Document:

Exhibit 10.30

 

SALLY BEAUTY HOLDINGS

2007 OMNIBUS INCENTIVE PLAN

 

RESTRICTED STOCK AGREEMENT

FOR EMPLOYEES

 

THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made
as of October 21, 2009 by and between Sally Beauty Holdings, Inc.  (the “Company”) and                                                       
(“Employee”).

 

1.                                       GRANT OF RESTRICTED SHARES.  Pursuant to the Sally Beauty Holdings, Inc.
2007 Omnibus Incentive Plan (the “Plan”) Employee is hereby awarded                   
shares (the “Restricted
Shares”) of Common Stock. 
All of the Restricted Shares shall be subject to the prohibition on the
transfer of the Restricted Shares and the obligations to forfeit the Restricted
Shares to the Company as set forth in Section 3 of this Agreement (“Forfeiture Restrictions”).

 

2.                                       EFFECT OF THE PLAN.  The Restricted Shares awarded to Employee are
subject to all of the terms and conditions of the Plan, which terms and
conditions are incorporated herein for all purposes, and of this Agreement
together with all rules and determinations from time to time issued by the
Committee and by the Board pursuant to the Plan.  The Company hereby reserves the right to
amend, modify, restate, supplement or terminate the Plan without the consent of
Employee, so long as such amendment, modification, restatement or supplement
shall not materially reduce the rights and benefits available to Employee
hereunder, and this Award shall be subject, without further action by the
Company or Employee, to such amendment, modification, restatement or supplement
unless provided otherwise therein. 
Capitalized terms used but not defined in this Agreement shall have the
meanings ascribed to such terms in the Plan.

 

3.                                       RESTRICTIONS.  Employee
hereby accepts the Award of the Restricted Shares and agrees with respect
thereto as follows:

 

(a)                                  No Transfer.  During such time as they are subject to the
Forfeiture Restrictions as provided herein, the Restricted Shares shall not be
sold, assigned, pledged, exchanged, hypothecated or otherwise transferred except
by will or the laws of decent and distribution. 
Any attempted transfer the Restricted Shares in contravention of this
Agreement, including by way of sale, assignment, transfer, pledge,
hypothecation or otherwise, shall be null and void without effect.

 

(b)                                 Restrictive Legend. 
Employee
agrees that in the event any stock certificate is issued in respect of
the Restricted Shares while such shares are still subject to the Forfeiture
Restrictions such certificate shall bear the following legend with
respect to the Forfeiture Restrictions applicable to such Award:

 

 

This
certificate and the shares of stock represented hereby are subject to the terms
and conditions, including forfeiture provisions and restrictions against
transfer (the “Restrictions”), contained in the Sally Beauty Holdings, Inc.
2007 Omnibus Incentive Plan and an agreement between the registered owner and
Sally Beauty Holdings, Inc. Any attempt to dispose of these shares in
contravention of the Restrictions, including by way of sale, assignment,
transfer, pledge, hypothecation or otherwise, shall be null and void without
effect.

 

(c)                                  Forfeiture of Restricted Shares.  If Employee terminates service with the
Company and its Subsidiaries prior to October 21, 2010 (the “Restriction Lapse Date”) for any
reason other than Employee’s death or Disability, then Employee (or Employee’s
estate, as applicable) shall, for no consideration, forfeit to the Company all
Restricted Shares.  If after the Restriction
Lapse Date Employee terminates service with the Company and its Subsidiaries
for any reason other than Employee’s death or Disability, then Employee shall,
for no consideration, forfeit to the Company all Restricted Shares with respect
to which the Forfeiture Restrictions have not lapsed pursuant to paragraph (d) of
this Section 3 as of the effective date of such termination of service.  Notwithstanding the forgoing, the Committee or
its designee may, in the Committee’s or the designee’s sole and absolute
discretion, as applicable, provide for the acceleration of the vesting of the
Restricted Shares, eliminate or make less restrictive any restrictions
contained in this Agreement, waive any restriction or other provision of the
Plan or this Agreement or otherwise amend or modify this Agreement in any manner
that is consistent with the terms of the Plan and is either (i) not
adverse to Employee, or (ii) consented to by Employee.

 

(d)                                 Lapse of Forfeiture Restrictions.  If Employee provides continuous, eligible service
to the Company and its Subsidiaries as determined by the Committee or its
designee, in the Committee’s or the designee’s sole and absolute discretion, as
applicable, the Forfeiture Restrictions will lapse with respect to twenty
percent (20%) of the Restricted Shares on the Restriction Lapse Date; an
additional twenty percent (20%) of the Restricted Shares on the first anniversary
of the Restriction Lapse Date; an additional twenty percent (20%) on the second
anniversary of the Restriction Lapse Date; an additional twenty percent (20%)
on the third anniversary of the Restriction Lapse Date; and the remaining twenty
percent (20%) of the Restricted Shares on the fourth anniversary of the Restriction
Lapse Date.  If the number of Restricted
Shares with respect to which the Forfeiture Restrictions would lapse as of any
particular anniversary of the Restriction Lapse Date results in the Forfeiture
Restrictions lapsing with respect to a fractional Restricted Share, such
installment will be rounded to the next whole Restricted Share, as determined
by the Company, except the final installment, which will be for the balance of
the Restricted Shares with respect to which the forfeiture restrictions have
lapsed.

 

(e)                                  Death or Disability.  If Employee terminates service with the
Company and its Subsidiaries as a result of Employee’s death or Disability, then,
in addition to the Restricted Shares with respect to which the Forfeiture
Restrictions have lapsed pursuant to paragraph (d) of this Section 3,
Employee (or Employee’s estate) shall have a right to those Restricted Shares
with respect to which the Forfeiture Restrictions would lapse as of the
anniversary of the Restriction Lapse Date next following the effective date of Employee’s
termination of service with the Company and its Subsidiaries as a result of Employee’s
death or Disability.

 

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(f)                                    Change in Control.  If a Change in Control occurs during the term
of this Agreement, the Forfeiture Restrictions will lapse with respect to one
hundred percent (100%) of the Restricted Shares.

 

(g)                                 Dividend and Voting Rights.  Subject to the Forfeiture Restrictions
contained in this Agreement, Employee shall have the rights of a stockholder
with respect to the Restricted Shares, including the right to vote all such
Restricted Shares, whether or not the Forfeiture Restrictions have lapsed with
respect to such Shares, and to receive all dividends, cash or stock, paid or
delivered thereon, from and after the date hereof.  Any dividends, cash or stock, paid or
delivered on any of the Restricted Shares shall be credited to an account for
the benefit of Employee.  In the event of
the forfeiture of any Restricted Shares pursuant to this Section 3, Employee
shall have no further rights with respect to such Restricted Shares, and Employee
shall forfeit any dividends, cash or stock, credited to the account for the
benefit of Employee which are related to the forfeited Restricted Shares.  To the extent the Forfeiture Restrictions
lapse with respect to any of the Restricted Shares pursuant to this Section 3,
all dividends, cash and stock, if any, credited to the account for the benefit
of Employee shall be used, to the extent necessary, to satisfy any applicable
federal, state and local income and employment tax withholding obligations
under Section 6 of this Agreement. 
To the extent any dividends, cash or stock, are not used to satisfy any
applicable federal, state and local income and employment tax withholding
obligations under Section 6 of this Agreement, such dividends, cash or stock,
will be distributed to Employee.  The
forfeiture of the Restricted Shares pursuant to this Section 3 shall not
invalidate any votes given by Employee with respect to such Restricted Shares
prior to forfeiture.

 

(h)                                 Evidence of Ownership.  Evidence of the Award of the Restricted
Shares pursuant to this Agreement may be accomplished in such manner as the
Company or its authorized representatives shall deem appropriate including,
without limitation, electronic registration, book-entry registration or issuance
of a stock certificate or certificates in the name of Employee or in the name
of such other party or parties as the Company and its authorized representatives
shall deem appropriate. The Company may retain, at its option, the physical
custody of any stock certificate representing any awards of Restricted Shares
during the restriction period or require that the certificates evidencing
Restricted Shares be placed in escrow or trust, along with a stock power
endorsed in blank, until all Forfeiture Restrictions are removed or
expire.  In the event the Award of the
Restricted Shares is documented or recorded electronically, the Company and its
authorized representatives shall ensure that Employee is prohibited from
selling, assigning, pledging, exchanging, hypothecating or otherwise
transferring the Restricted Shares while such shares are still subject to the
Forfeiture Restrictions.

 

Upon the lapse of the
Forfeiture Restrictions pursuant to this Section 3, the Company or, at the
Company’s instruction, its authorized representative shall release those
Restricted Shares with respect to which the Forfeiture Restrictions have
lapsed.  The lapse of the Forfeiture
Restrictions and the release of the Restricted Shares shall be evidenced in
such a manner as the Company and its authorized representatives deem
appropriate under the circumstances.

 

At the Company’s request, Employee
shall execute and deliver, as necessary, a stock power, in blank, with respect
to the Restricted Shares, and the Company may, as necessary, exercise such
stock power in the event of the forfeiture of any Restricted Shares pursuant to
this 

 

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Agreement,
or as may otherwise be required in order for the Company to withhold the
Restricted Shares necessary to satisfy any applicable federal, state and local
income and employment tax withholding obligations pursuant to Section 6 of
this Agreement.

 

4.                                       COMMUNITY INTEREST OF SPOUSE.  The community interest, if any, of any spouse
of Employee in any of the Restricted Shares shall be subject to all of the
terms, conditions and restrictions of this Agreement and the Plan, and shall be
forfeited and surrendered to the Company upon the occurrence of any of the
events requiring Employee’s interest in such Restricted Shares to be so
forfeited and surrendered pursuant to this Agreement.

 

5.                                       BINDING EFFECT.  This
Agreement shall be binding upon and inure to the benefit of any successors to
the Company and all persons lawfully claiming under Employee.

 

6.                                       TAX MATTERS.

 

(a)                                  The lapsing of
the Forfeiture Restrictions with respect to the Restricted Shares pursuant to Section 3
of this Agreement shall be subject to the satisfaction of all applicable
federal, state and local income and employment tax withholding requirements
(the “Required Withholding”).  By
execution of this Agreement Employee shall be deemed to have authorized the
Company, after taking into consideration any dividends, cash or stock, credited
to an account for the benefit of Employee, as contemplated in paragraph (g) of
Section 3, to withhold the Restricted Shares with respect to which the
Forfeiture Restrictions have lapsed necessary to satisfy Employee’s Required
Withholding, if any.  The amount of the
Required Withholding and the number of Restricted Shares required to satisfy Employee’s
Required Withholding, if any, as well as the amount reflected on tax reports
filed by the Company, shall be based on the closing price of the Common Stock
on the day the Forfeiture Restrictions lapse pursuant to Section 3 of this
Agreement.  Notwithstanding the
foregoing, the Company may require that Employee satisfy Employee’s Required
Withholding, if any, by any other means the Company, in its sole discretion,
considers reasonable.  The obligations of
the Company under this Agreement shall be conditioned on such satisfaction of
the Required Withholding.

 

(b)                                 Employee
acknowledges that the tax consequences associated with the Award are complex
and that the Company has urged Employee to review with Employee’s own tax advisors
the federal, state, and local tax consequences of this Award.  Employee is relying solely on such advisors
and not on any statements or representations of the Company or any of its
agents.  Employee understands that Employee
(and not the Company) shall be responsible for Employee’s own tax liability
that may arise as a result of this Agreement. 
Employee understands further that Section 83 of the Code taxes as
ordinary income the fair market value of the Restricted Shares with respect to
which the Forfeiture Restrictions lapse pursuant to this Agreement.

 

7.                                       EMPLOYMENT AGREEMENT CONTROLS.  Notwithstanding any language in this
Agreement to the contrary, to the extent of any conflict between this Agreement
and any written employment agreement with Employee, the terms of such
employment agreement shall control.

 

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IN WITNESS WHEREOF, the Company has caused
this Agreement to be duly executed by an authorized officer and Employee has
executed this Agreement, all as of the date first above written.

 

	
   

  	
  SALLY BEAUTY HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

EMPLOYEE ACKNOWLEDGES AND
AGREES THAT THE SHARES SUBJECT TO THIS RESTRICTED STOCK AWARD SHALL REMAIN
SUBJECT TO THE FORFEITURE RESTRICTIONS PROVIDED FOR IN THIS AGREEMENT AND THE
FORFEITURE RESTRICTIONS SHALL LAPSE, IF AT ALL, ONLY DURING THE PERIOD OF EMPLOYEE’S
SERVICE TO THE COMPANY OR AS OTHERWISE PROVIDED IN THIS AGREEMENT (NOT THROUGH
THE ACT OF BEING GRANTED THE RESTRICTED STOCK AWARD).  EMPLOYEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT OR THE PLAN SHALL CONFER UPON EMPLOYEE ANY RIGHT WITH
RESPECT TO FUTURE AWARDS OR CONTINUATION OF EMPLOYEE’S SERVICE TO THE
COMPANY.  Employee acknowledges receipt
of a copy of the Plan, represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts the Restricted Stock Award subject to
all of the terms and provisions hereof and thereof.  Employee has reviewed this Agreement and the
Plan in their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Agreement, and fully understands all provisions of this
Agreement and the Plan.

 

 

	
  DATED:

  	
   

  	
   

  	
  SIGNED:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  EMPLOYEE

  

 

5Exhibit 10.31

 

SALLY BEAUTY HOLDINGS 2007
OMNIBUS INCENTIVE PLAN

 

STOCK OPTION AGREEMENT

FOR EMPLOYEES

 

	
  Optionee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total
  Shares Subject to Option:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Option
  Exercise Price Per Share:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date
  of Grant:

  	
  October 21,
  2009

  	
   

  
	
   

  	
   

  	
   

  
	
  Vesting
  Commencement Date:

  	
  October 21,
  2009

  	
   

  
	
   

  	
   

  	
   

  
	
  Expiration
  Date:

  	
  October 21,
  2019

  	
   

  
	
   

  	
   

  	
   

  
	
  Type of Stock Option:

  	
  Non-Statutory Stock Option

  	
   

  

 

1.             Grant of Option.  Sally Beauty Holdings, Inc., a Delaware
corporation (the “Company”),
hereby grants to the optionee named above (the “Optionee”) an option (the “Option”) to purchase
the total number of shares of Common Stock set forth above (the “Shares”) at the
exercise price per Share set forth above (the “Exercise Price”), in accordance with
this Stock Option Agreement (“Option Agreement”) and subject to the terms and
conditions of the Sally Beauty Holdings 2007 Omnibus Incentive Plan, as amended
from time to time (the “Plan”),
which are incorporated herein by reference. 
Unless otherwise defined herein, capitalized terms used herein shall
have the same meanings ascribed to them in the Plan.

 

2.             Vesting; Time of Exercise.  Subject to the terms and conditions of the
Plan and this Option Agreement, the Option shall vest and become exercisable in
the following cumulative installments, as follows:

 

(a)           Twenty-five percent (25%) of
the Shares shall be exercisable at any time on or after the day immediately
preceding the first anniversary of the vesting commencement date set forth
above (the “Vesting Commencement Date”);

 

(b)           Up to an additional
twenty-five percent (25%) of the Shares shall become exercisable at any time on
or after the day immediately preceding the second anniversary of the Vesting
Commencement Date;

 

(c)           Up to an additional
twenty-five percent (25%) of the Shares shall become exercisable at any time on
or after the day immediately preceding the third anniversary of the Vesting
Commencement Date; and

 

(d)           The remaining Shares shall
become exercisable at any time on or after the day immediately preceding the
fourth anniversary of the Vesting Commencement Date.

 

 

If
an installment covers a fractional Share, such installment will be rounded to
the next highest Share, except the final installment, which will be for the
balance of the total Shares; provided, that, absent the occurrence of an
Adjustment Event as described in Section 4.4 of the Plan, the Optionee
shall in no event be entitled under the Option to purchase a number of shares
of Common Stock greater than the “Total Shares Subject to Option” indicated
above.  Unless otherwise provided in the
Plan or this Option Agreement, the Option shall expire on the Expiration Date
set forth above and must be exercised, if at all, on or before the Expiration
Date.  Unless otherwise provided below,
upon the effective date of an Optionee’s termination of service the unvested
portion of the Optionee’s Option under this Option Agreement shall be
forfeited.

 

If
the Optionee’s service with the Company or any Subsidiary is terminated as a
result of the Optionee’s Retirement and the Optionee does not agree to be bound
by the restrictions of Section 5.5 of the Plan, then the Option shall be
exercisable only to the extent that the Optionee could exercise it on the date
of his or her Retirement.  If the
Optionee’s service with the Company or any Subsidiary is terminated as a result
of the Optionee’s Retirement and the Optionee agrees to be bound by the
restrictive covenants of Section 5.5 of the Plan for the three-year period
following Optionee’s Retirement then Optionee will continue to vest in the
portion of the Option that was not vested and exercisable as of the date of the
Optionee’s Retirement for the three-year period following Optionee’s Retirement
as if the Optionee’s service had not terminated, unless Optionee violates the
any of the restrictive covenants of Section 5.5 of the Plan during such
three-year period.  If, in the sole
discretion of the Committee, the Optionee violates one of the restrictive
covenants of Section 5.5 of the Plan during the three-year period
following Optionee’s Retirement, then all Options, whether or not vested, shall
be immediately forfeited and cancelled as of the date of such violation.  If the Optionee’s service with the Company or
any Subsidiary is terminated as a result of the Optionee’s death or Disability
then the Optionee shall, in addition to the portion of the Option in which the
Optionee was vested as of the effective date of any such termination of
service, vest in that portion of the Option that becomes vested and exercisable
on the next vesting date following the effective date of the Optionee’s
termination of service as a result of the Optionee’s death or Disability.  If the Optionee voluntarily terminates
service for any other reason the Option shall be exercisable only to the extent
the Optionee was vested on the effective date of such termination of
service.  Unless, as described in Section 9.2
of the Plan, an Alternative Award replaces this Option, this Option shall
become fully vested and exercisable upon the occurrence during the term of this
Option Agreement of a Change in Control. 
If the Optionee’s service is terminated for Cause (or if, following the
date of termination of the Optionee’s service for any reason, the Compensation
Committee determines that circumstances exist that the Optionee’s service could
have been terminated for Cause) then all Options shall be immediately forfeited
and cancelled as of the date of such termination.

 

3.             Exercise of Option.

 

(a)           Right to Exercise.  The Option shall be exercisable in accordance
with the vesting provisions contained in Section 2 of this Option
Agreement and with the other applicable provisions of the Plan and this Option
Agreement.  The Option shall be subject
to the provisions of Article IX of the Plan relating to the exercisability
or termination of the Option in the event of a Change in Control.

 

2

 

(b)           Method of Exercise.  The Option shall be exercisable only by
delivery to the Company of an executed Stock Option Exercise Notice (the “Exercise
Notice”) in the form attached hereto as Exhibit A, or in such other
form approved by the Committee, which shall state the Optionee’s election to
exercise the Option, the whole number of Shares in respect of which the Option
is being exercised, and such other provisions as may be required by the
Committee or necessary to comply with securities and other applicable laws. The
Exercise Notice shall be signed by the Optionee and shall be delivered to the
Company by such method as may be permitted by the Committee, accompanied (in
any case) by payment of, or provision for the payment of, the Exercise Price
for each Share covered by the Exercise Notice, as described in Section 4
of this Option Agreement.  The Option
shall be deemed to be exercised to the extent provided in the Exercise Notice
upon receipt by the Company of such written Exercise Notice and the Exercise
Price.

 

(c)           Issuance of Shares.  If the Exercise Notice and payment are in a
form and substance satisfactory to the Company (or its counsel), and the
Optionee or any other person permitted to exercise the Option has complied with
Section 5 of this Option Agreement, the Company shall issue or cause the
issuance of, in the name of the Optionee or Optionee’s legal representative,
the Shares purchased by such exercise of the Option.

 

4.             Method of Payment. The Optionee’s
delivery of the signed Exercise Notice to exercise the Option (in whole or in
part) shall be accompanied by full payment of the Exercise Price for the Shares
being purchased.  Payment for the Shares
may be made in cash (by check) or at the election of the Optionee and where
permitted by law in one or more of the following methods: (i) if a public
market for the Common Stock exists, through a “same day sale” arrangement
between the Optionee and a broker-dealer that is a member of the National
Association of Securities Dealers, Inc. (an “NASD Dealer”) whereby
the Optionee elects to exercise the Stock Option and to sell a portion of the
shares of Common Stock so purchased to pay for the exercise price and whereby
the NASD Dealer commits upon receipt of such shares of Common Stock to forward
the exercise price directly to the Company; (ii) if a public market for
the Common Stock exists, through a “margin” commitment from the Optionee and an
NASD Dealer whereby the Optionee elects to exercise the Stock Option and to
pledge the shares of Common Stock so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of the
exercise price, and whereby the NASD Dealer commits upon receipt of such shares
of Common Stock to forward the exercise price directly to the Company; (iii) in
any other form of valid consideration that is acceptable to the Committee in
its sole discretion; provided, however, that such other form of consideration
is not otherwise prohibited by the Plan or this Option Agreement; or (iv) by
any combination of the foregoing. 
Notwithstanding the foregoing, the forms of payment provided in (i) or
(ii) above shall not be available to any Optionee who is a member
of the Board or an Executive Officer of the Company if any such form of payment
would be treated as a personal loan prohibited under Section 13(k) of
the Exchange Act, and Optionee shall not provide for payment of the
Exercise Price for the Shares being purchased by surrendering for cancellation
shares of Common Stock owned by the Optionee at the Fair Market Value per share
at the time of exercise.

 

5.             Tax Withholding Obligations.  No Shares shall be delivered to the Optionee,
or any other person permitted to exercise the Option, pursuant to the exercise
of the Option until the Optionee or such other person has made arrangements
acceptable to the Committee or its

 

3

 

designee for the satisfaction
of all applicable income tax, employment tax, and social security tax
withholding obligations, including obligations incident to the receipt of
Shares.  Upon exercise of the Option, the
Company or the Optionee’s employer may offset or withhold (from any amount owed
by the Company or the Optionee’s employer to the Optionee) or collect from the
Optionee, or such other person, an amount sufficient to satisfy such tax
obligations and/or the employer’s withholding obligations.

 

6.             Termination or Change of Service.

 

(a)           Post-Termination Exercise.  Subject to the provisions of Sections 7 and 8
of this Option Agreement, if the Optionee’s service with the Company or any
Subsidiary terminates, other than as described in Section 6(b) of
this Option Agreement, the Optionee may, to the extent otherwise so entitled at
the date of Optionee’s termination of service (the “Termination Date”),
exercise the Option until the 60th day following
the Optionee’s Termination Date (the “Post-Termination Exercise Period”).  Upon
termination of the Optionee’s service with the Company or any Subsidiary as
described in Section 6(b) of this Option Agreement, the Optionee’s
right to exercise the Option shall, except as otherwise determined by the
Committee, terminate concurrently with the termination of the Optionee’s
service with the Company or Subsidiary.  In
no event may the Option be exercised later than the Expiration Date set forth
on the first page of this Option Agreement.  In the event of the Optionee’s change in
status from Employee, non-employee director or Consultant to any other status
of Employee, non-employee director or Consultant, the Option shall remain in
effect and, except to the extent otherwise determined by the Committee,
continue to vest.  Except as provided in
Sections 7 and 8 of this Option Agreement, to the extent that the Optionee is
not entitled to exercise the Option on the Termination Date, or if the Optionee
does not exercise the Option within the Post-Termination Exercise Period, the
Option shall terminate.

 

(b)           No Post-Termination Exercise.  Unless the Committee otherwise determines, if
the Optionee’s service with the Company or any Subsidiary is terminated either (i) by
the Company or a Subsidiary for Cause, or (ii) if Optionee’s employment is
subject to the terms of a then-effective written employment agreement between
the Optionee and the Company or an affiliate, by the Optionee without
compliance with, or without “good reason” or words of similar import under, the
terms of such employment agreement, then the Optionee’s right to exercise the
Option shall immediately terminate.  For
purposes of this Option Agreement, the term “Cause” for termination by the
Company or a Subsidiary of the Optionee’s service with the Company or any
Subsidiary shall have the meaning set forth in a then-effective written
employment agreement between the Optionee and the Company or such Subsidiary
or, in the absence of such a definition in a then-effective written employment
agreement (in the determination of the Committee), shall mean Cause as
otherwise provided in the Plan.  The
Committee shall have discretion for the purposes of this Option Agreement to
determine whether any termination of service by the Optionee is in compliance
with, or is for “good reason” or words of similar import, under the terms of a
then-effective written employment agreement.

 

7.             Retirement. If the Optionee’s service
with the Company or any Subsidiary terminates as a result of the Optionee’s
Retirement and the Optionee does not agree to be bound by the restrictive
covenants of Section 5.5 of the Plan then the Optionee may exercise the
Option until the earlier of (i) the twelve-month anniversary of the
effective date of the Optionee’s termination of service as a result of the
Optionee’s Retirement, or (ii) the Expiration Date.  If the

 

4

 

Optionee’s service with the
Company or any Subsidiary terminates as a result of the Optionee’s Retirement
and the Optionee agrees to be bound by the restrictive covenants of Section 5.5
of the Plan then the Optionee will continue to vest in the Options pursuant to
the provisions of Section 2(d) of this Option Agreement and the
Optionee may exercise the Option until the earlier of (i) 60 days
following the earlier of (A) the third anniversary of the Optionee’s
Retirement, or (B) the twelve-month anniversary following the Optionee’s
death, or (ii) the Expiration Date.

 

8.             Death or Disability.  In the event of the termination of the
Optionee’s service with the Company or any Subsidiary as a result of the
Optionee’s death or Disability the Optionee, the Optionee’s estate, or any
person who acquired the right to exercise the Option by bequest or inheritance,
as applicable, may, to the extent the option was vested on the effective date
of the Optionee’s death or Disability, including any additional Options which
vested pursuant to the terms of Section 2(d) of this Option Agreement
as a result of the Optionee’s death or Disability, exercise the Option until
the earlier of (i) the twelve-month anniversary of the effective date of
the Optionee’s termination of service as a result of the Optionee’s death or
Disability, or (ii) the Expiration Date.

 

9.             Transferability of Option.  Neither the Option nor any of the Optionee’s
rights under this Option Agreement may be transferred or assigned in any manner
other than by will or by the law of descent and distribution or as may
otherwise be permitted by the Committee or by the terms of the Plan.  The Option and those rights may be exercised
during the lifetime of the Optionee only by the Optionee.

 

10.          Tax Consequences.  Set forth below is a brief summary, as of the
Date of Grant, of some of the federal tax consequences of exercise of the
Option and disposition of the Shares. 
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS
ARE SUBJECT TO CHANGE.  THE OPTIONEE
SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THE OPTION OR DISPOSING OF THE
SHARES.

 

(a)           Exercise of Non-Qualified
Stock Option.  There may
be a regular federal income tax liability upon the exercise of the Option.  The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to
the excess, if any, of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price.  If the
Optionee is an Employee or former Employee, the Company will be required to
withhold from the Optionee’s compensation or collect from the Optionee and pay
to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.

 

(b)           Disposition of Shares.  If the Shares are held for at least one year
before disposition, any gain on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.

 

11.          Term of Option.  The Option may be exercised no later than the
Expiration Date or such earlier date as otherwise provided in this Option
Agreement.

 

12.          Entire Agreement; Governing Law.  The Plan and this Option Agreement (with the
Exercise Notice, if the Option is exercised) constitute the entire agreement of
the Company and the Optionee (collectively the “Parties”) with respect to the
subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Parties with respect to the subject matter hereof, and
may not be modified adversely to the Optionee’s interest except by means of a
writing signed by the Parties.  Notwithstanding
any language in this Agreement to the

 

5

 

contrary, to the extent of
any conflict between this Agreement and any written employment agreement with
Optionee, the terms of such employment agreement shall control.  Nothing in the Plan and this Option Agreement
(except as expressly provided therein or herein) is intended to confer any
rights or remedies on any person other than the Parties.  The Plan and this Option Agreement are to be
construed in accordance with and governed by the internal laws of the State of
Delaware without giving effect to any choice-of-law rule that would cause
the application of the laws of any jurisdiction other than the internal laws of
the State of Delaware, to the rights and duties of the Parties.  Should any provision of the Plan or this
Option Agreement be determined by a court of law to be illegal or
unenforceable, such provision shall be enforced to the fullest extent allowed
by law and the other provisions shall nevertheless remain effective and shall
remain enforceable.

 

13.          Interpretive Matters.  Whenever required by the context, pronouns
and any variation thereof shall be deemed to refer to the masculine, feminine,
or neuter, and the singular shall include the plural, and vice versa.  The term “include” or “including” does not
denote or imply any limitation.  The
captions and headings used in this Option Agreement are inserted for
convenience and shall not be deemed a part of the Option or this Option
Agreement for construction or interpretation.

 

14.          Notice.  Any notice or other communication required or
permitted hereunder shall be given in writing and shall be deemed given,
effective, and received upon prepaid delivery in person or by courier or upon
the earliest of delivery or the third business day after deposit in the United
States mail if sent by certified mail, with postage and fees prepaid, addressed
to the other Party at its address as shown beneath its signature in this Option
Agreement, or to such other address as such Party may designate in writing from
time to time by notice to the other Party in accordance with this Section 14.

 

 

	
   

  	
  SALLY BEAUTY HOLDINGS, INC.

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

6

 

THE OPTIONEE ACKNOWLEDGES
AND AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED OTHERWISE HEREIN, THE SHARES
SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE
OPTIONEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER).  THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT NOTHING IN THIS OPTION AGREEMENT OR THE PLAN SHALL CONFER UPON THE
OPTIONEE ANY RIGHT WITH RESPECT TO FUTURE GRANTS OR CONTINUATION OF THE
OPTIONEE’S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE
OPTIONEE’S RIGHT OR THE RIGHT OF THE OPTIONEE’S EMPLOYER TO TERMINATE OPTIONEE’S
CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE.  THE OPTIONEE ACKNOWLEDGES THAT UNLESS THE
OPTIONEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY,
THE OPTIONEE’S STATUS IS AT-WILL.

 

The Optionee acknowledges
receipt of a copy of the Plan, represents that he or she is familiar with the
terms and provisions thereof, and hereby accepts this Option subject to all of
the terms and provisions hereof and thereof. 
The Optionee has reviewed this Option Agreement, the Plan, and the
Exercise Notice in their entirety, has had an opportunity to obtain the advice
of counsel prior to executing this Option Agreement, and fully understands all
provisions of this Option Agreement, the Plan and the Exercise Notice.  The Optionee further agrees to provide the
Company with such information as the Company considers necessary for the
administration of this Option Agreement.

 

 

	
   

  	
  OPTIONEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Print
  Name)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  

 

7

 

EXHIBIT A

 

SALLY BEAUTY HOLDINGS 2007
OMNIBUS INCENTIVE PLAN

 

STOCK OPTION EXERCISE NOTICE

 

This
Stock Option Exercise Notice (“Exercise Notice”) is made this         day
of                         ,
20       between Sally Beauty Holdings, Inc.
(the “Company”),
and the optionee named below (the “Optionee”) pursuant to the Sally Beauty
Holdings 2007 Omnibus Incentive Plan (the “Plan”). 
Unless otherwise defined herein, the capitalized terms used in this
Exercise Notice shall have the meaning ascribed to them in the Plan and in the
Stock Option Agreement (“Option
Agreement”) to which this Exercise Notice relates.

 

	
  Award
  Number:

  	
   

  
	
   

  	
   

  
	
  Optionee:

  	
   

  
	
   

  	
   

  
	
  Number
  of Shares Purchased:

  	
   

  
	
   

  	
   

  
	
  Option
  Exercise Price Per Share:

  	
   

  
	
   

  	
   

  
	
  Aggregate
  Purchase Price:

  	
   

  
	
   

  	
   

  
	
  Date
  of Grant:

  	
   

  
	
   

  	
   

  
	
  Vesting
  Commencement Date:

  	
   

  
	
   

  	
   

  
	
  Type of Stock Option:

  	
  Non-Qualified Stock Option

  

 

The
Optionee hereby delivers to the Company the Aggregate Purchase Price set forth
above (“Aggregate
Purchase Price”) in cash as indicated below or to the extent
provided for in the Option Agreement and approved by the Committee by accepting
this Exercise Notice, as follows (as applicable, check and complete):

 

	
  o

  	
  in
  cash in the amount of
  $                        ,
  receipt of which is acknowledged by the Company;

  
	
   

  	
   

  
	
  o

  	
  through
  a “same-day-sale” commitment, delivered herewith, from the Optionee and the
  NASD Dealer named therein in the amount of
  $                                      ;

  
	
   

  	
   

  
	
  o

  	
  through
  a “margin” commitment, delivered herewith, from the Optionee and the NASD
  Dealer named therein in the amount of
  $                                    ;

  

 

The Company and the Optionee
(the “Parties”) hereby agree as follows:

 

1.             Purchase of Shares.  On this date and subject to the terms and
conditions of this Exercise Notice, the Optionee hereby exercises the Option
granted in the Option Agreement between the Parties, dated as of the Date of
Grant set forth above, with respect to the Number of Shares Purchased set forth
above of the Common Stock (the “Shares”) at the Aggregate

 

1

 

Purchase Price equal to the Option
Exercise Price Per Share set forth above multiplied by the Number of Shares
Purchased set forth above.  The term “Shares”
refers to the Shares purchased under this Exercise Notice and includes all
securities received (a) in replacement of the Shares, and (b) as a
result of stock dividends or stock splits in respect of the Shares.

 

2.             Representations of the Optionee.  The Optionee represents and warrants to the
Company that the Optionee has received, read and understood the Plan, the
Option Agreement and this Exercise Notice and agrees to abide by and be bound
by their terms and conditions.

 

3.             Rights as Stockholder.  Until Optionee receives evidence of the
issuance of the Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Shares, notwithstanding
the exercise of the Option.  To the
extent the Optionee exercises the Option pursuant to the execution and delivery
of this Exercise Notice, the Company shall issue to Optionee the shares of
Common Stock covered by this Exercise Notice. 
Evidence of the issuance of the shares of Common Stock purchased
pursuant to the exercise of the Option may be accomplished in such manner as
the Company or its authorized representatives shall deem appropriate including,
without limitation, electronic registration, book-entry registration or
issuance of a certificate or certificates in the name of the Optionee or in the
name of such other party or parties as the Company and its authorized
representatives shall deem appropriate. 
No adjustment will be made for a dividend or other right for which the
record date is prior to the date the Optionee receives evidence of the issuance
of the Shares.

 

In the event the shares of
Common Stock issued pursuant to the exercise of this Option remain subject to
any additional restrictions, the Company and its authorized representatives
shall take such actions as the Company, or its authorized representative, deems
appropriate to ensure that the Optionee is prohibited from entering into any
transaction which would violate any such restrictions, until such restrictions
lapse.

 

4.             Tax Withholding Obligations.  The Optionee agrees to satisfy all applicable
federal, state and local income, employment and other tax withholding
obligations and herewith delivers to the Company the amount necessary, or has
made arrangements acceptable to the Company, to satisfy such obligations as
provided in the Plan and the Option Agreement.

 

5.             Tax Consequences.  The Optionee understands that he or she may
suffer adverse tax consequences as a result of the Optionee’s purchase or
disposition of the Shares.  The Optionee
represents that the Optionee has consulted with any tax consultant(s) he
or she deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.

 

6.             Successors and Assigns.  The Company may assign any of its rights
under this Exercise Notice, and this Exercise Notice shall inure to the benefit
of the successors and assigns of the Company. 
Subject to the restrictions on transfer herein set forth, this Exercise
Notice shall be binding upon the Optionee and his or her heirs, executors, administrators,
successors and permitted assigns.

 

7.             Interpretive Matters.  Whenever required by the context, pronouns
and any variation thereof shall be deemed to refer to the masculine, feminine,
or neuter, and the singular shall include the plural, and vice versa.  The term “include” or “including” does not
denote or imply any limitation.  The
captions and headings used in this Exercise Notice are inserted for

 

2

 

convenience and shall not be
deemed a part of this Exercise Notice for construction or interpretation.

 

8.             Entire Agreement; Governing Law.  This Exercise Notice, with the Plan and the
Option Agreement, constitute the entire agreement of the Parties with respect
to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Parties with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by
means of a writing signed by the Parties. 
Nothing in this Exercise Notice or in the Plan or the Option Agreement
(except as expressly provided herein or therein) is intended to confer any
rights or remedies on any person other than the Parties.  This Exercise Notice (like the Plan and the
Option Agreement) is to be construed in accordance with and governed by the
internal laws of the State of Delaware, without giving effect to any
choice-of-law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of Texas to the rights
and duties of the Parties.  Should any
provision of the Plan, the Option Agreement, or this Exercise Notice be
determined by a court of law to be illegal or unenforceable, such provision
shall be enforced to the fullest extent allowed by law, and the other
provisions shall nevertheless remain effective and shall remain enforceable.

 

9.             Notice.  Any notice or other communication required or
permitted hereunder shall be given in writing and shall be deemed given,
effective, and received upon prepaid delivery in person or by courier or upon
the earlier of delivery or the third business day after deposit in the United
States mail if sent by certified mail, with postage and fees prepaid, addressed
to the other Party at its address as shown beneath its signature in the Option
Agreement, or to such other address as such Party may designate in writing from
time to time by notice to the other Party in accordance with this Section 9.

 

10.          Further Instruments.  Each Party agrees to execute such further
instruments and to take such further action as may be necessary or reasonably
appropriate to carry out the purposes and intent of this Exercise Notice.

 

 

	
  Submitted by:

  	
   

  	
  Accepted by:

  
	
   

  	
   

  	
   

  
	
  OPTIONEE:

  	
   

  	
  SALLY BEAUTY HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Print Name)

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
  (Signature)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  Dated:

  	
   

  
					

 

3

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