Exhibit 10.12

LIMITED GUARANTEE

Limited Guarantee, dated as of June 19, 2006 (this “Limited Guarantee”), by
Clayton, Dubilier & Rice Fund VII, L.P. (the “Guarantor”), in favor of
Alberto-Culver Company, a Delaware corporation (the “Guaranteed Party”).

1. LIMITED GUARANTEE. To induce the Guaranteed Party to enter into the
Investment Agreement, dated as of June 19, 2006, (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Investment
Agreement”; capitalized terms used herein but not defined shall have the
meanings given thereto in the Investment Agreement), between the Guaranteed
Party, New Aristotle Company, a Delaware corporation and, as of the date hereof,
a wholly owned subsidiary of New Sally, Sally Holdings, Inc., a Delaware
corporation and, as of the date hereof, a wholly owned subsidiary of
Alberto-Culver (“Sally”), New Sally Holdings, Inc., a Delaware corporation and,
as of the date hereof, a wholly owned subsidiary of Alberto-Culver (the
“Company”) and CDRS Acquisition LLC, a Delaware limited liability company
(“Investor”), pursuant to which Investor will acquire approximately 47.5% of the
outstanding shares of common stock, par value $0.01 per share, of the Company,
the Guarantor hereby absolutely, unconditionally and irrevocably guarantees to
the Guaranteed Party, the due and punctual performance and discharge of the
payment obligations of the Investor under Section 8.2(f), 8.2(g) and 8.2(i) of
the Investment Agreement (the “Obligations”); provided that in no event shall
Guarantor’s liability under this Limited Guarantee exceed (x) $60 million plus
(y) the amount of any attorneys’ fees and expenses and interest, if any, payable
by Investor under Section 8.2(i) of the Investment Agreement (together, the
“Cap”), in the aggregate, it being understood that this Limited Guarantee may
not be enforced without giving effect to the Cap. It is acknowledged and agreed
that this Limited Guarantee will expire and will have no further force or
effect, and the Guaranteed Party will have no rights hereunder, in the event
that the Closing occurs. In furtherance of the foregoing, the Guarantor
acknowledges that its liability hereunder shall extend to the full amount of the
Obligations, and that the Guaranteed Party may, in its sole discretion, bring
and prosecute a separate action or actions against the Guarantor for the full
amount of any Obligations, subject in each case to the Cap, regardless of
whether action is brought against Investor or whether Investor is joined in any
such action or actions.

2. NATURE OF LIMITED GUARANTEE. The Guaranteed Party may, but shall not be
obligated to, file any claim relating to any Obligation in the event that
Investor becomes subject to a bankruptcy, reorganization or similar proceeding,
and the failure of the Guaranteed Party to so file shall not affect the
Guarantor’s obligations hereunder. In the event that any payment to the
Guaranteed Party in respect of any Obligation is rescinded or must otherwise be
returned for any reason whatsoever, the Guarantor shall remain liable hereunder
with respect to the Obligation as if such payment had not been made. This is an
unconditional guarantee of payment and not of collectibility.

3. CHANGES IN OBLIGATIONS, CERTAIN WAIVERS. The Guarantor agrees that the
Guaranteed Party may at any time and from time to time, without notice to or
further consent of the Guarantor, extend the time of payment of any Obligation,
and may also

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make any agreement with Investor for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any
modification of the terms thereof or of any agreement between the Guaranteed
Party and Investor without in any way impairing or affecting the Guarantor’s
obligations under this Limited Guarantee. The Guarantor agrees that the
obligations of the Guarantor hereunder shall not be released or discharged, in
whole or in part, or otherwise affected by (a) the failure of the Guaranteed
Party to assert any claim or demand or to enforce any right or remedy against
Investor or any other Person interested in the transactions contemplated by the
Investment Agreement; (b) any change in the time, place or manner of payment of
any Obligation or any rescission, waiver, compromise, consolidation or other
amendment or modification of any of the terms or provisions of the Investment
Agreement or any other agreement evidencing, securing or otherwise executed in
connection with any Obligation; (c) any change in the corporate existence,
structure or ownership of Investor or any other Person interested in the
transactions contemplated by the Investment Agreement; (d) any insolvency,
bankruptcy, reorganization or other similar proceeding affecting Investor or any
other Person interested in the transactions contemplated by the Investment
Agreement; (e) the existence of any claim, set-off or other right which the
Guarantor may have at any time against Investor or the Guaranteed Party, whether
in connection with any Obligation or otherwise, (f) the enforceability or
validity of the Obligations or any part thereof or any agreement related
thereto, (g) the adequacy of any other means the Guaranteed Party may have of
obtaining payment of any Obligation or (h) any other act or omission to act or
delay of any kind by the Guaranteed Party or any other Person or any other
circumstance which might, but for this Section 3, constitute a legal or
equitable discharge of the Guarantor’s obligations hereunder except as provided
in Section 9. To the fullest extent permitted by law, the Guarantor hereby
expressly waives any and all rights or defenses arising by reason of any law
which would otherwise require any election of remedies by the Guaranteed Party.
The Guarantor waives promptness, diligence, notice of the acceptance of this
Limited Guarantee and of any Obligation, presentment, demand for payment, notice
of non-performance, default, dishonor and protest, notice of the incurrence of
any Obligation and all other notices of any kind, all defenses which may be
available by virtue of any valuation, stay, moratorium law or other similar law
now or hereafter in effect, any right to require the marshalling of assets of
Investor or any other Person interested in the transactions contemplated by the
Investment Agreement, and all suretyship defenses generally (other than fraud or
willful misconduct by the Guaranteed Party or any of its Affiliates, defenses to
the payment of the Obligations that are available to Investor under the
Investment Agreement or a breach by the Guaranteed Party of this Limited
Guarantee). The Guarantor acknowledges that it will receive substantial direct
and indirect benefits from the transactions contemplated by the Investment
Agreement and that the waivers set forth in this Limited Guarantee are knowingly
made in contemplation of such benefits.

The Guaranteed Party hereby covenants and agrees that it shall not institute,
and shall cause its Affiliates not to institute, any proceeding or bring any
other claim arising under, or in connection with, the Investment Agreement, or
the transactions contemplated thereby against Guarantor or any Investor
Affiliate except for claims against the Guarantor under this Limited Guarantee.
The Guarantor hereby unconditionally and irrevocably agrees not to exercise any
rights that it may now have or hereafter acquire against Investor or any other
Person interested in the transactions contemplated by the Investment Agreement
that arise from the existence, payment, performance, or enforcement of the
Guarantor’s obligation under or in respect of this Limited Guarantee or

 

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any other agreement in connection therewith, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the
Guaranteed Party against Investor or such other Person, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from Investor
or such other Person, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim,
remedy or right, in each case unless and until the Obligations and all other
amounts payable under this Limited Guarantee shall have been paid in full in
cash. If any amount shall be paid to the Guarantor in violation of the
immediately preceding sentence at any time prior to the payment in full in cash
of the Obligations and all other amounts payable under this Limited Guarantee,
such amount shall be received and held in trust for the benefit of the
Guaranteed Party, shall be segregated from other property and funds of the
Guarantor and shall forthwith be paid or delivered to the Guaranteed Party in
the same form as so received (with any necessary endorsement or assignment) to
be credited and applied to the Obligations and all other amounts payable under
this Limited Guarantee, in accordance with the terms of the Investment
Agreement, whether matured or unmatured, or to be held as collateral for the
Obligations or other amounts payable under this Limited Guarantee thereafter
arising. Notwithstanding anything to the contrary contained in this Limited
Guarantee, the Guaranteed Party hereby agrees that to the extent Investor is
relieved of any of its any of its representations, warranties, covenants or
agreements contained in the Investment Agreement, or its payment obligations
under Section 8.2(f), 8.2(g) or 8.2(i) of the Investment Agreement, the
Guarantor shall be similarly relieved of its Obligations under this Limited
Guarantee.

4. EXPENSES. The Guarantor agrees to pay all reasonable out-of-pocket expenses
(including the reasonable fees and expenses of the Guaranteed Party’s counsel)
incurred by the Guaranteed Party in connection with the enforcement of the
rights of the Guaranteed Party hereunder; provided, that the Guarantor shall not
be liable for any expenses of the Guaranteed Party under this Section 4 (and all
monies paid to the Guarantor pursuant to this Limited Guarantee, if any, shall
be returned) if it is finally determined by a court of competent jurisdiction
that no payment under this Limited Guarantee is due, and provided, further, that
the obligation of Guarantor under this Section 4 shall not exceed $1,000,000.
The Guaranteed Party agrees to pay all reasonable out-of-pocket fees and
expenses (including the reasonable fees and expenses of the Guarantor’s counsel)
incurred by the Guarantor in connection with the defense and enforcement of the
rights of the Guarantor hereunder; provided, that the Guaranteed Party shall not
be liable for any expenses of the Guarantor under this Section 4 if it is
finally determined by a court of competent jurisdiction that any payment under
this Limited Guarantee is due, and provided, further, that the obligation of the
Guaranteed Party hereunder shall not exceed $1,000,000.

5. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of the Guaranteed Party
to exercise, and no delay in exercising, any right, remedy or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by
the Guaranteed Party of any right, remedy or power hereunder or under the
Investment Agreement or otherwise preclude any other or future exercise of any
right, remedy or power hereunder. Each and every right, remedy and power hereby
granted to the Guaranteed Party or allowed it by law or other agreement shall be
cumulative and not exclusive of any other, and may be exercised by the
Guaranteed Party at any time or from time to time.

 

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6. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants
that:

(a) the execution, delivery and performance of this Limited Guarantee have been
duly authorized by all necessary action and do not contravene any provision of
the Guarantor’s charter, partnership agreement, operating agreement or similar
organizational documents or any law, regulation, rule, decree, order, judgment
or contractual restriction binding on the Guarantor or its assets;

(b) all consents, approvals, authorizations, permits of, filings with and
notifications to, any governmental authority necessary for the due execution,
delivery and performance of this Limited Guarantee by the Guarantor have been
obtained or made and all conditions thereof have been duly complied with, and no
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required in connection with the execution, delivery or
performance of this Limited Guarantee;

(c) this Limited Guarantee constitutes a legal, valid and binding obligation of
the Guarantor enforceable against the Guarantor in accordance with its terms,
subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally, and (ii) general equitable principles (whether considered in a
proceeding in equity or at law); and

(d) the Guarantor has the financial capacity to pay and perform its obligations
under this Limited Guarantee, and all funds necessary for the Guarantor to
fulfill its Obligations under this Limited Guarantee shall be available to the
Guarantor for so long as this Limited Guarantee shall remain in effect in
accordance with Section 9 hereof.

7. NO ASSIGNMENT. Neither the Guarantor nor the Guaranteed Party may assign its
rights, interests or obligations hereunder to any other person (except by
operation of law) without the prior written consent of the Guaranteed Party (in
the case of an assignment by the Guarantor) or the Guarantor (in the case of an
assignment by the Guaranteed Party).

8. NOTICES. All notices, requests, demands, waivers and other communications
required or permitted to be given under this Limited Guarantee shall be in
writing and shall be given by personal delivery or sending by United States
Postal Service Express Mail or an overnight courier service, proof of delivery
requested, or sent by telecopy, to the following addresses:

 

  (a) if to the Guaranteed Party, to it at:

Alberto-Culver Company

2525 Armitage Avenue

Melrose Park, Illinois 60160

 

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Attention:  

Chief Executive Officer

Senior Vice President and

General Counsel

(with a separate notice to each such person)

Telecopy:   (708) 450-2511

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

Sidley Austin LLP

One S. Dearborn Street

Chicago, Illinois 60603

Attention: Frederick C. Lowinger, Esq.

                    David Zampa, Esq.

Telecopy:  (312) 853-7036

 

  (b) if to Guarantor, to it at:

Clayton, Dubilier & Rice Fund VII, L.P.

1403 Foulk Road, Suite 106

Wilmington, DE 19803

Telecopy:  (302) 427-7398

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

Clayton, Dubilier & Rice, Inc.

375 Park Avenue

18th Floor New York, New York 10152

Attention: Donald J. Gogel

Telecopy: (212) 407-5252

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

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention: Paul S. Bird, Esq.

Telecopy: (212) 909-6836

or to such other Person or address as a party shall specify by notice in writing
to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been given on the date of personal
receipt or proven delivery or, in the case of notice by telecopier, when receipt
thereof is confirmed by telephone.

9. CONTINUING LIMITED GUARANTEE. This Limited Guarantee shall remain in full
force and effect and shall be binding on the Guarantor, its successors and
assigns

 

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until the Obligations are satisfied in full in cash. Notwithstanding the
foregoing, this Limited Guarantee shall terminate and the Guarantor shall have
no further obligations under this Limited Guarantee as of the earlier of (i) the
Closing (as defined in the Investment Agreement) and (ii) the first anniversary
of any termination of the Investment Agreement in accordance with its terms if
the Guaranteed Party has not presented a claim for payment of any Obligation to
either Investor or the Guarantor by such first anniversary.

10. NO RECOURSE. Recourse against the Guarantor under this Limited Guarantee
shall be the sole and exclusive remedy of the Guaranteed Party and all of its
Affiliates against the Guarantor in respect of any liabilities or obligations
arising under, or in connection with, the Investment Agreement or the
transactions contemplated thereby. The Guaranteed Party by its acceptance of the
benefits hereof, covenants, agrees and acknowledges that no Person other than
the Guarantor shall have any obligation hereunder and that no recourse hereunder
shall be had against any current or future officer, agent, affiliate or employee
of the Guarantor, against any current or future general or limited partner or
stockholder of the Guarantor or any affiliate thereof or against any current or
future director, officer, employee, affiliate or general or limited partner,
stockholder or member of any of the foregoing (collectively, “Guarantor
Affiliates”) whether by the enforcement of any assessment or by any legal or
equitable proceeding, or by virtue of any statute, regulation or other
applicable law. The Guaranteed Party (for itself and its Affiliates)
acknowledges and agrees that Investor has no assets and that no funds are
expected to be contributed to Investor unless the Closing occurs. The Guaranteed
Party further agrees that neither it nor any of its Affiliates have any right of
recovery against the Guarantor or any of its stockholders, partners, members,
directors, officers or agents through Investor or otherwise, whether by piercing
of the corporate veil, by a claim on behalf of Investor against the Guarantor or
Investor’s stockholders or Affiliates, or otherwise, except for the rights under
this Limited Guarantee. The Guaranteed Party hereby covenants and agrees that it
shall not institute, and it shall cause its Affiliates not to institute, any
proceeding or bring any other claim arising under, or in connection with the
Investment Agreement or the transactions contemplated thereby, against the
Guarantor or any Guarantor Affiliate except for claims against the Guarantor
under this Limited Guarantee. Except as contemplated under Section 7, nothing
set forth in this Limited Guarantee shall affect or be construed to confer or
give any Person other than the Guaranteed Party (including any Person acting in
a representative capacity) any rights or remedies against any Person other than
the Guarantor as set forth herein.

11. GOVERNING LAW. This Limited Guarantee shall be governed by, and construed in
accordance with, the laws of the State of New York. Each of the parties hereto
(i) consents to submit itself to the personal jurisdiction of the United States
District Court for the Southern District of New York or any court of the State
of New York located in such district in the event any dispute arises out of this
Limited Guarantee or any of the transactions contemplated by this Limited
Guarantee, (ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction or venue by motion or other request for leave from any such court
and (iii) agrees that it will not bring any action relating to this Limited
Guarantee or any of the transactions contemplated by this Limited Guarantee in
any court other than such courts sitting in the State of New York. THE PARTIES
HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM
BROUGHT BY EITHER OF THEM AGAINST THE OTHER IN ANY MATTERS ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS LIMITED GUARANTEE.

 

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12. COUNTERPARTS. This Limited Guarantee may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.

13. SEVERABILITY. Wherever possible, each provision of this Limited Guarantee
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Limited Guarantee shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity without invalidating the remainder
of such provision or the remaining provisions of this Limited Guarantee.

14. HEADINGS. Section headings in this Limited Guarantee are for convenience of
reference only and shall not govern the interpretation of any provision of this
Limited Guarantee.

 

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IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be
executed and delivered as of the date first written above by its officer
thereunto duly authorized.

 

CLAYTON, DUBILIER & RICE FUND VII, L.P. By:   CD&R Associates VII, Ltd., its
general partner   By:  

/s/ Kevin J. Conway

  Name:   Kevin J. Conway   Title:  

Vice President, Secretary and

Assistant Treasurer

 

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IN WITNESS WHEREOF, the Guaranteed Party has caused this Limited Guarantee to be
executed and delivered as of the date first written above by its officer
thereunto duly authorized.

 

ALBERTO-CULVER COMPANY By:  

/s/ Gary P. Schmidt

Name:   Gary P. Schmidt Title:  

Senior Vice President, General Counsel and Secretary

 

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