Document:

Exhibit 4.4  

FIRST SUPPLEMENTAL INDENTURE  

Dated as of May 30, 2007 

to 

INDENTURE  

Dated as of November 16, 2006 

by
and among 

SALLY HOLDINGS LLC
  and
 SALLY CAPITAL INC.,

as Co-Issuers, 

the
SUBSIDIARY GUARANTORS named therein,

as Subsidiary Guarantors, 

and 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee 

10.5% SENIOR SUBORDINATED NOTES DUE 2016  

 
FIRST SUPPLEMENTAL INDENTURE  

        This FIRST SUPPLEMENTAL INDENTURE, dated as of May 30, 2007 (this "Supplemental Indenture"), by and among
Sally Holdings LLC, a Delaware limited liability company (the "Company"), Sally Capital Inc., a Delaware corporation (the
"Co-Issuer" and, together with the Company, the "Issuers"), Design Lengths, Inc., a
Delaware corporation ("Design Lengths"), Power IQ, Inc., a Delaware corporation ("Power IQ"),
Salon Success International, LLC, a Florida limited liability company ("Salon Success"), Soren Enterprises, Inc., a Delaware corporation
("Soren Enterprises" and together with Design Lengths, Power IQ and Salon Success, the "New Subsidiary
Guarantors"), and each of the subsidiary guarantors under the Indenture referred to below and identified on Schedule A  attached hereto (collectively, the "Existing Guarantors"), and Wells Fargo Bank, National Association, as Trustee under the
Indenture referred to below (the "Trustee"). 

W
I T N E S S E T H: 

        WHEREAS,
the Issuers, the Existing Guarantors, Pacific Salon Systems, Inc., a Washington corporation ("Pacific Salon"), XRG
Enterprises, Inc., a California corporation ("XRG") and the Trustee have heretofore become parties to an Indenture, dated as of
November 16, 2006 (as amended, supplemented, waived or otherwise modified, the "Indenture"), providing for the issuance of 10.5% Senior
Subordinated Notes due 2016 of the Issuers (the "Notes"); 

        WHEREAS,
all of the Existing Guarantors identified on Schedule A to this Supplemental Indenture are currently Subsidiary Guarantors under the Indenture; 

        WHEREAS,
Pacific Salon merged and consolidated with and into Innovations—Successful Salon Services, a California corporation
("Innovations"), whereby Innovations became the surviving entity, and XRG merged and consolidated with and into Innovations, whereby Innovations became
the surviving entity; 

        WHEREAS,
pursuant to Section 1303 of the Indenture, upon the merger or consolidation of any Subsidiary Guarantor with and into the Company or another Subsidiary Guarantor that is
the surviving Person in such merger or consolidation, then such Subsidiary Guarantor will automatically and unconditionally be released from all obligations under its Subsidiary Guarantee, and such
Subsidiary Guarantee shall thereupon terminate and be discharged and of no further force or effect; 

        WHEREAS,
the New Subsidiary Guarantors are indirect, wholly-owned subsidiaries of the Company; 

        WHEREAS,
the New Subsidiary Guarantors are Restricted Subsidiaries under the Indenture; 

        WHEREAS,
Sections 414 and 1308 of the Indenture provide that the Company is required to cause the New Subsidiary Guarantors to execute and deliver to the Trustee a supplemental indenture
pursuant to which the New Subsidiary Guarantors shall guarantee the Issuers' Subsidiary Guaranteed Obligations under the Notes pursuant to a Subsidiary Guarantee on the terms and conditions set forth
herein and in Article XIII of the Indenture; 

        WHEREAS,
each New Subsidiary Guarantor desires to enter into this Supplemental Indenture for good and valuable consideration, including substantial economic benefit in that the financial
performance and condition of the New Subsidiary Guarantors is dependent on the financial performance and condition of the Issuers, the obligations hereunder of which the New Subsidiary Guarantors have
guaranteed, and on the New Subsidiary Guarantors' access to working capital through the Company's access to revolving credit borrowings under the Senior Credit Agreements; and 

        WHEREAS,
pursuant to Section 901 of the Indenture, the parties hereto are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent
of any Holder. 

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        NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Subsidiary Guarantors, the Issuers,
the Existing Guarantors and the Trustee mutually covenant and agree for the benefit of the Holders of the Notes as follows: 

        1.    Defined Terms.    As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or
recital hereto are used herein as therein defined. The words "herein," "hereof" and "hereby" and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture
as a whole and not to any particular Section hereof. 

        2.    Release of Certain Subsidiary Guarantees.    Pursuant to Section 1303 of the Indenture, each of Pacific
Salon and XRG is released from all obligations under its Subsidiary Guarantee, and Pacific Salon's and XRG's Subsidiary Guarantee shall thereupon terminate and be discharged and of no further force or
effect. 

        3.    Agreement to Guarantee.    Upon the execution of this Supplemental Indenture, each of the New Subsidiary
Guarantors shall become and each of the Existing Guarantors shall continue to be, a "Subsidiary Guarantor" under and as defined in the Indenture. Each New Subsidiary Guarantor hereby agrees, jointly
and severally with any other New Subsidiary Guarantors and Existing Guarantors and fully and unconditionally, to guarantee the Subsidiary Guaranteed Obligations under the Indenture and the Notes on
the terms and subject to the conditions set forth in Article XIII of the Indenture and to be bound by (and shall be entitled to the benefits of) all other applicable provisions of the Indenture
as a "Subsidiary Guarantor" under the Indenture. The Subsidiary Guarantee of each New Subsidiary Guarantor is subject to the subordination provisions of the Indenture. 

        4.    Termination, Release and Discharge.    Each New Subsidiary Guarantor's Subsidiary Guarantee shall terminate and
be of no further force or effect, and each New Subsidiary Guarantor shall be released and discharged from all obligations in respect of such Subsidiary Guarantee, as and when provided in
Section 1303 of the Indenture. 

        5.    Parties.    Nothing in this Supplemental Indenture is intended or shall be construed to give any Person, other
than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of each New Subsidiary Guarantor's Subsidiary Guarantee or any provision contained herein or in
Article XIII of the Indenture. 

        6.    Governing Law.    THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. THE TRUSTEE, THE COMPANY, THE CO-ISSUER, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE HOLDERS AGREE TO SUBMIT TO THE
JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL
INDENTURE. 

        7.    Ratification of Indenture; Supplemental Indentures Part of Indenture.    Except as expressly amended hereby, the
Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of
the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity
or sufficiency of this Supplemental Indenture or as to the accuracy of the recitals to this Supplemental Indenture. 

        8.    Counterparts.    The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts,
all of which together shall constitute one and the same agreement. 

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        9.    Headings.    The Section headings herein are for convenience of reference only and shall not be deemed to alter
or affect the meaning or interpretation of any provisions hereof. 

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        IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. 

	 	 	COMPANY:
	

 	
 	

SALLY HOLDINGS LLC
	

 	
 	

By:	

/s/  GARY G. WINTERHALTER      

	 	 	Name:	Gary G. Winterhalter
	 	 	Title:	President and Chief Executive Officer
	

 	
 	
CO-ISSUER:
	

 	
 	

SALLY CAPITAL INC.
	

 	
 	

By:	

/s/  GARY G. WINTERHALTER      

	 	 	Name:	Gary G. Winterhalter
	 	 	Title:	President and Chief Executive Officer
	

 	
 	
NEW SUBSIDIARY GUARANTORS:
	

 	
 	

DESIGN LENGTHS, INC.
	

 	
 	

By:	

/s/  RAAL H. ROOS      

	 	 	Name:	Raal H. Roos
	 	 	Title:	Secretary
	

 	
 	

POWER IQ, INC.
	

 	
 	

By:	

/s/  RAAL H. ROOS      

	 	 	Name:	Raal H. Roos
	 	 	Title:	Secretary
	

 	
 	

SALON SUCCESS INTERNATIONAL, LLC
	

 	
 	

By:	

/s/  GARY G. WINTERHALTER      

	 	 	Name:	Gary G. Winterhalter
	 	 	Title:	Sole Manager
	 	 	 	 

S-1

 

	

 	
 	

SOREN ENTERPRISES, INC.
	

 	
 	

By:	

/s/  RAAL H. ROOS      

	 	 	Name:	Raal H. Roos
	 	 	Title:	Secretary

S-2

 

	

 	
 	
EXISTING GUARANTORS:
	

 	
 	

DESIGN LENGTHS, INC.

ARMSTRONG-MCCALL HOLDINGS, INC.

ARMSTRONG-MCCALL HOLDINGS, L.L.C.

ARMSTRONG MCCALL MANAGEMENT, L.C.

ARNOLD'S, INC.

BEAUTY HOLDING LLC

BEAUTY SYSTEMS GROUP LLC

BEYOND THE ZONE, INC.

BRENTWOOD BEAUTY LABORATORIES INTERNATIONAL, INC.

COLORESSE, INC.

DIORAMA SERVICES COMPANY, LLC

ENERGY OF BEAUTY, INC.

ESTHETICIAN SERVICES, INC.

FOR PERMS ONLY, INC.

HIGH INTENSITY PRODUCTS, INC.

INNOVATIONS-SUCCESSFUL SALON SERVICES

ION PROFESSIONAL PRODUCTS, INC.

LADY LYNN ENTERPRISES, INC.

LAND OF DREAMS, INC.

LOME BEAUTY INTERNATIONAL, INC.

MIRACLE LANE, INC.

MODERN PANACHE, INC.

NAIL LIFE, INC.

NEKA SALON SUPPLY, INC.

NEW IMAGE PROFESSIONAL PRODUCTS, INC.

PROCARE LABORATORIES, INC.

SALLY BEAUTY DISTRIBUTION LLC

SALLY BEAUTY DISTRIBUTION OF OHIO, INC.

SALLY BEAUTY INTERNATIONAL FINANCE LLC

SALLY BEAUTY SUPPLY LLC

SATIN STRANDS, INC.

SEXY U PRODUCTS, INC.

SILK ELEMENTS, INC.

TANWISE, INC.

VENETIAN BLENDS, INC.
	

 	
 	

By:	

/s/  RAAL H. ROOS      

	 	 	Name:	Raal H. Roos
	 	 	Title:	Secretary

S-3

 

	

 	
 	

ARMSTRONG MCCALL L.P.
	

 	
 	

By:	

Armstrong McCall Management, L.C., its General Partner
	

 	
 	

By:	

/s/  RAAL H. ROOS      

	 	 	Name:	Raal H. Roos
	 	 	Title:	Secretary

S-4

 

	

 	
 	
TRUSTEE:
	

 	
 	
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
	

 	
 	

By:	

/s/  JOSEPH P. O'DONNELL      

	 	 	Name:	Joseph P. O'Donnell
	 	 	Title:	Vice President

S-5

 
Schedule A  

Existing Guarantors  

	Name of Existing Guarantor as Specified in its Charter/Constituent Documents
 
	 	State or Jurisdiction of Incorporation or

Organization

	Armstrong McCall Holdings, Inc	 	Texas
	Armstrong McCall Holdings, L.L.C	 	Delaware
	Armstrong McCall, L.P	 	Texas
	Armstrong McCall Management L.C	 	Texas
	Arnold's, Inc	 	Arkansas
	Beauty Holding LLC	 	Delaware
	Beauty Systems Group LLC	 	Delaware
	Beyond the Zone, Inc	 	Delaware
	Brentwood Beauty Laboratories International, Inc	 	Texas
	Coloresse, Inc	 	Delaware
	Diorama Services Company, LLC	 	Delaware
	Energy of Beauty, Inc	 	Delaware
	Esthetician Services, Inc	 	Delaware
	For Perms Only, Inc	 	Delaware
	High Intensity Products, Inc	 	Delaware
	Innovations—Successful Salon Services	 	California
	Ion Professional Products, Inc	 	Delaware
	Lady Lynn Enterprises, Inc	 	Delaware
	Land of Dreams, Inc	 	Delaware
	Lome Beauty International, Inc	 	Delaware
	Miracle Lane, Inc	 	Delaware
	Modern Panache, Inc	 	Delaware
	Nail Life, Inc	 	Delaware
	Neka Salon Supply, Inc	 	New Hampshire
	New Image Professional Products, Inc	 	Delaware
	Procare Laboratories, Inc	 	Delaware
	Sally Beauty Distribution LLC	 	Delaware
	Sally Beauty Distribution of Ohio, Inc	 	Delaware
	Sally Beauty International Finance LLC	 	Delaware
	Sally Beauty Supply LLC	 	Delaware
	Satin Strands, Inc	 	Delaware
	Sexy U Products, Inc	 	Delaware
	Silk Elements, Inc	 	Delaware
	Tanwise, Inc	 	Delaware
	Venetian Blends, Inc	 	DelawareExhibit 10.16  

ALBERTO-CULVER COMPANY

EMPLOYEE STOCK OPTION PLAN OF 2003  

 (as amended through September 21, 2006)  

1.     Purpose of ACSOP  

        The Alberto-Culver Company Employee Stock Option Plan of 2003 (hereinafter called the "ACSOP") is intended to encourage ownership of the Common Stock of
Alberto-Culver Company (the "Company") by eligible key employees of the Company and its subsidiaries and to provide incentives for them to make maximum efforts for the success of the business. Options
granted under the ACSOP will be non-qualified options (not incentive options as defined in Section 422 of the Internal Revenue Code of 1986 and the rules and regulations promulgated
thereunder (the "Code")). 

2.     Eligibility  

        Key employees of the Company and its subsidiaries who perform services which contribute materially to the management, operation and development of the business
("Optionees") will be eligible to receive options under the ACSOP. 

3.     Administration  

        The Compensation and Leadership Development Committee of the Board of Directors of the Company (the "Committee") shall have full power and authority, subject to
the express provisions of the ACSOP, to determine the purchase price of the stock covered by each option, the Optionees to whom and the time or times at which options shall be granted, the terms and
conditions of the options, including the terms of payment thereof, and the number of shares of stock to be covered by each option. The Committee shall have full power to construe, administer and
interpret the ACSOP, and full power to adopt such rules and regulations as the Committee may deem desirable to administer the ACSOP. No member of the Committee shall be liable for any action or
determination made in good faith with respect to the ACSOP or any option thereunder. Determinations by the Committee under the ACSOP need not be uniform and may be made by it selectively among
Optionees, whether or not such persons are similarly situated. The determination of the Committee as to any disputed question arising under the ACSOP, including questions of construction and
interpretation, shall be final, conclusive and binding. 

        The
Committee may, in its discretion, delegate to a committee of member(s) of the Committee its authority with respect to such matters under the ACSOP and options granted under the ACSOP
as the Committee may specify. 

        The
Committee shall be comprised solely of members each of whom shall be an "outside director" within the meaning of Section 162(m) of the Code, and a "non-employee
director" within the meaning of Section 16 ("Section 16") of the Securities Exchange Act of 1934 and the rules and regulations thereunder ("Exchange Act"), provided, however, that if any
member of the Committee is not (i) an "outside director" within the meaning of Section 162(m) of the Code or (ii) a "non-employee director" within the meaning of
Section 16, the Committee shall set up a subcommittee comprised solely of outside directors and non-employee directors for purposes of all matters arising under this ACSOP involving
"officers" within the meaning of Rule 16a-1(f) under Section 16, and "covered employees" within the meaning of Section 162(m) of the Code for the plan year at issue. 

4.     Number of Shares of Stock to be Offered  

        The Committee may authorize from time to time the issuance pursuant to the ACSOP of shares not to exceed 9,000,000 of the Company's Common Stock in the aggregate,
subject to adjustment under paragraph 10 hereof. Such shares of Common Stock which may be issued pursuant to options granted 

 

under
the ACSOP may be authorized and unissued shares or issued and reacquired shares as the Committee from time to time may determine. If any option granted under the ACSOP shall terminate or be
surrendered or expire unexercised in whole or in part, the shares of stock so released from such option may be made the subject of additional options granted under the ACSOP. In addition, any shares
of Common Stock withheld to pay, in whole or in part, the amount required to be withheld under applicable tax laws in accordance with paragraph 7(d) hereof, may be made the subject of
additional options granted under the ACSOP. 

5.     Option Price  

        The purchase price under each option granted pursuant to the ACSOP shall be determined by the Committee but shall not be less than the Fair Market Value (as
defined below) of the Company's Common Stock on the date the option is granted. For purposes of the ACSOP, "Fair Market Value" shall mean the average of the high and low transaction prices of a share
of Common Stock of the Company as reported in the New York Stock Exchange Composite Transactions on the date as of which such value is being determined or, if there shall be no reported transactions
for such date, on the next preceding date for which transactions were reported. 

6.     Grant of Options  

        The Committee may not grant to any individual Optionee in any fiscal year an option or options with respect to more than 600,000 shares of Common Stock. 

7.     Term and Exercise of Options  

        (a)   Each
option granted shall provide that it is not exercisable after the expiration of ten (10) years from the date the option is granted, or such shorter period as
the Committee determines, and each option shall be subject to the following limitations with respect to its exercise: 

	(i)
	Except
as otherwise provided in paragraph 11(a) hereof, no option may be exercised until the day preceding the anniversary date of the grant of the option.

	(ii)
	Except
as otherwise provided in paragraph 11(a) hereof, on the day preceding the anniversary date of the grant of the option in each of the four calendar years immediately
following the year of the grant of the option, the right to purchase twenty-five percent (25%) of the total number of shares of stock specified in the option shall accrue to the Optionee.
Subject to paragraph 8 hereof, each such right to purchase such twenty-five percent (25%) may be exercised, in whole or in part, at any time after such right accrues and prior to
the expiration of the term of the option. 

        (b)   Notwithstanding
the foregoing or paragraph 8 hereof, the Committee may in its discretion (i) specifically provide at the date of grant for another time or
times of exerciseability; (ii) at any time prior to the expiration or termination of any option previously granted, accelerate the exercisability of any option subject to such terms and
conditions as the Committee deems necessary or appropriate to effectuate the purpose of the ACSOP; or (iii) at any time prior to the expiration or termination of any option previously granted,
extend the term of any option (including such options held by officers or directors) for such additional period as the Committee, in its discretion, shall determine; provided that effective
January 1, 2005, the term of an option shall not be extended beyond the later of the fifteenth day of the third month following the date on which the option would otherwise have expired, or the
last day of the calendar year in which the option would otherwise have expired (or such other date as may be permitted by final regulations issued under Section 409A of the Code). In no event,
however, shall the aggregate option period with respect to any option, including the original term of the option and any extensions thereof, exceed ten years. 

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        (c)   An
option may be exercised (subject to the receipt of payment) by giving written notice to the Company specifying the number of shares to be purchased. The full purchase
price for such shares may be paid (i) in cash, (ii) by check, (iii) by delivery of previously owned shares of Common Stock, or (iv) by a combination of these methods of
payment. However, under no circumstances may any Optionee deliver previously owned shares of Common Stock obtained from the exercise of stock options under any option plan of the Company or the
vesting of shares restricted under any restricted stock plan of the Company or the Management Bonus Plan during the six months immediately preceding the exercise date. Payment must be received by the
Company before any exercise is consummated. For purposes of the delivery of previously owned shares of Common Stock, the per share value of such shares shall be the Fair Market Value on the date of
exercise. 

        (d)   At
any time when an Optionee is required to pay to the Company an amount required to be withheld under applicable tax laws in connection with the exercise of an option
(calculated by taking the minimum statutory withholding rates for federal, state and local tax purposes including payroll taxes, applicable to the income generated by the Optionee by such exercise),
the Optionee may satisfy this obligation (i) in cash, (ii) by check, (iii) by delivery of previously owned shares of Common Stock, (iv) by making an election to have the
Company withhold shares of Common Stock, or (v) by a combination of these methods of payment, in each case having a value equal to the amount required to be withheld. The Optionee must specify
the method of satisfying this obligation on or before the date of exercise. The value of the shares to be withheld or delivered shall be based on the Fair Market Value of the Common Stock on the date
of exercise. 

8.     Continuity of Employment  

        (a)   Each
option shall be subject to the following in addition to the restrictions set forth in paragraphs 6 and 7 hereof: 

	(i)
	If
an Optionee dies without having fully exercised his or her option, the executors or administrators of his or her estate or legatees or distributees shall have the right during the
one (1) year period following his or her death (but not after the expiration of the term of such option) to exercise such option in whole or in part but only to the extent that the Optionee
could have exercised it at the date of his or her death.

	(ii)
	If
an Optionee's termination of employment is due to disability, the Optionee's option shall terminate one (1) year after his or her termination of employment (but not after
the expiration of the term of such option) and may be exercised only to the extent that such Optionee could have exercised it at the date of his or her termination of employment. For purposes of the
ACSOP, "disability" shall have the meaning provided in the Company's applicable long-term disability plan and such disability continues for more than three months or, in the absence of
such a definition, when an Optionee becomes totally disabled as determined by a physician mutually acceptable to the Optionee and the Committee before attaining his or her 65th birthday
and if such total disability continues for more than three months. Disability does not include any condition which is intentionally self-inflicted or caused by illegal acts of the
Optionee.

	(iii)
	Subject
to the third sentence of this paragraph 8(a)(iii), if an Optionee's termination of employment is due to retirement, all options (or portions thereof) which are
(a) vested at the time of retirement may be exercised for a period of two (2) years following retirement (but not after the expiration of the term of the option) and (b) unvested
at the time of retirement may be exercised for a period of five (5) years from the date of grant (but not after the expiration of the term of the option). Subject to the third sentence of this
paragraph 8(a)(iii), following retirement, options (or portions thereof) which are unvested at the time of retirement will continue to vest under such options' vesting schedule for a period of
five 

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(5) years
following retirement. Only for options granted in January, 2003, if an Optionee's termination of employment is due to retirement (as defined in the ACSOP prior to January 1,
2004), such option shall terminate one (1) year after his or her termination of employment (but not after the expiration of the term of such option) and may be exercised only to the extent that
such Optionee could have exercised such option at the date of his or her termination of employment. For purposes of the ACSOP, "retirement" shall be reached when an Optionee's employment terminates
and at the time of such termination the sum of such Optionee's age and years of service as an employee of the Company or any of its subsidiaries equals or exceeds 75 years ("Rule of 75"). 

	(iv)
	If
an Optionee's termination of employment is for any reason other than death, retirement or physical disability, the Optionee's option shall terminate upon said termination of
employment; provided, however, that if such termination of employment occurs following a Change in Control (as such term is defined in paragraph 11(b) hereof), the Optionee's option shall
terminate three (3) months after his or her termination of employment (but not after the expiration of the term of such option). 

        (b)   Nothing
contained in the ACSOP or any option granted pursuant to the ACSOP shall confer upon any Optionee any right to be continued in the employment of the Company or
any subsidiary or shall prevent the Company or any subsidiary from terminating an Optionee's employment at any time, with or without cause. The determination by the Committee of whether an authorized
leave of absence constitutes a termination of employment shall be final, conclusive and binding. 

9.     Non-Transferability of Options  

        An option granted under the ACSOP shall not be assignable or transferable by an Optionee otherwise than by will or the laws of descent and distribution, and an
option shall be exercisable during the lifetime of the Optionee only by him or her. Subject to the following sentence, an option transferred by will or the laws of descent and distribution may only be
exercised by the legatee or distributee during the one year period following the Optionee's death and may only be exercised to the extent it was exercisable by the Optionee prior to his or her death.
In the event that at the time of the Optionee's death the Optionee met the Rule of 75, an option transferred by will or the laws of descent and
distribution may only be exercised by the legatee or distributee during the period of time that the Optionee could have exercised such options at the time of his or her death and such options shall
continue to vest as if the Optionee had not died. 

10.   Adjustment upon Change in Stock  

        Each option, the number and kind of shares subject to future options and the number of shares subject to options that may be granted to an Optionee in any fiscal
year under the ACSOP shall be adjusted, as may be determined to be equitable in the sole and absolute discretion of the Committee, in the event there is any change in the outstanding Common Stock, or
any event that could cause a change in the outstanding Common Stock, including, without limitation, by reason of a stock dividend, recapitalization, reclassification, issuance of Common Stock,
issuance of rights to purchase Common Stock, extraordinary cash dividend, issuance of securities convertible into or exchangeable for Common Stock, merger, consolidation, stock split, reverse stock
split, spin-off, combination, exchange or conversion of shares, or any other similar type of event. The Committee's determination of any adjustment pursuant to this paragraph10 shall be
final, conclusive and binding. 

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11.   Change in Control  

        (a)   (1)
Notwithstanding any provision of the ACSOP, in the event of a Change in Control, all outstanding options shall immediately be exercisable in full and shall be
subject to the provisions of paragraph 11(a)(2) or 11(a)(3), to the extent that either such paragraph is applicable. 

        (2)   Notwithstanding
any provision of the ACSOP, in the event of a Change in Control in connection with which the holders of shares of the Company's Common Stock receive
shares of common stock that are registered under Section 12 of the Exchange Act, all outstanding options shall immediately be exercisable in full and there shall be substituted for each share
of the Company's Common Stock available under the ACSOP, whether or not then subject to an outstanding option, the number and class of shares into which each outstanding share of the Company's Common
Stock shall be converted pursuant to such Change in Control. In the event of any such substitution, the purchase price per share of each option shall be appropriately adjusted by the Committee or the
committee to which authority has been delegated pursuant to paragraph 3 hereof, such adjustments to be made without an increase in the aggregate purchase price. 

        (3)   Notwithstanding
any provision in the ACSOP, in the event of a Change in Control in connection with which the holders of the Company's Common Stock receive consideration
other than shares of common stock that are registered under Section 12 of the Exchange Act, each outstanding option shall be surrendered to the Company by the holder thereof, and each such
option shall immediately be cancelled by the Company, and the holder shall receive, within ten (10) days of the occurrence of such Change in Control, a cash payment from the Company in an
amount equal to the number of shares of the Company's Common Stock then subject to such option, multiplied by the excess, if any, of (i) the greater of (A) the highest per share price
offered to stockholders of the Company in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of the Company's Common Stock on the date of
occurrence of the Change in Control over (ii) the purchase price per share of the Company's Common Stock subject to the option. The Company may, but is not required to, cooperate with any
person who is subject to Section 16 of the Exchange Act to assure that any cash payment in accordance with the foregoing to such person is made in compliance with Section 16 of the
Exchange Act and the rules and regulations thereunder providing for an exemption from Section 16(b) of the Exchange Act. 

        (b)   "Change
in Control" means: 

        (1)   The
occurrence of any one or more of the following events: 

        (A)  The
acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of
beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act of both (x) 20% or more of the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities") and (y) combined voting power of Outstanding Company Voting
Securities in excess of the combined voting power of the Outstanding Company Voting Securities held by the Exempt Persons (as such term is defined in paragraph 11(c));  provided, however, that a
Change in Control shall not result from an acquisition of Company Voting Securities: 

        (i)    directly
from the Company, except as otherwise provided in paragraph 11(b)(2)(A); 

        (ii)   by
the Company, except as otherwise provided in paragraph 11(b)(2)(B); 

        (iii)  by
an Exempt Person; 

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        (iv)  by
an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or 

        (v)   by
any corporation pursuant to a reorganization, merger or consolidation involving the Company, if, immediately after such reorganization, merger or consolidation, each
of the conditions described in clauses (i) and (ii) of paragraph 11(b)(1)(C) shall be satisfied. 

        (B)  The
cessation for any reason of the members of the Incumbent Board (as such term is defined in paragraph 11(d)) to constitute at least a majority of the Board of
Directors of the Company (hereinafter called the "Board"). 

        (C)  Consummation
of a reorganization, merger or consolidation unless, in any such case, immediately after such reorganization, merger or consolidation: 

        (i)    more
than 60% of the combined voting power of the then outstanding securities of the corporation resulting from such reorganization, merger or consolidation entitled to
vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals or entities who were the beneficial owners of the
combined voting power of all of the Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation; and 

        (ii)   at
least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such reorganization, merger or consolidation. 

        (D)  Consummation
of the sale or other disposition of all or substantially all of the assets of the Company other than (x) pursuant to a tax-free
spin-off of a subsidiary or other business unit of the Company or (y) to a corporation with respect to which, immediately after such sale or other disposition: 

        (i)    more
than 60% of the combined voting power of the then outstanding securities thereof entitled to vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of the combined voting power of all of the Outstanding Company Voting Securities
immediately prior to such sale or other disposition; and 

        (ii)   at
least a majority of the members of the board of directors thereof were members of the Incumbent Board at the time of the execution of the initial agreement or action
of the Board providing for such sale or other disposition. 

        (E)  Approval
by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company. 

        (2)   Notwithstanding
the provisions of paragraph 11(b)(1): 

        (A)  no
acquisition of Company Voting Securities shall be subject to the exception from the definition of Change in Control contained in clause (i) of
paragraph 11(b)(1)(A) if such acquisition results from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired
directly from the Company; and 

        (B)  for
purposes of clause (ii) of paragraph 11(b)(1)(A), if any Person (other than the Company, an Exempt Person or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall, by reason of an acquisition of Company Voting Securities by the Company, become the beneficial owner 

6

 

of
(x) 20% or more of the combined voting power of the Outstanding Company Voting Securities and (y) combined voting power of Outstanding Company Voting Securities in excess of the
combined voting power of the Outstanding Company Voting Securities held by the Exempt Persons, and such Person shall, after such acquisition of Company Voting Securities by the Company, become the
beneficial owner of any additional Outstanding Company Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control. 

        (c)   "Exempt
Person" (and collectively, the "Exempt Persons") means: 

        (1)   Leonard
H. Lavin or Bernice E. Lavin; 

        (2)   any
descendant of Leonard H. Lavin and Bernice E. Lavin or the spouse of any such descendant; 

        (3)   the
estate of any of the persons described in paragraph 11(c)(1) or (2); 

        (4)   any
trust or similar arrangement for the benefit of any person described in paragraph 11(c)(1) or (2); or 

        (5)   the
Lavin Family Foundation or any other charitable organization established by any person described in paragraph 11(c)(1) or (2). 

        (d)   "Incumbent
Board" means those individuals who, as of October 24, 2002, constitute the Board, provided that: 

        (1)   any
individual who becomes a director of the Company subsequent to such date whose election, or nomination for election by the Company's stockholders, was approved
either by the vote of at least a majority of the directors then comprising the Incumbent Board or by the vote of at least a majority of the combined voting power of the Outstanding Company Voting
Securities held by the Exempt Persons shall be deemed to have been a member of the Incumbent Board; and 

        (2)   no
individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board or the Exempt
Persons for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or
on behalf of any Person other than the Board or the Exempt Persons shall be deemed to have been a member of the Incumbent Board. 

12.   Amendment and Discontinuance  

        The Committee or the Board, without further approval of the stockholders, may, at any time and from time to time, suspend or discontinue the ACSOP in whole or in
part or amend the ACSOP in such respects as the Committee or the Board may deem proper and in the best interests of the Company or as may be advisable, provided, however, that no suspension or
amendment shall be made which would: 

	(i)
	Adversely
affect or impair any option previously granted under the ACSOP without the consent of the Optionee, or

	(ii)
	Except
as specified in paragraph 10, increase the total number of shares for which options may be granted under the ACSOP or decrease the minimum price at which options may be
granted under the ACSOP. 

7

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