Document:

Exhibit 10.15

 

ETELOS, INC.

1900 O’Farrell Street

Suite 320

San Mateo, CA 94403

 

May 2, 2008

 

	
  Enable Growth Partners LP

  One Ferry Building, Suite 255

  San Francisco, California 94111

  Attn: Brendan O’Neil

  	
  Pierce Diversified Strategy Master Fund LLC, Ena

  One Ferry Building, Suite 255

  San Francisco, California 94111

  Attn: Brendan O’Neil

  
	
   

  	
   

  
	
  Enable Opportunity Partners LP

  One Ferry Building, Suite 255

  San Francisco, California 94111

  Attn: Brendan O’Neil

  	
   

  

 

Re:          Beneficial
Ownership Limitation

 

Dear Mr. O’Neil:

 

Reference is made to that certain Securities Purchase Agreement, dated
as of August 28, 2007, by and among Etelos, Inc. (successor to
Etelos, Incorporated) (the “Company”) and each of Enable Growth Partners
LP, Enable Opportunity Partners LP and Pierce Diversified Strategy Master Fund
LLC, Ena (each, a “Holder” and such agreement, the “Purchase
Agreement”) and those certain 6% Convertible Senior Subordinated Notes (“Notes”)
and Warrants (“Warrants”) issued pursuant thereto.

 

The Company and Holder agree that the Company shall not effect any
conversion of the Note or exercise of the Warrant, and a Holder shall not have
the right to convert any portion of the Note or the Warrant, to the extent that
after giving effect to the conversion or exercise thereof, as the case may be,
set forth on the applicable Notice of Conversion or Notice of Exercise, the
Holder (together with the Holder’s affiliates, and any other person or entity
acting as a group together with the Holder or any of the Holder’s affiliates)
would beneficially own in excess of the Beneficial Ownership Limitation (as
defined below).  For purposes of the foregoing sentence, the number of
shares of Common Stock beneficially owned by the Holder and its affiliates
shall include the number of shares of Common Stock issuable upon conversion of
the Note and exercise of the Warrant with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which are
issuable upon (A) conversion of the remaining, unconverted principal
amount of the Note beneficially owned by the Holder or any of its affiliates, (B) exercise
of the remaining, unexercised Warrant beneficially owed by the Holder or any of
its affiliates and (C) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitation contained
herein 

 

 

(including, without limitation, any other Debentures or Warrants)
beneficially owned by the Holder or any of its affiliates.  Except as set
forth in the preceding sentence, for purposes of this agreement, beneficial
ownership shall be calculated in accordance with Section 13(d) of the
Securities and Exchange Act of 1934, and the rules and regulations
promulgated thereunder (the “Exchange Act”).  To the extent that the limitation contained
in this agreement applies, the determination of whether the Debenture is
convertible or Warrant is exercisable (in relation to other securities owned by
the Holder together with any affiliates) and of which principal amount of the
Debenture is convertible or Warrant is exercisable shall be in the sole
discretion of the Holder, and the submission of a Notice of Conversion or
Notice of Exercise shall be deemed to be the Holder’s determination of whether
the Debenture may be converted or Warrant may be exercised (in relation to
other securities owned by the Holder together with any affiliates) and which
principal amount of the Debenture is convertible or Warrant is exercised in each
case subject to the Beneficial Ownership Limitation. To ensure compliance with
this restriction, the Holder will be deemed to represent to the Company each
time it delivers a Notice of Conversion or Notice of Exercise that such notice
has not violated the restrictions set forth in this paragraph and the Company
shall have no obligation to verify or confirm the accuracy of such
determination.  In addition, a
determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act.  For purposes of this agreement, in
determining the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as stated in the most
recent of the following: (A) the Company’s most recent periodic or annual
report, as the case may be; (B) a more recent public announcement by the
Company; or (C) a more recent notice by the Company or the Company’s
transfer agent setting forth the number of shares of Common Stock outstanding. 
Upon the written or oral request of a Holder, the Company shall within two
trading days confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding.  In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including the Debenture or
Warrant, by the Holder or its affiliates since the date as of which such number
of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock issuable upon conversion of the Debenture and Warrant held by the Holder.  The Holder, upon not less than 61 days’ prior
notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this agreement, provided that the Beneficial Ownership
Limitation in no event exceeds 9.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock upon conversion of the Debentures or exercise of the Warrants held
by the Holder and the provisions of this agreement shall continue to apply.  Any such increase or decrease will not be
effective until the 61st day after such notice is delivered to the
Company.  The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this agreement to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder
of the Debentures and Warrants.

 

This letter agreement shall be governed by and construed in accordance
with the terms set forth in the Purchase Agreement.

 

2

 

This letter agreement may be executed in one or more counterparts, each
of which shall be considered an original document.  This letter agreement may be delivered by
facsimile or electronic format, which shall be deemed an original counterpart
for all purposes.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  ETELOS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jeffrey L. Garon

  
	
   

  	
   

  	
   

  	
  Name: Jeffrey L. Garon

  
	
   

  	
   

  	
   

  	
  Title: President and CEO

  

 

Accepted and Agreed to:

 

	
  ENABLE GROWTH PARTNERS LP

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Brendan O’Neil

  	
   

  
	
   

  	
   

  	
  Name: Brendan O’Neil

  	
   

  
	
   

  	
   

  	
  Title: President and Chief Investment Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ENABLE OPPORTUNITY PARTNERS LP

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Brendan O’Neil

  	
   

  
	
   

  	
   

  	
  Name: Brendan O’Neil

  	
   

  
	
   

  	
   

  	
  Title: President and Chief Investment Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  PIERCE DIVERSIFIED STRATEGY MASTER FUND LLC, ENA

  
	
   

  
	
   

  
	
  By:

  	
   

  	
  /s/ Brendan O’Neil

  	
   

  
	
   

  	
   

  	
  Name: Brendan O’Neil

  	
   

  
	
   

  	
   

  	
  Title: President and Chief Investment Officer

  	
   

  

 

3Exhibit 10.1

 

SALLY BEAUTY HOLDINGS, INC.

 

ANNUAL INCENTIVE PLAN

 

2007

 

SECTION 1

PURPOSE

 

The purpose of the Sally Beauty
Holdings Annual Incentive Plan is to permit Sally Beauty Holdings, Inc.
(the “Company”), through awards of annual incentive compensation that satisfy
the requirements for performance-based compensation under Section 162(m) of
the Internal Revenue Code, to attract and retain executives and to motivate
these executives to promote the profitability and growth of the Company.

 

SECTION 2

DEFINITIONS

 

“Award” shall mean the
amount granted to a Participant by the Committee for a Performance Period.

 

“Board” shall mean the
Board of Directors of the Company, or the successor thereto.

 

“Code” shall mean the
Internal Revenue Code of 1986, as amended.

 

“Committee” shall mean
the Compensation Committee of the Board or any subcommittee thereof which meets
the requirements of Section 162(m)(4)(C) of the Code.

 

“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.

 

“Executive” shall mean
any “covered employee” (as defined in Section 162(m) of the Code)
and, in the discretion of the Committee, any other executive officer of the
Company or its Subsidiaries.

 

“Operating Income” shall
mean, for each Performance Period, the operating income of the Company as
reported in the Company’s audited consolidated financial statements for the
Performance Period, with such adjustments for such Performance Period as the
Committee may provide for prior to the commencement thereof, or at such later
time as may be permitted by applicable provisions of the Code (which
adjustments may include effects of charges for restructurings, discontinued
operations, extraordinary items, other unusual or non-recurring items, and the
cumulative effect of tax or accounting changes, each as determined in
accordance with generally accepted accounting principles and identified in the
financial statements, notes to the financial statements or management’s
discussion and analysis).

 

“Participant” shall
mean, for each Performance Period, each Executive who has been selected by the
Committee to participate in the Plan.

 

“Performance Period”
shall mean the Company’s fiscal year or any other period designated by the
Committee with respect to which an Award may be granted.

 

“Plan” shall mean this
Sally Beauty Holdings Annual Incentive Plan, as amended from time to time.

 

“Stock Plans” shall mean
the Sally Beauty Holdings 2007 Omnibus Incentive Plan and any future equity
compensation plans approved by the shareholders of the Company.

 

1

 

SECTION 3

ADMINISTRATION

 

The Committee shall administer
the Plan and shall have full authority to interpret the Plan, to establish rules and
regulations relating to the operation of the Plan, to select Participants, to
determine the amounts of any Awards and to make all determinations and take all
other actions necessary or appropriate for the proper administration of the
Plan.  The Committee’s interpretation of
the Plan, and all actions taken within the scope of its authority, shall be
final and binding on the Company, its stockholders and Participants,
Executives, former Executives and their respective successors and assigns.  No member of the Committee shall be eligible
to participate in the Plan.

 

SECTION 4

DETERMINATION OF AWARDS

 

(a)   Prior to the beginning of each Performance
Period, or at such later time as may be permitted by applicable provisions of
the Code, the Committee shall establish the Executives or class of Executives
who will be Participants in the Plan. 
For each Performance Period the Award payable to the Chief Executive
Officer of the Company is 1% of Operating Income with respect to such
Performance Period, and the Award payable to each other Participant is 0.5% of
Operating Income with respect to such Performance Period.

 

(b)  Following the end of
each Performance Period, and before any payments are made under the Plan, the
Committee shall certify in writing (i) that the Company has positive
Operating Income for such Performance Period and (ii) the amount of the
maximum Awards provided for in paragraph (a) of this section.

 

(c)  Following the
certification required by paragraph (b) of this section, the Committee may
determine to grant to any Participant an Award, which may not exceed the amount
determined in accordance with paragraph (a) of this section for such
Participant.  The Committee may reduce or
eliminate the Award granted to any Participant based on factors determined by
the Committee, including but not limited to, performance against financial
goals and the Participant’s personal performance.

 

SECTION 5

PAYMENT OF AWARDS

 

Each Participant shall be
eligible to receive, as soon as practicable after the amount of such
Participant’s Award for a Performance Period has been determined, payment of
the Award in cash, stock, restricted stock, options, other stock-based or
stock-denominated units or any combination thereof determined by the
Committee.  Equity or equity-based awards
shall be granted under the terms and conditions of one or more of the Company’s
Stock Plans.  Payment of the award may be
deferred in accordance with a written election by the Participant pursuant to
procedures established by the Committee.

 

SECTION 6

AMENDMENTS

 

The Committee may amend the
Plan at any time and from time to time, provided that no such amendment that
would require the consent of the stockholders of the Company pursuant to Section 162(m) of
the Code, New York Stock Exchange listing rules or the Exchange Act, or
any other applicable law, rule or regulation, shall be effective without
such consent.  No amendment which
adversely affects a Participant’s rights to, or interest in, an Award granted
prior to the date of the amendment shall be effective unless the Participant
shall have agreed thereto in writing.

 

2

 

SECTION 7

TERMINATION

 

The Committee may terminate
this Plan at any time but in no event shall the termination of the Plan
adversely affect the rights of any Participant to a previously granted Award
without such Participant’s written consent.

 

SECTION 8

OTHER PROVISIONS

 

(a)  No Executive or other
person shall have any claim or right to be granted an Award under this Plan
until such Award is actually granted. 
Neither the establishment of this Plan, nor any action taken hereunder,
shall be construed as giving any Executive any right to be retained in the
employ of the Company.  Nothing contained
in this Plan shall limit the ability of the Company to make payments or awards
to Executives under any other plan, agreement or arrangement.

 

(b)  The rights and
benefits of a Participant hereunder are personal to the Participant and, except
for payments made following a Participant’s death, shall not be subject to any
voluntary or involuntary alienation, assignment, pledge, transfer, encumbrance,
attachment, garnishment or other disposition.

 

(c)  Awards under this
Plan shall not constitute compensation for the purpose of determining
participation or benefits under any other plan of the Company unless specifically
included as compensation in such plan.

 

(d)  The Company shall
have the right to deduct from Awards any taxes or other amounts required to be
withheld by law.

 

(e)  Nothing contained in
the Plan shall be construed to prevent the Company or any of its subsidiaries
from taking any corporate action which is deemed by it to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
any awards made under the Plan and nothing in the Plan shall be deemed to limit
or restrict the ability of the Company or any of its subsidiaries from
establishing any compensation plan or arrangement, or making any payment, or
granting any award to any Executive or other person.  No employee, beneficiary or other person
shall have any claim against the Company or any of its subsidiaries as a result
of any such action.

 

(f)  All questions
pertaining to the construction, regulation, validity and effect of the
provisions of the Plan shall be determined in accordance with the laws of the
State of New York without regard to principles of conflict of laws.

 

(g)  No member of the
Committee or the Board, and no officer, employee or agent of the Company shall
be liable for any act or action hereunder, whether of commission or omission,
taken by any other member, or by any officer, agent, or employee, or, except in
circumstances involving bad faith, for anything done or omitted to be done in
the administration of the Plan.

 

SECTION 9

EFFECTIVE DATE

 

The Plan shall be effective as
of April 26, 2007, subject to approval by the stockholders of the Company
in accordance with Section 162(m) of the Code.

 

3

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