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Exhibit 10.1
FORM OF DIRECTOR INDEMNIFICATION AGREEMENT
Indemnification Agreement, dated as of [ · ], 2006, between Sally
Beauty Holdings Inc., a Delaware corporation (the " Company
") and
(" Indemnitee ").
WHEREAS, qualified persons are reluctant to serve corporations
as directors unless they are provided with broad indemnification
and insurance against claims arising out of their service to and
activities on behalf of the corporations; and
WHEREAS, the Company has determined that attracting and
retaining such persons is in the best interests of the
Company’s stockholders and that it is reasonable, prudent and
necessary for the Company to indemnify such persons to the fullest
extent permitted by applicable law and to provide reasonable
assurance regarding insurance.
NOW, THEREFORE, the Company and Indemnitee hereby agree as
follows:
1. Defined Terms; Construction .
(a) Defined Terms . As used in this Agreement, the
following terms shall have the following meanings:
" Change in Control " means, and shall be deemed to have
occurred if, on or after the date of this Agreement, ( i
) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended),
other than ( A ) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
any of its subsidiaries acting in such capacity, or ( B
) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing
more than 20% of the total voting power represented by the
Company’s then outstanding Voting Securities, ( ii
) during any period of two consecutive years commencing from
and after the date hereof, individuals who at the beginning of such
period constitute the board of directors of the Company and any new
director whose election by the board of directors of the Company or
nomination for election by the Company’s stockholders was
approved by a vote of at least a majority of the directors
then still in office who either were directors at the beginning of
the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute
a majority thereof, ( iii ) the stockholders of
the Company approve a merger or consolidation of the Company
with any other corporation other than a merger or
consolidation that would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% of the
total voting power represented by the Voting Securities of the
Company or such surviving
entity outstanding immediately after such merger
or consolidation, ( iv ) the stockholders of the
Company approve a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of (in
one transaction or a series of related transactions) all or
substantially all of its assets, or ( v ) the Company
shall file or have filed against it, and such filing shall not be
dismissed, any bankruptcy, insolvency or dissolution proceedings,
or a trustee, administrator or creditors committee shall be
appointed to manage or supervise the affairs of the
Company.
" Corporate Status " means the status of a person who is
or was a director (or a member of any committee of a board of
directors), officer, employee or agent (including without
limitation a manager of a limited liability company) of the Company
or any of its subsidiaries, or of any predecessor thereof, or is or
was serving at the request of the Company as a director (or a
member of any committee of a board of directors), officer, employee
or agent (including without limitation a manager of a limited
liability company) of another corporation, limited liability
company, partnership, joint venture, trust or other enterprise, or
of any predecessor thereof, including service with respect to an
employee benefit plan.
" Determination " means a determination that either (
x ) there is a reasonable basis for the conclusion that
indemnification of Indemnitee is proper in the circumstances
because Indemnitee met a particular standard of conduct (a "
Favorable Determination ") or ( y ) there is no
reasonable basis for the conclusion that indemnification of
Indemnitee is proper in the circumstances because Indemnitee met a
particular standard of conduct (an " Adverse Determination
"). An Adverse Determination shall include the decision that a
Determination was required in connection with indemnification and
the decision as to the applicable standard of conduct.
" DGCL " means the General Corporation Law of the State
of Delaware, as amended from time to time.
" Expenses " means all attorneys’ fees and
expenses, retainers, court, arbitration and mediation costs,
transcript costs, fees of experts, bonds, witness fees, costs of
collecting and producing documents, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage,
delivery service fees and all other disbursements or expenses of
the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being
or preparing to be a witness in, appealing or otherwise
participating in a Proceeding.
" Independent Legal Counsel " means an attorney or firm
of attorneys competent to render an opinion under the applicable
law, selected in accordance with the provisions of
Section 5(e), who has not otherwise performed any services for
the Company or any of its subsidiaries or for Indemnitee within the
last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement or under indemnity
agreements similar to this Agreement).
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" Proceeding " means a threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, including without limitation a
claim, demand, discovery request, formal or informal investigation,
inquiry, administrative hearing, arbitration or other form of
alternative dispute resolution, including an appeal from any of the
foregoing.
" Voting Securities " means any securities of the Company
that vote generally in the election of directors.
(b) Construction . For purposes of this Agreement,
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(i) References to the Company or any of its "subsidiaries" shall
include any corporation, limited liability company, partnership,
joint venture, trust or other entity or enterprise that before or
after the date of this Agreement is party to a merger or
consolidation with the Company or any such subsidiary or that is a
successor to the Company as contemplated by Section 8(d)
(whether or not such successor has executed and delivered the
written agreement contemplated by Section 8(d)).
(ii) References to "fines" shall include any excise taxes
assessed on Indemnitee with respect to an employee benefit
plan.
(iii) References to a "witness" in connection with a Proceeding
shall include any interviewee or person called upon to produce
documents in connection with such Proceeding.
2. Agreement to Serve .
Indemnitee agrees to serve as a director of the Company or one
or more of its subsidiaries and in such other capacities as
Indemnitee may serve at the request of the Company from time to
time, and, by its execution of this Agreement, the Company confirms
its request that Indemnitee serve as a director of the Company and
in such other capacities. Indemnitee shall be entitled to resign or
otherwise terminate such service with immediate effect at any time,
and neither such resignation or termination nor the length of such
service shall affect Indemnitee’s rights under this
Agreement. This Agreement shall not constitute an employment
agreement, supersede any employment agreement to which Indemnitee
is a party or create any right of Indemnitee to continued
employment or appointment.
3. Indemnification .
(a) General Indemnification . The Company shall indemnify
Indemnitee, to the fullest extent permitted by applicable law in
effect on the date hereof or as amended to increase the scope of
permitted indemnification, against Expenses,
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losses, liabilities, judgments, fines, penalties
and amounts paid in settlement (including all interest, assessments
and other charges in connection therewith) incurred by Indemnitee
or on Indemnitee’s behalf in connection with any Proceeding
in any way connected with, resulting from or relating to
Indemnitee’s Corporate Status.
(b) Additional Indemnification Regarding Expenses .
Without limiting the foregoing, in the event any Proceeding is
initiated by Indemnitee or the Company or any of its subsidiaries
to enforce or interpret this Agreement or any rights of Indemnitee
to indemnification or advancement of Expenses (or related
obligations of Indemnitee) under the Company’s or any such
subsidiary’s certificate of incorporation or bylaws, any
other agreement to which Indemnitee and the Company or any of its
subsidiaries are party, any vote of stockholders or directors of
the Company or any of its subsidiaries, the DGCL, any other
applicable law or any liability insurance policy, the Company shall
indemnify Indemnitee against all Expenses incurred by Indemnitee or
on Indemnitee’s behalf in connection with such Proceeding,
whether or not Indemnitee is successful in such Proceeding, except
to the extent that the court presiding over such Proceeding
determines that material assertions made by Indemnitee in such
Proceeding were in bad faith or were frivolous.
(c) Partial Indemnification . If Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Company for a portion of any Expenses, losses, liabilities,
judgments, fines, penalties and amounts paid in settlement incurred
by Indemnitee, but not for the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for such portion.
(d) Nonexclusivity . The indemnification provided by this
Agreement shall not be deemed exclusive of any rights to which
Indemnitee may be entitled under the Company’s certificate of
incorporation or bylaws, any agreement, any vote of stockholders or
directors, the DGCL, any other applicable law or any liability
insurance policy.
(e) Exceptions . Any other provision herein to the
contrary notwithstanding, the Company shall not be obligated under
the Agreement to indemnify Indemnitee:
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(i) For Expenses incurred in connection with Proceedings
initiated or brought voluntarily by Indemnitee and not by way of
defense, counterclaim or crossclaim, except ( x ) as
contemplated by Section 3(b), ( y ) in specific
cases if the board of directors of the Company has approved the
initiation or bringing of such Proceeding, and ( z ) as
may be required by law.
(ii) For an accounting of profits arising from the purchase and
sale by Indemnitee of securities within the meaning of
Section 16(b) of the Securities Exchang
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