Sally Beauty Supply 2006 Annual Report Download - page 115

(b) As additional consideration for the termination of the Severance Agreement, SHI agrees that it and New Sally will enter into a
new Severance Agreement substantially in the form attached hereto as Exhibit A (the “New Severance Agreement”), which New
Severance Agreement shall become effective at the Effective Time.
If the Executive shall be entitled to any payments or benefits pursuant to the Severance Agreement or the New Severance Agreement
in connection with a Change in Control unrelated to the Transaction, then the Executive shall not be entitled to any payments or
benefits hereunder.
For purposes of this Section 2, the term “Cause” shall have the meaning assigned to it in the Severance Agreement, provided that
(i) the Agreement Date shall be substituted for the term “Change in Control” each place such term appears in such definition, (ii) the
term “Company” shall, to the extent the context requires, be deemed to also refer to SHI and its affiliates. “Good Reason” shall mean,
without the Executive’ s consent, the occurrence of any of the following circumstances during the period beginning on the Agreement
Date and ending on the second anniversary of the Effective Time unless such circumstances are fully corrected prior to the expiration
of the fifteen (15) calendar day period following delivery to SHI and its parent corporation of the Executive’ s notice of intention to
terminate his employment for Good Reason describing such circumstances in reasonable detail: (i) a reduction in the Executive’ s rate
of annual base salary or (ii) a change in location of the Executive’ s principal office to a location more than 20 miles from its current
location.
3. Limitations on Payments to the Executive. 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 Internal Revenue Code of 1986, as amended (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 3 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 SHI 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 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 SHI 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.
4. Withholding Taxes. SHI may withhold from all payments due to the Executive (or the Executive’ s estate or beneficiaries)
hereunder all taxes which, by applicable federal, state, local or other law, are required to be withheld therefrom.
5. Agreement Date; Termination of Agreement. This Agreement shall be effective on the Agreement Date. This Agreement shall
terminate and be of no further force or effect, except in respect of any benefits then accrued by the Executive hereunder, if and only if
(a) the principal agreements related to the Transaction are not signed by the Company and the Investor (or another affiliate of CD&R)
on or prior to October 31, 2006, or (b) such principal agreements are terminated prior to the consummation of the Transaction.
6. Scope of Agreement. Nothing in this Agreement shall be deemed to entitle the Executive to continued employment with the
Company or SHI.
7. Successors; Binding Agreement.
(a) This Agreement shall inure to the benefit of and be enforceable by the Company and SHI and their respective successors and
assigns, and by the Executive and the Executive’ s personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die after terminating employment pursuant to Section 2(a) while any amounts
would be payable to the Executive hereunder
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