Document:

Exchange Agreement, dated as of January 27, 2005, Harvey P. Alstodt

 Exhibit 10.12 
  
 EXCHANGE AGREEMENT 
  
 This Exchange Agreement (this “Agreement”) is entered into as of January 27, 2005, between DLI Holding Corp., a Delaware corporation
(“Holding”), and Harvey P. Alstodt (the “Executive”). 
  
 WHEREAS, Del Laboratories, Inc., a Delaware corporation (the “Company”), Holding and DLI Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Holding (“Acquisition
Sub”), have entered into a Merger Agreement, dated as of July 1, 2004 (as the same may be amended from time to time, the “Merger Agreement”), pursuant to which Acquisition Sub shall merge with and into the Company, with the
Company continuing as the surviving corporation (the “Merger”); 
  
 WHEREAS, the Executive is the beneficial owner of options (the “Options”) to acquire shares of common stock, par value $1.00 per share, of the Company (the “Company Common Stock”);

  
 WHEREAS, as part of a letter agreement entered into with
Holding on July 1, 2004, Executive is required to cancel and exchange certain Options for substitute options (each, a “New Option”) to acquire shares of common stock, par value $0.01 per share, of Holding (the “Holding Common
Stock”) as part of an interdependent package of arrangements provided for in such letter agreement; 
  
 WHEREAS, subject to the terms and conditions set forth herein, immediately prior to the Effective Time (as defined in the Merger Agreement), the Options
identified on the signature page hereto (the “Exchange Options”) shall be cancelled in exchange (the “Option Exchange”) for New Options; 
  
 WHEREAS, Holding and the Executive have agreed to the terms of a new employment agreement that will be entered into by the
Company and the Executive in connection with the Closing (as defined in the Merger Agreement), a copy of which is attached as Exhibit A (the “New Employment Agreement”); and 
  
 WHEREAS, the parties have agreed to the terms of a Limited Liability Company
Agreement that will be entered into in connection with the Closing (as defined in the Merger Agreement), a copy of which is attached as Exhibit E (the “LLC Agreement”). 
  
 NOW, THEREFORE, in consideration of the mutual promises, covenants, representations and warranties contained herein, Holding
and the Executive hereby agree as follows: 
  
 1. Option
Exchange. Effective as of the Closing, each Exchange Option shall be cancelled in exchange for a New Option that shall (A) cover the number of shares determined by multiplying (i) the number of shares of Company Common Stock

 that were issuable upon exercise of such Exchange Option immediately prior to the Closing by (ii) the ratio of the
Merger Consideration (as defined in the Merger Agreement) to average price per share paid (directly or indirectly) by Kelso Investment Associates VII, L.P. and KEP VI, LLC (collectively, “Kelso”) for a share of Common Stock of
Holding at the Closing (rounded to the nearest whole share of Holding Common Stock) (the “Option Exchange Ratio”), and (B) have such per share exercise price equal to the quotient determined by dividing (i) the
exercise price per share of Company Common Stock at which each Exchange Option was exercisable immediately prior to the Closing by (ii) the Option Exchange Ratio (rounded to the nearest whole cent). Each New Option shall be evidenced by a
stock option agreement in the form attached as Exhibit B (the “Rollover Stock Option Agreement”). 
  
 2. Closing. The closing of the transactions contemplated by this Agreement shall take place at the offices of Debevoise & Plimpton LLP, 919
Third Avenue, New York, New York 10022, immediately prior to the Closing under the Merger Agreement. 
  
 3. Covenants. 
  
 (a) The Executive waives any rights he may otherwise have on or after the Closing to terminate his employment for “Good Reason”
by reason of Section 1(g)(i) or 1(g)(ii) of the Change in Control Agreement (the “CIC Agreement”), dated as of April 16, 2001, between the Company and the Executive and, following the Closing Date (as defined in the Merger
Agreement), the parties hereto agree that the CIC Agreement shall terminate in all respects; provided that (i) Holding complies with its obligations under this Agreement, (ii) the New Employment Agreement is entered into no
later than the Closing Date and (iii) the Equity Agreements are entered into by the parties thereto no later than the Closing Date. For purposes of this Agreement, “Equity Agreements” shall mean, collectively, the following
documents attached as exhibits hereto: (i) Stockholders Agreement (Exhibit C); (ii) Registration Rights Agreement (Exhibit D); (iii) Limited Liability Company Agreement (Exhibit E); and (iv) Stock Incentive Plan and
related form of Option Agreement (Exhibits E-1 and E-2). 
  
 4.
Representations and Warranties of the Executive. The Executive represents and warrants as follows: 
  
 (a) Binding Agreement. The Executive has the capacity to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The Executive has duly and validly executed and delivered this Agreement and this Agreement constitutes a legal, valid and binding obligation of the Executive, enforceable against the Executive in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforceability is
considered in a proceeding in equity or at law). 
  

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 (b) Ownership of Options. The Executive is the beneficial owner of the number of
Exchange Options on the signature page hereof, free and clear of any security interests, liens, charges, encumbrances, equities, claims, options or limitations of whatever nature and free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of the Exchange Options), except as may exist by reason of this Agreement or pursuant to applicable law, or pursuant to the restrictions on transferability and on exercise provided for in
the Company’s 1994 Stock Plan and any related option agreement. Except as provided for in this Agreement, the Merger Agreement and the other agreements contemplated hereby and thereby, there are no outstanding options or other rights to acquire
from the Executive, or obligations of the Executive to sell or to dispose of, any Exchange Options. 
  
 (c) No Agreements. Except for this Agreement, and any other agreements contemplated hereby, the Executive has not entered into or
agreed to be bound by any other arrangements or agreements of any kind with any other party with respect to the Exchange Options, including, but not limited to, arrangements or agreements with respect to the acquisition or disposition thereof or any
interest therein or the voting of any such shares. 
  
 (d) No Conflict. Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the performance of the Executive’s obligations hereunder will (a) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, or acceleration) under any contract, agreement, instrument, commitment, arrangement or understanding
to which the Executive is a party, or result in the creation of a security interest, lien, charge, encumbrance, equity or claim with respect to the Executive’s Exchange Options, or (b) require any material consent, authorization or
approval of any person, entity or government entity, or (c) violate or conflict with any writ, injunction or decree applicable to the Executive or the Executive’s Exchange Options. 
  
 (e) Securities Laws Matters. The Executive
acknowledges receipt of advice from Holding that (i) the New Options and any shares of Holding Common Stock acquired on exercise of the New Options (“Exercise Shares”) have not been registered under the Securities Act of 1933
(the “Act”) or qualified under any state securities or “blue sky” or non U.S. securities laws, (ii) it is not anticipated that there will be any public market for any Exercise Shares, (iii) any Exercise
Shares must be held indefinitely and the Executive must continue to bear 
  

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 the economic risk of the investment in the shares of Holding Common Stock unless such shares of Holding
Common Stock are subsequently registered under the Act and such state or non U.S. securities laws or an exemption from such registration is available, (iv) Rule 144 promulgated under the Act (“Rule 144”) is not presently
available with respect to sales of any Exercise Shares and Holding has made no covenant to make Rule 144 available and Rule 144 is not anticipated to be available in the foreseeable future, (v) when and if any Exercise Shares may be disposed
of without registration in reliance upon Rule 144, such disposition can be made only in limited amounts and in accordance with the terms and conditions of such Rule, (vi) if the exemption afforded by Rule 144 is not available, public sale of
the shares of any Exercise Shares without registration will require the availability of an exemption under the Act, (vii) restrictive legends in the form set forth in the Stockholders Agreement shall be placed on the certificate representing
the shares of any Exercise Shares and (viii) a notation shall be made in the appropriate records of the Holding indicating that the shares of any Exercise Shares are subject to restrictions on transfer and, if Holding should in the future
engage the services of a stock transfer agent, appropriate stop-transfer instructions will be issued to such transfer agent with respect to any Exercise Shares. 
  
 (f) Accredited Investor. The Executive is an “accredited investor” as such term is defined
in Rule 501(a) promulgated under the Securities Act. 
  
 (g) Executive’s Experience. (A) The Executive’s financial situation is such that the Executive can afford to bear the economic risk of holding the New Options for an indefinite period of time, (B) the
Executive can afford to suffer complete loss of his investment in the New Options, and (C) the Executive’s knowledge and experience in financial and business matters are such that the Executive is capable of evaluating the merits and
risks of the Executive’s investment in the New Options. 
  
 (h) Access to Information. The Executive represents and warrants that the Executive has been granted the opportunity to ask questions of, and receive answers from, representatives of Holding concerning the
terms and conditions of the Option Exchange and to obtain any additional information that the Executive deems necessary to verify the accuracy of the information so provided. 
  
 (i) Investment Intent. The Executive is acquiring the New Options, and such Executive will acquire
any Exercise Shares solely for the Executive’s own account for investment and not with a view to or for sale in connection with any distribution thereof. The Executive agrees that the Executive will not, directly or indirectly, offer, transfer,
sell, pledge, hypothecate or otherwise dispose of any of the New Options or any Exercise Shares (or solicit any offers to 
  

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 buy, purchase or otherwise acquire or take a pledge of any shares of Holding Common Stock), except in
compliance with (i) the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder, (ii) applicable state and non-U.S. securities or “blue sky” laws and (iii) the provisions of
this Agreement, the Rollover Stock Option Agreement and the Stockholders Agreement. 
  
 5. Representations and Warranties of Holding. Holding represents and warrants as follows: 
  
 (a) Corporate Form. Holding is a corporation duly organized, validly existing and in good standing under the laws of the State of
Delaware and has (and, immediately following the Effective Time (as defined in the Merger Agreement), will have) all requisite corporate power and authority to own or lease and operate its properties and to carry on its business as now conducted.

  
 (b) Corporate Authority, etc. Holding
has (and, immediately prior to the Effective Time, will have) all requisite corporate power and authority to enter into this Agreement and to perform all of its obligations hereunder and to carry out the transactions contemplated hereby and Holding
has (and, immediately prior to the Effective Time, will have) all requisite corporate power and authority to issue the New Options. Holding has duly and validly executed and delivered this Agreement and this Agreement constitutes a legal, valid and
binding obligation on Holding, enforceable against Holding in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights
generally and by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law). The Exercise Shares, when issued, delivered and paid for in accordance with the terms hereof, will be duly and
validly issued, fully paid and nonassessable. 
  
 (c) Required Filings and Approvals. Other than as provided for in the Merger Agreement and the disclosure schedules thereto, the execution and delivery of this Agreement by Holding, and the consummation of the transactions
contemplated hereby by Holding, do not require a material consent, approval or authorization of, or filing, registration or qualification with, any governmental authority on the part of Holding, other than the filings, registrations or
qualifications (i) that may be required under Regulation D under the Securities Act, (ii) that may be required under the state securities laws or “blue sky” laws of any state of the United States of America that may be
required to be made or obtained, all of which Holding will comply with prior to the date of the Closing, or (iii) the failure of which to make or obtain, in the aggregate, would not reasonably be expected to have a material adverse effect on
Holding or the Company. 
  

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 (d) No Conflicts. Other than as provided for in the Merger Agreement and the
disclosure schedules thereto, none of the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby, by Holding will conflict with the certificate of incorporation or the by-laws of Holding or
result in any breach of, or constitute a default under any contract, agreement or instrument to which Holding is a party or by which it or any of its respective assets is bound. 
  
 6. Conditions Precedent. The obligations of Holding to consummate the transactions contemplated hereby are subject to
(i) the conditions set forth in Section 7.01 and 7.02 of the Merger Agreement being satisfied or waived by Holding, (ii) the relevant parties entering into the LLC Agreement, and (iii) the Executive having entered into the
Stockholders Agreement and the Registration Rights Agreement referred to in Section 3; provided that Holding may waive the condition set forth in the preceding Clause (iii). 
  
 7. Miscellaneous. 
  
 (a) Binding Effect; Benefits. This Agreement shall be binding upon the successors, heirs, executors and administrators of the
parties hereto. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement and their respective successors or permitted assigns any legal or equitable right, remedy or
claim under or in respect of any agreement or any provision contained herein, except as provided in Section 7(j) below. No party shall have liability for any breach of any representation or warranty contained herein, except for any knowing or
intentional breach thereof. 
  
 (b)
Amendments. This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by the Executive and Holding. 
  
 (c) Assignability. Neither this Agreement nor any
right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any party without the prior written consent of the other. 
  

(d) Specific Performance. The parties acknowledge and agree that any breach of the terms of this Agreement would give rise to
irreparable harm for which money damages would not be an adequate remedy and accordingly the parties hereto agree that, in addition to any other remedies, each party shall be entitled to enforce the terms of this Agreement by a decree of specific
performance without the necessity of proving the inadequacy of money damages as a remedy. 
  

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 (e) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. 
  
 (f)
Counterparts. This Agreement may be executed by facsimile and in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 
  
 (g) Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated herein are not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner. 
  
 (h) Waiver. Any party to this Agreement may waive any condition to their obligations contained
herein. 
  
 (i) Termination. This
Agreement shall terminate on the earliest to occur of (i) the termination of the Merger Agreement in accordance with its terms and (ii) an agreement in writing of Holding and the Executive to terminate this Agreement. Termination shall
not relieve any party from liability for any intentional breach of its obligations hereunder committed prior to such termination. 
  
 (j) Third Party Beneficiary. The Company is a third party beneficiary of this Agreement with the right to enforce the provisions
hereof. 
  
 [The signature page follows] 
  

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 IN WITNESS WHEREOF, Holding and the Executive have executed this Agreement as of the date first above
written. 
  

					
	 DLI HOLDING CORP.

		
	 By:
	 	 /s/ Philip E. Berney

	 	 	 Name:
	 	 Philip E. Berney

	 	 	 Title:
	 	 President

	
	 EXECUTIVE

	
	 /s/ Harvey P. Alstodt

	 Harvey P. Alstodt

  

							
	 Date of Grant of Exchange
Options

	  	 Number of
 Exchange Options

	  	Current Exercise Price of
Exchange Options

	  	Expiration Date of Exchange
Options

	 July 17, 2002
	  	20,397	  	19.9456	  	July 17, 2012
	 July 24, 2001
	  	7,596	  	9.5972	  	July 24, 2011Rollover Stock Option Agreement, William McMenemy

 Exhibit 10.13 
  
 DLI Holding Corp. 
  
 ROLLOVER STOCK OPTION AGREEMENT 
  
 ROLLOVER STOCK OPTION AGREEMENT (the “Agreement”), dated as of January 27, 2005, between DLI Holding Corp. a Delaware corporation
(“Holding”), and William McMenemy (the “Employee”). Capitalized terms used herein without definition have the meaning set forth in Section 15 hereof. 
  
 WHEREAS, in connection with the merger of Del Laboratories, Inc., a Delaware
corporation (“Del”) into DLI Acquisition Corp., a Delaware corporation, (the “Merger”) Holding and the Employee entered into an Exchange Agreement, dated as of January 27, 2005 (the
“Exchange Agreement”), pursuant to which the Employee agreed to exchange certain options to purchase shares of common stock of Del held by the Employee prior to the Merger (the “Del Options”) for
options to purchase common stock of Holding (“Holding Common Stock”). 
  
 NOW, THEREFORE, the parties hereto agree as follows: 
  

	 	1.	Confirmation of Grant, Option Price. 

  
 (a) Confirmation of Grant. Holding hereby evidences and confirms the grant to the Employee, effective as of the date hereof (the “Grant
Date”), of options to purchase from Holding the number of shares of Holding Common Stock (the “Options”) specified on Schedule A hereto. 
  
 (b) Option Price. Each Option shall have the exercise price per share (the “Option Price”)
specified on Schedule A hereto. 
  
 (c) Character of
Options. The Options granted hereunder are not intended to be “incentive stock options” within the meaning of section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). 
  

	 	2.	Vesting, Exercisability and Forfeiture. 

  
 All Options granted pursuant to this agreement shall be fully vested as of the date hereof and shall terminate on the date specified on Schedule A hereto,
which is the date the applicable Del Options would have otherwise terminated if the Employee had not entered into the Exchange Agreement and if the Del Options had remained outstanding following the Merger (the “Expiration
Date”). All Options may be exercised, subject to the provisions hereof, on the Exercise Date. Any Option not exercised on the Exercise Date shall terminate. 

	 	3.	Method of Exercise and Payment. 

  
 All or part of the Options may be exercised by the Employee upon (a) the Employee’s written notice to Holding of exercise, (b) the
Employee’s payment of the Option Price in full at the time of exercise (i) in cash or cash equivalents, (ii) at any time following a Public Offering, in unencumbered shares of Holding Common Stock owned by the Employee for at
least six (6) months (or such longer period as is required by applicable accounting standards to avoid a charge to earnings) having a Fair Market Value on the date of exercise equal to such Option Price, (iii) at any time following a Public
Offering, in a combination of cash and Holding Common Stock or (iv) in accordance with such procedures or in such other form as the Committee shall from time to time determine and (c) if such Options are exercised prior to a Public
Offering, the Employee’s execution of the Stockholders Agreement and the Registration Rights Agreement in order to become a party to such agreements with respect to the shares of Holding Common Stock issuable upon the exercise of such Options.
As soon as practicable after receipt of a written exercise notice and payment in full of the exercise price of any Options and, if applicable, receipt of evidence of the Employee’s execution of the Stockholders Agreement and Registration Rights
Agreement in accordance with this Section 3, but subject to Section 6 below, Holding shall deliver to the Employee a certificate or certificates representing the shares of Holding Common Stock acquired upon the exercise of such Options, registered
in the name of the Employee, provided that, if Holding, in its sole discretion, shall determine that, under applicable securities laws, any certificates issued under this Section 3 must bear a legend restricting the transfer of such Holding
Common Stock, such certificates shall bear the appropriate legend. In addition to the other methods for paying the Option Price provided for in this Section 3, Employee may pay the Option Price by having Holding retain a number of shares of Holding
Common Stock that would otherwise be issuable on exercise of the Options having a Fair Market Value equal to such Option Price. It is agreed that Employee may satisfy clause (a) above by delivering written notice to Holding of his desire to pay the
Option Price as described in the preceding sentence on or before the Exercise Date and clause (c) above by being reasonably available to execute such agreements on or before the Exercise Date (although Holding may, in its sole discretion, defer
issuance of any Holding Common Stock until such agreements are actually executed). 
  

	 	4.	Company Call Right; Shares Received on Option Exercise; Termination. 

  

(a) Upon the Employee’s termination of employment with Holding for any reason, and prior to a Public Offering, Holding shall have the right to
repurchase the Employee’s Options from the Employee for an amount equal to the excess, if any, of the Fair Market Value of the Holding Common Stock underlying the Options over the aggregate Option Price of the Options. 
  

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 (b) Upon the Employee’s termination of employment with Holding for any reason, and prior to a Public
Offering, any shares of Holding Common Stock purchased by the Employee upon exercise of the Options shall be subject in all respects to the Stockholders Agreement. 
  
 (c) Except as described in this Section 4, a termination of the Employee’s employment for any reason shall have no
effect on the terms and conditions of the Options. 
  
 (d) To the
extent that the right in this Section 4(a) is subject to the requirements of Section 409A of the Code, the Company shall exercise such right only on the Qualifying Termination Date or such other date as may comply with Section 409A of the Code.

  

	 	5.	Qualifying Change in Control. 

  
 (a) Payment. Unless the Committee shall otherwise determine in good faith that such treatment is inappropriate, on a Qualifying Change in Control
Date, each outstanding Option shall be canceled in exchange for a payment in cash of an amount equal to the excess, if any, of the Change in Control Price over the Option Price. 
  
 (b) Transferability. The Committee may not determine that the treatment in Section 5(a) is inappropriate unless the
Holding Common Stock issuable on exercise of the Option (or the equity security into which such stock is converted under Section 9 hereof in connection with the Change in Control) shall have terms and conditions which provide that in the event that
the Employee’s employment is involuntarily terminated following a Change in Control any conditions on the Employee’s rights under, or any restrictions on transfer applicable to, any such equity shall be waived or shall lapse, as the case
may be. 
  
 (c) Notice. Holding will use its good-faith
efforts to provide 30 days notice to the Employee of the Qualifying Change in Control Date. 
  

	 	6.	Tax Withholding. 

  
 Whenever Holding Common Stock is to be issued pursuant to the exercise of an Option or any cash payment is to be made hereunder, Holding or any Subsidiary
shall have the power to withhold, or require the Employee to remit to Holding or such Subsidiary, an amount sufficient to satisfy the statutory minimum federal, state, and local withholding tax requirements relating to such transaction, and Holding
or such Subsidiary may defer payment of cash or issuance of Holding Common Stock until such requirements are satisfied. 
  

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	 	7.	Nontransferability of Awards. 

  
 No Options granted hereby may be sold, transferred, pledged, assigned, encumbered or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution or, on such terms and conditions as the Committee shall establish, to a Permitted Transferee. All rights with respect to Options granted to the Employee hereunder shall be exercisable during his lifetime only by such
Employee or, if permitted by the Committee, a Permitted Transferee. Following the Employee’s death, all rights with respect to the Employee’s outstanding Options shall be exercised by his designated beneficiary, his estate or, if permitted
by the Committee, a Permitted Transferee. 
  

	 	8.	Beneficiary Designation. 

  
 The Employee may from time to time name any beneficiary or beneficiaries (who may be named contingently or successively) by whom any right under this
Agreement is to be exercised in case of his death. Each designation will revoke all prior designations by the Employee, shall be in a form reasonably prescribed by the Committee, and will be effective only when filed by the Employee in writing with
the Committee during his lifetime. If no beneficiary is named, or if a named beneficiary does not survive the Employee, benefits remaining unpaid or Options outstanding at the Employee’s death shall be paid to or exercisable by the
Employee’s surviving spouse, if any, or otherwise to his estate. 
  

	 	9.	Adjustment in Capitalization. 

  
 The aggregate number of shares of Holding Common Stock subject to outstanding Option grants and the respective exercise prices applicable to outstanding
Options, shall be proportionately adjusted to reflect, as deemed equitable and appropriate by the Committee, any stock dividend, stock split or share combination of, or extraordinary cash dividend on, the Holding Common Stock, or any
recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares affecting the Holding Common Stock, or any issuance of any warrants or rights offering (other than any such offering under the DLI
Holding Corp. Stock Incentive Plan) to purchase Holding Common Stock at a price materially below Fair Market Value, or any other similar event affecting the Holding Common Stock. All determinations and calculations required under this Section 9
shall be made in the sole discretion of the Committee. 
  

	 	10.	Requirements of Law. 

  
 The issuance of shares of Holding Common Stock pursuant to the Options shall be subject to all applicable laws, rules and regulations, and to such
approvals by any 

  

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governmental agencies or national securities exchanges as may be required. No shares of Holding Common Stock shall be issued upon exercise of any Options
granted hereunder, if such exercise would result in a violation of applicable law, including the U.S. federal securities laws and any applicable state or foreign securities laws. 
  

	 	11.	No Guarantee of Employment. 

  
 Nothing in this Agreement shall interfere with or limit in any way the right of Holding or any Subsidiary to terminate the Employee’s employment at
any time, or confer upon the Employee any right to continue in the employ of Holding or any Subsidiary. 
  

	 	12.	No Rights as Stockholder. 

  
 Except as otherwise required by law, the Employee shall not have any rights as a stockholder with respect to any shares of Holding Common Stock covered by
the Options granted hereby until such time as the shares of Holding Common Stock issuable upon exercise of such Options have been so issued. Notwithstanding anything else contained herein to the contrary, the exercise of any portion of the Options
conveyed hereby is expressly conditioned upon the Employee becoming a party to the Stockholders Agreement and the Registration Rights Agreement with respect to any shares of Holding Common Stock to be acquired upon such exercise. 
  

	 	13.	Restrictions on Sale Upon Public Offering. 

  
 Except as otherwise provided in the Registration Rights Agreement, the Employee agrees that, in the event that Holding files a registration statement
under the Act with respect to a public offering of any shares of its capital stock, the Employee will not effect any sale or distribution of any shares of the Holding Common Stock including, but not limited to, pursuant to Rule 144 under the
Securities Act, within seven days prior to and 90 days (unless Holding, in consultation with the managing underwriter, determines that a longer period, not to exceed 180 days, is required, or such shorter period as the managing underwriter for any
underwritten offering may agree) after the effective date of the registration statement relating to such registration (the “Trigger Date”), except as part of such registration or unless, in the case of a sale or distribution
not involving a public offering, the transferee agrees in writing to be subject to this Section 13; provided that, with respect to any shelf registration statement on Form S-3, the Trigger Date shall be the pricing of any offering made under
such registration statement and the Employee agrees to execute a customary holdback agreement with the underwriters for any such public offering. 
  

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	 	14.	Interpretation; Construction. 

  
 Any determination or interpretation by the Committee under or pursuant to this Agreement shall be final and conclusive on all persons affected hereby.

  

	 	15.	Additional Definitions. 

  
 Whenever used herein, the following terms shall have the respective meanings set forth below: 
  
 Act: the Securities Act of 1933, as amended. 
  
 Board: the Board of Directors of Holding. 
  
 Change in Control: a transaction or series of transactions (other than
a Public Offering): 
  
 (i) involving the sale,
transfer or other disposition by the Kelso Entities to one or more persons or entities that are not, immediately prior to such sale, affiliates of Holding or any Kelso Entity, of all or substantially all of the Holding Common Stock beneficially
owned by the Kelso Entities as of the date of such transaction; or 
  
 (ii) involving the sale, transfer or other disposition of all or substantially all of the assets of Holding and the Subsidiaries, taken as a whole, to one or more persons or entities that are not, immediately prior to
such sale, transfer or other disposition, affiliates of Holding or any of the Kelso Entities. 
  
 Change in Control Price: the price per share of Holding Common Stock paid in conjunction with any transaction resulting in a Change in Control (as determined in good faith by the Committee if any part of the
offered price is payable other than in cash). 
  
 Committee: the Compensation Committee of the Board or, if there shall not be any such committee then serving, the Board. 
  
 Exercise Date: the first to occur of (i) a Qualifying Change in Control Date, (ii) a Qualifying Termination Date and (iii) the day before the
Expiration Date. 
  
 Fair Market Value: if no Public
Offering has occurred, the fair market value of a share of Holding Common Stock as determined in accordance with the Stockholders Agreement. Following a Public Offering, the Fair Market Value, on any date of determination, shall mean the average of
the closing sales prices for a share of Holding Common Stock as reported on a national exchange for each of the ten business 
  

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days preceding the date of determination or the average of the last transaction prices for a share of Holding Common Stock as reported on a nationally
recognized system of price quotation for each of the ten business days preceding the date of determination. In the event that there are no Holding Common Stock transactions reported on such exchange or system on such date, Fair Market Value shall
mean the closing price on the immediately preceding date on which Holding Common Stock transactions were so reported. 
  
 Kelso: Kelso Investment Associates VII, L.P. 
  
 Kelso Entities: collectively, Kelso and KEP VI, LLC. 
  
 Permitted Transferee: a transferee permitted under Section 1.2(b) or 1.2(c) of the Stockholders Agreement. 
  
 Public Offering: an underwritten initial public offering of Holding
Common Stock having an aggregate offering value (measured by Holding’s proceeds before underwriters’ discounts and selling commissions) of at least $75 million and after which an established trading market exists for Holding Common Stock.

  
 Registration Rights Agreement: the Registration Rights
Agreement, dated as of January 27, 2005, among Holding, and certain other stockholders of Holding, as it may be amended from time to time. 
  
 Stockholders Agreement: the Stockholders Agreement, dated as of January 27, 2005, among Holding, DLI Holding, LLC, a Delaware limited liability
company, and certain other stockholders of Holding, as it may be amended from time to time. 
  
 Qualifying Change in Control Date: either (i) if Holding has provided at least 30 days notice of the Change in Control, the date of a Change in Control that is also a “change in control” as used in
Section 409A, or (ii) if Holding has not provided at least 30 days notice of the Change in Control, and a Change in Control that is also a “change in control” as used in Section 409A occurs, the 30th day after Holding has provided such notice. 
  
 Qualifying Termination Date: either (i) if Employee is not a “key employee” as used in Section 409A, the 30th day after Employee’s termination of employment with Holding for any reason, and (ii) if Employee is a “key
employee” as used in Section 409A, six months after Employee’s termination of employment with Holding for any reason. 
  
 Section 409A: Section 409A of the Internal Revenue Code of 1986, as amended, and the rules and guidance issued thereunder (and any successor
section). 
  

 7 

 Subsidiary: any corporation a majority of whose outstanding voting securities is owned, directly
or indirectly, by Holding. 
  

	 	16.	Miscellaneous. 

  
 (a) Notices. All notices, requests, demands, letters, waivers and other communications required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been duly given if (i) delivered personally, (ii) mailed, certified or registered mail with postage prepaid, (iii) sent by next-day or overnight mail or delivery, or (iv) sent by
fax, as follows: 
  

	 	(i)	If to Holding, to it at: 

  

	 	    	DLI Holding Corp. 

	 	    	c/o Kelso & Company 

	 	    	320 Park Avenue, 24th Floor

	 	    	New York, New York 10022 

	 	    	Fax: 212-223-2379 

	 	    	Attention: James J. Connors II, Esq. 

  

	 	(ii)	If to the Employee, to the Employee’s last known home address, 

  

	 	    	with a copy to 

  

	 	    	Sullivan & Cromwell LLP 

	 	    	125 Broad Street 

	 	    	New York, New York 10004 

	 	    	Fax: 212-558-3588 

	 	    	Attention: Marc Trevino, Esq. 

  
 or to such other person or address as any party shall specify by notice in writing to Holding. All such notices, requests, demands, letters, waivers and other
communications shall be deemed to have been received (w) if by personal delivery on the day after such delivery, (x) if by certified or registered mail, on the fifth business day after the mailing thereof, (y) if by next-day or
overnight mail or delivery, on the day delivered, or (z) if by fax, on the day delivered, provided that such delivery is confirmed. 
  
 (b) Binding Effect; Benefits. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or
claim under or in respect of any agreement or any provision contained herein. 
  

 8 

 (c) Waiver. Either party hereto may by written notice to the other (i) extend the time for
the performance of any of the obligations or other actions of the other under this Agreement, (ii) waive compliance with any of the conditions or covenants of the other contained in this Agreement and (iii) waive or modify performance
of any of the obligations of the other under this Agreement. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of either party, shall be deemed
to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained herein. The waiver by either party hereto of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any preceding or succeeding breach and no failure by either party to exercise any right or privilege hereunder shall be deemed a waiver of such party’s rights or privileges hereunder or shall be deemed a waiver of
such party’s rights to exercise the same at any subsequent time or times hereunder. 
  
 (d) No Impact On Benefits. The Options granted under this Agreement shall not be deemed compensation for purposes of calculating an Employee’s rights under any employee benefit plan. 
  
 (e) Securities Law Compliance. The Employee shall represent to Holding
in writing, when the Employee receives shares upon exercise of an Option (or at such other time as the Committee deems appropriate) that the Employee is acquiring such shares (unless they are then covered by an effective registration statement filed
under the Act) for the Employee’s own account for investment only and with no present intention to transfer, sell or otherwise dispose of such shares except such disposition by a legal representative as shall be required by will or the laws of
any jurisdiction in winding up the estate of the Employee. Such shares shall be transferable only if the proposed transfer shall be permissible pursuant to this Agreement and if, in the opinion of counsel satisfactory to Holding, such transfer at
such time will be in compliance with all applicable securities laws. 
  
 (f) Unsecured Creditor. To the extent that the Employee or his executor, administrator or other personal representative, as the case may be, acquires a right to receive any payment from Holding pursuant to this Agreement, such right
shall be no greater than the right of an unsecured general creditor of Holding. 
  
 (g) Severability of Provisions. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Agreement
shall be construed and enforced as if such provision had not been included. 
  

 9 

 (h) Applicable Law. This Agreement shall be governed by and construed in accordance with the law
of the State of Delaware, regardless of the law that might be applied under principles of conflict of laws. 
  
 (i) Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement. 
  
 (j)
Counterparts. This Agreement 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. 
  
 — Signature page follows — 
  

 10 

 IN WITNESS WHEREOF, Holding and the Employee have duly executed this Agreement as of the date first above
written. 
  

					
	 DLI HOLDING CORP.

		
	 By:
	 	 /s/ Philip E. Berney

	 	 	 Name:
	 	Philip E. Berney
	 	 	 Title:
	 	President
	
	 EMPLOYEE

	
	 /s/ William McMenemy

	 William McMenemy

 Schedule A 
 McMenemy Rollover Options 
  

						
	 Options

	  	Exercise Price

	  	Expiration Date

	 21,819
	  	$	18.65	  	July 17, 2012
	 15,273
	  	$	8.97	  	July 24, 2011
	 7,224
	  	$	9.08	  	July 14, 2010
	 8,046
	  	$	22.17	  	July 10, 2010
	 2,514
	  	$	19.28	  	December 23, 2009
	 12,250
	  	$	19.71	  	October 29, 2009
	 42,249
	  	$	20.12	  	June 24, 2009
	 25,446
	  	$	18.99	  	April 12, 2009

  

 12

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