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,
(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:
(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.
(i
