stock subject to the Plan or the individual Award
limitations specified in Section 4.3, (iii) modify the restrictions
provided in Section 4.5, or (iv) materially modify the requirements
for participation in the Plan.  No
amendment, modification, or termination of the Plan shall in any manner
adversely affect any Award theretofore granted under the Plan, without the
consent of the Participant.

ARTICLE
XII

MISCELLANEOUS
PROVISIONS

12.1         Nontransferability of Awards.  No Award shall be assignable or transferable
except by will or the laws of descent and distribution; provided that the
Committee may permit (on such terms and conditions as it shall establish) in
its sole discretion a Participant to transfer an Award for no consideration to
the Participant’s child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the Participant’s household (other
than a tenant or employee), a trust in which these persons have more than fifty
percent of the beneficial interest, a foundation in which these persons (or the
Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than fifty percent of the voting
interests (individually, a “Permitted Transferee”).  Except to the extent 

 23
 

required by
law, no Award shall be subject to any lien, obligation or liability of the
Participant.  All rights with respect to
Awards granted to a Participant under the Plan shall be exercisable during the
Participant’s lifetime only by such Participant or, if applicable, his or her
Permitted Transferee(s).  The rights of a
Permitted Transferee shall be limited to the rights conveyed to such Permitted
Transferee, who shall be subject to and bound by the terms of the agreement or
agreements between the Participant and the Company.

12.2         Beneficiary
Designation.  Each Participant under
the Plan may from time to time name any beneficiary or beneficiaries (who may
be named contingently or successively) to whom any benefit under the Plan is to
be paid or by whom any right under the Plan is to be exercised in case of his
or her death.  Each designation will revoke
all prior designations by the same Participant, shall be in a form prescribed
by the Committee, and will be effective only when filed by the Participant in
writing with the Committee during his lifetime. 
In the absence of any such designation, benefits remaining unpaid at the
Participant’s death shall be paid to or exercised by the Participant’s
surviving spouse, if any, or otherwise to or by his or her estate.

12.3         No
Guarantee of Employment or Participation. 
Nothing in the Plan shall interfere with or limit in any way the right
of the Company or any Subsidiary to terminate any Participant’s employment at
any time, nor to confer upon any Participant any right to continue in the
employ of the Company or any Subsidiary. 
No Employee shall have a right to be selected as a Participant, or, having
been so selected, to receive any future Awards.

12.4         Tax
Withholding.  The Company shall have
the right and power to deduct from all amounts paid to a Participant in cash or
shares (whether under this Plan or otherwise) or to require a Participant to remit
to the Company promptly upon notification of the amount due, an amount (which
may include shares of Common Stock) to satisfy the minimum federal, state or
local or foreign taxes or other obligations required by law to be withheld with
respect thereto with respect to any Award under this Plan.  In the case of any Award satisfied in the
form of shares of Common Stock, no shares of Common Stock shall be issued
unless and until arrangements satisfactory to the Committee shall have been
made to satisfy the statutory minimum withholding tax obligations applicable
with respect to such Award.  The Company
may defer payments of cash or issuance or delivery of Common Stock until such
requirements are satisfied.  Without
limiting the generality of the foregoing, the Company shall have the right to
retain, or the Committee may, subject to such terms and conditions as it may
establish from time to time, permit Participants to elect to tender, shares of
Common Stock (including shares of Common Stock issuable in respect of an Award)
to satisfy, in whole or in part, the amount required to be withheld (provided
that such amount shall not be in excess of the minimum amount required to
satisfy the statutory withholding tax obligations).

12.5         Compliance
with Legal and Exchange Requirements. 
The Plan, the granting and exercising of Awards thereunder, and any
obligations of the Company under the Plan, shall be subject to all applicable
federal and state laws, rules, and regulations, and to such approvals by any
regulatory or governmental agency as may be required, and to any rules or
regulations of any exchange on which the Common Stock is listed.  The Company, in its discretion, may postpone
the granting and exercising of Awards, the issuance or delivery of shares of
Common Stock under any Award or any other action permitted under the Plan to
permit the Company, with reasonable diligence, to complete such stock exchange
listing or registration or qualification of such Shares or other required
action under any federal or state law, rule, or regulation and may require any
Participant to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of shares of
Common Stock in compliance with applicable laws, rules, and regulations.  The Company shall not be 

 24
 

obligated by
virtue of any provision of the Plan to recognize the exercise of any Award or
to otherwise sell or issue shares of Common Stock in violation of any such
laws, rules, or regulations, and any postponement of the exercise or settlement
of any Award under this provision shall not extend the term of such
Awards.  Neither the Company nor its
directors or officers shall have any obligation or liability to a Participant
with respect to any Award (or shares of Common Stock issuable thereunder) that
shall lapse because of such postponement.

12.6         Indemnification.  Each person who is or shall have been a
member of the Committee or of the Board shall be indemnified and held harmless
by the Company against and from any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him in connection with or resulting
from any claim, action, suit, or proceeding to which he may be made a party or
in which he may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Company’s approval, or paid by him in satisfaction
of any judgment in any such action, suit, or proceeding against him, provided he
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf.  The foregoing right of indemnification shall
not be exclusive and shall be independent of any other rights of
indemnification to which such persons may be entitled under the Company’s
Articles of Incorporation or By-laws, by contract, as a matter of law, or
otherwise.

12.7         No
Limitation on Compensation.  Nothing
in the Plan shall be construed to limit the right of the Company to establish
other plans or to pay compensation to its employees, in cash or property, in a
manner which is not expressly authorized under the Plan.

12.8         Deferrals.  The Committee may postpone the exercising of
Awards, the issuance or delivery of Common Stock under any Award or any action
permitted under the Plan to prevent the Company or any Subsidiary from being
denied a Federal income tax deduction with respect to any Award other than an
ISO.

12.9         409A
Compliance.  The Plan is intended to
be administered in a manner consistent with the requirements, where applicable,
of Section 409A of the Code.  Where
reasonably possible and practicable, the Plan shall be administered in a manner
to avoid the imposition on participants of immediate tax recognition and
additional taxes pursuant to such Section 409A. 
Notwithstanding the foregoing, neither the Company nor the Committee
shall have any liability to any person in the event such Section 409A applies
to any such Award in a manner that results in adverse tax consequences for the
participant or any of his beneficiaries or transferees.

12.10       Governing
Law.  The Plan shall be construed in
accordance with and governed by the laws of the State of Delaware, 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.

12.11       Severability;
Blue Pencil.  In the event that any
one or more of the provisions of this Plan shall be or 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 excise or modify such provision or
provisions of these covenants as to the court shall appear not reasonable and
to enforce the remainder of these covenants as so amended.

 25
 

12.12       No
Impact On Benefits.  Except as may
otherwise be specifically stated under any employee benefit plan, policy or
program, no amount payable in respect of any Award shall be treated as
compensation for purposes of calculating a Participant’s right under any such
plan, policy or program.

12.13       No Constraint on
Corporate Action.  Nothing in this
Plan shall be construed (i) to limit, impair or otherwise affect
the Company’s right or power to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, or to merge or
consolidate, or dissolve, liquidate, sell, or transfer all or any part of its
business or assets or (ii) to limit the right or power of the
Company, or any Subsidiary to take any action which such entity deems to be
necessary or appropriate.

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

 26Exhibit
10.23

Execution Copy

 

AMENDED AND
RESTATED 

STOCKHOLDERS AGREEMENT

among

Michaels Stores,
Inc.

and

Certain
Stockholders of Michaels Stores, Inc.

Originally dated
as of October 31, 2006 

and amended and restated on February 16, 2007

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  EFFECTIVENESS;
  DEFINITIONS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.   Effectiveness

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.2.   Definitions

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  TRANSFER
  RESTRICTIONS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1.   Certain
  Permitted Transfers

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.2.   Right
  of First Refusal

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.3.   Securities
  Laws Restrictions

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.4.   Impermissible
  Transfer

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.5.   Other
  Restrictions on Transfer

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.6.   Period

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  RIGHT OF
  PARTICIPATION

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.   Right
  of Participation

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.2.   Post-Issuance
  Notice

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.3.   Excluded
  Transactions

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.4.   Certain
  Provisions Applicable to Options, Warrants and Convertible Securities

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.5.   Acquired
  Shares

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.6.   Period

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  COMPANY
  CALL OPTION AND MANAGEMENT PUT RIGHTS

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.1.   Call
  Option Upon Termination

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.2.   Put
  Option Upon Termination

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  INFORMATION RIGHTS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.1.   Financial
  and Other Information

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.2.   Other
  Information

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.3.   Confidentiality

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.4.   Period

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  REMEDIES

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1.   Generally

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.2.   Deposit

  	
   

  	
  14

  

 

 i
 

 

	
  7.

  	
   

  	
  LEGENDS

  	
   

  	
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  7.1.     Restrictive Legend

  	
   

  	
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  7.2.     1933 Act Legends

  	
   

  	
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  7.3.     Stop Transfer Instruction

  	
   

  	
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  7.4.     Termination of 1933 Act Legend

  	
   

  	
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  8.

  	
   

  	
  AMENDMENT,
  TERMINATION, ETC

  	
   

  	
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  8.1.     Oral Modifications

  	
   

  	
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  8.2.     Written Modifications

  	
   

  	
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  8.3.     Effect of Termination

  	
   

  	
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  9.

  	
   

  	
  DEFINITIONS

  	
   

  	
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  9.1.     Certain Matters of Construction

  	
   

  	
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  9.2.     Definitions

  	
   

  	
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  10.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
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  10.1.   Authority: Effect

  	
   

  	
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  10.2.   Notices

  	
   

  	
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  10.3.   Merger; Binding Effect, Etc

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.4.   Descriptive Heading

  	
   

  	
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  10.5.   Counterparts

  	
   

  	
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  10.6.   Severability

  	
   

  	
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  10.7.   No Recourse

  	
   

  	
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  11.

  	
   

  	
  GOVERNING
  LAW

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  11.1.   Governing Law

  	
   

  	
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  11.2.   Consent to Jurisdiction

  	
   

  	
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  11.3.   WAIVER OF JURY TRIAL

  	
   

  	
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  11.4.   Exercise of Rights and Remedies

  	
   

  	
  26

  

 

 ii

AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT

This Amended and Restated Stockholders Agreement (the “Agreement”)
is made as of February 16, 2007 and amends and restates the Stockholders
Agreement dated as of October 31, 2006 (the “Original Agreement”), and is by and among:

(i)            Michaels Stores, Inc.
(the “Company”);

(ii)           Michaels Holdings LLC
(the “LLC”), Highfields Capital I LP, Highfields Capital II LP, and
Highfields Capital III LP (collectively, the “Highfields Funds”),
4390075 Canada Inc. and any other Person executing this Agreement and listed as
an “Investor” on the signature pages hereto and such other Persons who from
time to time become party hereto by executing a counterpart signature page
hereof and are designated by the Board as “Investors” (collectively with their
Permitted Transferees, the “Investors”);

(iii)          such other Persons who
from time to time become party hereto by executing a counterpart signature page
hereof (or an option award, joinder agreement or other agreement that binds
such Persons to this Agreement) and are designated by the Board as “Managers”
(collectively, the “Managers”); and

(iv)          such other Persons, if
any, that from time to time become party hereto as Permitted Transferees of
Shares pursuant to Section 2.2 (together with the Investors and the Managers,
the “Stockholders”) in accordance with the terms hereof.

RECITALS

1.             On or about the date
of the Original Agreement, the Company consummated a leveraged recapitalization
transaction on the terms and subject to the conditions of an Agreement and Plan
of Merger, dated as of June 30, 2006 (as amended, the “Merger Agreement”),
among the Company, Bain Paste Mergerco, Inc., a Delaware corporation,
Blackstone Paste Mergerco, Inc., a Delaware corporation, Bain Paste Finco, LLC,
a Delaware limited liability company, and Blackstone Paste Finco, LLC, a
Delaware limited liability company.

2.             Upon the closing of
the transactions contemplated by the Merger Agreement, the Common Stock (as
defined below) of the Company was held as set forth on Schedule I
hereto.

3.             In connection with
the foregoing, the Company and the Investors entered into a Registration Rights
Agreement dated on or about the date of the Original Agreement (the “Registration
Rights Agreement”).

4.             The parties believe
that it is in the best interests of the Company and the Stockholders to set
forth their agreements on certain matters.

AGREEMENT

Therefore, the parties hereto hereby agree as follows:

1.     EFFECTIVENESS; DEFINITIONS.

1.1.       Effectiveness.  This
Agreement shall become effective on the Closing Date (as defined in the Merger
Agreement)(referred to herein as the “Closing”).

1.2.       Definitions.  Certain terms
are used in this Agreement as specifically defined herein.  These definitions are set forth or referred
to in Section 9 hereof.

2.     TRANSFER RESTRICTIONS.

No holder of Shares may Transfer such Shares to any
other Person at any time except as provided in this Section 2.

2.1.       Certain Permitted Transfers.

2.1.1.       Intra-Investor Group Transfers.  Any holder of Investor
Shares may Transfer any or all of such Shares to an Affiliate or Affiliated
Fund of such holder.

2.1.2.       Estate Planning.  Subject to the
provisions of Section 4, any holder of Shares who is a natural Person may
Transfer any or all of such Shares (i) by gift to, or for the benefit of, any
Member or Members of the Immediate Family of such holder or (ii) by Transfer to
a trust, private foundation or entity formed for estate planning purposes for
the benefit of such holder and/or any Member or Members of the Immediate Family
of such holder so long as such holder serves as trustee for such trust or in an
equivalent capacity with respect to any such private foundation or other entity
and provided that the trust instrument or other documents governing such
trust, private foundation or other entity provides that such holder, as trustee
(or equivalent), shall retain sole and exclusive control over the voting and
disposition of such Shares until the termination of this Agreement.

2.1.3.       Upon Death.  Subject
to the provisions of Section 4, if applicable, upon the death of any holder of
Shares who is a natural Person, such Shares may be distributed by the will or
other instrument taking effect at death of such holder or by applicable laws of
descent and distribution to such holder’s estate, executors, administrators,
personal representatives, heirs, legatees or distributees, whether or not such
recipients are Members of the Immediate Family of such holder.

2.1.4.       Company or Other Persons with Board Approval.  Any holder of Shares may
Transfer any or all of such Shares (i) with the Board’s approval, to the
Company or any subsidiary of the Company or (ii) to such other Persons as the
Board may approve.

 2
 

2.1.5.       Additional Permitted Transfers by Investors.  Any holder of Investor
Shares may Transfer any or all of such Shares to its partners, members or other
holders of its beneficial interests in connection with the termination of such
holder’s legal existence, subject to compliance with Section 2 of the
Registration Rights Agreement.  Any such
Transfer may be made no earlier than twelve months prior to the termination of
such holder’s legal existence.

No Transfer permitted under the terms of this Section
2.1 shall be effective unless the transferee of such Shares (each, a “Permitted
Transferee”) has delivered to the Company a written acknowledgment and
agreement in form and substance reasonably satisfactory to the Company that
such Shares to be received by such Permitted Transferee will remain Investor
Shares or Management Shares, as the case may be, and will be subject to all of
the provisions of this Agreement and that such Permitted Transferee will be
bound by, and will be a party to, this Agreement as the holder of Investor
Shares or Management Shares, as the case may be, hereunder; provided, however,
that (a) any Shares that are Transferred to any director, officer or employee
of, or consultant or adviser to, the Company or any of its subsidiaries will
thereafter become Management Shares hereunder, and (b) any Shares that are
Transferred to any Investor will thereafter become Investor Shares hereunder;
and provided further that no Transfer by any holder of Shares to a
Permitted Transferee will relieve such holder of any of its obligations
hereunder.  Notwithstanding anything to
the contrary herein or otherwise, the Board will have no obligation to approve
any Transfer to any Person pursuant to Section 2.1.4.

2.2.       Right of First Refusal.

2.2.1.       Right of First Refusal.  In
addition to Transfers permitted under Section 2.1, each holder of Shares other
than holders of Management Shares may Transfer Shares to any Prospective
Transferee in compliance with this Section 2.2.

2.2.2.       Notice.  Any
holder of Shares other than holders of Management Shares that has a bona fide,
binding, written offer to purchase all or any portion of such Shares, shall
first deliver to the Company a written notice (the “ROFR Offer Notice”)
at least 60 days prior to such proposed Transfer.  The ROFR Offer Notice shall include:

(a)           the principal terms and conditions of the proposed
Transfer, including (i) the names and addresses of the Prospective Transferees,
(ii) the number and class of the Shares to be Transferred to each such
Prospective Transferee, (iii) the date of the proposed Transfer, (iv) the
proposed purchase price, (v) any other material terms of the proposed Transfer
and (vi) a copy of such bona fide, binding, written offer from the Prospective
Transferees; and

(b)           an irrevocable offer (a “ROFR Option”) to Sell
all such Shares to the Company or its designee for a purchase price equal to or
less than the price specified in the ROFR Offer Notice for such Shares and
otherwise on terms that are the same or more favorable to the Company than the
terms that would apply to such proposed Sale to the Prospective Transferees.

 3
 

2.2.3.       Acceptance.  Any
ROFR Option may be exercised by delivery of written notice of acceptance (the “ROFR
Acceptance Notice”) to the offeror within 60 days after delivery of the
related ROFR Offer Notice.  The ROFR
Acceptance Notice shall state that the Company or its designee has elected to
exercise the ROFR Option.  The ROFR
Option will be allocated among the Company and its designees in such proportion
as the Company may, in its sole discretion, determine.

2.2.4.       Failure to Exercise ROFR.  If
the Company or its designee(s) do not deliver a ROFR Acceptance Notice as
provided in Section 2.2.3, then they shall be deemed to have forfeited any
right to purchase the subject Shares hereunder, and the holder of such Shares
shall be free to sell such Shares to the Prospective Transferee upon the terms
set forth in the ROFR Offer Notice within the 120 day period following the
delivery of the ROFR Offer Notice.

2.2.5.       Closing.  The
closing of any purchase and sale of Shares pursuant to the exercise of any ROFR
Option shall take place as soon as reasonably practicable, and in any event not
later than 45 days after delivery of the ROFR Acceptance Notice (provided, that
such time shall be extended as necessary to comply with applicable legal
requirements) at the principal office of the Company, or at such other time and
location as the parties to such purchase may mutually determine.  At the closing of any purchase and sale of
Shares following the exercise of any ROFR Option, the holders of Shares to be
sold will deliver to the Company (or to its designee(s), if applicable) a
certificate or certificates representing the Shares to be purchased duly
endorsed, or with stock (or equivalent) powers duly endorsed, for transfer with
signature guaranteed, free and clear of any Adverse Claim, with any necessary
stock (or equivalent) transfer tax stamps affixed, together with such
certifications, representations and warranties as the Company may reasonably
request regarding matters such as that: 
(a) such holder has full right, title and interest in and to such
Shares; (b) such holder has all necessary power and authority and has taken all
necessary action to sell such Shares as contemplated; and (c) there is no
Adverse Claim with respect to such Shares, and the Company (or its designee(s),
if applicable) will pay to such holder by certified or bank check or wire
transfer of immediately available federal funds the purchase price of the
Shares being purchased by it.  If the
purchase price includes consideration other than cash, the cash equivalent
value of the non-cash consideration will be determined by the Board in good
faith.

2.2.6.       Acknowledgment.  Each
holder of Shares acknowledges and agrees that, without limiting such holder’s
rights under Section 5, neither the Company nor any of its designee(s) (nor any
other Person directly or indirectly affiliated with the Company or its
designees, whether as a significant stockholder, director, officer, manager,
employee, agent or otherwise) shall have any duty or obligation to affirmatively
disclose to such selling Stockholders, and they shall not have any right to be
advised of, any material information regarding the Company or otherwise at any
time prior to or upon the exercise of any ROFR Option or any purchase of the
Shares in accordance with the terms of this Section 2.2.

 4
 

2.2.7.       Joinder to this Agreement.  No Transfer of Shares
permitted under the terms of this Section 2.2 shall be effective unless, and it
shall be a condition to any such Transfer of any Shares that, the transferee of
such Shares has delivered to the Company a written acknowledgment and agreement
in form and substance reasonably satisfactory to the Company to the effect that
the transferee will be bound by the terms and conditions of this Agreement to
the same extent as the holder Transferring such Shares is bound at the time of
such Transfer.

2.3.       Securities Laws Restrictions.  No holder of Shares may
Transfer such Shares to any other Person unless such holder first takes all
reasonable and customary steps, to the reasonable satisfaction of the Company
(subject to reasonable cooperation from the Company to facilitate such sale,
but without necessity of registering Shares under applicable securities laws),
to ensure that such Transfer (a) would not violate applicable securities laws
and (b) would not cause the Company to be required to register a class of
equity securities pursuant to Section 12(g) of the Exchange Act or the rules
and regulations adopted thereunder.

2.4.       Impermissible Transfer.  Any attempted Transfer of Shares not
permitted under the terms of this Section 2 shall be null and void, and the
Company shall not in any way give effect to any such impermissible Transfer.

2.5.       Other Restrictions on Transfer.  The restrictions on
Transfer contained in this Agreement are in addition to any other restrictions
on Transfer to which a Stockholder may be subject, including any restrictions
on Transfer contained in a restricted stock agreement, stock option agreement
or stock subscription agreement.

2.6.       Period.  Each of the
foregoing provisions of this Section 2 shall expire upon the earlier of (a) the
consummation of a Change of Control or (b) the effectiveness of the Company’s
registration statement in connection with the Initial Public Offering.

3.     RIGHT OF PARTICIPATION.

Subject to Section 3.3, the Company shall not, and
shall not permit any direct or indirect subsidiary of the Company (the Company
and each such subsidiary, an “Issuer”) to, issue or sell any shares of
any of its capital stock or any securities convertible into or exchangeable for
any shares of its capital stock, issue or grant any options or warrants for the
purchase of, or enter into any agreements providing for the issuance
(contingent or otherwise) of, any of its capital stock or any stock or securities
convertible into or exchangeable for any shares of its capital stock, in each
case, to any Investor (including any holder of more than 10% of the interests
in the LLC) or an Affiliate of any Investor (each an “Issuance” of “Subject
Securities”), except in compliance with the provisions of Section 3.1 or
Section 3.2.

3.1.       Right of Participation.

3.1.1.       Offer.  Not fewer
than 20 business days prior to the consummation of an Issuance, a notice (the “Participation
Notice”) shall be furnished by the Issuer to each holder of Investor Shares
and Management Participation Shares (the “Participation Offerees”).  The Participation Notice shall include:

 5
 

(a)           the principal terms and conditions of the proposed
Issuance, including (i) the amount, kind and terms of the Subject Securities to
be included in the Issuance, (ii) the number of Equivalent Shares represented
by such Subject Securities (if applicable), (iii) the percentage of the total
Fair Market Value of Equivalent Shares outstanding as of immediately prior to
giving effect to such Issuance which the Fair Market Value of Equivalent Shares
held by such Participation Offeree constitutes (excluding for such purposes
Unvested Management Shares, the “Participation Portion”), (iv) the price
(including if applicable, the Price Per Equivalent Share) per unit of the
Subject Securities, including a description of any pricing formulae and of any
non-cash consideration sufficiently detailed to permit valuation thereof, (v)
the proposed manner of disposition, (vi) the name and address of the Person to
whom the Subject Securities will be issued (the “Prospective Subscriber”)
and (vii) if known, the proposed Issuance date; and

(b)           an offer by the Issuer to issue, at the option of each
Participation Offeree, to such Participation Offeree such portion of the
Subject Securities to be included in the Issuance as may be requested by such
Participation Offeree (not to exceed the Participation Portion of the total
amount of Subject Securities to be included in the Issuance), on the same terms
and conditions, with respect to each unit of Subject Securities issued to the
Participation Offerees, as each of the Prospective Subscribers shall be issued
units of Subject Securities.

3.1.2.       Exercise.

(a)           General.  Each Participation Offeree desiring to accept
the offer contained in the Participation Notice shall accept such offer by
furnishing a written commitment to the Issuer within 15 business days after the
effectiveness of the Participation Notice specifying the amount of Subject
Securities (not in any event to exceed the Participation Portion of the total
amount of Subject Securities to be included in the Issuance) which such
Participation Offeree desires to be issued to it (each a “Participating
Buyer”).  Each Participation Offeree
who does not so accept such offer in compliance with the above requirements,
including the applicable time periods, shall be deemed to have waived all
rights to participate in such Issuance, and the Issuer shall thereafter be free
to issue Subject Securities in such Issuance to the Prospective Subscriber and
any Participating Buyers, at a price no less than the minimum price set forth
in the Participation Notice and on other principal terms not substantially more
favorable to the Prospective Subscriber than those set forth in the
Participation Notice, without any further obligation to such non-accepting
Participation Offerees pursuant to this Section 3.  If, prior to consummation, the terms of such
proposed Issuance shall change with the result that the price shall be less
than the minimum price set forth in the Participation Notice or the other
principal terms shall be substantially more favorable to the Prospective
Subscriber than those set forth in the Participation Notice, it shall be
necessary for a separate Participation Notice to be furnished, and the terms
and provisions of this Section 3.1 separately complied with, in order to
consummate such Issuance pursuant to this Section 3.1.

 6
 

(b)           Irrevocable Acceptance.  The acceptance
of each Participating Buyer shall be irrevocable except as hereinafter
provided, and each such Participating Buyer shall be bound and obligated to
acquire in the Issuance on the same terms and conditions, with respect to each
unit of Subject Securities issued, as the Prospective Subscriber, such amount
of Subject Securities as such Participating Buyer shall have specified in such
Participating Buyer’s written commitment.

(c)           Time Limitation.  If at the end of the 180th day
following the date of the effectiveness of the Participation Notice the Issuer
has not completed the Issuance, each Participating Buyer shall be released from
all obligations under the written commitment, the Participation Notice shall be
null and void, and it shall be necessary for a separate Participation Notice to
be furnished, and the terms and provisions of this Section 3.1 separately
complied with, in order to consummate such Issuance pursuant to this Section
3.1.

3.1.3.       Other Securities.  The
Issuer may condition the participation of the Participation Offerees in an
Issuance upon the purchase by such Participation Offerees of any securities
(including, if applicable, debt securities) other than Subject Securities (“Other
Securities”) if and to the extent that Prospective Subscribers’
participation in such Issuance is so conditioned.  In such case, each Participating Buyer shall
acquire in the Issuance, together with the Subject Securities to be acquired by
it, Other Securities in the same proportion to the Subject Securities to be
acquired by it as the proportion of Other Securities to Subject Securities
being acquired by the Prospective Subscriber in the Issuance, on the same terms
and conditions, as to each unit of Subject Securities and Other Securities
issued to the Participating Buyers, as the Prospective Subscriber shall be
issued units of Subject Securities and Other Securities.

3.1.4.       Certain Legal Requirements.  In the event that the
participation in any Issuance by a holder of Shares as a Participating Buyer
would require under applicable law (a) the registration or qualification of
such securities or (b) the provision to any participant in the Issuance of any
information (other than information required to be provided pursuant to Section
5) regarding the Company, its subsidiaries, such securities or the Issuer that
is not otherwise required to be provided for the Issuance, such holder of
Shares shall not have the right to participate in the Issuance.  Without limiting the generality of the
foregoing, it is understood and agreed that neither the Company nor the Issuer
shall be under any obligation to effect a registration of such securities under
the Securities Act or similar state statutes.

3.1.5.       Further Assurances.  Each
Participating Buyer will take or cause to be taken all such reasonable actions
as may be necessary or reasonably desirable in order to consummate each
Issuance pursuant to this Section 3.1 and any related transactions
expeditiously, including executing, acknowledging and delivering consents,
assignments, waivers and other documents or instruments; filing applications,
reports, returns, filings and other documents or instruments with governmental
authorities; and otherwise cooperating with the Company, the Issuer and the
Prospective Subscriber.  Without limiting
the generality of the foregoing, each such Participating Buyer agrees 

 7
 

to
execute and deliver such subscription and other agreements specified by the
Issuer to which the Prospective Subscriber will be party.

3.1.6.       Closing.  The
closing of an Issuance pursuant to Section 3.1 shall take place at such time
and place as the Issuer shall specify by notice to each Participating
Buyer.  At the Closing of any Issuance
under this Section 3.1.6 each Participating Buyer shall be delivered the notes,
certificates or other instruments evidencing the Subject Securities (and, if
applicable, Other Securities) to be issued to such Participating Buyer,
registered in the name of such Participating Buyer or its designated nominee,
free and clear of any Adverse Claims, with any transfer tax stamps affixed, against
delivery by such Participating Buyer of the applicable consideration.

3.2.       Post-Issuance Notice.  Notwithstanding the notice
requirements of Sections 3.1.1 and 3.1.2, as long as such action would not
materially disadvantage any Person who would have been a Participation Offeree,
the Issuer may proceed with any Issuance prior to having complied with the
provisions of Section 3.1; provided that the Issuer shall:

(a)           provide to each holder of Shares who would have been a
Participation Offeree in connection with such Issuance (i) with prompt notice
of such Issuance and (ii) the Participation Notice described in Section 3.1.1
in which the actual price per unit of Subject Securities (and, if applicable,
actual Price Per Equivalent Share) shall be set forth;

(b)           offer to issue to such holder of Shares such number of
securities of the type issued in the Issuance as may be requested by such
holder of Shares (not to exceed the Participation Portion that such holder of
Shares would have been entitled to pursuant to Section 3.1 multiplied by the
sum of (i) the number of Subject Securities included in the Issuance and
(ii) the aggregate number of Shares issued pursuant to this
Section 3.2 with respect to such Issuance) on the same economic terms and
conditions with respect to such securities as the subscribers in the Issuance
received; and

(c)           keep such offer open for a period of 10 business days,
during which period, each such holder may accept such offer by sending a
written acceptance to the Issuer committing to purchase an amount of such
securities (not in any event to exceed the Participation Portion that such
holder would have been entitled to pursuant to Section 3.1 multiplied by
the sum of (i) the number of Subject Securities included in such Issuance
and (ii) the aggregate number of Shares issued pursuant to this
Section 3.2 with respect to such Issuance).

3.3.       Excluded Transactions.  The provisions of this Section 3
shall not apply to Issuances by the Company or any subsidiary of the Company as
follows:

(a)           Any Issuance of Common Stock upon the exercise or
conversion of any Common Stock, Options, Warrants or Convertible Securities
outstanding or approved on the date of the Original Agreement or Issued after
the date of the Original Agreement in compliance with the provisions of this
Section 3;

 8
 

(b)           Any Issuance of Common Stock pursuant to the Initial
Public Offering;

(c)           The Issuance of Shares in connection with the Closing;
or

(d)           Any Issuance of shares of Common Stock in connection
with any stock split, stock dividend or recapitalization approved by the Board.

3.4.       Certain Provisions Applicable to Options, Warrants and
Convertible Securities.  In the event that the
Issuance of Subject Securities shall result in any increase in the number of
shares of Common Stock issuable upon exercise, conversion or exchange of any
Options, Warrants or Convertible Securities, the number of shares (or
Equivalent Shares, if applicable) of Subject Securities (and Other Securities,
if applicable) which the holders of such Options, Warrants or Convertible
Securities, as the case may be, shall be entitled to purchase pursuant to
Section 3.1, if any, shall be reduced, share for share, by the amount of any
such increase.

3.5.       Acquired Shares.  Any Subject Securities constituting
Common Stock acquired by any holder of Shares pursuant to this Section 3 shall
be deemed for all purposes hereof to be Investor Shares or Management Shares
hereunder of like kind with the Shares then held by the acquiring holder
hereunder.

3.6.       Period.  Each of the
foregoing provisions of this Section 3 shall expire on the earlier of
(a) the consummation of a Change of Control or (b) the closing of the
Initial Public Offering.

4.     COMPANY CALL OPTION AND MANAGEMENT PUT RIGHTS.

4.1.       Call Option Upon Termination.  Except as the Company may
otherwise agree in writing with any Manager with respect to Shares held by such
Manager’s Management Call Group, upon any termination of the employment by the
Company and its subsidiaries of any Manager (by the Company, such Manager or
otherwise), the Company shall have the right to purchase all of the Management
Shares held by such Manager or originally issued to such Manager but held by
one or more Permitted Transferees (collectively, the “Management Call Group”)
on the following terms (the “Management Call Option”):

4.1.1.         Purchased Management Shares. 
The Company may
purchase all of the Purchased Management Shares held by such Management Call
Group at a per share price equal to the Fair Market Value of such Shares on the
Management Call Notice Date.

4.1.2.       Other Shares.  For all
Management Shares which are not Purchased Management Shares, the following
terms shall apply:

(a)           Termination for Cause. If such termination is the result of termination of such Manager’s
employment by the Company or its subsidiaries for Cause, then the Company may
purchase all or any portion of the Shares held by such Management Call Group at
a per Share price equal to the lesser of the

 9
 

Cost or
the Fair Market Value of such Shares on the Management Call Notice Date.

(b)           Death or Disability.  If such termination is the result
of the death or Disability of such Manager, then the Company may
purchase all or any portion of the Shares held by such Management Call
Group at a per Share price equal to the Fair Market Value of such Shares on the
Management Call Notice Date.

(c)           Termination by Manager.  If such
termination is the result of termination by a Manager (but not by the Company)
other than by reason of the Manager’s death or Disability and other than in
circumstances where the Company or its subsidiaries would have grounds to
terminate such Manager for Cause, then the Company may purchase all or any
portion of the Shares held by such Management Call Group at a per Share price
equal to the Fair Market Value of such Shares on the Management Call Notice
Date.

(d)           Termination by the Company Not for Cause.  If such
termination is the result of termination by the Company or its
subsidiaries and such termination is not for Cause, then the Company may
purchase all or any portion of the Shares held by such Management Call
Group at a per Share price equal to the Fair Market Value of such Shares on the
Management Call Notice Date.

4.1.3.       Notices.  Any
Management Call Option may be exercised by delivery of written notice thereof
(the “Management Call Notice”) to all members of the applicable
Management Call Group from whom the Company has elected to purchase Shares no
later than the Management Call Notice Date. 
The Management Call Notice shall state that the Company has elected to
exercise the Management Call Option and the price or date for determining the
price of such shares.  For purposes of
this Section 4.1, the “Management Call Notice Date” shall mean the date
of delivery of a Management Call Notice, which, if delivered, shall be no later
than 240 days after (but not before the date that is one day after the
six-month anniversary of) the later of (i) the date of termination of
employment or (ii) the exercise of any Option originally granted to such
Manager or the date upon which any Unvested Shares granted to such Manager
become Vested Shares.

4.1.4.       Vesting.  The
rights of the Company to purchase Management Shares under this Section 4.1 are
in addition to, and do not modify, any vesting requirements that may be included
in the terms of any Management Shares, and any Shares which remain subject to
restrictions upon termination by a Manager shall be automatically forfeited to
the Company, if applicable, in accordance with their terms.

4.1.5.       Payments.  The
Company shall make any payment required to be made by the Company to the
Management Call Group under any provision of this Section 4.1 in cash.

 10
 

4.1.6.       Closing.

(i)            The closing of any purchase and sale of Management
Shares pursuant to this Section 4.1 shall take place as soon as reasonably
practicable, and in any event not later than 30 days after the Management Call
Notice Date (provided that such time shall be extended as necessary to
comply with applicable legal requirements) at the principal office of the
Company, or at such other time and location as the parties to such purchase may
mutually determine.

(ii)           At the closing of any purchase and sale of Management
Shares following the exercise of any Management Call Option, the holders of
Shares to be sold shall deliver to the Company a certificate or certificates
representing the Shares to be purchased by the Company duly endorsed, or with
stock (or equivalent) powers duly endorsed, for transfer with signature
guaranteed, free and clear of any Adverse Claim, with any necessary stock (or
equivalent) transfer tax stamps affixed, and the Company shall pay to such
holder by certified or bank check or wire transfer of immediately available
federal funds the purchase price of the Shares being purchased by the Company.  The delivery of a certificate or certificates
for Shares by any Person selling Shares pursuant to any Management Call Option
shall be deemed a representation and warranty by such Person that:  (a) such Person has full right, title and
interest in and to such Shares; (b) such Person has all necessary power and
authority and has taken all necessary action to sell such Shares as
contemplated and (c) such Shares are free and clear of any and all Adverse
Claims.

4.1.7.       Investor Group Call Option.  If the Company shall elect
not to purchase pursuant to this Section 4.1 all Management Shares that are
held by a Management Call Group, the Company may, in its discretion, allocate
all of its rights to purchase such Shares under this Section to one or more
Investors in the discretion of the Company, provided however that any purchase
of Shares by an Investor shall be for cash and shall be made within the time
periods set forth for the Company’s performance under this Section.

4.1.8.       Acknowledgment.  Each
holder of Management Shares acknowledges and agrees that neither the Company
nor any Person directly or indirectly affiliated with the Company (in each case
whether as a director, officer, manager, employee, agent or otherwise) shall
have any duty or obligation to affirmatively disclose to holders of Management
Shares, and they shall not have any right to be advised of, any material
information regarding the Company or otherwise at any time prior to, upon, or
in connection with any termination of his or her employment by the Company or
its subsidiaries upon the exercise of any Management Call Option or any
purchase of the Shares in accordance with the terms hereof.

4.1.9.       Period.  The
foregoing provisions of this Section 4.1 shall expire upon the earlier of (a)
the consummation of a Change of Control and (b) the closing of the Initial
Public Offering.

4.2.       Put Option Upon Termination.  Prior to the closing of the
Initial Public Offering, upon any termination of a Manager’s employment
resulting from the Manager’s death or

 11

disability, such Manager shall have
the right to require the Company to purchase, as provided below, all or any
portion of the Management Shares held by such Manager on the following terms
(the “Put Option”):

4.2.1.       Exercise; Notice.  Such
Manager, the Manager’s representative or the Manager’s estate may exercise the
Put Option with respect to all or any portion of the Management Shares held by
such Manager by delivery of written notice thereof (the “Put Notice”) to
the Company at any time within sixty (60) days commencing on the date of a
termination of employment that results from the Manager’s death or disability.

4.2.2.       Determination Date; Payment.  The Company shall purchase
all of the Management Shares that are subject to a Put Notice (the “Notice
Shares”) on the date that is six months and one day after the date the Put
Notice is received by the Company. 
Subject to subsection 4.2.3 below, the Company shall purchase all of the
Notice Shares in a cash lump sum equal to the Fair Market Value of such shares
as of the date that they are repurchased by the Company.

4.2.3.       Distributions and Cash Payments.  To the extent that (i)(a)
any payment of cash required under the terms of this Section 4.2 or any payment
of principal or interest on a promissory note issued under Section 4.2 or (b) a
distribution to the Company from any of its subsidiaries in an amount equal to
the amount of cash required to be paid under the terms of this Section 4.2 or
the amount of any payment of principal or interest on a promissory note issued
under this Section 4.2 would, in any event, constitute, result in or give rise
to a breach or violation of, or any default or right or cause of action under
any agreement of the Company or any of its subsidiaries in respect of
indebtedness for borrowed money (it being understood that the Company and its
subsidiaries will use any basket reserved for the repurchase of equity of the
Company or its subsidiaries, but shall not be required to use any basket
reserved for general corporate purposes), or (ii) the Board in good faith
determines that the authorization of any such payment or distribution would be
detrimental to the Company given the Company’s financial condition and
liquidity requirements at such time or would constitute a violation of law or
of the Board’s fiduciary duties, then the Company will instead issue a
promissory note in the principal amount of such cash payment and in the case of
a cash payment in respect of a promissory note issued under this Section 4.2,
notwithstanding any of the provisions of such note, such payment will not
become due and payable.  Interest will
accrue on the principal of any such promissory note at a rate equal to 8% per
annum and the principal of such note, together with the interest thereon, will
become due and payable from time to time to the extent consistent with clauses
(i) and (ii) above.  Any promissory note
issued under this Section 4.2 may be prepaid in whole or in part at any time
and from time to time without premium or penalty.

4.2.4.       Closing.

(i)            The closing of any purchase and sale of Notice Shares
pursuant to the exercise of any right granted pursuant to this Section 4.2
shall take place at the

 12
 

principal
office of the Company, or at such other time and location as the parties to
such purchase may mutually determine.

(ii)           At the closing of any purchase and sale of Notice
Shares following the exercise of any Put Option, the holders of Shares to be
sold shall deliver to the Company a certificate or certificates representing
the Shares to be purchased by the Company duly endorsed, or with stock (or
equivalent) powers duly endorsed, for transfer with signature guaranteed, free
and clear of any Adverse Claim, with any necessary stock (or equivalent)
transfer tax stamps affixed, and the Company shall pay to such holder by
certified or bank check or wire transfer of immediately available federal funds
the purchase price of the Shares being purchased by the Company.  The delivery of a certificate or certificates
for Shares by any Person selling Shares pursuant to any Put Option shall be
deemed a representation and warranty by such Person that:  (a) such Person has full right, title and
interest in and to such Shares; (b) such Person has all necessary power and
authority and has taken all necessary action to sell such Shares as
contemplated and (c) such Shares are free and clear of any and all Adverse
Claims.

5.     INFORMATION RIGHTS.

5.1.       Financial and Other Information.  The Company shall provide
or cause to be provided, to any Stockholder that, together with its Affiliates
or Affiliated Funds, initially holds more than 5% of the outstanding Common
Stock as of the Closing (a “Five Percent Stockholder”), the following
information:

5.1.1.       Annual Reports.  As soon as available, and in any event
within 90 days after the end of each fiscal year, the consolidated balance
sheet of the Company and its subsidiaries as at the end of such fiscal year and
the consolidated statements of income, cash flows and stockholders’ equity for
such fiscal year of the Company and its subsidiaries, accompanied by the audit
report of independent certified public accountants of recognized national
standing with respect thereto.

5.1.2.       Quarterly Reports.  As
soon as available, and in any event within 45 days after the end of each of the
first three fiscal quarters of each fiscal year, the unaudited consolidated
balance sheet of the Company and its subsidiaries as at the end of such fiscal
quarter and the consolidated statements of income, cash flows and stockholder’s
equity for such fiscal quarter and the portion of the fiscal year then ended
with such fiscal quarter of the Company and its subsidiaries.  

5.1.3.       Monthly Reports.  As
soon as available, and in any event within 30 days after the end of each fiscal
month, other than the last month of any fiscal quarter or of the fiscal year,
the unaudited consolidated balance sheet of the Company and its subsidiaries as
at the end of such fiscal month and the consolidated statements of income, cash
flows and stockholder’s equity for such fiscal month and the portion of the
fiscal year then ended with such fiscal month of the Company and its
subsidiaries.

 13
 

If, at any time, the Company is required by the rules
and regulations of the Commission to file annual and quarterly reports
electronically with the Commission through the Commission’s Electronic Data
Gathering, Analysis and Retrieval System (or any successor system), or is
voluntarily filing such reports, then the obligations of the Company under
Sections 5.1.1 and 5.1.2 shall be satisfied by the making of such filings.

5.2.       Other Information.  The Company will also furnish to each
Five Percent Stockholder with reasonable promptness, such other information and
data with respect to the Company as such Stockholder may from time to time
reasonably request, which information will not be used for any purpose by such
Five Percent Stockholder other than to evaluate his, her or its investment in
the Company and shall be subject to the confidentiality provisions of Section
5.3 below.

5.3.       Confidentiality.  Each Five Percent Stockholder covenants
and agrees that if such Five Percent Stockholder receives information under
this Section 5, such Five Percent Stockholder shall keep confidential, and
cause its officers, directors, employees, agents and representatives, to keep
confidential, all information, materials and documents concerning the business
of the Company and its subsidiaries furnished by, or on behalf of, the Company
or its subsidiaries or otherwise acquired by such Five Percent Stockholder (the
“Confidential Information”). 
Notwithstanding the foregoing, a Five Percent Stockholder shall be
permitted to disclose Confidential Information: 
(a) to its officers, managers, directors, employees, agents and
representatives and Affiliates provided that such Confidential Information
shall remain confidential; (b) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process, or to the extent
requested by any governmental agency or authority; (c) to the extent such
Confidential Information (i) becomes publicly available other than as a result
of a breach of this Agreement, (ii) becomes available to the Five Percent
Stockholder on a non-confidential basis from a source other than the Company or
its subsidiaries or (iii) was available to the Five Percent Stockholder on a
non-confidential basis prior to its disclosure to the Five Percent Stockholder
by the Company or its subsidiaries; or (d) to the extent the Company or its
subsidiaries shall have consented to such disclosure in writing.

5.4.       Period.  Each of the
foregoing provisions of this Section 5 shall expire on the closing of the
Initial Public Offering.

6.     REMEDIES.

6.1.       Generally.  The Company
and each holder of Shares shall have all remedies available at law, in equity
or otherwise in the event of any breach or violation of this Agreement or any
default hereunder by the Company or any holder of Shares.  The parties acknowledge and agree that in the
event of any breach of this Agreement, in addition to any other remedies which
may be available, each of the parties hereto shall be entitled to specific
performance of the obligations of the other parties hereto and, in addition, to
such other equitable remedies (including, preliminary or temporary relief) as
may be appropriate in the circumstances.

6.2.       Deposit.  Without
limiting the generality of Section 6.1, if any holder of Shares fails to
deliver to the purchaser thereof the certificate or certificates evidencing
Shares to be Sold pursuant to Section 4 hereof, such purchaser may, at its
option, in addition to all other remedies it

 14
 

may have, deposit the purchase price
for such Shares with any national bank or trust company having combined
capital, surplus and undivided profits in excess of One Hundred Million Dollars
($100,000,000) (the “Escrow Agent”) and the Company shall cancel on its
books the certificate or certificates representing such Shares and thereupon
all of such holder’s rights in and to such Shares shall terminate.  Thereafter, upon delivery to such purchaser
by such holder of the certificate or certificates evidencing such Shares (duly
endorsed, or with stock powers duly endorsed, for transfer, with signature
guaranteed, free and clear of any Adverse Claims, and with any transfer tax
stamps affixed), such purchaser shall instruct the Escrow Agent to deliver the
purchase price (without any interest from the date of the closing to the date
of such delivery, any such interest to accrue to such purchaser) to such
holder.

7.     LEGENDS.

7.1.       Restrictive Legend.  Each certificate representing Shares
shall have the following legend endorsed conspicuously thereupon:

The sale, encumbrance or other disposition of the
shares of stock represented by this certificate are subject to the provisions
of a Stockholders Agreement and a Registration Rights Agreement, in each case
to which the issuer and certain of its stockholders are party, a copy of which
may be inspected at the principal office of the issuer or obtained from the
issuer without charge.

Each certificate representing Investor Shares shall
also have the following legend endorsed conspicuously thereupon:

The shares of stock represented by this certificate
were originally issued to, or issued with respect to shares originally issued
to, the following Investor:                 .

Each certificate representing Management Shares shall
also have the following legend endorsed conspicuously thereupon:

The shares of stock represented by this certificate
were originally issued to, or issued with respect to shares originally issued
to, the following Manager:                 .

Any person who acquires Shares which are not subject
to any of the terms of this Agreement shall have the right to have such legend
(or the applicable portion thereof) removed from certificates representing such
Shares.

7.2.       1933 Act Legends.  Each certificate representing Shares
shall have the following legend endorsed conspicuously thereupon:

The
securities represented by this certificate were issued in a private placement,
without registration under the Securities Act of 1933, as amended (the “Act”),
and may not be sold, assigned, pledged or otherwise transferred in the absence
of an effective

 15
 

registration
under the Act covering the transfer or an opinion of counsel, satisfactory to
the issuer, that registration under the Act is not required.

7.3.       Stop Transfer Instruction.  The Company will instruct any
transfer agent not to register the Transfer of any Shares until the conditions
specified in the foregoing legends are satisfied.

7.4.       Termination of 1933 Act Legend.  The requirement imposed by
Section 7.2 hereof shall cease and terminate as to any particular Shares (i)
when, in the opinion of Ropes & Gray LLP, or other counsel reasonably
acceptable to the Company, such legend is no longer required in order to assure
compliance by the Company with the Securities Act or (ii) when such Shares have
been effectively registered under the Securities Act or transferred pursuant to
Rule 144.  Wherever (x) such requirement
shall cease and terminate as to any Shares or (y) such Shares shall be
transferable under paragraph (k) of Rule 144, the holder thereof shall be
entitled to receive from the Company, as the case may be, without expense, new
certificates not bearing the legend set forth in Section 7.2 hereof.

8.     AMENDMENT, TERMINATION, ETC.

8.1.       Oral Modifications.  This Agreement may not be orally
amended, modified, extended or terminated, nor shall any oral waiver of any of
its terms be effective.

8.2.       Written Modifications.  This Agreement may be amended,
modified, extended or terminated, and the provisions hereof may be waived, only
by an agreement in writing signed by the Company and the Stockholders that hold
a majority of the Shares held by all Stockholders; provided, however,
that any amendment, modification, extension, termination or waiver (an “Amendment”)
shall also require the consent of any Stockholder who would be
disproportionately and adversely affected thereby.

Each such Amendment shall be binding upon each party
hereto and each holder of Shares subject hereto.  In addition, each party hereto and each
holder of Shares subject hereto may waive any right hereunder by an instrument
in writing signed by such party or holder.

8.3.       Effect of Termination.  No termination under this Agreement
shall relieve any Person of liability for breach prior to termination.

9.     DEFINITIONS.  For purposes of this Agreement:

9.1.       Certain Matters of Construction.  In addition to the
definitions referred to or set forth below in this Section 9:

(a)   The words “hereof’, “herein”, “hereunder” and words of
similar import shall refer to this Agreement as a whole and not to any
particular Section or provision of this Agreement, and reference to a
particular Section of this Agreement shall include all subsections thereof;

(b)   The word “including” shall mean including, without
limitation;

 16
 

(c)   Definitions shall be equally applicable to both nouns
and verbs and the singular and plural forms of the terms defined; and

(d)   The masculine, feminine and neuter genders shall each
include the other.

9.2.       Definitions.  The
following terms shall have the following meanings:

“Adverse Claim” shall have the meaning set
forth in Section 8-102 of the applicable Uniform Commercial Code.

“Affiliate” shall mean, with respect to any
specified Person, (i) any other Person which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common
control with, such specified Person (for the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling,” “controlled by”
and “under common control with”), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise); and (ii) with
respect to any natural Person, any Member of the Immediate Family of such
natural Person.

“Affiliated Fund” means with respect to any
Investors, each corporation, trust, limited liability company, general or
limited partnership or other entity under common control with that Investor
(including any such entity with the same general partner or principal
investment advisor as that Investor or with a general partner or principal
investment advisor that is an Affiliate of the general partner or principal
investment advisor of that Investor), and in the case of the LLC, Affiliated
Fund shall include each member of the LLC.

“Agreement” shall have the meaning set forth in
the Preamble.

“Amendment” shall have the meaning set forth in
Section 8.2.

“Board” shall mean the board of directors of
the Company.

“business day” shall mean any day that is not a
Saturday, a Sunday or other day on which banks are required or authorized by
law to be closed in the City of New York.

“Cause”,
with respect to any Manager, shall mean the following events or conditions, as
determined by the Board in its reasonable judgment:  (i) the refusal or failure to perform
(other than by reason of disability), or material negligence in the performance
of such Manager’s duties and responsibilities to the Company or any of its
Affiliates, or refusal or failure to follow or carry out any reasonable
direction of the Board, and the continuance of such refusal, failure or
negligence for a period of 10 days after written notice delivered by the
Company to such Manager that specifically identifies the manner in which the
Manager has failed to perform his or her duties; (ii) the material breach by
such Manager of any provision of any material agreement between such Manager
and the Company or any of its Affiliates; (iii) fraud, embezzlement, theft or
other dishonesty by such Manager with respect to the Company or any of its
Affiliates; (iv) the conviction of, or a plea of nolo
contendere by, such Manager to any felony or any other crime
involving dishonesty or moral turpitude; and (v) any other conduct that
involves a breach of fiduciary duty to the Company on the part of such Manager.

 17
 

“Change of Control” shall mean the occurrence
of any of the following: (i) any consolidation or merger of the Company with or
into any other corporation or other Person, or any other corporate
reorganization or transaction (including the acquisition of capital stock of
the Company), whether or not the Company is a party thereto, in which the
stockholders of the Company immediately prior to such consolidation, merger,
reorganization or transaction, own capital stock either (A) representing
directly, or indirectly through one or more entities, less than fifty percent
(50%) of the economic interests in or voting power of the Company or other
surviving entity immediately after such consolidation, merger, reorganization
or transaction or (B) that does not directly, or indirectly through one or more
entities, have the power to elect a majority of the entire board of directors
of the Company or other surviving entity immediately after such consolidation,
merger, reorganization or transaction, (ii) any stock sale or other transaction
or series of related transactions, whether or not the Company is a party
thereto, after giving effect to which in excess of fifty percent (50%) of the
Company’s voting power is owned directly, or indirectly through one or more
entities, by any Person and its “affiliates” or “associates” (as such terms are
defined in the rules adopted by the Commission under the Exchange Act), other
than the Investors and their respective Affiliated Funds, excluding, in any
case referred to in clause (i) or (ii) the Initial Public Offering or any bona
fide primary or secondary public offering following the occurrence of the
Initial Public Offering; or (iii) a sale, lease or other disposition of all or
substantially all of the assets of the Company.

“Closing” shall have the meaning set forth in
Section 1.1.

“Commission” shall mean the Securities and
Exchange Commission.

“Common Stock” shall mean the common stock, par
value $0.10 per share, of the Company.

“Company” shall have the meaning set forth in
the Preamble.

“Confidential Information” shall have the
meaning set forth in Section 5.3.

“Convertible Securities” shall mean any
evidence of indebtedness, shares of stock (other than Common Stock) or other
securities (other than Options and Warrants) which are directly or indirectly
convertible into or exchangeable or exercisable for shares of Common Stock.

“Cost” shall mean with respect to any
Management Shares, the purchase price paid for such Management Shares by the
original holder thereof less any distributions received with respect to such
Management Shares; provided, that the Cost of (i) unvested shares of
capital stock shall equal the purchase price paid for such shares, if any, and
(ii) unvested options shall equal zero; and provided, further,
that any consideration included in the purchase price for any unvested Shares
shall equal zero.

“Disability”, with respect to any Manager,
shall have the meaning ascribed to such term in any employment agreement,
severance or other similar agreement between such Manager and the Company or
any of its subsidiaries, or, if no such agreement exists or the provisions of
such agreements conflict, the disability of a Manager during his employment
hereunder through any illness, injury, accident or condition of either a
physical or psychological nature as a result of which he is unable to perform
substantially all of his duties and responsibilities hereunder,

 18
 

notwithstanding the provision of any reasonable
accommodation, for ninety (90) consecutive days during any period of three
hundred and sixty-five (365) consecutive calendar days.

“Equivalent Shares” shall mean, at any date of
determination, (i) as to any outstanding shares of Common Stock, such number of
shares of Common Stock and (ii) as to any outstanding Options, Warrants or
Convertible Securities which constitute Shares, the maximum number of shares of
Common Stock for which or into which such Options, Warrants or Convertible
Securities may at the time be exercised, converted or exchanged (or which will
become exercisable, convertible or exchangeable on or prior to, or by reason
of, the transaction or circumstance in connection with which the number of
Equivalent Shares is to be determined).

“Escrow Agent” shall have the meaning set forth
in Section 6.2.

“Exchange Act” shall mean the Securities
Exchange Act of 1934, as in effect from time to time.

“Fair Market Value” shall mean, as of any date,
as to any Share, the Board’s reasonable, good faith determination of the fair
value of such Share as of the applicable reference date (which determination is
absent manifest error), taking into account and giving due consideration to
such factors as the Board determines are appropriate, including without
limitation: (i) amounts paid for Shares in recently completed arms-length
transactions, (ii) valuations of companies comparable to the Company and its
subsidiaries and (iii) the financial performance and expected financial
performance of the Company and its subsidiaries.

“Five Percent Stockholder” shall have the
meaning set forth in Section 5.1.

“Highfields Funds” shall have the meaning set forth
in the Preamble.

“Initial Public Offering” shall mean the
initial Public Offering registered on Form S-1 (or any successor form under the
Securities Act) after the date of the Original Agreement.

“Investors” shall have the meaning set forth in
the Preamble.

“Investor Shares” shall mean all Shares held by
an Investor.

“Issuance” shall have the meaning set forth in
Section 3.

“Issuer” shall have the meaning set forth in
Section 3.

“LLC” shall have the meaning set forth in the
Preamble.

“Management Call Group” shall have the meaning
set forth in Section 4.1.

“Management Call Notice” shall have the meaning
set forth in Section 4.1.3.

“Management Call Notice Date” shall have the
meaning set forth in Section 4.1.3.

“Management Call Option” shall have the meaning
set forth in Section 4.1.

 19
 

“Management Participation Shares” means
Purchased Management Shares and, without duplication, Vested Management Shares.

“Management Shares” shall mean all Shares held
by a Manager.  Any Management Shares that
are Transferred by the holder thereof to such holder’s Permitted Transferees
shall remain Management Shares in the hands of such Permitted Transferee.

“Managers” shall have the meaning set forth in
the Preamble.

“Members of the
Immediate Family” means, with respect to any individual, each spouse or
child or other descendants of such individual, each trust created solely for
the benefit of one or more of the aforementioned Persons and their spouses and
each custodian or guardian of any property of one or more of the aforementioned
Persons in his or her capacity as such custodian or guardian.

“Merger Agreement” shall have the meaning set
forth in the Recitals.

“Notice Shares” shall have the meaning set
forth in Section 4.2.2.

“Options” shall mean any options to subscribe
for, purchase or otherwise directly acquire Common Stock from the Company,
other than any such option held by the Company or any right to purchase shares
pursuant to this Agreement.

“Other Securities” shall have the meaning set
forth in Section 3.1.3.

“Participating Buyer” shall have the meaning
set forth in Section 3.1.2.

“Participation Notice” shall have the meaning
set forth in Section 3.1.1.

“Participation Offerees” shall have the meaning
set forth in Section 3.1.1.

“Participation Portion” shall have the meaning
set forth in Section 3.1.1.

“Permitted Transferee” shall have the meaning
set forth in Section 2.1.

“Person” shall mean any individual,
partnership, corporation, company, association, trust, joint venture, limited
liability company, unincorporated organization, entity or division, or any
government, governmental department or agency or political subdivision thereof.

“Price Per Equivalent Share” means the Board’s
good faith determination of the price per Equivalent Share of any Convertible
Securities or Options which are the subject of an issuance pursuant to Section
3 hereof.

“Prospective Subscriber” shall have the meaning
set forth in Section 3.1.1.

“Prospective Transferee” shall mean any Person
other than a competitor of the Company.

 “Public
Offering” shall mean a public offering and sale of Common Stock for cash
pursuant to an effective registration statement under the Securities Act.

 20
 

“Purchased Management Shares” shall mean, with
respect to any Manager or direct or indirect Permitted Transferee of a Manager,
all of the Management Shares which were either (i) originally purchased
from the Company by that Manager for cash, (ii) retained by that Manager in
respect of Rollover Shares (as defined in the Merger Agreement) or (iii)
retained by that Manager in respect of Rollover Options (as defined in the
Merger Agreement).  Shares issued to
Managers directly or indirectly pursuant to an incentive plan or scheme,
including any restricted stock award (whether or not vested), Options and
Shares issued upon exercise of Options (except those specified in clause (iii)
above), are not Purchased Management Shares for purposes of this Agreement.

“Put Notice” shall have the meaning set forth
in Section 4.2.1.

“Put Option” shall have the meaning set forth
in Section 4.2.

“Registration Rights Agreement” shall have the
meaning set forth in the Recitals.

“ROFR Acceptance Notice” shall have the meaning
set forth in Section 2.2.3.

“ROFR Offer Notice” shall have the meaning set
forth in Section 2.2.2.

“ROFR Option” shall have the meaning set forth
in Section 2.2.2.

“Sale” shall mean a Transfer for value and the
terms “Sell” and “Sold” shall have correlative meanings.

“Securities Act” shall mean the Securities Act
of 1933, as in effect from time to time.

“Shares” shall mean (i) all shares of Common
Stock held by a Stockholder, whenever issued, including all shares of Common
Stock issued upon the exercise, conversion or exchange of any Options, Warrants
or Convertible Securities and (ii) all Options, Warrants and Convertible Securities
held by a Stockholder (treating such Options, Warrants and Convertible
Securities as a number of Shares equal to the number of Equivalent Shares
represented by such Options, Warrants and Convertible Securities for all
purposes of this Agreement except as otherwise specifically set forth herein).

“Stockholders” shall have the meaning set forth
in the Preamble.

“Subject Securities” shall have the meaning set
forth in Section 3.

“Transfer” shall mean any sale, pledge,
assignment, encumbrance or other transfer or disposition of any Shares to any
other Person, whether directly, indirectly, voluntarily, involuntarily, by
operation of law, pursuant to judicial process or otherwise.

“Unvested Management Shares” shall mean, at any
time, all Management Shares that are not Vested Management Shares or Purchased
Management Shares.

 21
 

“Vested Management Shares” shall mean, at any
time, all Management Shares that are granted or issued under any restricted
stock award, stock option award or similar program with respect to which all
applicable vesting conditions have been satisfied.

“Warrants” shall mean any warrants to subscribe
for, purchase or otherwise directly acquire Common Stock.

10.   MISCELLANEOUS.

10.1.     Authority: 
Effect.  Each
party hereto represents and warrants to and agrees with each other party that
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized on behalf of such
party and do not violate any agreement or other instrument applicable to such
party or by which its assets are bound. 
This Agreement does not, and shall not be construed to, give rise to the
creation of a partnership among any of the parties hereto, or to constitute any
of such parties members of a joint venture or other association.

10.2.     Notices.  Any
notices, requests, demands, claims and other communications required or
permitted in this Agreement shall be effective if in writing and (a) delivered
personally, (b) sent by facsimile, or (c) sent by overnight courier, in each
case, addressed as follows:

If to the Company to:

	
  

  	
  Michaels Stores, Inc.

  
	
   

  	
  8000 Bent Branch
  Drive

  
	
   

  	
  Irving, Texas
  75261

  
	
   

  	
  Facsimile:

  	
  (972) 409-1901

  
	
   

  	
  Attention:

  	
  Jeffrey N. Boyer

  

 

with copies to:

	
  

  	
  Ropes & Gray LLP

  
	
   

  	
  One
  International Place

  
	
   

  	
  Boston, MA 02110

  
	
   

  	
  Facsimile:

  	
  (617) 951-7050

  
	
   

  	
  Attention:

  	
  David C. Chapin

  
	
   

  	
   

  	
  William M.
  Shields

  
	
   

  	
   

  	
  R. Newcomb
  Stillwell

  

 

If to the LLC, to:

	
  

  	
  c/o Bain Capital Partners,
  LLC

  
	
   

  	
  111 Huntington
  Avenue

  
	
   

  	
  Boston,
  Massachusetts 02199

  
	
   

  	
  Facsimile:

  	
  (617) 516-2010

  
	
   

  	
  Attention:

  	
  Matthew S. Levin

  
	
   

  	
   

  	
  Todd M. Cook

  

 

 22
 

and

	
  

  	
  c/o Blackstone Management
  Associates V, LLC

  
	
   

  	
  345 Park Avenue,
  31st Floor

  
	
   

  	
  New York, New
  York 10154

  
	
   

  	
  Facsimile:

  	
  (212) 583-5712

  
	
   

  	
  Attention:

  	
  Michael Chae

  
	
   

  	
   

  	
  Matthew S.
  Kabaker

  
	
   

  

 

with copies to:

	
  

  	
  Ropes & Gray LLP

  
	
   

  	
  One
  International Place

  
	
   

  	
  Boston, MA 02110

  
	
   

  	
  Facsimile:(617)
  951-7050

  
	
   

  	
  Attention:

  	
  David C. Chapin

  
	
   

  	
   

  	
  William M.
  Shields

  
	
   

  	
   

  	
  R. Newcomb
  Stillwell

  

 

If to the Highfields Funds, to them:

	
  

  	
  c/o Highfields Capital
  Management LP

  
	
   

  	
  John Hancock
  Tower

  
	
   

  	
  200 Clarendon
  Street, 51st Floor

  
	
   

  	
  Boston,
  Massachusetts 02116

  
	
   

  	
  Facsimile:

  	
  (617) 850-7503

  
	
   

  	
  Attention:

  	
  Joseph Mazzella

  
	
   

  

 

with copies to:

	
  

  	
  Goodwin Procter LLP

  
	
   

  	
  Exchange Place

  
	
   

  	
  Boston,
  Massachusetts 02109

  
	
   

  	
  Facsimile:

  	
  (617) 523-1231

  
	
   

  	
  Attention:

  	
  Laura C. Hodges
  Taylor

  

 

If to 4390075 Canada Inc., to:

	
  

  	
  4390075 Canada Inc.

  
	
   

  	
  1 St Clair
  Avenue East

  
	
   

  	
  Suite 1003

  
	
   

  	
  Toronto, Ontario

  
	
   

  	
  M4T 2V7 Canada

  
	
   

  	
  Facsimile:

  	
  (514) 201-5290

  
	
   

  	
  Attention:

  	
  Gregory David

  

 

 23
 

If to a Manager, or a direct or indirect transferee of
a Manager, to it at the address set forth in the records of the Company.

If to any other Stockholder, to it at the address set
forth in the records of the Company.

Notice to the holder of record of any shares of
capital stock shall be deemed to be notice to the holder of such shares for all
purposes hereof.

Unless otherwise specified herein, such notices or
other communications shall be deemed effective (a) on the date received, if
personally delivered, (b) on the date received if delivered by facsimile on a
business day, or if not delivered on a business day, on the first business day
thereafter and (c) 2 business days after being sent by overnight courier.  Each of the parties hereto shall be entitled
to specify a different address by giving notice as aforesaid to each of the
other parties hereto.

10.3.     Merger; Binding Effect, Etc.  This Agreement, together with the
Registration Rights Agreement, constitute the entire agreement of the parties
with respect to their subject matter, supersede all prior or contemporaneous
oral or written agreements or discussions with respect to such subject matter,
and shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, representatives, successors and permitted assigns.  Except as otherwise expressly provided
herein, no Stockholder party hereto may assign any of his, her or its
respective rights or delegate any of his, her or its respective obligations
under this Agreement without the prior written consent of the Company and the
Stockholders that hold a majority of the Shares held by all Stockholders, and
any attempted assignment or delegation in violation of the foregoing shall be
null and void.

10.4.     Descriptive Heading.  The descriptive headings of this
Agreement are for convenience of reference only, are not to be considered a
part hereof and shall not be construed to define or limit any of the terms or
provisions hereof.

10.5.     Counterparts.  This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one
instrument.

10.6.     Severability.  In
the event that any provision hereof would, under applicable law, be invalid or
unenforceable in any respect, such provision shall be construed by modifying or
limiting it so as to be valid and enforceable to the maximum extent compatible
with, and possible under, applicable law. 
The provisions hereof are severable, and in the event any provision
hereof should be held invalid or unenforceable in any respect, it shall not
invalidate, render unenforceable or otherwise affect any other provision
hereof.

10.7.     No Recourse.  Notwithstanding
anything that may be expressed or implied in this Agreement, the Company and
each Stockholder covenant, agree and acknowledge that no recourse under this
Agreement or any documents or instruments delivered in connection with this
Agreement shall be had against any current or future director, officer,
employee, general or limited partner or member of any Stockholder or of any
Affiliate or assignee thereof, as such,

 24
 

whether by the enforcement of any
assessment or by any legal or equitable proceeding, or by virtue of any
statute, regulation or other applicable law, it being expressly agreed and
acknowledged that no personal liability whatsoever shall attach to, be imposed
on or otherwise be incurred by any current or future officer, agent or employee
of any Stockholder or any current or future member of any Stockholder or any
current or future director, officer, employee, partner or member of any
Stockholder or of any Affiliate or assignee thereof, as such, for any
obligation of any Stockholder under this Agreement or any documents or
instruments delivered in connection with this Agreement for any claim based on,
in respect of or by reason of such obligations or their creation.

11.   GOVERNING LAW.

11.1.     Governing Law.  This
Agreement and all claims arising out of or based upon this Agreement or
relating to the subject matter hereof shall be governed by and construed in
accordance with the domestic substantive laws of the State of New York without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of the domestic substantive laws of any other
jurisdiction.

11.2.     Consent to Jurisdiction.  Each party to this Agreement, by
its execution hereof, (a) hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the State of New York
for the purpose of any action, claim, cause of action or suit (in contract,
tort or otherwise), inquiry, proceeding or investigation arising out of or
based upon this Agreement or relating to the subject matter hereof, (b) hereby
waives to the extent not prohibited by applicable law, and agrees not to
assert, and agrees not to allow any of its subsidiaries to assert, by way of
motion, as a defense or otherwise, in any such action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such
proceeding brought in one of the above-named courts is improper, or that this
Agreement or the subject matter hereof or thereof may not be enforced in or by
such court and (c) hereby agrees not to commence or maintain any action, claim,
cause of action or suit (in contract, tort or otherwise), inquiry, proceeding
or investigation arising out of or based upon this Agreement or relating to the
subject matter hereof or thereof other than before one of the above-named
courts nor to make any motion or take any other action seeking or intending to
cause the transfer or removal of any such action, claim, cause of action or
suit (in contract, tort or otherwise), inquiry, proceeding or investigation to
any court other than one of the above-named courts whether on the grounds of
inconvenient forum or otherwise. 
Notwithstanding the foregoing, (x) to the extent that any party hereto
is or becomes a party in any litigation in connection with which it may assert
indemnification rights set forth in this agreement, the court in which such
litigation is being heard shall be deemed to be included in clause (a) above; and
(y) any party to this Agreement may commence and maintain an action to enforce
a judgment of any of the above-named courts in any court of competent
jurisdiction.  Each party hereto hereby
consents to service of process in any such proceeding in any manner permitted
by New York law, and agrees that service of process by registered or certified
mail, return receipt requested, at its address specified pursuant to Section
10.2 hereof is reasonably calculated to give actual notice.

 25
 

11.3.     WAIVER OF JURY TRIAL.  TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR
ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE),
INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING.  EACH
PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO
THAT THIS SECTION 11.3 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE
RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT.  ANY PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 11.3 WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

11.4.     Exercise of Rights and Remedies.  No delay of or omission in
the exercise of any right, power or remedy accruing to any party as a result of
any breach or default by any other party under this Agreement shall impair any
such right, power or remedy, nor shall it be construed as a waiver of or
acquiescence in any such breach or default, or of any similar breach or default
occurring later; nor shall any such delay, omission nor waiver of any single
breach or default be deemed a waiver of any other breach or default occurring
before or after that waiver.

[Signature pages
follow]

 26

IN WITNESS WHEREOF, each of the undersigned has duly executed
this Agreement (or caused this Agreement to be executed on its behalf by its
officer or representative thereunto duly authorized) as of the date first above
written.

	
  COMPANY

  	
   

  	
  MICHAELS STORES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/ Jeffrey N. Boyer

  	
   

  
	
   

  	
   

  	
   

  	
  Jeffrey N. Boyer

  
	
   

  	
   

  	
   

  	
  President and Chief Financial Officer

  

 

[Stockholders Agreement]

 

	
  INVESTORS

  	
   

  	
  MICHAELS HOLDINGS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/ Todd Cook

  	
   

  
	
   

  	
   

  	
   

  	
  Todd Cook

  
	
   

  	
   

  	
   

  	
  Vice President, Secretary and

  Assistant Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/ Michael S. Chae

  	
   

  
	
   

  	
   

  	
   

  	
  Michael S. Chae

  
	
   

  	
   

  	
   

  	
  Co-Chairman

  

 

 

	
  INVESTORS

  	
  HIGHFIELDS CAPITAL I LP, a Delaware limited

  partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Highfields Associates LLC, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard L. Grubman

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HIGHFIELDS CAPITAL II LP, a Delaware limited

  partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Highfields Associates LLC, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard L. Grubman

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HIGHFIELDS CAPITAL III LP, a Cayman Islands

  exempted limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Highfields Associates LLC, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard L. Grubman

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  
					

 

 

	
  INVESTORS

  	
   

  	
  4390075 CANADA INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory David

  	
   

  
	
   

  	
   

  	
  Name: Gregory David

  
	
   

  	
   

  	
  Title:  Director

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