Contract

EXHIBIT 10.4

 

THIS OPTION AND THE SHARES RECEIVED UPON EXERCISE OF THIS OPTION SHALLBE SUBJECT TO THE RIGHTS, RESTRICTIONS AND OBLIGATIONS APPLICABLE TO SUCHSECURITIES, ALL AS PROVIDED IN THE STOCKHOLDERS AGREEMENT DATED AS OF JUNE 10,2004 AMONG THE COMPANY AND CERTAIN OTHER PARTIES THERETO, AS AMENDED AND INEFFECT FROM TIME TO TIME (THE “STOCKHOLDERS AGREEMENT”).

 

STB BEAUTY, INC.

2004 STOCK OPTION

 

TIMEOPTION CERTIFICATE

 

This stock optionis granted by STB Beauty, Inc., a Delaware corporation (the “Company”), to __________ (the “Optionee”), pursuant to theCompany’s 2004 Equity Incentive Plan (the “Plan”).  All capitalized terms not otherwise definedherein shall have the meaning provided in the Plan.

 

1.             Grant of Option.

This certificateevidences the grant by the Company on _________to the Optionee of an option to purchase, in whole or in part, on the termsprovided herein and in the Plan, a total of _______shares of Common Stock of the Company, $.01 par value per share (the “Shares”)at $_____ per Share.

 

The latest date onwhich this option may be exercised (the “Final Exercise Date”) is the earliestof (a) the tenth anniversary of the date hereof or (b) the termination hereofin accordance with this certificate, the Stockholders Agreement or the Plan.

 

The optionevidenced by this certificate is not intended to qualify as an incentive stockoption under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

 

This option shallvest and become exercisable as to 20% of the total number of Shares on __________, respectively.  Notwithstanding the foregoing, this optionshall vest and become exercisable as to 100% of the total number of Shares onthe date of the consummation of a Sale Transaction (as defined below).  No option shall vest after the termination ofthe Optionee’s employment with the Company or any of its subsidiaries.

 

As used herein,the following terms shall have the meanings set forth below:

 

“Affiliate” shallmean, with respect to any specified Person, any other Person which, directly orindirectly, through one or more intermediaries controls, or is controlled by,or is under common control with, such specified Person (for the purposes ofthis definition, “control” (including, with correlative meanings, the terms “controlling,”“controlled by” and “under common control with”), as used with respect to anyPerson, means the possession, directly or

 

 

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indirectly, of the power to direct or cause the direction of themanagement or policies of such Person, whether through the ownership of votingsecurities, by agreement or otherwise).

 

“Group” shall meanany two or more Persons who, directly or indirectly, through any contract,arrangement, understanding, relationship or otherwise, act as a partnership,limited partnership, syndicate or other group for the purpose of acquiring orholding securities of the Company.

 

“Person” shallmean any individual, partnership, corporation, association, limited liabilitycompany, trust, joint venture, unincorporated organization or entity, or anygovernment, governmental department or agency or political subdivision thereof.

 

“Sale Transaction” shall mean (i) any transaction orseries of related transactions in which any Person who is not an Affiliate ofthe Company, or any two or more such Persons acting as a Group, and allAffiliates of such Person or Persons, who prior to such time owned no shares ofthe Company’s Common Stock or shares of the Company’s Common Stock representingless than fifty percent (50%) of the voting power at elections for the Board ofDirectors of the Company (the “Board”), shall (A) acquire, whether by purchase,exchange, tender offer, merger, consolidation, recapitalization or otherwise,or (B) otherwise be the owner of (as a result of a redemption of shares of the Company’s Common Stockor otherwise), shares of the Company’s Common Stock (or shares in a successorcorporation by merger, consolidation or otherwise) such that following suchtransaction or transactions, such Person or Group and their respectiveAffiliates beneficially own fifty percent (50%) or more of the voting power atelections for the board of directors of the Company or any successorcorporation, or (ii) the sale or transfer of all or substantially all theCompany’s or MD Beauty, Inc.’s assets and following such sale or transfer,there is a liquidation of the Company. For purposes of this definition, it is understood and agreed that as ofthe date hereof, the only stockholders of the Company which constituteAffiliates of the Company are Berkshire Fund VI Investment Corp., BerkshireFund V, Limited Partnership, Berkshire Fund VI, Limited Partnership, BerkshireInvestors LLC, and JH MDB Investors, L.P.

 

2.             Exerciseof Option.

Each election to exercisethis option shall be in writing, signed by the Optionee or by his or herexecutor or administrator or by the Person or Persons to whom this option istransferred by will or the applicable laws of descent and distribution (the “LegalRepresentative”), and received by the Company at its principal office,accompanied by payment in full and by such additional documentation evidencingthe right to exercise (or, in the case of a Legal Representative, the authorityof such Legal Representative) as the Company may require.  The purchase price may be paid (i) in cash orby personal check, bank check or money order payable to the order of theCompany, (ii) through the delivery of shares of Stock that have beenoutstanding for at least six months and that have a fair market value on thelast business day preceding the date of exercise equal to the exercise price,(iii) by delivery of an unconditional and irrevocable undertaking by a brokerto deliver to the Company promptly upon the sale of Shares to be issued sufficientfunds to pay the exercise price, or (iv) by any combination of the permissibleforms of payment.

 

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3.             Stockholders Agreement;Termination of Employment.

The optionevidenced by this certificate and any Shares received upon the exercise of thisoption shall be subject to the Plan and the Stockholders Agreement, and theissuance of this option certificate shall be conditional upon the execution anddelivery by the Optionee of a joinder to the Stockholders Agreement.  This option and the Shares received uponexercise of this option shall be subject to the rights, restrictions andobligations applicable to options and shares of Common Stock of the Company asprovided from time to time in such Stockholders Agreement, including withoutlimitation, the obligations applicable to options and shares of Common Stock ofthe Company under Section 2.2 thereof relating to the Company’s right to callsecurities in the event of the termination of the Optionee’s employment withthe Company or any of its subsidiaries. In addition to the provisions of the Plan and the StockholdersAgreement, upon termination of the Optionee’s employment with the Company orany of its subsidiaries for any reason, any portion of this option that shallnot have vested prior to or upon such termination shall immediately terminate.

 

4.             Restrictions on Transfer.

(a)           Inaddition to the provisions of Section 3 above, if at the time this option isexercised the Company and a majority in interest of the Management Stockholders(as defined in the Stockholders Agreement) are party to any other agreementrestricting the transfer of any outstanding shares of its Common Stock, thisoption may be exercised only if the Shares so acquired are made subject to thetransfer restrictions set forth in that agreement (or if more than one suchagreement is then in effect, the agreement or agreements specified by theBoard).

(b)           Certificatesevidencing any Shares purchased by an Optionee upon exercise of options grantedhereby may bear the following legends, in addition to any legends which may berequired by any agreement referred to in the immediately preceding paragraph:

“Thesecurities represented by this Certificate have not been registered under theSecurities Act of 1933, as amended, and may not be sold, offered for sale,pledged or hypothecated in the absence of an effective registration statementas to the securities under said Act or an opinion of counsel satisfactory tothe Company and its counsel that such registration is not required.”

 

“Thesecurities represented by this Certificate are subject to the terms andconditions, including certain restrictions on transfer, of a StockholdersAgreement dated as of June 10, 2004, as amended from time to time, and none of suchsecurities, or any interest therein, shall be transferred, pledged, encumberedor otherwise disposed of except as provided in that Agreement.  A copy of the Stockholders Agreement is onfile with the Secretary of the Company and will be mailed to any properlyinterested person without charge within five (5) business days after receipt ofa written request.”

 

All Shares shallalso bear all legends required by federal and state securities laws.

 

 

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5.             Withholding.

No Shares will beissued pursuant to the exercise of this option unless and until the Personexercising this option shall have remitted to the Company an amount sufficientto satisfy any federal, state or local withholding tax requirements, or shallhave made other arrangements satisfactory to the Company with respect to suchtaxes.  The Optionee shall be responsiblefor filing an election under Section 83(b) of the Internal Revenue Code of1986, as amended, within 30 days of the exercise of the option to the extentdeemed necessary or desirable by the Optionee and the Optionee shall providethe Company with a copy of any such election promptly thereafter.

 

6.             Nontransferability of Option.

This option is nottransferable by the Optionee other than by will or the applicable laws ofdescent and distribution, and is exercisable during the Optionee’s lifetimeonly by the Optionee.

 

7.             Effect on Employment.

Neither the grantof this option, nor the issuance of Shares upon exercise of this option, shallgive the Optionee any right to be retained in the employ of the Company, affectthe right of the Company to discharge or discipline such Optionee at any timeor affect any right of such Optionee to terminate his or her employment at anytime.

 

8.             Provisions of the Plan.

This option issubject in its entirety to the provisions of the Plan, a copy of which isfurnished to the Optionee with this option.

 

 

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IN WITNESSWHEREOF, the Company has caused this Stock Option to be executed by its dulyauthorized officer.

 

 

 

STB BEAUTY, INC.

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Dated: