0001104659-12-036399.txt : 20120511 0001104659-12-036399.hdr.sgml : 20120511 20120511143146 ACCESSION NUMBER: 0001104659-12-036399 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20120511 DATE AS OF CHANGE: 20120511 GROUP MEMBERS: CD&R ASSOCIATES VII, L.P. GROUP MEMBERS: CD&R ASSOCIATES VII, LTD. GROUP MEMBERS: CD&R INVESTMENT ASSOCIATES VII, LTD. GROUP MEMBERS: CD&R PARALLEL FUND ASSOCIATES VII, LTD. GROUP MEMBERS: CD&R PARALLEL FUND VII, L.P. GROUP MEMBERS: CDRS ACQUISITION LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Sally Beauty Holdings, Inc. CENTRAL INDEX KEY: 0001368458 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 362257936 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-82212 FILM NUMBER: 12833733 BUSINESS ADDRESS: STREET 1: 3001 COLORADO BOULEVARD CITY: DENTON STATE: TX ZIP: 76210 BUSINESS PHONE: (940) 898-7500 MAIL ADDRESS: STREET 1: 3001 COLORADO BOULEVARD CITY: DENTON STATE: TX ZIP: 76210 FORMER COMPANY: FORMER CONFORMED NAME: New Sally Holdings, Inc. DATE OF NAME CHANGE: 20060707 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Clayton Dubilier & Rice Fund VII L P CENTRAL INDEX KEY: 0001313676 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 113 SOUTH CHURCH ST STREET 2: GA TOWN CITY: GRAND CAY CAY ISL STATE: E9 ZIP: 00000 BUSINESS PHONE: 345-949-8066 MAIL ADDRESS: STREET 1: 113 SOUTH CHURCH ST STREET 2: GA TOWN CITY: GRAND CAY CAY ISL STATE: E9 ZIP: 00000 SC 13D/A 1 a12-11888_1sc13da.htm SC 13D/A

 

 

UNITED STATES

 

 

SECURITIES AND EXCHANGE COMMISSION

 

 

Washington, D.C. 20549

 

 

 

 

 

SCHEDULE 13D/A

 

 

Under the Securities Exchange Act of 1934
(Amendment No. 4)

 

SALLY BEAUTY HOLDINGS, INC.

(Name of Issuer)

 

Common Stock, par value $0.01 per share

(Title of Class of Securities)

 

79546E 10 4

(CUSIP Number)

 

CDRS Acquisition LLC

c/o Clayton, Dubilier & Rice, LLC

Attention: Theresa A. Gore

375 Park Ave, New York NY 10152

(212) 407-5227

 

Copy to:

 

Peter J. Loughran, Esq.

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

(212) 909-6000

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

May 11, 2012

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 



 

CUSIP No. 79546E 10 4

 

 

1.

Names of Reporting Persons
CDRS Acquisition LLC

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 o

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds
Not Applicable.

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
Delaware

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
0 Shares

 

8.

Shared Voting Power
22,959,641 Shares (see Item 5)

 

9.

Sole Dispositive Power
0 Shares

 

10.

Shared Dispositive Power
22,959,641 Shares (see Item 5)

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
22,959,641 Shares (see Item 5)

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares   o

 

 

13.

Percent of Class Represented by Amount in Row (11)
12.8% (1)

 

 

14.

Type of Reporting Person
OO

 


(1)   Based on 187,213,528 shares of common stock, par value $0.01 per share (“Shares”), of Sally Beauty Holdings, Inc., a Delaware corporation  (“Sally Beauty” or the “Issuer”), outstanding on April 30, 2012, and the retirement of the Shares purchased by Sally Beauty in the Stock Repurchase (as defined herein).

 

2



 

CUSIP No. 79546E 10 4

 

 

1.

Names of Reporting Persons
Clayton Dubilier & Rice Fund VII, L.P.

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 o

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds
Not Applicable.

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
Cayman Islands

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
0 Shares

 

8.

Shared Voting Power
22,959,641 Shares (see Item 5)

 

9.

Sole Dispositive Power
0 Shares

 

10.

Shared Dispositive Power
22,959,641 Shares (see Item 5)

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
22,959,641 Shares (see Item 5)

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares   o

 

 

13.

Percent of Class Represented by Amount in Row (11)
12.8% (1)

 

 

14.

Type of Reporting Person
PN

 


(1) Based on 187,213,528 Shares of Sally Beauty outstanding on April 30, 2012, and the retirement of the Shares purchased by Sally Beauty in the Stock Repurchase.

 

3



 

CUSIP No. 79546E 10 4

 

 

1.

Names of Reporting Persons
CD&R Associates VII, Ltd.

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 o

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds
Not Applicable.

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
Cayman Islands

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
0 Shares

 

8.

Shared Voting Power
22,959,641 Shares (see Item 5)

 

9.

Sole Dispositive Power
0 Shares

 

10.

Shared Dispositive Power
22,959,641 Shares (see Item 5)

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
22,959,641 Shares (see Item 5)

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares   o

 

 

13.

Percent of Class Represented by Amount in Row (11)
12.8% (1)

 

 

14.

Type of Reporting Person
CO

 


(1) Based on 187,213,528 Shares of Sally Beauty outstanding on April 30, 2012, and the retirement of the Shares purchased by Sally Beauty in the Stock Repurchase.

 

4



 

CUSIP No. 79546E 10 4

 

 

1.

Names of Reporting Persons
CD&R Associates VII, L.P.

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 o

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds
Not Applicable.

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
Cayman Islands

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
0 Shares

 

8.

Shared Voting Power
22,959,641 Shares (see Item 5)

 

9.

Sole Dispositive Power
0 Shares

 

10.

Shared Dispositive Power
22,959,641 Shares (see Item 5)

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
22,959,641 Shares (see Item 5)

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares   o

 

 

13.

Percent of Class Represented by Amount in Row (11)
12.8% (1)

 

 

14.

Type of Reporting Person
PN

 


(1) Based on 187,213,528  Shares of Sally Beauty outstanding on April 30, 2012, and the retirement of the Shares purchased by Sally Beauty in the Stock Repurchase.

 

5



 

CUSIP No. 79546E 10 4

 

 

1.

Names of Reporting Persons
CD&R Investment Associates VII, Ltd.

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 o

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds
Not Applicable.

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
Cayman Islands

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
0 Shares

 

8.

Shared Voting Power
22,959,641 Shares (see Item 5)

 

9.

Sole Dispositive Power
0 Shares

 

10.

Shared Dispositive Power
22,959,641 Shares (see Item 5)

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
22,959,641 Shares (see Item 5)

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares   o

 

 

13.

Percent of Class Represented by Amount in Row (11)
12.8% (1)

 

 

14.

Type of Reporting Person
CO

 


(1) Based on 187,213,528 Shares of Sally Beauty outstanding on April 30, 2012, and the retirement of the Shares purchased by Sally Beauty in the Stock Repurchase.

 

6



 

CUSIP No. 79546E 10 4

 

 

1.

Names of Reporting Persons
CD&R Parallel Fund VII, L.P.

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 o

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds
Not Applicable.

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
Cayman Islands

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
0 Shares

 

8.

Shared Voting Power
151,886 Shares (See Item 5)

 

9.

Sole Dispositive Power
0 Shares

 

10.

Shared Dispositive Power
151,886 Shares (See Item 5)

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
151,886 Shares (See Item 5)

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares   o

 

 

13.

Percent of Class Represented by Amount in Row (11)
0.1% (1)

 

 

14.

Type of Reporting Person
PN

 


(1) Based on 187,213,528 Shares of Sally Beauty outstanding on April 30, 2012, and the retirement of the Shares purchased by Sally Beauty in the Stock Repurchase.

 

7



 

CUSIP No. 79546E 10 4

 

 

1.

Names of Reporting Persons
CD&R Parallel Fund Associates VII, Ltd.

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 o

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds
Not Applicable.

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
Cayman Islands

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
0 Shares

 

8.

Shared Voting Power
151,886 Shares (See Item 5)

 

9.

Sole Dispositive Power
0 Shares

 

10.

Shared Dispositive Power
151,886 Shares (See Item 5)

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
151,886 Shares (See Item 5)

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares   o

 

 

13.

Percent of Class Represented by Amount in Row (11)
0.1% (1)

 

 

14.

Type of Reporting Person
CO

 


(1) Based on 187,213,528 Shares of Sally Beauty outstanding on April 30, 2012, and the retirement of the Shares purchased by Sally Beauty in the Stock Repurchase.

 

8



 

Explanatory Note

This Amendment No. 4 (this “Amendment No. 4”) to the Statement on Schedule 13D, initially filed on June 28, 2006, as amended by Amendment No. 1, filed on November 27, 2006, Amendment No. 2, filed on October 18, 2011, and Amendment No. 3, filed on February 10, 2012 (the “Statement”), relates to the beneficial ownership of the Shares of Sally Beauty. This Amendment No. 4 is being filed on behalf of the reporting persons (the “Reporting Persons”) identified on the cover pages of this Amendment No. 4. Information in respect of each Reporting Person is given solely by such Reporting Person, and no Reporting Person has responsibility for the accuracy or completeness of information supplied by any other Reporting Person.

 

 

Item 2.

Identity and Background

The agreement among the Reporting Persons relating to the joint filing of this Amendment No. 4 is attached as Exhibit 1.1 hereto.

 

 

Item 4.

Purpose of Transaction

Item 4 of the Statement is amended by inserting the following information:

 

Pursuant to an Underwriting Agreement, dated May 7, 2012 (the “Underwriting Agreement”), among Sally Beauty, CDRS Acquisition LLC (“CDRS”), CD&R Parallel Fund VII, L.P. (“Parallel Fund VII” and, together with CDRS, the “CD&R Investors”) and Barclays Capital Inc. (the “Underwriter”), on May 11, 2012, CDRS sold 14,901,422 Shares of Sally Beauty and Parallel Fund VII sold 98,578 Shares of Sally Beauty, in each case to the Underwriter at a price of $26.485 per Share, in a registered offering (the “Secondary Offering”).

 

Pursuant to the Underwriting Agreement, the CD&R Investors have agreed with the Underwriter, not to offer or sell, dispose of or hedge, directly or indirectly, any common stock without the permission of the Underwriter for a period of 60 days from May 8, 2012, subject to certain exceptions and automatic extension in certain circumstances.

 

The foregoing description of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to the Underwriting Agreement, which is filed as Exhibit 7.1 hereto and is incorporated herein by reference.

 

Pursuant to a Stock Repurchase Agreement, dated May 6, 2012 (the “Stock Repurchase Agreement”), among Sally Beauty, CDRS and Parallel Fund VII, on May 11, 2012, CDRS sold 7,501,817 Shares of Sally Beauty and Parallel Fund VII sold 49,627 Shares of Sally Beauty, in each case to Sally Beauty at a price of $26.485 per Share (the “Stock Repurchase”).

 

The foregoing description of the Stock Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Stock Purchase Agreement, which is filed as Exhibit 7.2 hereto and is incorporated herein by reference.

 

Except as described in this Item 4 and Item 6 of this Amendment No. 4 which are incorporated herein by reference, the Reporting Persons have no present plans or proposals that relate to or would result in any of the actions required to be reported herein.

 

Item 5.

Interest in Securities of the Issuer

Item 5 of the Statement is amended and restated in its entirety by inserting the following information:

 

(a)-(b)

 

As of the date hereof (and after giving effect to sale of the Shares of Sally Beauty in the Secondary Offering and the Stock Repurchase), each of the Reporting Persons beneficially owns the number and percentage of Shares of Sally Beauty then issued and outstanding listed opposite its name:

 

Reporting Person

 

Amount Beneficially Owned

 

Percent of Class(1)

 

CDRS Acquisition LLC

 

22,959,641

 

12.8

%

Clayton Dubilier & Rice Fund VII, L.P.

 

0

(2)

0.0

%

CD&R Associates VII, Ltd.

 

0

(2)

0.0

%

CD&R Associates VII, L.P.

 

0

(2)

0.0

%

CD&R Investment Associates VII, Ltd.

 

0

(2)(3)

0.0

%

CD&R Parallel Fund VII, L.P.

 

151,886

 

0.1

%

CD&R Parallel Fund Associates VII, Ltd.

 

0

(3)(4)

0.0

%

 

9



 


(1) Based on 187,213,528 Shares of Sally Beauty outstanding on April 30, 2012, and the retirement of the Shares purchased by Sally Beauty in the Stock Repurchase.

 

(2) CDRS is a limited liability company of which Clayton Dubilier & Rice Fund VII, L.P. is the sole member, of which CD&R Associates VII, Ltd. is the general partner, which is a wholly-owned subsidiary of CD&R Associates VII, L.P., of which CD&R Investment Associates VII, Ltd. is the general partner.  Each of Clayton Dubilier & Rice Fund VII, L.P., CD&R Associates VII, Ltd., CD&R Associates VII, L.P. and CD&R Investment Associates VII, Ltd. expressly disclaims beneficial ownership of the Shares held by CDRS as well as of the Shares held by Parallel Fund VII.

 

(3) CD&R Investment Associates VII, Ltd. and CD&R Parallel Fund Associates VII, Ltd. are each managed by a three person board of directors, and all board action relating to the voting or disposition of these Shares requires approval of a majority of the applicable board. Joseph L. Rice, III, Donald J. Gogel and Kevin J. Conway, as the directors of each of CD&R Investment Associates VII, Ltd. and CD&R Parallel Fund Associates VII, Ltd., may be deemed to share beneficial ownership of the Shares shown as beneficially owned by the funds associated with Clayton, Dubilier & Rice, LLC. Such persons disclaim such beneficial ownership.

 

(4) Parallel Fund VII is a Cayman Islands exempted limited partnership of which CD&R Parallel Fund Associates VII, Ltd. is the general partner.  CD&R Parallel Fund Associates VII, Ltd. expressly disclaims beneficial ownership of the Shares held by Parallel Fund VII as well as of the Shares held by CDRS.

 

(b)

 

In addition to the description set forth above in this Item 5, see the cover pages of this Amendment No. 4 for indications of the respective voting powers and disposition powers of the Reporting Persons.

 

 

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Item 6 of the Statement is amended and restated in its entirety by inserting the following information:

 

The information set forth in Item 4 above is hereby incorporated by reference in response to Item 6.

 

 

Item 7.

Material to Be Filed as Exhibits

 

EXHIBIT INDEX

 

Exhibit

 

 

Number

 

Description

1.1

 

Joint Filing Agreement, dated May 11, 2012, by and among the Reporting Persons.

7.1

 

Underwriting Agreement, dated May 7, 2012, among Sally Beauty Holdings, Inc., CDRS Acquisition LLC, CD&R Parallel Fund VII, L.P., and Barclays Capital Inc.

7.2

 

Stock Repurchase Agreement, dated May 6, 2012, among Sally Beauty Holdings, Inc., CDRS Acquisition LLC and CD&R Parallel Fund VII, L.P.

 

10



 

SIGNATURE

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.

 

 

CDRS ACQUISITION LLC

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

Name:  Theresa A. Gore

 

 

 

Title:  Executive Vice President and Treasurer

 

 

 

 

 

 

 

CLAYTON, DUBILIER & RICE FUND VII, L.P.

 

 

 

 

 

By:

CD&R Associates VII, Ltd.,

 

 

 

its general partner

 

 

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

Name:

Theresa A. Gore

 

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

 

 

 

 

 

 

CD&R ASSOCIATES VII, LTD.

 

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

Name:

Theresa A. Gore

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

 

 

 

 

 

 

CD&R ASSOCIATES VII, L.P.

 

 

 

 

By:

CD&R Investment Associates VII, Ltd.,

 

 

 

its general partner

 

 

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

Name:

Theresa A. Gore

 

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

 

 

 

 

 

 

CD&R INVESTMENT ASSOCIATES VII, LTD.

 

 

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

Name:

Theresa A. Gore

 

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

11



 

 

CD&R PARALLEL FUND VII, L.P.

 

 

 

 

 

 

 

 

By:

CD&R Parallel Fund Associates VII, Ltd.,

 

 

 

its general partner

 

 

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

Name:

Theresa A. Gore

 

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

 

 

 

 

 

 

CD&R PARALLEL FUND ASSOCIATES VII, LTD.

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

Name:

Theresa A. Gore

 

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

 

Dated: May 11, 2012

 

12


EX-1.1 2 a12-11888_1ex1d1.htm EX-1.1

Exhibit 1.1

 

Joint Filing Agreement

 

Pursuant to Rule 13d-1(k)(1) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned agree that the Amendment No. 4 to the Statement on Schedule 13D, and any subsequent amendments thereto, to which this exhibit is attached is filed on behalf of each of them in the capacities set forth below.

 

Dated: May 11, 2012

 



 

 

CDRS ACQUISITION LLC

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

Name:  Theresa A. Gore

 

 

 

Title:  Executive Vice President and Treasurer

 

 

 

 

 

 

 

CLAYTON, DUBILIER & RICE FUND VII, L.P.

 

 

 

 

 

By:

CD&R Associates VII, Ltd.,

 

 

 

its general partner

 

 

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

Name:

Theresa A. Gore

 

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

 

 

 

 

 

 

CD&R ASSOCIATES VII, LTD.

 

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

Name:

Theresa A. Gore

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

 

 

 

 

 

 

CD&R ASSOCIATES VII, L.P.

 

 

 

 

By:

CD&R Investment Associates VII, Ltd.,

 

 

 

its general partner

 

 

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

Name:

Theresa A. Gore

 

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

 

 

 

 

 

 

CD&R INVESTMENT ASSOCIATES VII, LTD.

 

 

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

Name:

Theresa A. Gore

 

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 



 

 

CD&R PARALLEL FUND VII, L.P.

 

 

 

 

 

 

 

 

By:

CD&R Parallel Fund Associates VII, Ltd.,

 

 

 

its general partner

 

 

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

Name:

Theresa A. Gore

 

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

 

 

 

 

 

 

CD&R PARALLEL FUND ASSOCIATES VII, LTD.

 

 

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

Name:

Theresa A. Gore

 

 

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 


EX-7.1 3 a12-11888_1ex7d1.htm EX-7.1

Exhibit 7.1

 

SALLY BEAUTY HOLDINGS, INC.

 

15,000,000 Shares

 

Common Stock

 

Underwriting Agreement

 

May 7, 2012

 

Barclays Capital Inc.

745 Seventh Avenue

New York, New York 10019

 

Ladies and Gentlemen:

 

The stockholders of Sally Beauty Holdings, Inc., a Delaware corporation (the “Company”), named in Schedule II hereto (the “Selling Stockholders”) propose, subject to the terms and conditions stated herein, to sell to Barclays Capital Inc. (the “Underwriter”) an aggregate of 15,000,000 shares (the “Shares”) of Common Stock, par value $0.01 per share (“Stock”), of the Company.

 

In connection with the offering of the Shares, the Selling Stockholders and the Company have entered into the Stock Repurchase Agreement, dated as of May 6, 2012 (the “Stock Repurchase Agreement”), pursuant to which the Selling Stockholders have agreed to sell to the Company, and the Company has agreed to purchase from the Selling Stockholders on the Closing Date in a private, non-underwritten transaction, $200,000,000 of shares of Stock (the “Concurrent Stock Repurchase”) at a purchase price per share equal to the price per share at which the Underwriter will purchase the Shares from the Selling Stockholders pursuant to Section 3 of this Agreement.  The Concurrent Stock Repurchase is conditioned upon the consummation of the offering of the Shares pursuant to this Agreement and the other terms and conditions set forth in the Stock Repurchase Agreement. The closing of the offering of the Shares is not contingent on the closing of the Concurrent Stock Repurchase.

 

1.             The Company represents and warrants to, and agrees with the Underwriter that:

 

(a)           An automatic shelf registration statement on Form S-3 (File No. 333-170675) covering the public offering and sale by selling stockholders named from time to time of Stock, including the Shares, has been filed with the Securities and Exchange Commission (the “Commission”), which automatic shelf registration statement became effective pursuant to Rule 462(e) under the Securities Act of 1933, as amended (the “Act”); and no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued and no proceeding for that purpose has been initiated or, to the knowledge of the Company, threatened by the Commission (any preliminary prospectus included in the Registration Statement or filed with the Commission pursuant to Rule 424(b) of the rules and

 

1



 

regulations of the Commission under the Act (“Rule 424(b)”), including the documents incorporated or deemed to be incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act, are collectively referred to herein as a “Preliminary Prospectus”; the various parts of the Registration Statement, including (i) any post-effective amendment thereto, each in the form heretofore delivered to the Underwriter, (ii) the exhibits and any schedules thereto at such time, (iii) the documents incorporated or deemed to be incorporated by reference therein at such time pursuant to Item 12 of Form S-3 under the Act and (iv) the documents otherwise deemed to be a part thereof as of such time pursuant to Rule 430B under the Act (“Rule 430B”), are hereinafter collectively called the “Registration Statement” (provided, however, that the “Registration Statement” without reference to a time means such registration statement as amended by any post-effective amendments thereto as of the time of the first contract of sale for the Shares, which time shall be considered the “new effective date” of such registration statement with respect to the Shares within the meaning of paragraph (f)(2) of Rule 430B, including the exhibits and schedules thereto as of such time, the documents incorporated or deemed incorporated by reference therein at such time pursuant to Item 12 of Form S-3 under the Act and the documents otherwise deemed to be a part thereof as of such time pursuant to the Rule 430B); the Preliminary Prospectus dated May 7, 2012, relating to the Shares (including any documents incorporated by reference therein) in the form first filed pursuant to the provisions of Rule 424(b) is hereinafter called the “Pricing Prospectus”; the final prospectus relating to the Shares (to be prepared and filed by the Company in accordance with the provisions of Rule 424(b)) in the form first furnished or made available to the Underwriter for use in connection with the offering of the Shares, including the documents incorporated or deemed to be incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act, are collectively referred to herein as the “Prospectus”; and any “issuer free writing prospectus” as defined in Rule 433 under the Act relating to the Shares is hereinafter called an “Issuer Free Writing Prospectus”);

 

(b)           The Company meets the requirements for use of Form S-3 under the Act.  The Registration Statement is an “automatic shelf registration statement” (as defined in Rule 405 under the Act (“Rule 405”)) and the Shares have been and remain eligible for registration by the Company on such automatic shelf registration statement;

 

(c)           No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission, and each Preliminary Prospectus dated on or after May 7, 2012, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by the Underwriter expressly for use therein;

 

(d)           The documents incorporated or deemed to be incorporated by reference in the Registration Statement, the Pricing Prospectus and the Prospectus, when they became effective or at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the Act, the Securities Exchange Act of

 

2



 

1934, as amended, and the rules and regulations of the Commission thereunder (the “Exchange Act”);

 

(e)           For the purposes of this Agreement, the “Applicable Time” is 8:50 a.m. (New York City time) on May 8, 2012.  The Pricing Prospectus, as supplemented by the Issuer Free Writing Prospectuses and other information listed on Schedule III(a) (collectively, the “Pricing Disclosure Package”), as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; no Issuer Free Writing Prospectus listed on Schedule III(b) hereto conflicts with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus; and each Issuer Free Writing Prospectus, to the extent not superseded or modified by any subsequent Issuer Free Writing Prospectus, as supplemented by and taken together with the Pricing Disclosure Package as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in an Issuer Free Writing Prospectus in reliance upon and in conformity with information furnished in writing to the Company (i) by the Underwriter expressly for use therein or (ii) by a Selling Stockholder expressly for use in the preparation of the answers therein to Item 7 of Form S-3;

 

(f)            The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, (i) as to each part of the Registration Statement, as of its effectiveness and at each deemed effective date with respect to the Underwriter pursuant to Rule 430(B)(f)(2) under the Act, and (ii) as to the Prospectus and any amendment or supplement thereto, as of the applicable filing date, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the Prospectus, in light of the circumstances under which they were made); provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company (i) by the Underwriter expressly for use therein or (ii) by a Selling Stockholder expressly for use in the preparation of the answers therein to Item 7 of Form S-3;

 

(g)           (A) At the original effectiveness of the Registration Statement, (B) at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) of the Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the Act or form of prospectus), (C) at the time the Company or any person acting on its behalf (within the meaning, for this clause only, of Rule 163(c) under the Act) made any offer relating to the Shares in reliance on the exemption of Rule 163 under the Act, and (D) as of the Applicable Time, the Company was and is a “well-known seasoned issuer” (as defined in Rule 405);

 

(h)           The Company and its consolidated subsidiaries, taken together as a whole, have not sustained since the date of the latest audited financial statements included in the Pricing Prospectus any material loss or material interference with its business from fire, explosion, flood

 

3



 

or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in the Pricing Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, there has not been any material change in the capital stock or long-term debt of the Company and its consolidated subsidiaries, taken together as a whole, or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Pricing Prospectus;

 

(i)            The Company and its subsidiaries collectively have good title in fee simple to, or have valid rights to lease or otherwise use, all items of real property, and title to, or valid rights to lease or otherwise use, all personal property, which are material to the business of the Company and its subsidiaries, taken as a whole (collectively, the “Business”), free and clear of all liens, encumbrances, claims and title defects (collectively, “Liens”) that would reasonably be expected to have a material adverse effect on the financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”), other than Liens securing or otherwise permitted by indebtedness described in the Pricing Prospectus, and except as do not materially interfere with the use of such properties;

 

(j)            The Company has been duly incorporated and is validly existing in good standing under the laws of the State of Delaware, with power and authority to own its properties and conduct its business as described in the Pricing Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing (if applicable) under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure to be so incorporated, or to be so qualified or have such corporate power or authority would not reasonably be expected to have a Material Adverse Effect; each “significant subsidiary” of the Company (as such term is defined in Rule 1-02 of Regulation S-X) (each a “Subsidiary” and, collectively, the “Subsidiaries”) has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its incorporation or organization, with power and authority to own its properties and conduct its business as described in the Pricing Prospectus, and has been duly qualified as a foreign corporation, partnership or limited liability company for the transaction of business and is in good standing (if applicable) under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification except where the failure to be so organized, or to be so qualified or have such corporate power or authority would not reasonably be expected to have a Material Adverse Effect; each of the Company’s Subsidiaries is listed on Schedule IV hereto;

 

(k)           The Company has an authorized capitalization as set forth in the Pricing Prospectus and all of the issued shares of capital stock of the Company (including the Shares) have been duly and validly authorized and issued and are fully paid and non-assessable and conform in all material respects to the description of the Stock contained in the Pricing Disclosure Package and Prospectus; none of the outstanding shares of capital stock of the Company (including the Shares) were issued in violation of the preemptive or other similar rights of any securityholder of the Company; all of the issued shares of capital stock of each of the Company’s Subsidiaries that is a corporation have been duly and validly authorized and issued,

 

4



 

are fully paid and non-assessable and, to the extent that a Subsidiary is a partnership or a limited liability company, all of the issued equity interests of each such Subsidiary of the Company have been duly and validly authorized and issued and, in each case, except as otherwise set forth in the Pricing Prospectus, are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, other than Liens granted under or otherwise permitted by indebtedness described in the Pricing Prospectus, as the same may be amended, supplemented, waived or otherwise modified from time to time, or refunded, refinanced, restructured, replaced, renewed, repaid, increased or extended from time to time (whether in whole or in part);

 

(l)            The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby and thereby; and this Agreement has been duly authorized, executed and delivered by the Company;

 

(m)          There are no persons with registration rights or other similar rights to have any securities registered for sale pursuant to the Registration Statement or otherwise registered for sale or sold by the Company under the Act pursuant to this Agreement, other than those rights that have been waived or rights which have not been exercised by the holders thereof within the appropriate time period required by the applicable stockholders agreement.

 

(n)           The compliance by the Company with this Agreement and the Stock Repurchase Agreement and the consummation of the transactions herein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of the property or assets of the Company or any of its Subsidiaries is subject, (ii) violate any provision of the certificate of incorporation or by-laws, or other organizational documents, as applicable, of the Company or its Subsidiaries or (iii) violate any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their properties; except, in the case of clauses (i) and (iii), as would not reasonably be expected to have a Material Adverse Effect, in the case of each such clause, after giving effect to any consents, approvals, authorizations, orders, registrations, qualifications, waivers and amendments as will have been obtained or made as of the date of this Agreement; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the execution, delivery and performance by the Company of its obligations under this Agreement or the Stock Repurchase Agreement, including the consummation by the Company of the transactions contemplated by this Agreement, except (v) the registration under the Act of the Shares, (w) such consents, approvals, authorizations, registrations or qualifications as may be required under foreign or state securities or Blue Sky laws or the rules and regulations of the Financial Industry Regulatory Authority, in connection with the sale of the Shares by the Selling Stockholders, (x) such consents, approvals, authorizations, orders, registrations, qualifications, waivers, amendments or terminations as will have been obtained or made as of the Time of Delivery (as defined in Section 5 hereof), and (y) where the failure to obtain or make any such consent, approval, authorization, order, registration or qualification would not reasonably be expected to have a Material Adverse Effect;

 

5



 

(o)           Neither the Company nor, to the knowledge of the Company, any of its Subsidiaries is (i) in violation of its certificate of incorporation or by-laws (or other organizational document, as applicable) or (ii) in default in the performance or observance of any obligation, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except in the case of clause (ii) for any violation or default that would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect;

 

(p)           The statements set forth in the Pricing Prospectus and the Prospectus under the caption “Description of Capital Stock”, insofar as they purport to constitute a summary of the terms of the Stock, are accurate, complete and fair;

 

(q)           Other than as set forth in the Pricing Prospectus, there are no legal or governmental proceedings pending to which the Company or, to the knowledge of the Company, any of its subsidiaries is a party or of which any property of the Company or, to the knowledge of the Company, any of its subsidiaries is the subject which would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and, to the knowledge of the Company, no such proceedings are threatened by governmental authorities or by others;

 

(r)            None of the Company or any of its subsidiaries is, or after giving effect to the offering and sale of the Shares will be, an “investment company,” as such term is defined in the United States Investment Company Act of 1940, as amended;

 

(s)           The consolidated historical financial statements of the Company incorporated by reference into the Pricing Prospectus present fairly in all material respects the financial position of the Company and its consolidated subsidiaries, as of the dates indicated, and the results of its and their operations and the changes in its and their shareholders equity and cash flows for the periods specified (subject to the omission of footnotes and normal year end audit and other adjustments, as to any unaudited financial statements of the Company); such consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis, subject to the limitations set out in the notes to the respective financial statements of the Company incorporated by reference in the Pricing Prospectus and the Prospectus.  The interactive data in eXtensible Business Reporting Language incorporated by reference in the Pricing Prospectus and the Prospectus fairly presents the information called for in all material respects and has been prepared in all material respects in accordance with the Commission’s rules and guidelines applicable thereto;

 

(t)            At the time of filing the Registration Statement and any post-effective amendment thereto, at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Act) of the Shares and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined under Rule 405 under the Act;

 

(u)           KPMG LLP, who has audited certain consolidated financial statements of the Company and its consolidated subsidiaries incorporated by reference into the Pricing

 

6



 

Prospectus, has advised the Company that they are independent public accountants with respect to the Company as required by the Act and the rules and regulations of the Commission thereunder, the Exchange Act and the Public Accounting Oversight Board;

 

(v)           The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that transactions are executed in accordance with management’s general or specific authorizations; transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; access to assets is permitted only in accordance with management’s general or specific authorization; and the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences;

 

(w)          Since the date of the latest audited financial statements incorporated by reference into the Pricing Prospectus, to the knowledge of the Company, there has been no change in the Company’s internal control over financial reporting that has materially adversely affected, or would reasonably be expected to materially adversely affect, the Company’s internal control over financial reporting;

 

(x)            The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to the Company and its subsidiaries is made known to the Company’s principal executive officer and principal financial officer by others within those entities; and such disclosure controls and procedures are effective;

 

(y)           The Company and its subsidiaries collectively possess all licenses, permits, certificates, consents, orders, approvals and other authorizations from, and have made all declarations and filings with, all federal, state and other governmental authorities, presently required or necessary to own or lease, as the case may be, and to operate their properties and to carry on the business as set forth in the Pricing Prospectus (“Permits”), except where the failure to possess, make or obtain such Permits (by possession, declaration or filing) would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

 

(z)            Except as disclosed in the Pricing Prospectus, there is no claim pending or, to the knowledge of the Company, threatened under any Environmental Law (as defined below) against the Company or its subsidiaries that would reasonably be expected to have a Material Adverse Effect.  The term “Environmental Law” means any federal, local or foreign law, regulation, ordinance, order, judgment decree, permit or rule (including rule of common law) now in effect governing pollution, or actual or alleged exposure to, hazardous or toxic materials, substances or wastes, including but not limited to, asbestos or asbestos-containing materials;

 

(aa)         There is no strike or labor dispute, slowdown or work stoppage with the employees of the Company or any of its subsidiaries that is pending or, to the knowledge of the Company, threatened, except as would not reasonably be expected to have a Material Adverse Effect;

 

7



 

(bb)         The Company and its subsidiaries collectively carry insurance (including self-insurance, if any) in such amounts and covering such risks as in the Company’s reasonable determination is adequate for the conduct of the business and the value of its properties, except where the failure to carry such insurance would not reasonably be expected to have a Material Adverse Effect;

 

(cc)         The Company and its subsidiaries collectively own, or have the legal right to use, all United States patents, patent applications, trademarks, trademark applications, trade names, copyrights, technology, know-how and processes necessary for them to conduct the business as currently conducted (the “Intellectual Property”), except for those the failure to own or have such legal right to use would not be reasonably expected to have a Material Adverse Effect.  Except as disclosed in the Pricing Prospectus, no claim has been asserted and is pending by any person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does the Company know of any such claim, and, to the knowledge of the Company, the use of such Intellectual Property by the Company and its subsidiaries does not infringe on the rights of any person, except for such claims and infringements which in the aggregate, would not be reasonably expected to have a Material Adverse Effect;

 

(dd)         The Company has filed or caused to be filed all United States federal income tax returns and all other material tax returns which are required to be filed and has paid (a) all taxes shown to be due and payable on such returns and (b) all taxes shown to be due and payable on any assessments of which it has received notice made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any governmental authority (other than any (i) taxes, fees or other charges with respect to which the failure to pay, in the aggregate, would not reasonably be expected to have a Material Adverse Effect or (ii) taxes, fees or other charges the amount or validity of which are currently being contested in good faith by appropriate proceedings diligently conducted and with respect to which reserves in conformity with GAAP have been provided on the books of the Company).  No tax lien has been filed, and no claim is being asserted, with respect to any such tax, fee or other charge, against the Company or, to the knowledge of the Company, any of its Subsidiaries, except for liens or charges that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect;

 

(ee)         Neither the Company nor, to the knowledge of the Company, any of the Company’s subsidiaries or any director, officer or employee acting on behalf of the Company or any of its subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (ii) made any direct or indirect unlawful payment to any government official or employee from corporate funds, (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment;

 

(ff)           The operations of the Company and, to the knowledge of the Company, the operations of the Company’s subsidiaries are and have been conducted at all times in all material respects in compliance with applicable financial record-keeping and reporting requirements of the anti-money laundering laws and regulations of the United States and any

 

8



 

related or similar statutes (including, without limitation, the U.S. PATRIOT Act of 2001), rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is, to the knowledge of the Company, pending or threatened;

 

(gg)         Neither the Company nor, to the knowledge of the Company, the Company’s subsidiaries, or any of their respective directors, officers or employees, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”); and

 

(hh)         There are no states in the United States in which the Company generated in excess of 7.5% of its consolidated net sales for the year ended September 30, 2011 or the six months ended March 31, 2012 other than California and Texas.

 

2.             Each of the Selling Stockholders severally and not jointly represents and warrants to, and agrees with the Underwriter that:

 

(a)           All consents, approvals, authorizations and orders necessary for the execution and delivery by such Selling Stockholder of this Agreement and the Stock Repurchase Agreement and for the sale and delivery of the shares of Common Stock to be sold by such Selling Stockholder hereunder and thereunder, have been obtained, or will be obtained prior to the Time of Delivery; and such Selling Stockholder has full right, power and authority to enter into this Agreement and the Stock Repurchase Agreement and to sell, assign, transfer and deliver the shares of Common Stock to be sold by such Selling Stockholder hereunder and thereunder, except for such consents, approvals, authorizations and orders as would not impair in any material respect the consummation of the Selling Stockholders’ obligations hereunder;

 

(b)           The sale of the Shares to be sold by such Selling Stockholder hereunder and the compliance by such Selling Stockholder with all of the provisions of this Agreement and the Stock Repurchase Agreement and the consummation of the transactions herein and therein contemplated (i) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any statute, indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which such Selling Stockholder is a party or by which such Selling Stockholder is bound or to which any of the property or assets of such Selling Stockholder is subject, (ii) nor will such action result in any violation of the provisions of (a) any organizational or similar documents pursuant to which such Selling Stockholder was formed or (b) any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over such Selling Stockholder or the property of such Selling Stockholder; except in the case of clause (i) or clause (ii)(b), for such conflicts, breaches, violations or defaults as would not impair in any material respect the consummation of such Selling Stockholder’s obligations hereunder and thereunder.

 

(c)           Immediately prior to the Time of Delivery, such Selling Stockholder will be the beneficial or record holder of the Shares with full dispositive power thereover, and holds, and will hold, such Shares free and clear of all liens, encumbrances, equities or claims; and, upon

 

9



 

delivery of such Shares and payment therefor pursuant hereto, assuming that the Underwriter has no notice of any adverse claims within the meaning of Section 8-105 of the New York Uniform Commercial Code as in effect in the State of New York from time to time (the “UCC”), the Underwriter will acquire a valid security entitlement (within the meaning of Section 8-102(a)(17) of the UCC) to such Securities purchased by the Underwriter, and no action (whether framed in conversion, replevin, constructive trust, equitable lien or other theory) based on an adverse claim (within the meaning of Section 8-105 of the UCC) to such security entitlement may be asserted against the Underwriter;

 

(d)           During the period beginning from the date hereof and continuing to and including the date 60 days after the date of the Prospectus (the initial “Lock-Up Period”), such Selling Stockholder will not offer, sell, contract to sell or otherwise dispose of, except as provided hereunder, shares of common stock of the Company or any options or warrants to purchase shares of common stock of the Company, or any securities that are convertible into or exchangeable for, or that represent the right to receive, Stock, without the prior written consent of the Underwriter; provided, however, that if (1) during the last 17 days of the initial Lock-Up Period, the Company releases earnings results or announces material news or a material event or (2) prior to the expiration of the initial Lock-Up period, the Company announces that it will release earnings results during the 15-day period following the last day of the initial Lock-Up Period, then in each case the Lock-Up Period will be automatically extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the announcement of the material news or material event, as applicable, unless the Underwriter waives, in writing, such extension; provided, however, that any Selling Stockholder may transfer such Selling Stockholder’s Shares (i) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth herein, (ii) to any trust for the direct or indirect benefit of the Selling Stockholder or the immediate family of the Selling Stockholder, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, or (iii) with the prior written consent of the Underwriter; provided, however, in the case of any transfer pursuant to clauses (i) or (ii), no filing by any party (donor, donee, transferor or transferee) under the Exchange Act or other public announcement shall be required or shall be made voluntarily in connection with such transfer or distribution (other than a filing on a Form 5 made after the expiration of the initial Lock-Up Period).  For purposes of this Section 2(d), “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.  In addition, notwithstanding the foregoing, if the applicable Selling Stockholder is a corporation, partnership, association or other entity, such Selling Stockholder may transfer its Shares to any of its (x) subsidiaries, (y) affiliates, including any other investment fund sponsored by or affiliated with Clayton, Dubilier & Rice, LLC or (z) in the case of a partnership, any of the partners of such partnership or any of the partners or shareholders (as applicable) of the general partner of such partnership; provided, however, that in any such case, it shall be a condition to the transfer that the transferee execute an agreement stating that the transferee is receiving and holding such capital stock subject to the provisions of this section 2(d) and there shall be no further transfer of such capital stock except in accordance with this section 2(d), and provided further that any such transfer shall not involve a disposition for value.  Such Selling Stockholder hereby acknowledges that the Company has agreed herein to provide written notice of any event that would result in an extension of the Lock-Up Period pursuant to the first sentence of this paragraph to such Selling Stockholder (in accordance with Section 14 herein).

 

10



 

Furthermore, the restrictions set forth above shall not apply to shares of Stock sold by the Selling Stockholders pursuant to the Stock Repurchase Agreement;

 

(e)           Such Selling Stockholder has not taken and will not take, directly or indirectly, any action which is designed to or which has constituted or which would reasonably be expected to cause or result in stabilization or manipulation of the price of any equity security, or any securities convertible into or exchangeable for, or that represent a right to receive an equity security or any equity-linked securities of the Company to facilitate the sale or resale of the Shares;

 

(f)            To the extent, but only to the extent, that any statements made in the Registration Statement, the Pricing Prospectus, the Prospectus, any Issuer Free Writing Prospectus or any amendment or supplement thereto are made in reliance upon and in conformity with written information relating to such Selling Stockholder furnished to the Company by such Selling Stockholder expressly for use therein in preparation of the answers to Item 7 of Form S-3, the Registration Statement, the Pricing Prospectus, the Prospectus, any Issuer Free Writing Prospectus do not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the Pricing Prospectus, the Prospectus, or any amendment or supplement thereto, and any Issuer Free Writing Prospectus, in light of the circumstances under which they were made); and

 

(g)           In order to document the Underwriter’s compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions herein contemplated, such Selling Stockholder will deliver to the Underwriter prior to or at the Time of Delivery (as hereinafter defined) a properly completed and executed United States Treasury Department Form W-9 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof).

 

3.             Subject to the terms and conditions herein set forth, each of the Selling Stockholders severally and not jointly agrees to sell to the Underwriter, and the Underwriter agrees to purchase from each of the Selling Stockholders, at a purchase price per share of $26.485, the Shares.

 

4.             Upon the authorization by the Selling Stockholders of the release of the Shares, the Underwriter proposes to offer the Shares for sale upon the terms and conditions set forth in the Prospectus.

 

5.

 

(a)           The Shares to be purchased by the Underwriter hereunder, in definitive form, and in such authorized denominations and registered in such names as the Underwriter may request upon at least forty-eight hours’ prior notice to the Selling Stockholders shall be delivered by or on behalf of the Selling Stockholders to the Underwriter, through the facilities of The Depository Trust Company (“DTC”), for the account of the Underwriter, against payment by or on behalf of the Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the account specified by each of the Selling Stockholders to the Underwriter

 

11



 

at least twenty-four hours in advance.  The time and date of such delivery and payment shall be, with respect to the Shares, 9:00 a.m., New York City time, on May 11, 2012 or such other time and date as the Underwriter and the Selling Stockholders may agree upon in writing.  Such time and date for delivery of the Shares is herein called the “Time of Delivery.”

 

(b)           The documents to be delivered at the Time of Delivery by or on behalf of the parties hereto pursuant to Section 9 hereof, including the cross receipt for the Shares and any additional documents requested by the Underwriter pursuant to Sections 9(l) and (m) hereof, will be delivered at the offices of Fried, Frank, Harris, Shriver & Jacobson LLP, One New York Plaza, New York, New York 10004 (the “Closing Location”), and the Shares will be delivered at the office of DTC or its designated custodian, all at the Time of Delivery.  A meeting will be held at the Closing Location at 5:00 p.m., New York City time, on the New York Business Day next preceding the Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto.  For the purposes of this Section 5, “New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York City are generally authorized or obligated by law or executive order to close.

 

6.             The Company agrees with the Underwriter:

 

(a)           To prepare the Prospectus in a form approved by the Underwriter acting reasonably and to file such Prospectus pursuant to Rule 424(b) not later than the Commission’s close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430B; to make no further amendment or any supplement to the Registration Statement or the Prospectus prior to the Time of Delivery which shall be disapproved by the Underwriter acting reasonably promptly after reasonable notice thereof; to advise the Underwriter, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or any amendment or supplement to the Prospectus has been filed and to furnish the Underwriter with copies thereof; to file promptly all material required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Act; to file promptly all reports and any definitive proxy, or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the Shares; to advise the Underwriter, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus in respect of the Shares, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or any notice from the Commission objecting to the use of the form of Registration Statement or any post-effective supplement thereto, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order; to pay the required Commission filing fees relating to the Shares within the time required by Rule 456(b)(1)(i) under the Act without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) under the Act

 

12



 

(including, if applicable, by updating the “Calculation of Registration Fee” table in accordance with Rule 456(b)(1)(ii) under the Act either in a post-effective amendment to the Registration Statement or on the cover page of a prospectus filed pursuant to Rule 424(b));

 

(b)           Promptly from time to time to take such action as the Underwriter may reasonably request to qualify the Shares for offering and sale under the securities laws of such jurisdictions as the Underwriter may reasonably request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Shares; provided, however, that in connection therewith the Company shall not be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 6(b), (2) consent, or take any action that would subject it, to general service of process in any such jurisdiction or (3) make any changes to its certificate of incorporation, by-laws or other organizational document, or any agreement between it and any of its equityholders;

 

(c)           As soon as practicable, but in no event later than 12:00 p.m., New York City time, on the second New York Business Day next preceding the Time of Delivery and from time to time, to furnish the Underwriter with written and electronic copies of the Prospectus in New York City in such quantities as the Underwriter may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Shares and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus in order to comply with the Act, to notify the Underwriter and upon the Underwriter’s request to prepare and furnish without charge to the Underwriter and to any dealer in securities as many written and electronic copies as the Underwriter may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; and in case the Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Shares at any time nine months or more after the time of issue of the Prospectus, upon the Underwriter’s request but at the expense of the Underwriter, to prepare and deliver to the Underwriter as many written and electronic copies as the Underwriter may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;

 

(d)           To make generally available to its securityholders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158 under the Act);

 

13



 

(e)           During the Lock-Up Period, not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of Stock or any securities of the Company that are substantially similar to the Shares, including but not limited to any options or warrants to purchase shares of Stock or any securities that are convertible into or exchangeable for, or that represent the right to receive, Stock or any such substantially similar securities or file any registration statement under the Act with respect to any of the foregoing (other than pursuant to employee equity plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this Agreement), without the prior written consent of the Underwriter;  provided, however, that if (1) during the last 17 days of the initial Lock-Up Period, the Company releases earnings results or announces material news or a material event or (2) prior to the expiration of the initial Lock-Up Period, the Company announces that it will release earnings results during the 15-day period following the last day of the initial Lock-Up Period, then in each case the Lock-Up Period will be automatically extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the announcement of the material news or material event, as applicable, unless the Underwriter waives, in writing, such extension; the Underwriter acknowledges and agrees that the public disclosure of an event or news by the Company shall not be deemed to be an admission or an indication that such news or event is material; the Company will provide the Underwriter and the Selling Stockholders with prior notice of any such announcement that gives rise to an extension of the Lock-up Period; and

 

(f)            The Company will use its best efforts to maintain the listing of the Shares on the New York Stock Exchange (the “Exchange”).

 

7.

 

(a)           The Company represents and agrees that, without the prior consent of the Underwriter, it has not made and will not make any offer relating to the Shares that would constitute a “free writing prospectus” as defined in Rule 405 under the Act; the Underwriter represents and agrees that, without the prior consent of the Company, it has not made and will not make any offer relating to the Shares that would constitute a free writing prospectus; any such free writing prospectus the use of which has been consented to by the Company is listed on Schedule III(a) hereto;

 

(b)           The Company has complied and will comply with the requirements of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending;

 

(c)           The Company agrees that if at any time following issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will give notice thereof as soon as reasonably practicable to the Underwriter and following such notice, if requested by the Underwriter, will prepare and furnish without charge to the Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission; provided,

 

14



 

however, that this representation and warranty shall not apply to any statements or omissions in an Issuer Free Writing Prospectus made in reliance upon and in conformity with information furnished in writing to the Company by the Underwriter expressly for use therein.

 

8.             The Company covenants and agrees with the Underwriter that (a) the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company’s counsel, counsel for the Selling Stockholders and the Company’s accountants in connection with the registration of the Shares under the Act and all other expenses in connection with the preparation, printing, reproduction and filing of the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriter and dealers; (ii) the cost of printing this Agreement, the Blue Sky Memorandum, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Shares; (iii) up to $15,000 in connection with the qualification of the Shares for offering and sale under state securities laws as provided in Section 6(b) hereof, including the fees and disbursements of counsel for the Underwriter in connection with such qualification and in connection with the Blue Sky Memorandum; (iv) all fees and expenses in connection with listing the Shares on the Exchange; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriter in connection with, any required review by the Financial Industry Regulatory Authority of the terms of the sale of the Shares; and (vi) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the Shares, including without limitation expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and the cost of aircraft and other transportation chartered in connection with the road show; and (b) the Company will pay or cause to be paid (i) the cost of preparing stock certificates; (ii) the cost and charges of any transfer agent or registrar; and (iii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section.

 

Each of the Selling Stockholders, severally and not jointly, covenants that it will pay or cause to be paid all costs and expenses incident to the performance of such Selling Stockholder’s obligations hereunder which are not otherwise specifically provided for in this Section, including all expenses and taxes incident to the sale and delivery of the Shares to be sold by such Selling Stockholder to the Underwriter hereunder.  It is understood, however, that the Company shall bear, and the Selling Stockholders shall not be required to pay or to reimburse the Company for, the cost of any other matters not directly relating to the sale and purchase of the Shares pursuant to this Agreement.

 

Except as provided in this Section, and Sections 10 and 13 hereof, the Underwriter will pay all of its own costs and expenses, including the fees of its counsel, stock transfer taxes on resale of any of the Shares by the Underwriter, and any advertising expenses connected with any offers it may make.

 

9.             The obligations of the Underwriter hereunder, as to the Shares to be delivered at the Time of Delivery, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company and the Selling Stockholders herein are, at

 

15



 

and as of the Time of Delivery, true and correct, the condition that the Company and the Selling Stockholders shall have performed all of its and their respective obligations hereunder theretofore to be performed, and the following additional conditions:

 

(a)           The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; all material required to be filed by the Company pursuant to Rule 433(d) under the Act shall have been filed with the Commission within the applicable time period prescribed for such filing by Rule 433 under the Act; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; no stop order suspending or preventing the use of the Prospectus or any Issuer Free Writing Prospectus shall have been initiated or threatened by the Commission; all requests for additional information on the part of the Commission shall have been complied with to the Underwriter’s reasonable satisfaction; the Commission shall not have notified the Company of any objection to the use of the form of the Registration Statement or any post-effective amendment thereto; and the Company shall have paid the required Commission filing fees relating to the Shares within the time period required by Rule 456(1)(i) under the Act without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) under the Act and, if applicable, shall have updated the “Calculation of Registration Fee” table in accordance with Rule 456(b)(1)(ii) under the Act either in a post-effective amendment to the Registration Statement or on the cover page of a prospectus filed pursuant to Rule 424(b);

 

(b)           Fried, Frank, Harris, Shriver & Jacobson LLP, counsel for the Underwriter, shall have furnished to the Underwriter such written opinion or opinions, dated the Time of Delivery, in form and substance satisfactory to the Underwriter, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;

 

(c)           (i) Alston & Bird LLP, counsel for the Company, shall have furnished to the Underwriter its written opinion and negative assurance letter (forms of such opinion and negative assurance letter are attached as Annexes I(a) and I(b) hereto), and (ii) Matthew Haltom, Esq., Deputy General Counsel of the Company, shall have furnished to the Underwriter his written opinion (a form of such opinion is attached as Annex I(c) hereto), each dated the Time of Delivery;

 

(d)           (i) Debevoise & Plimpton LLP, counsel for the Selling Stockholders, shall have furnished to the Underwriter its written opinion (a form of such opinion is attached as Annex II(a) hereto), (ii) Richards, Layton & Finger, counsel for the Selling Stockholders, shall have furnished to the Underwriter its written opinion (a form of such opinion is attached as Annex II(b) hereto) and (iii) Maples and Calder, counsel for the Selling Stockholders, shall have furnished to the Underwriter its written opinion (a form of such opinion is attached as Annex II(c) hereto), each dated the Time of Delivery;

 

(e)           On the date of the Prospectus upon execution of this Agreement; at 9:30 a.m., New York City time, on the date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement; and also at the Time of Delivery,

 

16



 

KPMG LLP shall have furnished to the Underwriter a “comfort” letter or “comfort” letters, dated the respective dates of delivery thereof, in form and substance reasonably satisfactory to the Underwriter and in accordance with professional auditing standards;

 

(f)            (i)  The Company and its subsidiaries, taken together as a whole, have not sustained since the date of the latest audited financial statements to be included in the Pricing Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus, and (ii)  since the respective dates as of which information is given in the Pricing Prospectus, there shall not have been any change in the capital stock or long-term debt of the Company and its subsidiaries, taken as a whole, or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Pricing Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in the judgment of the Underwriter so material and adverse as to make it impracticable or inadvisable to proceed with the public offering, sale or the delivery of the Shares on the terms and in the manner contemplated in the Prospectus;

 

(g)           On or after the Applicable Time, (i) no downgrading shall have occurred in the rating accorded any debt of the Company or any of its Subsidiaries by any “nationally recognized statistical rating organization”, as that term is defined by the Commission for purposes of Section 3(a)(62) under the Exchange Act, and (ii) no such organization shall publicly announce that it has under surveillance or review, with possible negative implications, its rating of any debt of the Company or any of its Subsidiaries;

 

(h)           From the date hereof and on or prior to the Time of Delivery, there shall not have occurred any of the following:  (i) a suspension or material limitation in trading in securities generally on the Exchange; (ii) a suspension or material limitation in trading in the Company’s securities on the Exchange; (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war; or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in the judgment of the Underwriter makes it impracticable or inadvisable to proceed with the public offering, sale or the delivery of the Shares on the terms and in the manner contemplated in the Prospectus;

 

(i)            The Company shall have complied with the provisions of Section 6(c) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement;

 

(j)            At the date of this Agreement, the Underwriter shall have received an agreement substantially in the form of Schedule V hereto signed by the persons listed on Schedule VI hereto;

 

17



 

(k)           The Shares to be sold at the Time of Delivery shall have been duly listed on the Exchange;

 

(l)            The Company shall have furnished or caused to be furnished to the Underwriter at the Time of Delivery certificates of officers of the Company, satisfactory to the Underwriter as to the accuracy of the representations and warranties of the Company, herein at and as of the Time of Delivery, as to the performance by the Company, of all of its obligations hereunder to be performed at or prior to the Time of Delivery, as to the matters set forth in subsection (a) of this Section and as to such other matters as the Underwriter may reasonably request; and

 

(m)          The Selling Stockholders, shall have furnished or caused to be furnished to the Underwriter at the Time of Delivery certificates of officers of the Selling Stockholders, satisfactory to the Underwriter as to the accuracy of the representations and warranties of the Selling Stockholders, herein at and as of the Time of Delivery, as to the performance by the Selling Stockholders of all of their obligations hereunder to be performed at or prior to the Time of Delivery and as to such other matters as the Underwriter may reasonably request.

 

10.

 

(a)           The Company will indemnify and hold harmless the Underwriter and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act and their respective officers, directors, employees, affiliates and selling agents against any losses, claims, damages or liabilities, joint or several, to which the Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (including any information deemed to be a part thereof pursuant to Rule 430B), any Preliminary Prospectus, the Pricing Prospectus, the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus (taken together with the Pricing Disclosure Package) or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Act, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the Preliminary Prospectus, the Pricing Prospectus, or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, in the light of the circumstances under which they were made), and will reimburse the Underwriter for any legal or other expenses reasonably incurred by the Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable to the Underwriter in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission related to the Underwriter and made in the Registration Statement (including any information deemed to be a part thereof pursuant to Rule 430B), any Preliminary Prospectus, the Pricing Prospectus or the Prospectus or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, in reliance upon and in conformity with written information furnished to the Company by the Underwriter expressly for use therein.  For purposes of this Agreement, the only information furnished in writing to the Company by the Underwriter shall be the information in the first paragraph under the heading “Underwriting—

 

18



 

Commissions and Discounts” and the information in the second, third and fourth paragraphs under the heading “Underwriting—Price Stabilization, Short Positions,” in each case contained in the Prospectus.

 

(b)           Each Selling Stockholder, severally and not jointly, will indemnify and hold harmless the Underwriter and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act and their respective officers, directors, employees, affiliates and selling agents against any losses, claims, damages or liabilities, joint or several, to which the Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus (taken together with the Pricing Disclosure Package), or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the Preliminary Prospectus, the Pricing Prospectus, or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, in the light of the circumstances under which they were made), in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or any such amendment or supplement in reliance upon and in conformity with written information relating to such Selling Stockholder furnished to the Company by such Selling Stockholder expressly for use in the preparation of the answers to Item 7 of Form S-3; and will reimburse the Underwriter for any legal or other expenses reasonably incurred by the Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that such Selling Stockholder shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by the Underwriter expressly for use therein; provided, further, that the liability of a Selling Stockholder pursuant to this subsection (b) shall not exceed the product of (i) the number of Shares sold by such Selling Stockholder and (ii) the per share net proceeds to the Selling Stockholder as set forth in the Prospectus.

 

(c)           The Underwriter will indemnify and hold harmless the Company, each Selling Stockholder and each person, if any, who controls the Company or any Selling Stockholder within the meaning of Section 15 of the Act or Section 20 of the Exchange Act and their respective officers, directors, employees, affiliates and selling agents against any losses, claims, damages or liabilities to which the Company or such Selling Stockholder may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (including any information deemed to be a part thereof pursuant to Rule 430B), any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free

 

19



 

Writing Prospectus (taken together with the Pricing Disclosure Package), or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the Preliminary Prospectus, the Pricing Prospectus, or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, in the light of the circumstances under which they were made), in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission related to the Underwriter and was made in the Registration Statement (including any information deemed to be a part thereof pursuant to Rule 430B), any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any such amendment or supplement thereto, or any Issuer Free Writing Prospectus, in reliance upon and in conformity with written information furnished to the Company by the Underwriter expressly for use therein; and will reimburse the Company and each Selling Stockholder, for any legal or other expenses reasonably incurred by the Company and each Selling Stockholder in connection with investigating or defending any such action or claim as such expenses are incurred.

 

(d)           Promptly after receipt by an indemnified party under subsection (a), (b) or (c) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection.  In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation.  It is understood that the indemnifying party or parties shall not, in connection with any one action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations be liable for the fees and expenses of more than one separate firm of attorneys at any time for all indemnified parties (except to the extent that local counsel (in addition to any regular counsel) is required to effectively defend against any such action or proceeding).  No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any indemnified party.

 

(e)           If the indemnification provided for in this Section 10 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a), (b), (c) or (d) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to

 

20



 

therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriter on the other from the offering of the Shares.  If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (d) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Selling Stockholders on the one hand and the Underwriter on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations.  The relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriter on the other shall be deemed to be in the same respective proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and the Selling Stockholders bear to the total underwriting discounts and commissions received by the Underwriter, as set forth in the table on the cover page of the Prospectus.  The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Selling Stockholders on the one hand or the Underwriter on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The Company, each of the Selling Stockholders and the Underwriter agree that it would not be just and equitable if contribution pursuant to this subsection (e) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (e).  The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this subsection (e), the Underwriter shall not be required to contribute any amount in excess of the underwriting commissions received by the Underwriter in connection with the Shares underwritten by it and distributed to the public.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  The liability of a Selling Stockholder pursuant to this subsection (e) shall not exceed the product of (i) the number of Shares sold by such Selling Stockholder and (ii) the per share net proceeds to the Selling Stockholder as set forth in the Prospectus.

 

(f)            The obligations of the Company and the Selling Stockholders under this Section 10 shall be in addition to any liability which the Company and the respective Selling Stockholders may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Underwriter within the meaning of the Act and each broker-dealer affiliate of the Underwriter; and the obligations of the Underwriter under this Section 10 shall be in addition to any liability which the Underwriter may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company or any Selling Stockholder within the meaning of the Act.

 

21



 

11.           [INTENTIONALLY OMITTED]

 

12.           The respective indemnities, agreements, representations, warranties and other statements of the Company, the Selling Stockholders and the Underwriter, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of the Underwriter or any controlling person of the Underwriter, or the Company, or any of the Selling Stockholders, or any officer or director or controlling person of the Company, or any controlling person of any Selling Stockholder and shall survive delivery of and payment for the Shares.

 

13.           If for any reason any Shares are not delivered by or on behalf of the Selling Stockholders as provided herein, the Company and the Selling Stockholders pro rata (based on the number of Shares to be sold by such Selling Stockholder hereunder) will reimburse the Underwriter for all out-of-pocket expenses, including fees and disbursements of counsel, reasonably incurred by the Underwriter in making preparations for the purchase, sale and delivery of the Shares not so delivered, but neither the Company nor any Selling Stockholder shall then be under any further liability to the Underwriter except as provided in Sections 8 and 10 hereof.

 

14.             All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriter shall be delivered or sent by mail, telex or facsimile transmission to Barclays Capital Inc., 745 Seventh Avenue, New York, New York 10019, Attention:  Syndicate Registration (Fax: 646-834-8133), with a copy, in the case of any notice pursuant to Section 10(d), to the Director of Litigation, Office of the General Counsel, Barclays Capital Inc., 745 Seventh Avenue, New York, New York 10019; with a copy to Fried, Frank, Harris, Shriver & Jacobson LLP, One New York Plaza, New York, New York 10004, Attn: Valerie Ford Jacob; if to any Selling Stockholder shall be delivered or sent by mail, telex or facsimile transmission to Debevoise & Plimpton LLP, 919 Third Avenue, New York, New York 10022, Attn: Peter J. Loughran; and if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Registration Statement, Attention: Matthew Haltom, Vice President, Assistant Secretary and Deputy General Counsel, with a copy (which shall not constitute notice) to Alston & Bird LLP, One Atlanta Center, 1201 West Peachtree Street, Atlanta, Georgia, 30309-3424, Attn: Scott Ortwein.  Any such statements, requests, notices or agreements shall take effect upon receipt thereof.

 

15.           This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriter, the Company and the Selling Stockholders and, to the extent provided in Sections 10 and 13 hereof, the officers and directors of the Company and each person who controls the Company, any Selling Stockholder or the Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement.  No purchaser of any of the Shares from the Underwriter shall be deemed a successor or assign by reason merely of such purchase.

 

16.           Time shall be of the essence of this Agreement.  As used herein, the term “business day” shall mean any day when the Commission’s office in Washington, D.C. is open for business.

 

22



 

17.           Each of the Company and the Selling Stockholders acknowledges and agrees that (i) the purchase and sale of the Shares pursuant to this Agreement is an arm’s-length commercial transaction between the Company and the Selling Stockholders, on the one hand, and the Underwriter, on the other, (ii) in connection therewith and with the process leading to such transaction, the Underwriter is acting solely as a principal and not the agent or fiduciary of the Company or the Selling Stockholders, (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Company or the Selling Stockholders with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether the Underwriter has advised or is currently advising the Company or the Selling Stockholders on other matters) or any other obligation to the Company or the Selling Stockholders except the obligations expressly set forth in this Agreement and (iv) the Company and the Selling Stockholders have consulted their own legal and financial advisors to the extent they deemed appropriate. Each of the Company and the Selling Stockholders agrees that it will not claim that the Underwriter has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company or the Selling Stockholders, in connection with such transaction or the process leading thereto.

 

18.           The Company acknowledges that the Underwriter is a full service securities firm and as such from time to time, subject to applicable securities laws, may effect transactions for its own account or the account of its customers and hold long or short positions in debt or equity securities of the companies which may be the subject of the transactions contemplated by this Agreement.

 

19.           In accordance with the requirements of the USA Patriot Act (Title III of Public Law 107-56 (signed into law October 26, 2001)), the Underwriter is required to obtain, verify and record information that identifies its clients, including the Company, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriter to properly identify its clients.

 

20.           This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Underwriter with respect to the subject matter hereof.

 

21.           This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

22.           The Company and the Underwriter each hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

23.           This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.

 

[Signature Pages Follow]

 

23



 

If the foregoing is in accordance with your understanding, please sign and return to us four counterparts hereof, and upon the acceptance hereof by the Underwriter, this Agreement and such acceptance hereof shall constitute a binding agreement between the Underwriter, the Company and each of the Selling Stockholders.

 

 

 

Very truly yours,

 

 

 

SALLY BEAUTY HOLDINGS, INC.

 

 

 

 

 

By:

/s/ Mark J. Flaherty

 

 

Name:

Mark J. Flaherty

 

 

Title:

Senior Vice President and CFO

 

 

 

 

 

 

 

 

 

Selling Stockholders

 

 

 

CDRS ACQUISITION LLC

 

 

 

 

 

 

 

 

 

By:

/s/ Theresa Gore

 

 

Name:

Theresa A. Gore

 

 

Title:

Executive Vice President and Treasurer

 

 

 

 

 

 

 

 

 

CD&R PARALLEL FUND VII, L.P.
By: CD&R Parallel Fund Associates VII, Ltd.,
its general partner

 

 

 

 

 

 

 

 

 

By:

/s/ Theresa Gore

 

 

Name:

Theresa A. Gore

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

24



 

Accepted as of the date first above written:

 

 

BARCLAYS CAPITAL INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ David Levin

 

 

 

Name:

David Levin

 

 

 

Title:

Managing Director

 

 

 

[Signature Page – Underwriting Agreement]

 



 

SCHEDULE I

 

[INTENTIONALLY OMITTED]

 

I-1



 

SCHEDULE II

 

 

 

Number of
Shares
to be Sold

 

 

 

 

 

The Selling Stockholders:

 

 

 

 

 

 

 

CDRS Acquisition LLC

 

14,901,422

 

CD&R Parallel Fund VII, L.P.

 

98,578

 

 

 

 

 

Total

 

15,000,000

 

 

II-1



 

SCHEDULE III(a)

 

Issuer Free Writing Prospectuses Included in the Pricing Disclosure Package: None.

 

Other Information Included in the Pricing Disclosure Package:

 

1.             The Selling Stockholders are selling 15,000,000 Shares.

 

2.             The public offering price per share is $26.600.

 

III(a)-1



 

SCHEDULE III(b)

 

Issuer Free Writing Prospectuses not included in the Pricing Disclosure Package: Launch press release, dated May 7, 2012.

 

III(b)-1



 

SCHEDULE IV

 

Sally Holdings LLC
Beauty Systems Group LLC
Sally Beauty Supply LLC
Sally Beauty Distribution LLC
Sally Beauty Holdings LP

 

IV-1



 

SCHEDULE V

 

Sally Beauty Holdings, Inc.

 

Form of Lock-Up Agreement

 

May 7, 2012

 

Barclays Capital Inc.

745 Seventh Avenue

New York, New York 10019

 

Re:  Sally Beauty Holdings, Inc. - Lock-Up Agreement

 

Ladies and Gentlemen:

 

The undersigned understands that Barclays Capital Inc. (the “Underwriter”) proposes to enter into an Underwriting Agreement with Sally Beauty Holdings, Inc., a Delaware corporation (the “Company”) and the Selling Stockholders named in Schedule II to such agreement, providing for a public offering of shares (the “Shares”) of the Common Stock, par value $0.01 per share (the “Common Stock”), of the Company pursuant to a Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”).

 

In consideration of the agreement by the Underwriter to offer and sell the Shares, and of other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the undersigned agrees that, subject to the other provisions of this Lock-Up Agreement, during the period specified in the following paragraph (the “Lock-Up Period”), the undersigned will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of Common Stock of the Company, or any options or warrants to purchase any shares of Common Stock of the Company, or any securities convertible into, exchangeable for or that represent the right to receive shares of Common Stock of the Company, whether now owned or hereinafter acquired, owned directly by the undersigned (including holding as a custodian) or with respect to which the undersigned has beneficial ownership within the rules and regulations of the SEC (collectively the “Undersigned’s Shares”). The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Undersigned’s Shares even if such Shares would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any of the Undersigned’s Shares or with respect to any security that includes, relates to, or derives any significant part of its value from such Shares.

 

V-1



 

The initial Lock-Up Period will commence on the date of this Lock-Up Agreement and continue for 60 days after the public offering date set forth on the final prospectus used to sell the Shares (the “Public Offering Date”) pursuant to the Underwriting Agreement; provided, however, that if (1) during the last 17 days of the initial Lock-Up Period, the Company releases earnings results or announces material news or a material event or (2) prior to the expiration of the initial Lock-Up Period, the Company announces that it will release earnings results during the 15-day period following the last day of the initial Lock-Up Period, then in each case the Lock-Up Period will be automatically extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the announcement of the material news or material event, as applicable, unless the Underwriter waives, in writing, such extension.   The Underwriter acknowledges and agrees that the public disclosure of an event or news by the Company shall not be deemed to be an admission or an indication that such news or event is material.

 

The undersigned hereby acknowledges that the Company has agreed in the Underwriting Agreement to provide written notice of any event that would result in an extension of the Lock-Up Period pursuant to the previous paragraph to the undersigned (in accordance with Section 14 of the Underwriting Agreement) and agrees that any such notice properly delivered will be deemed to have been given to, and received by, the undersigned. The undersigned hereby further agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this Lock-Up Agreement during the period from the date of this Lock-Up Agreement to and including the 34th day following the expiration of the initial Lock-Up Period, it will give notice thereof to the Company and will not consummate such transaction or take any such action unless it has received written confirmation from the Company that the Lock-Up Period (as such may have been extended pursuant to the previous paragraph) has expired.

 

Notwithstanding the foregoing, the undersigned may transfer the Undersigned’s Shares (i) to the Company to satisfy tax withholding obligations related to the vesting of Common Stock issued to the undersigned in accordance with Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (ii) by will or intestacy, provided that such transferee agrees to be bound in writing by the restrictions set forth herein, (iii) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth herein, (iv) to any trust, partnership or limited liability company for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the trustee of the trust, partnership or limited liability company, as the case may be, agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, (v) to a member of the undersigned’s immediate family,  provided that such immediate family member agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, or (vi) with the prior written consent of the Underwriter; provided, however, in the case of any transfer pursuant to clauses (ii), (iii), (iv) or (v), no filing by any party (donor, donee, transferor or transferee) under the Exchange Act or other public announcement shall be required or shall be made voluntarily in connection with such transfer or distribution (other than a filing on a Form 5 made after the expiration of the initial Lock-Up Period).  For purposes of this Lock-Up Agreement “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. The undersigned now has, and, except as contemplated by clauses (i), (ii), (iii), (iv), (v) and (vi), for the duration of this Lock-Up Agreement will have, good and

 

V-2



 

marketable title to the Undersigned’s Shares, free and clear of all liens, encumbrances, and claims whatsoever.  The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the Undersigned’s Shares except in compliance with the foregoing restrictions.

 

Notwithstanding anything to the contrary herein, the undersigned shall be permitted to establish a contract, instruction or plan (a “10b5-1 Plan”) meeting the requirements of Rule 10b5-1(c)(1) under the Exchange Act, at any time during the Lock-Up Period, provided that, prior to the expiration of the Lock-Up Period, (x) the undersigned shall not transfer any of the Undersigned’s Shares under such 10b5-1 Plan and (y) no public announcement or filing under the Exchange Act regarding the establishment of such 10b5-1 Plan shall be required of or voluntarily made by or on behalf of the undersigned or the Company during the Lock-Up Period.

 

[Furthermore, the restrictions set forth in this Agreement shall not apply to shares of Common Stock sold pursuant to the Stock Repurchase Agreement, dated as of May 6, 2012, between the Selling Stockholders and the Company.](1)

 

[Signature page follows]

 


(1)  This provision will be included in the lock-up agreements for affiliates of the Selling Stockholders.

 

V-3



 

The undersigned understands that the Company and the Underwriter are relying upon this Lock-Up Agreement in proceeding toward consummation of the offering.  The undersigned further understands that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors, and assigns.

 

 

Very truly yours,

 

 

 

 

 

Exact Name of Shareholder

 

 

 

 

 

Authorized Signature

 

 

 

 

 

Title

 

V-4



 

SCHEDULE VI

 

James G. Berges

Gary G. Winterhalter

Kathleen J. Affeldt

Marshall E. Eisenberg

Kenneth A. Giuriceo

Robert R. McMaster

Walter L. Metcalfe, Jr.

John A. Miller

Martha Miller

Edward E. Rabin

Richard J. Schnall

Mark J. Flaherty

John R. Golliher

Raal H. Roos

Michael G. Spinozzi

Janna Minton

 

VI-1


EX-7.2 4 a12-11888_1ex7d2.htm EX-7.2

Exhibit 7.2

 

STOCK REPURCHASE AGREEMENT

 

THIS STOCK REPURCHASE AGREEMENT (this “Agreement”) is entered into as of May 6, 2012 by and between CDRS Acquisition LLC (“CDRS”), and CD&R Parallel Fund, VII, L.P. (“Parallel Fund” and, together with CDRS, the “CDR Investors”) and Sally Beauty Holdings, Inc., a Delaware corporation (the “Company”).

 

Background

 

A.            The CDR Investors own 45,662,971 shares of the Company’s common stock, $0.01 par value per share ( “Common Stock”), and have agreed to transfer a portion of those shares to the Company on the terms and conditions set forth in this Agreement;

 

B.            The Company has agreed to repurchase a portion of the shares of Common Stock held by the CDR Investors at the price and upon the terms and conditions provided in this Agreement (the “Repurchase”);

 

C.            Promptly after the date hereof, the CDR Investors and the Company intend to commence an underwritten public offering (the “Public Offering”) of shares of Common Stock held by the CDR Investors (the “Underwritten Shares”); and

 

D.            The CDR Investors and the Company desire to condition the Repurchase on the closing of the Public Offering, among other things.

 

THEREFORE, in consideration of the mutual covenants herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby agree as follows:

 

Agreement

 

1.             Repurchase.

 

(a)           The CDR Investors hereby agree to transfer, assign, sell, and convey 100% of their right, title, and interest in and to an aggregate number of shares of Common Stock (the “Repurchase Shares”) equal to (i) $200,000,000 (the “Purchase Price”) divided by (ii) the per share price at which the CDR Investors sell the Underwritten Shares to the underwriter in the Public Offering and the Company hereby agrees to purchase the Repurchase Shares for the Purchase Price.  CDRS shall transfer, assign, sell, and convey 99.34% (rounded to the nearest whole share) of the Repurchase Shares to the Company and Parallel Fund shall transfer, assign, sell, and convey 0.66% (rounded to the nearest whole share) of the Repurchase Shares to the Company.  Subject to the satisfaction of the conditions set forth in paragraph 1(b), the Company hereby agrees to purchase the Repurchase Shares for the Purchase Price.

 

(b)           The obligations of the Company to purchase the Repurchase Shares shall be subject to (i) the closing of the Public Offering pursuant to an underwriting agreement by and among the Company, the CDR Investors and the underwriters named therein (the “Underwriting Agreement”) no later than 10 business days from the date hereof and (ii) the receipt by the Special

 



 

Committee of the Board of Directors of a fairness opinion from Houlihan Lokey Financial Advisors, Inc. no later than two business days after the execution of the Underwriting Agreement stating to the effect that the consideration to be paid by the Company to the CDR Investors for the Repurchase Shares pursuant to this Agreement is fair to the Company from a financial point of view.

 

(c)           The closing of the sale of the Repurchase Shares (the “Closing”), as applicable, shall take place upon the same day as the closing of the sale of the Underwritten Shares at the offices of Alston & Bird LLP, One Atlantic Center, 1201 West Peachtree Street, Atlanta, GA 30309, or at such other time and place as may be agreed upon by the Company and the CDR Investors.  At the Closing, the CDR Investors shall deliver to the Company or as instructed by the Company duly executed stock powers relating to the Repurchase Shares, as applicable, and the Company agrees to deliver to the CDR Investors the Purchase Price by wire transfer of immediately available funds.

 

2.             Company Representations.                In connection with the transactions contemplated hereby, the Company represents and warrants to the CDR Investors that:

 

(a)        The Company is a corporation duly organized and existing under the laws of the State of Delaware. The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.

 

(b)        This Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company enforceable in accordance with its terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization or other laws affecting enforcement of creditors’ rights or by general equitable principles.

 

(c)        The compliance by the Company with this Agreement and the consummation of the transactions herein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) violate any provision of the certificate of incorporation or by-laws, or other organizational documents, as applicable, of the Company or its subsidiaries or (iii) violate any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their properties; except, in the case of clauses (i) and (iii), as would not reasonably be expected to have a material adverse effect on the financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole, in the case of each such clause, after giving effect to any consents, approvals, authorizations, orders, registrations, qualifications, waivers and amendments as will have been obtained or made as of the date of this Agreement; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the execution, delivery and performance by the Company of its obligations under this Agreement, including the consummation by the Company of the

 

2



 

transactions contemplated by this Agreement, except where the failure to obtain or make any such consent, approval, authorization, order, registration or qualification would not reasonably be expected to have a material adverse effect on the financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole.

 

3.             Representations of the CDR Investors.           In connection with the transactions contemplated hereby, each of the CDR Investors severally and not jointly represents and warrants to the Company that:

 

(a)        All consents, approvals, authorizations and orders necessary for the execution and delivery by such CDR Investor of this Agreement and for the sale and delivery of the Repurchase Shares to be sold by such CDR Investor hereunder, have been obtained; and such CDR Investor has full right, power and authority to enter into this Agreement and to sell, assign, transfer and deliver the Repurchase Shares to be sold by such CDR Investor hereunder, except for such consents, approvals, authorizations and orders as would not impair in any material respect the consummation of the CDR Investors’ obligations hereunder.

 

(b)        This Agreement has been duly authorized, executed and delivered by such CDR Investor and constitutes a valid and binding agreement of such CDR Investor, enforceable in accordance with its terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization or other laws affecting enforcement of creditors’ rights or by general equitable principles.

 

(c)        The sale of the Repurchase Shares to be sold by such CDR Investor hereunder and the compliance by such CDR Investor with all of the provisions of this Agreement and the consummation of the transactions contemplated herein (i) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any statute, indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which such CDR Investor is a party or by which such CDR Investor is bound or to which any of the property or assets of such CDR Investor is subject, (ii) nor will such action result in any violation of the provisions of (x) any organizational or similar documents pursuant to which such CDR Investor was formed or (y) any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over such CDR Investor or the property of such CDR Investor; except in the case of clause (i) or clause (ii)(y), for such conflicts, breaches, violations or defaults as would not impair in any material respect the consummation of such CDR Investor’s obligations hereunder.

 

(d)        As of the date hereof and immediately prior to the delivery of the Repurchase Shares to the Company at the Closing, such CDR Investor will be the beneficial or record holder of the Repurchase Shares with full dispositive power thereover, and holds, and will hold, such Repurchase Shares free and clear of all liens, encumbrances, equities or claims; and, upon delivery of such Repurchase Shares and payment therefor pursuant hereto, assuming that the Company has no notice of any adverse claims within the meaning of Section 8-105 of the New York Uniform Commercial Code as in effect in the State of New York from time to time (the “UCC”), the Company will acquire a valid security entitlement (within the meaning of Section 8-102(a)(17) of the UCC) to such Repurchase Shares purchased by the Company, and no action (whether framed in conversion, replevin, constructive trust, equitable lien or other theory)

 

3



 

based on an adverse claim (within the meaning of Section 8-105 of the UCC) to such security entitlement may be asserted against the Company.

 

4.             Termination.          This Agreement may be terminated at any time by the mutual written, consent of the Company and the CDR Investors.  Furthermore, this Agreement shall automatically terminate and be of no further force and effect, in the event that, (a) the commencement of the Public Offering has not been publicly announced within 3 business days after the date hereof or (b) the conditions in paragraph 1(b) of this Agreement have not been satisfied within 10 business days after the date hereof.

 

5.             Notices.                                                    All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally, mailed by certified or registered mail, return receipt requested and postage prepaid, or sent via a nationally recognized overnight courier, or sent via facsimile to the recipient. Such notices, demands and other communications will be sent to the address indicated below:

 

To the CDR Investors:

 

Theresa A. Gore
Clayton, Dubilier & Rice

375 Park Avenue
New York, New York 10152
Facsimilie No.: (212) 407-5250

Email Address: tgore@cdr-inc.com

 

With a copy to (which shall not constitute notice):

 

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

Attn: Peter J. Loughran

Facsimile No.: (212) 521-7375

Email Address: pjloughran@debevoise.com

 

To the Company:

 

Sally Beauty Holdings, Inc.

3001 Colorado Boulevard

Denton, Texas 76210

Attention: Matthew O. Haltom

Facsimile No.: (940) 297-4990

Email Address: mhaltom@sallybeauty.com

 

4



 

With a copy to (which shall not constitute notice):

 

Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3449
Attention:  W. Scott Ortwein
Facsimile:  (404) 253-8376
Email Address:  scott.ortwein@alston.com

 

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party.

 

6.             Miscellaneous.

 

(a)           Survival of Representations and Warranties.  All representations and warranties contained herein or made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

 

(b)           Severability.          Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality, or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed, and enforced in such jurisdiction as if such invalid, illegal, or unenforceable provision had never been contained herein.

 

(c)           Complete Agreement.  This Agreement and any other agreements ancillary thereto and executed and delivered on the date hereof embody the complete agreement and understanding between the parties and supersede and preempt any prior understandings, agreements, or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

(d)           Counterparts.        This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

(e)           Successors and Assigns.  Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the CDR Investors and the Company and their respective successors and assigns.

 

(f)            Governing Law. The Agreement will be governed by and construed in accordance with the laws of the State of New York.

 

(g)           Remedies.  The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent

 

5



 

jurisdiction (without posting any bond or deposit) for specific performance or other injunctive relief in order to enforce, or prevent any violations of, the provisions of this Agreement.

 

(h)           Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the CDR Investors and the Company.

 

(i)            Further Assurances.  Each of the Company and the CDR Investors shall execute and deliver such additional documents and instruments and shall take such further action as may be necessary or appropriate to effectuate fully the provisions of this Agreement.

 

(j)            Expenses.  Each of the Company and the CDR Investors shall bear their own expenses in connection with the drafting, negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

 

 

[Signatures appear on following page.]

 

6



 

IN WITNESS WHEREOF, the parties hereto have executed this Stock Repurchase Agreement as of the date first written above.

 

 

 

CDR Investors

 

 

 

 

 

CDRS ACQUISITION LLC

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

 

 

Name:

Theresa A. Gore

 

 

Title:

Executive Vice President and Treasurer

 

 

 

 

 

 

 

 

 

 

CD&R PARALLEL FUND VII, L.P.

 

 

By: CD&R Parallel Fund Associates VII, Ltd.,

 

 

 

 

 

By:

/s/ Theresa A. Gore

 

 

 

 

 

 

Name:

Theresa A. Gore

 

 

Title:

Vice President, Treasurer and Assistant Secretary

 

 

 

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

SALLY BEAUTY HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Mark J. Flaherty

 

 

Name:

Mark J. Flaherty

 

 

Title:

Senior Vice President and Chief Financial Officer

 

[Signature page to Stock Repurchase Agreement]