Document:

Exhibit 10.1

 

FORM OF AMENDED AND RESTATED

SEVERANCE AGREEMENT

 

THIS AMENDED AND RESTATED SEVERANCE AGREEMENT is entered into as of
                      ,
2008 (the “Effective Date”) by and between Sally Beauty Holdings, Inc., a
Delaware corporation (the “Company’), and                             
(the “Executive”). This Agreement amends and restates the Severance Agreement
between the parties dated as of November 16, 2006.

 

WHEREAS, the Executive is serving as a key employee of the Company and
his services and knowledge are valuable to the Company in connection with the
management of one or more of the Company’s principal operating facilities,
divisions, departments or subsidiaries; and

 

WHEREAS, the Board (as defined in Section 1) has determined that
it is in the best interests of the Company and its shareholders to secure the
Executive’s continued services and to ensure the Executive’s continued
dedication and objectivity in the event of any threat or occurrence of, or
negotiation or other action that could lead to, or create the possibility of, a
Change in Control (as defined in Section 1) of the Company, without
concern as to whether the Executive might be hindered or distracted by personal
uncertainties and risks created by any such possible Change in Control, and to
encourage the Executive’s full attention and dedication to the Company.

 

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and the Executive hereby
agree as follows:

 

1.             Definitions. As used in this
Agreement, the following terms shall have the respective meanings set forth
below:

 

(a)           “Board” means the Board of Directors of the
Company.

 

(b)           “Cause” means (1) a material breach by
the Executive of those duties and responsibilities of the Executive which do
not differ in any material respect from the duties and responsibilities of the
Executive during the six-month period immediately prior to a Change in Control
(other than as a result of incapacity due to physical or mental illness) which
is demonstrably willful and deliberate on the Executive’s part, which is
committed in bad faith or without reasonable belief that such breach is in the
best interests of the Company and which is not remedied in a reasonable period
of time after receipt of written notice from the Company specifying such breach
or (2) the commission by the Executive of a felony involving moral
turpitude.

 

(c)           “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, including any “person” within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act but specifically excluding the Investor or
any affiliate of the Investor (a “Person”), of beneficial ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act of 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”); provided, however, that a Change in
Control shall not result from an acquisition of Outstanding Company Voting
Securities:

 

(i)            directly
from the Company, except as otherwise provided in Section 1(c)(2)(A);

 

(ii)           by
the Company, except as otherwise provided in Section 1(c)(2)(B);

 

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

 

(iv)          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
Section 1(c)(1)(C) shall be satisfied.

 

(B)           The cessation for any reason of the members
of the Incumbent Board (as such term is defined in Section 1(h)) to
constitute at least a majority of 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 50% 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)          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

 

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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 50% 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 shareholders of the Company
of a plan of complete liquidation or dissolution of the Company.

 

(2)           Notwithstanding the provisions of Section 1(c)(1)(A):

 

(A)          No acquisition of Outstanding Company Voting
Securities shall be subject to the exception from the definition of Change in
Control contained in clause (i) of Section 1(c)(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 Section 1(c)(1)(A),
if any Person (other than the Company 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 Outstanding Company Voting
Securities by the Company, become the beneficial owner of 20% or more of the
combined voting power of the Outstanding Company Voting Securities, and such
Person shall, after such acquisition of Outstanding 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.

 

(d)           “Company” means Sally Beauty Holdings, Inc.

 

(e)           “Date of Termination” means (1) the
effective date on which the Executive’s employment by the Company terminates as
specified in a prior written notice by the Company or the Executive, as the
case may be, to the other, delivered pursuant to Section 11 or (2) if
the Executive’s employment by the Company terminates by reason of death, the
date of death of the Executive.

 

(f)            “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

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(g)           “Good Reason” means, without the Executive’s
express written consent, the occurrence of any of the following events after a
Change in Control:

 

(1)           a material diminution
in the Executive’s authority, duties, or responsibilities as in effect
immediately prior to such Change in Control or as the same may be increased
from time to time thereafter;

 

(2)           a material diminution
in the authority, duties, or responsibilities of the supervisor to whom the
Executive is required to report, including a requirement that the Executive
report to a corporate officer or employee instead of reporting directly to the
Board;

 

(3)           a material reduction by
the Company in the Executive’s rate of annual base salary as in effect
immediately prior to such Change in Control or as the same may be increased
from time to time thereafter;

 

(4)           a material diminution
in the budget over which the Executive retains authority;

 

(5)           a material change in
the geographic location at which the Executive must perform services (it being
acknowledged that a change of 20 miles or more shall be a material change); or

 

(6)           any other action or
inaction that constitutes a material breach by the Company of this Agreement,
including, without limitation, any failure by the Company to comply with and
satisfy Section 10(b) of this Agreement.

 

A termination by the Executive shall not constitute termination for
Good Reason unless the Executive shall first have delivered to the Company
written notice setting forth with specificity the occurrence deemed to give
rise to a right to terminate for Good Reason (which notice must be given no
later than 90 days after the occurrence of such event), and there shall have
passed a reasonable time (not less than 30 days) within which the Company may
take action to correct, rescind or otherwise substantially reverse the
occurrence supporting termination for Good Reason as identified by the
Executive.

 

(h)           “Incumbent Board” means those individuals
who, as of November 16, 2006, 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 shareholders, was approved by the vote of at least a majority of
the directors then comprising the Incumbent Board 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 election
contest, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act, or any other actual

 

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or threatened solicitation of proxies or consents by or on behalf of
any Person other than the Board shall be deemed to have been a member of the
Incumbent Board.

 

(i)            “Nonqualifying Termination” means a
termination of the Executive’s employment (1) by the Company for Cause, (2) by
the Executive for any reason other than a Good Reason, (3) as a result of
the Executive’s death or (4) by the Company due to the Executive’s absence
from his duties with the Company on a full-time basis for at least 180
consecutive days as a result of the Executive’s incapacity due to physical or
mental illness.

 

(j)            “Termination Period” means the period of
time beginning with a Change in Control and ending on the earlier to occur of (1) two
years following such Change in Control or (2) the Executive’s death.

 

2.             Obligations of the Executive. The
Executive agrees that in the event of a Change in Control, he shall not
voluntarily leave the employ of the Company without Good Reason until 90 days
following such Change in Control. The Executive further agrees that in the
event that any person or group attempts a Change in Control, he shall not
voluntarily leave the employ of the Company during such attempted Change in
Control unless an event occurs which would have constituted Good Reason had it
occurred following a Change in Control (for purposes of determining whether
such an event would have constituted Good Reason had it occurred following a
Change in Control, the definition of Good Reason shall be interpreted as if a
Change in Control had occurred when such attempted Change in Control became
known to the Board). The Executive acknowledges that if he leaves the employ of
the Company for any reason prior to a Change in Control, he shall not be
entitled to any payment or benefit pursuant to this Agreement.

 

3.             Payments Upon Termination of Employment.

 

(a)           If during the Termination Period the
employment of the Executive shall terminate, other than by reason of a
Nonqualifying Termination, then the Company shall pay to the Executive (or the
Executive’s beneficiary or estate) within 30 days following the Date of
Termination (or such later date as may be required by Section 17 hereof),
as compensation for services rendered to the Company:

 

(1)           a cash amount equal to the sum of (i) the
Executive’s base salary from the Company and its affiliated companies through
the Date of Termination, to the extent not theretofore paid, (ii) an
amount equal to the Executive’s annual bonus in an amount determined in
accordance with the terms of the Company’s annual incentive plan, multiplied by
a fraction, the numerator of which is the number of days in the Company’s
fiscal year prior to the Date of Termination and the denominator of which is
365 (which amount, notwithstanding the foregoing, shall be paid when and as
bonuses under such plan are ordinarily paid), and (iii) any accrued
vacation pay, in each case to the extent not theretofore paid; plus

 

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(2)           provided that the Company has received a
customary release (which release shall extend to all claims against the Company,
the Investor and their respective affiliates and agents) signed by the
Executive, a lump sum payment equal to [2.99][2.49][1.99][1.49] times the
Executive’s annual base salary at the Date of Termination from the Company and
its affiliated companies plus [2.99][2.49][1.99][1.49] times the average
of the dollar amount of the Executive’s actual or annualized (for any fiscal
year consisting of less than 12 full months or with respect to which the
Executive has been employed by the Company and its affiliated companies for
less than 12 full months) annual bonus, paid or payable, including by reason of
any deferral, to the Executive by the Company and its affiliated companies in
respect of the five fiscal years of the Company (or such portion thereof during
which the Executive performed services for the Company and its affiliated
companies if the Executive shall have been employed by the Company and its
affiliated companies for less than such five fiscal year period) immediately
preceding the fiscal year in which the Date of Termination occurs.; provided,
further, that any amount paid pursuant to this Section 3(a)(2) shall
be paid in lieu of any other amount of severance relating to salary or bonus
continuation to be received by the Executive upon termination of employment of
the Executive under any severance plan, policy or arrangement of the Company.

 

(b)           In addition to the payments to be made
pursuant to Section 3(a) hereof, any stock options granted to the
Executive under the Company’s equity compensation plans shall be treated in
accordance with the terms of such plan, and the payment of any compensation
previously deferred by the Executive (together with any interest and earnings
thereon) shall be treated in accordance with the terms of such separate deferral
arrangement.

 

(c)           For a period of 24 months commencing on the
Date of Termination, the Company shall continue to keep in full force and
effect all policies of medical, accident, disability and life insurance with
respect to the Executive and his dependents with the same level of coverage,
upon the same terms and otherwise to the same extent as such policies shall
have been in effect immediately prior to the Date of Termination or as provided
generally with respect to other peer executives of the Company and its
affiliated companies, and the Company and the Executive shall share the costs
of the continuation of such insurance coverage in the same proportion as such
costs were shared immediately prior to the Date of Termination. Notwithstanding
the foregoing: (i) during the period of coverage, the benefits provided in
any one calendar year shall not affect the amount of benefits provided in any
other calendar year (other than any life-time coverage limits under the
applicable medical plans); (ii) the reimbursement of an eligible expense
shall be made on or before December 31 of the year following the year in
which the expense was incurred; and (iii) the Executive’s rights pursuant
to this Section 3(c) shall not be subject to liquidation or exchange
for another benefit.

 

(d)           If during the Termination Period the
employment of the Executive shall terminate by reason of a Nonqualifying
Termination, then the Company shall pay to the Executive within 30 days
following the Date of Termination, a cash amount equal to the sum of (1) the
Executive’s full annual base salary from the Company through the Date of
Termination, to the extent not theretofore paid and (2) any accrued
vacation pay, to the

 

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extent not theretofore paid.  The
payment of any compensation previously deferred by the Executive (together with
any interest and earnings thereon) shall be treated in accordance with the
terms of such separate deferral arrangement.

 

4.             Limitations on Payments by the Company.
Solely for the purposes of the computation of benefits under this Agreement and
notwithstanding any other provisions hereof, payments to the Executive under
this Agreement shall be reduced (but not below zero) so that the present value,
as determined in accordance with Section 280G(d)(4) of the Code, of
such payments plus any other payments that must be taken into account for
purposes of any computation relating to the Executive under Section 280G(b)(2)(A)(ii) of
the Code, shall not, in the aggregate, exceed 2.99 times the Executive’s “base
amount,” as such term is defined in Section 280G(b)(3) of the Code.
Notwithstanding any other provision hereof, no reduction in payments under the
limitation contained in the immediately preceding sentence shall be applied to
payments hereunder which do not constitute “excess parachute payments” within
the meaning of the Code. Any payments in excess of the limitation of this Section 4
or otherwise determined to be “excess parachute payments” made to the Executive
hereunder shall be deemed to be overpayments which shall constitute an amount
owing from the Executive to the Company with interest from the date of receipt
by the Executive to the date of repayment (or offset) at the applicable federal
rate under Section 1274(d) of the Code, compounded semi-annually,
which shall be payable to the Company upon demand; provided, however,
that no repayment shall be required under this sentence if in the written
opinion of tax counsel satisfactory to the Executive and delivered to the
Executive and the Company such repayment does not allow such overpayment to be
excluded for federal income and excise tax purposes from the Executive’s income
for the year of receipt or afford the Executive a compensating federal income
tax deduction for the year of repayment.

 

5.             Withholding Taxes. The Company may
withhold from all payments due to the Executive (or his beneficiary or estate)
hereunder all taxes which, by applicable federal, state, local or other law,
the Company is required to withhold therefrom.

 

6.             Reimbursement of Expenses. If any
contest or dispute shall arise under this Agreement involving termination of
the Executive’s employment with the Company or involving the failure or refusal
of the Company to perform fully in accordance with the terms hereof, the
Company shall reimburse the Executive, on a current basis, for all legal fees
and expenses, if any, incurred by the Executive in connection with such contest
or dispute, together with interest in an amount equal to the prime rate from
time to time in effect, as published under “Money Rates” in The Wall Street
Journal, but in no event higher than the maximum legal rate permissible
under applicable law, such interest to accrue from the date the Company
receives the Executive’s statement for such fees and expenses through the date
of payment thereof; provided, however, that, the Executive shall
be required to reimburse the Company for all sums advanced to the Executive
pursuant to this Section 6 unless he shall have prevailed with respect to
one or more material claim in such contest or dispute. The amount reimbursable
by the Company under this Section 6 in any one calendar year shall not
affect the amount reimbursable in any other calendar year, and the
reimbursement of an eligible expense shall be made within 30 days after
delivery of the Executive’s respective written requests for payment

 

7

 

accompanied with such evidence of fees and expenses incurred as the
Company reasonably may require, but in any event no later than December 31
of the year after the year in which the expense was incurred.  The Executive’s rights pursuant to this Section 6
shall expire at the end of ten years after the Date of Termination and shall
not be subject to liquidation or exchange for another benefit.

 

7.             Operative Event. Notwithstanding
any provision herein to the contrary, no amounts shall be payable hereunder
unless and until there is a Change in Control at a time when the Executive is
employed by the Company.

 

8.             Termination of Agreement.

 

(a)           This Agreement shall be effective on the
Effective Date and shall continue until terminated by the Company as provided
in Section 8(b); provided, however, that this Agreement
shall terminate in any event upon the first to occur of (i) termination of
the Executive’s employment with the Company prior to a Change in Control or (ii) the
Executive’s death.

 

(b)           The
Company shall have the right prior to a Change in Control, in its sole
discretion, pursuant to action by the Board, to approve the termination of this
Agreement, which termination shall not become effective until the date fixed by
the Board for such termination, which date shall be at least 120 days after
notice thereof is given by the Company to the Executive in accordance with Section 11;
provided, however, that no such action shall be taken by the Board during any
period of time when the Board has knowledge that any person has taken steps
reasonably calculated to effect a Change in Control until, in the opinion of the
Board, such person has abandoned or terminated its efforts to effect a Change
in Control; and provided  further, that in no event shall this
Agreement be terminated in the event of a Change in Control.

 

9.             Scope of Agreement. Nothing in this
Agreement shall be deemed to entitle the Executive to continued employment with
the Company or its subsidiaries, and if the Executive’s employment with the
Company shall terminate prior to a Change in Control, then the Executive shall
have no further rights under this Agreement; provided, however,
that any termination of the Executive’s employment following a Change in
Control shall be subject to all of the provisions of this Agreement.

 

10.           Successors; Binding Agreement.

 

(a)           This Agreement shall not be terminated by any
merger or consolidation of the Company whereby the Company is or is not the
surviving or resulting corporation or as a result of any transfer of all or
substantially all of the assets of the Company. In the event of any such
merger, consolidation or transfer of assets, the provisions of this Agreement
shall be binding upon the surviving or resulting corporation or the person or
entity to which such assets are transferred.

 

(b)           The
Company agrees that concurrently with any merger, consolidation or transfer of
assets referred to in Section 10(a), it will cause any successor or
transferee unconditionally to assume, by written instrument delivered to the
Executive (or his

 

8

 

beneficiary or estate), all of the obligations of the Company
hereunder. Failure of the Company to obtain such assumption prior to the
effectiveness of any such merger, consolidation or transfer of assets shall be
a breach of this Agreement and shall entitle the Executive to compensation and
other benefits from the Company in the same amount and on the same terms as the
Executive would be entitled hereunder if the Executive’s employment were
terminated following a Change in Control other than by reason of a
Nonqualifying Termination. For purposes of implementing the foregoing payment
of compensation and benefits to the Executive, the date on which any such
merger, consolidation or transfer becomes effective shall be deemed the Date of
Termination.

 

(c)           This Agreement shall inure to the benefit of
and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die after a termination of employment during
the Termination Period (other than a Nonqualifying Termination) while any
amounts would be payable to the Executive hereunder had the Executive continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to such person or persons appointed
in writing by the Executive to receive such amounts or, if no person is so
appointed, to the Executive’s estate.

 

11.           Notice.

 

(a)           For purposes of this Agreement, all notices
and other communications required or permitted hereunder shall be in writing
and shall be deemed to have been duly given when delivered or five days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed (1) if to the Executive, to his most recent
address as it appears in the records of the Company, and if to the Company, to
it at 3001 Colorado Boulevard, Denton, TX 76210, attention of the President,
with a copy to the General Counsel or (2) to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.

 

(b)           A written notice of the Executive’s Date of
Termination by the Company or the Executive, as the case may be, to the other,
shall (i) indicate the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated and (iii) specify
the termination date (which date shall not be less than 15 days after the
giving of such notice). The failure by the Executive or the Company to set
forth in such notice any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of the Executive or the Company
hereunder or preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

12.           Full Settlement; Resolution of Dispute.
The Company’s obligation to make any payments provided for in this Agreement
and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, 

 

9

 

defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and, such amounts shall not be reduced whether or not the Executive obtains
other employment.

 

13.           Employment with Subsidiaries.
Employment with the Company for purposes of this Agreement shall include
employment with any corporation or other entity in which the Company has a
direct or indirect ownership interest of 50% or more of the total combined
voting power of the then outstanding securities of such corporation or other
entity entitled to vote generally in the election of directors.

 

14.           Governing Law; Validity. The
interpretation, construction and performance of this Agreement shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Delaware without regard to the principle of conflicts of laws. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which other provisions shall remain in full force and effect.

 

15.           Counterparts. This Agreement may be
executed in two counterparts, each of which shall be deemed to be an original
and both of which together shall constitute one and the same instrument.

 

16.           Miscellaneous. No provision of this
Agreement may be modified or waived unless such modification or waiver is
agreed to in writing and signed by the Executive and by a duly authorized
officer of the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. Failure by the Executive or the Company to insist
upon strict compliance with any provision of this Agreement or to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement. The rights of, and benefits payable to,
the Executive, his estate or his beneficiaries pursuant to this Agreement are
in addition to any rights of, or benefits payable to, the Executive, his estate
or his beneficiaries under any other employee benefit plan or compensation
program of the Company.

 

17.           Application
of Section 409A.

 

(a)           This Agreement shall be interpreted and administered in a manner so that
any amount or benefit payable hereunder shall be paid or provided in a manner
that is either exempt from or compliant with the requirements Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”) and applicable advice and regulations issued
thereunder.

 

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(b)           Notwithstanding
anything in this Agreement to the contrary, to the extent that any amount or
benefit that would constitute non-exempt “deferred compensation” for purposes
of Section 409A of the Code would otherwise be payable or distributable
hereunder by reason of the Executive’s termination of employment, such amount
or benefit will not be payable or distributable to the Executive by reason of
such circumstance unless (i) the circumstances giving rise to such
termination of employment meet any description or definition of “separation
from service” in Section 409A of the Code and applicable regulations
(without giving effect to any elective provisions that may be available under
such definition), or (ii) the payment or distribution of such amount or
benefit would be exempt from the application of Section 409A of the Code
by reason of the short-term deferral exemption or otherwise.  This provision does not prohibit the vesting of any amount upon a termination of employment,
however defined.  If this provision
prevents the payment or distribution of any amount or benefit, such payment or
distribution shall be made on the date, if any, on which an event occurs that
constitutes a Section 409A-compliant “separation from service” or such
later date as may be required by subsection (c) below.

 

(c)           Notwithstanding
anything in this Agreement to the contrary, if any amount or benefit that would
constitute non-exempt “deferred compensation” for purposes of Section 409A
of the Code would otherwise be payable or distributable under this Agreement by
reason of the Executive’s separation from service during a period in which he
is a Specified Employee (as defined below), then, subject to any permissible
acceleration of payment by the Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic
relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment
of employment taxes):

 

(1)           if
the payment or distribution is payable in a lump sum, the Executive’s right to
receive payment or distribution of such non-exempt deferred compensation will
be delayed until the earlier of Executive’s death or the first day of the
seventh month following the Executive’s separation from service; and

 

(2)           if
the payment or distribution is payable over time, the amount of such non-exempt
deferred compensation that would otherwise be payable during the six-month
period immediately following the Executive’s separation from service will be
accumulated and the Executive’s right to receive payment or distribution of
such accumulated amount will be delayed until the earlier of the Executive’s
death or the first day of the seventh month following the Executive’s
separation from service, whereupon the accumulated amount will be paid or
distributed to the Executive on such date and the normal payment or
distribution schedule for any remaining payments or distributions will resume.

 

For purposes of this Agreement, the term “Specified
Employee” has the meaning given such term in Code Section 409A and the
final regulations thereunder (“Final 409A Regulations”), provided,
however, that, as permitted in the Final 409A Regulations, the
Company’s Specified Employees and its application of the six-month delay rule of
Code Section 409A(a)(2)(B)(i) shall be determined in accordance with rules adopted
by the Board or a committee thereof, which shall be applied consistently with
respect to all

 

11

 

nonqualified deferred compensation arrangements of the
Company, including this Agreement.

 

(d)           The Company shall have the right to make
such amendments, if any, to this Agreement as shall be necessary to avoid the
application of Section 409A(a)(1) of the Code to the payments of
amounts pursuant to this Agreement, and shall give prompt notice of any such
amendment to the Executive. If the Company defers payments to the Executive
pursuant to this Section 17, then the Company shall provide the Executive
with prompt written notice thereof, including reasonable explanation and the
estimated date on which it has determined it is permitted to make the payments
deferred under this Section 17.

 

IN WITNESS WHEREOF, the Company has caused
this Agreement to be executed by a duly authorized officer of the Company and
the Executive has executed this Agreement as of the Effective Date.

 

 

	
   

  	
   

  	
  Sally Beauty Holdings, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  President and Chief Executive

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  

 

12Exhibit 10.1

 

EIGHTH AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

 

THIS EIGHTH AMENDMENT
to Loan and Security Agreement (this “Amendment”) is entered into this 30th day
of September, 2008, by and between Silicon Valley Bank (“Bank”) and XPLORE
TECHNOLOGIES CORPORATION OF AMERICA, a Delaware corporation (“Borrower”) whose
address is 14000 Summit Drive, Suite 900, Austin, Texas 78728.

 

RECITALS

 

A.                                    Bank and Borrower have entered
into that certain Loan and Security Agreement dated as of September 15,
2005, as amended by that certain First Amendment to Loan and Security Agreement
by and between Bank and Borrower dated as of November 28, 2005, that
certain Letter amending Loan and Security Agreement by and between Bank and
Borrower dated as of March 30, 2006, that certain Second Amendment to Loan
and Security Agreement by and between Bank and Borrower dated as of May 15,
2006, that certain Third Amendment to Loan and Security Agreement by and
between Bank and Borrower dated as of February 28, 2007, that certain
Fourth Amendment to Loan and Security Agreement by and between Bank and
Borrower dated as of March 28, 2008, that certain Fifth Amendment to Loan
and Security Agreement by and between Bank and Borrower dated as of May 27,
2008, that certain Sixth Amendment to Loan and Security Agreement by and
between Bank and Borrower dated as of August 6, 2008 and that certain
Seventh Amendment to Loan and Security Agreement by and between Bank and
Borrower dated as of August 29, 2008  (as the same may from time to time be further
amended, modified, supplemented or restated, the “Loan Agreement”).

 

B.                                    Bank has extended credit to
Borrower for the purposes permitted in the Loan Agreement.

 

C.                                    Borrower has requested that Bank
amend the Loan Agreement to (i) reset certain financial covenants and (ii) make
certain other revisions to the Loan Agreement as more fully set forth herein.

 

D.                                    Bank has agreed to so amend
certain provisions of the Loan Agreement, but only to the extent, in accordance
with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth below.

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:

 

1.                                      Definitions.  Capitalized terms used but not defined in
this Amendment shall have the meanings given to them in the Loan Agreement.

 

 

2.                                      Amendments
to Loan Agreement.

 

2.1                               Cap
on Credit Extensions. 
Notwithstanding any other provision of the Loan Agreement, until such
time as Borrower has complied with the paragraph regarding Subordinated Debt
prior to the “Definitions” portion of Section 5 of the Schedule to the
Loan Agreement (as amended hereby) the aggregate amount of Credit Extensions
made to Borrower under the Loan Documents shall not exceed Four Million Five
Hundred Thousand Dollars ($4,500,000).

 

2.2                               Schedule
Section 5 (FINANCIAL COVENANTS (Section 5.1)).  The paragraph regarding Subordinated Debt
prior to the “Definitions” portion of Section 5 of the Schedule to the
Loan Agreement is hereby amended and restated to read as follows:

 

                                                Subordinated Debt. 
Borrower shall have received (a) at least One Million Dollars
($1,000,000) in proceeds from the issuance of Subordinated Debt no later than September 5,
2008, and (b) at least Two Million Dollars ($2,000,000) (exclusive of the
One Million Dollars ($1,000,000) required in clause (a) above) in proceeds
from the issuance of Subordinated Debt no later than October 21, 2008.

 

3.                                      Limitation
of Amendments.

 

3.1                               The
amendments set forth in Section 2
and the waiver set forth in Section 3,
above, are effective for the purposes set forth herein and shall be limited
precisely as written and shall not be deemed to (a) be a consent to any
amendment, waiver or modification of any other term or condition of any Loan
Document, or (b) otherwise prejudice any right or remedy which Bank may
now have or may have in the future under or in connection with any Loan
Document.

 

3.2                               This
Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents, except as herein amended, are
hereby ratified and confirmed and shall remain in full force and effect.

 

4.                                      Representations
and Warranties.  To induce Bank to
enter into this Amendment, Borrower hereby represents and warrants to Bank as
follows:

 

4.1                               Immediately
after giving effect to this Amendment (a) the representations and
warranties contained in the Loan Documents are true, accurate and complete in
all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they
are true and correct as of such date), and (b) no Event of Default has
occurred and is continuing;

 

4.2                               Borrower
has the power and authority to execute and deliver this Amendment and to
perform its obligations under the Loan Agreement, as amended by this Amendment;

 

2

 

4.3                               The
organizational documents of Borrower delivered to Bank with the Sixth Amendment
to Loan and Security Agreement remain true, accurate and complete and have not
been amended, supplemented or restated and are and continue to be in full force
and effect;

 

4.4                               The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, have been duly authorized;

 

4.5                               The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a
Person binding on Borrower, (c) any order, judgment or decree of any court
or other governmental or public body or authority, or subdivision thereof,
binding on Borrower, or (d) the organizational documents of Borrower;

 

4.6                               The
execution and delivery by Borrower of this Amendment and the performance by
Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not require any order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by any
governmental or public body or authority, or subdivision thereof, binding on
either Borrower, except as already has been obtained or made; and

 

4.7                               This
Amendment has been duly executed and delivered by Borrower and is the binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of general
application and equitable principles relating to or affecting creditors’
rights.

 

5.                                      Counterparts.  This Amendment may be executed in any number
of counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.

 

6.                                      Effectiveness.  This Amendment shall be deemed effective upon
(a) the due execution and delivery to Bank of this Amendment by each party
hereto, and (b) Borrower’s payment of a fee in an amount equal to Ten
Thousand Dollars ($10,000).

 

[Signature page follows.]

 

3

 

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

 

	
  BANK

  	
  BORROWER

  
	
   

  	
   

  
	
  Silicon Valley Bank

  	
  XPLORE TECHNOLOGIES

  
	
   

  	
  CORPORATION OF AMERICA

  
	
   

  	
   

  
	
  By: 

  	
  /s/John A. Craig 

  	
   

  	
  By: 

  	
  /s/Michael J. Rapisand 

  
	
  Name: 

  	
  John A. Craig

  	
   

  	
  Name:  

  	
  Michael J. Rapisand

  
	
  Title:

  	
  Relationship Manager

  	
   

  	
  Title:

  	
  Chief Financial Officer

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