EQUITY SETTLEMENT AGREEMENT
This EQUITY SETTLEMENT AGREEMENT (this "AGREEMENT") is dated as of
February 15, 2007, and is between DLI Holding Corp., a Delaware corporation (the
"COMPANY"), DLI Holding LLC, a Delaware limited liability company ( the "LLC")
and Xxxxxxx XxXxxxxx ("XXXXXXXX").
WHEREAS, pursuant to Section 5 of the Transition Arrangements Agreement,
dated as of August 15, 2005, among the parties hereto, the LLC distributed
571.42 shares of common stock of the Company (the "COMPANY STOCK") in full
liquidation of the Common Units of the LLC purchased by XxXxxxxx (as
contemplated by Section 7.2(c) of the Limited Liability Company Agreement of the
LLC, dated January 27, 2005) (the "LLC AGREEMENT");
WHEREAS, the Company notified XxXxxxxx pursuant to Section 5 of the
Transition Arrangements Agreement that it desired to purchase all of XxXxxxxx'x
Company Stock pursuant to Section 3.1 of the Stockholders Agreement, dated as of
January 27, 2005, among the Company, the LLC and those employees of the Company
or its subsidiaries listed on Schedule A thereto, but the Company and XxXxxxxx
agreed that in light of the circumstances of the Company, such purchase would be
deferred;
WHEREAS, the Company now desires to effect the deferred repurchase
referred to above;
WHEREAS, pursuant to Section 4(a) of the Rollover Stock Option Agreement,
dated as of January 27, 2005, between the Company and XxXxxxxx, the Company also
desires to repurchase XxXxxxxx'x options at the prices set forth on Schedule A;
and
WHEREAS, in connection with the transactions contemplated hereby, XxXxxxxx
is willing to (i) forfeit the 5,454.42 Operating Units, as such term is defined
in the LLC Agreement, and for such Operating Units to be cancelled, (ii) release
the Company, the LLC and each of their affiliates from any and all obligations
and liabilities to XxXxxxxx with respect to the options, the Company Stock, the
Operating Units or otherwise with respect to any other interests in equity or
equity rights in respect of the Company, the LLC or any of their affiliates and
(iii) resign from all board memberships and other positions held by him with the
Company and its affiliates.
NOW, THEREFORE,
1. Representations and Warranties. XxXxxxxx hereby represents and warrants
that he has valid legal title to the Company Stock, and that the Company Stock
is free and clear of any liens, pledges, encumbrances, security interests or
other claims of any type or nature whatsoever. XxXxxxxx represents and warrants
that he has full power and authority to sell, transfer and deliver the Company
Stock to the Company, and upon such sale, transfer and delivery, the Company
shall acquire valid, lawful title to the Company Stock free and clear of any
liens, pledges, encumbrances, security interests or other claims of any type or
nature whatsoever.
2. Share Repurchase. XxXxxxxx hereby agrees to sell to the Company, and
the Company hereby agrees to purchase from XxXxxxxx, the Company Stock for an
aggregate purchase price of $20,000. Such purchase and sale shall be effective
on the date hereof and XxXxxxxx and the Company hereby agree and acknowledge
that on the date hereof, the Company shall pay such amount to XxXxxxxx and the
Company's records shall reflect that the shares are no longer owned by XxXxxxxx.
3. Option Cash Out. The Company hereby exercises its right to repurchase
XxXxxxxx'x options pursuant to Section 4(a) of the Rollover Stock Option
Agreement. XxXxxxxx and the Company hereby agree and acknowledge that on the
date hereof, the Company shall pay to XxXxxxxx $1,222,379.30, which is an amount
equal to (i) $2,000,259.38, which represents the difference between $32.72
(which the parties agree shall be the deemed fair market value of a share of
common stock of the Company for purposes of this Section 3) and the exercise
prices of the options identified on Schedule A multiplied by the number of
shares as to which such options relate, less (ii) applicable tax withholding
obligations of $777,880.08. XxXxxxxx and the Company hereby agree and
acknowledge that from the date hereof the options have no further force or
effect.
4. Cancellation of Operating Units. Notwithstanding anything in the LLC
Agreement or otherwise to the contrary, XxXxxxxx hereby waives all rights in
respect of the Operating Units and forfeits such Operating Units to the LLC.
5. Release. XxXxxxxx hereby releases the Company, the LLC and each of
their affiliates from any and all obligations and liabilities to XxXxxxxx with
respect to the options, the Company Stock, the Operating Units or otherwise with
respect to any other interests in equity or equity rights in respect of the
Company, the LLC or any of their affiliates. Without limiting the generality of
the forgoing, XxXxxxxx agrees that from the date hereof he shall have no rights
under the LLC Agreement, the Stockholders Agreement, the Registration Rights
Agreement, dated January 27, 2005, and the Rollover Stock Option Agreement, and
that such agreements and any schedules appended thereto may be amended in the
discretion of the parties thereto (other than XxXxxxxx) as they shall deem
necessary or appropriate to reflect the transactions contemplated by this
Agreement. The Company and the LLC and each of their affiliates hereby release
XxXxxxxx from any and all obligations and liabilities to the Company and/or the
LLC with respect to the options, the Company Stock, the Operating Units or
otherwise with respect to any other interests in equity or equity rights in
respect of the Company, the LLC or any of their affiliates.
6. Board Resignation. Effective as of the date hereof, XxXxxxxx hereby
resigns from all board memberships and other positions held by him with the
Company and its affiliates.
7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, XxXxxxxx the Company, and the LLC have executed this
Agreement as of the date set forth above.
DLI HOLDING CORP
By:
------------------------
Name:
Title:
DLI HOLDING LLC
By:
------------------------
Name:
Title:
EXECUTIVE
------------------------
Name: Xxxxxxx XxXxxxxx
SCHEDULE A
NUMBER OF EXERCISE SPREAD AGGREGATE
OPTIONS PRICE VALUE SPREAD VALUE
-------- ------ ------ -------------
21,819 $18.65 $14.07 $306,993.33
15,273 $ 8.97 $23.75 $362,733.75
7,224 $ 9.08 $23.64 $170,775.36
8,046 $22.17 $10.55 $84,885.30
2,514 $19.28 $13.44 $33,788.16
12,250 $19.71 $13.01 $159,372.50
42,249 $20.12 $12.60 $532,337.40
25,446 $18.99 $13.73 $349,373.58
------- -------------
134,821 $2,000,259.38
Withholding Obligations:
Federal Income Tax: $600,090.78
Social Security $ 1,766.48
Medicare $ 29,003.76
State Taxes: $147,019.06
TOTAL: $777,880.08
TOTAL CASH PAYMENT: $1,222,379.30
