Sally Beauty Supply 2006 Annual Report Download - page 133

THE TRANSACTIONS
Interests of Certain Persons in the Transactions
Termination Agreements. In connection with the transactions described above, on June 18, 2006, (i) Alberto-Culver entered into a
termination agreement with Mr. Bernick and (ii) Alberto-Culver and Sally Holdings entered into a termination and consulting
agreement with Mr. Renzulli. The description of these agreements below is subject to, and qualified by reference to, the agreements
filed herewith and incorporated herein by reference.
The termination agreement with Mr. Bernick provides that at the time of the distributions, Mr. Bernick will cease being Chief
Executive Officer and a director of Alberto-Culver (and, if the time of the distributions occurs after December 31, 2006, will cease
being an employee of Alberto-Culver). The termination agreement also provides that Mr. Bernick acknowledges that the transactions
under the investment agreement and other transaction agreements are not a change in control for purposes of his severance agreement
and that his severance agreement will terminate immediately prior to the time of the distributions. Following the time of the
distributions, Mr. Bernick will receive pursuant to the termination agreement,
• a lump sum payment of $6,723,200 in respect of his waiver of his severance agreement; and
• a lump sum payment of $2,660,000 as a retirement bonus.
The termination agreement also provides that Alberto-Culver will:
• for 36 months after the time of the distributions, continue to provide Mr. Bernick with certain medical benefits (and thereafter
permit Mr. Bernick to continue for his lifetime certain medical benefits with Alberto-Culver at his cost);
• reimburse Mr. Bernick for up to $25,000 of legal fees and expenses incurred in connection with the negotiation and execution
of his termination agreement.
Finally, the termination agreement provides that if the time of the distributions occurs prior to December 31, 2006, Mr. Bernick
will
• remain an employee of Alberto-Culver until such date, with salary and bonus opportunities consistent to those in place for him
prior to the time of the distributions and other benefits; and
• receive, following December 31, 2006, a payment equal to any additional amounts that would have been allocated to his
account under Alberto-Culver’ s Executive Deferred Compensation Plan had he remained an employee through January 31,
2007.
The termination and consulting agreement with Mr. Renzulli provides that at the time of the distributions, Mr. Renzulli’ s
employment with Alberto-Culver will terminate. The termination agreement also provides that Mr. Renzulli acknowledges that the
transactions under the investment agreement and other transaction agreements are not a Change in Control for purposes of his
severance agreement and that his severance agreement will terminate immediately prior to the time of the distributions. Following the
time of the distributions, Mr. Renzulli will receive pursuant to the termination and consulting agreement:
• from Sally Holdings a lump sum payment of $3,641,034 in respect of his waiver of his severance agreement; and
• from Alberto-Culver a lump sum payment approximately equal to the amount he would have received in salary, bonus and
additional contributions to the Alberto-Culver Executive Deferred Compensation Plan had he remained employed through
January 31, 2007.
The termination and consulting agreement also provides that for 36 months after the time of the distributions, Sally Holdings will
continue to provide Mr. Renzulli with certain medical benefits (and thereafter permit Mr. Renzulli to continue for his lifetime certain
medical benefits with Sally Holdings at his cost). Finally, the termination and consulting agreement provides that Mr. Renzulli will,
for a period of three years following the time of the distributions, be available to provide consulting services to the executive
management of Sally Holdings and its affiliates for up to a total of 20 days per calendar year. Sally Holdings shall pay Mr. Renzulli
$500,000 per year for providing these services.
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