EXHIBIT 10 (i)
Alberto-Culver
Company
Executive Deferred Compensation
Plan
(As amended and restated through
January 1, 2005)
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I.
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Preamble, Definitions and
Purpose
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Pursuant to this plan document,
Alberto-Culver Company will maintain an unfunded deferred
compensation plan, to be established as of January 1, 1999,
and to be known as the Alberto-Culver Company Executive Deferred
Compensation Plan (“Plan”). Under the terms of the
Plan, eligible employees of the Alberto-Culver Company and certain
of its domestic subsidiaries are allowed to defer a portion of
their Compensation. Participants and their beneficiaries shall have
no interest in any Company assets as a source of funds to satisfy
the benefit obligations under the Plan. The Plan constitutes an
unsecured promise by the Company to make benefit payments in the
future and Participants shall have the status of general unsecured
creditors of the Company.
Effective as of January 1,
2005, the Plan is being amended and restated in its
entirety.
Capitalized terms are generally
defined in the Section where used. The following terms appear in
several Sections and are defined below for convenient
reference:
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(a)
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“Beneficiary” -One or
more individuals, trusts or other entities that are designated in
the most recent writing by the Participant to receive a benefit in
the event of the Participant’s death. If more than one
Beneficiary survives the Participant, such benefit payments shall
be made equally to all such Beneficiaries, unless otherwise
indicated by the Participant on the beneficiary form.
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(b)
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“Code” -The Internal
Revenue Code of 1986, as amended.
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(c)
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“Compensation” -The
salary and commissions, where applicable, of an employee as set by
the Company for a Plan Year, exclusive of any amounts payable under
severance plans, option plans, and any other benefit or welfare
plan of the Company now or hereafter existing; provided, however,
that effective January 1, 2004, Compensation shall also
include incentive pay under the Company’s management
incentive plans, middle management bonus plans and sales incentive
plans, but expressly excluding any incentive pay under the
Company’s 1994 Shareholder Value Incentive Plan. The Plan
Administrator shall have the discretion to determine which types of
incentive pay are included in Compensation under the foregoing
definition, which includes the authority to add or delete incentive
plans of the Company.
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(d)
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“Compensation
Committee” -the Compensation Committee of the Board of
Directors of Alberto-Culver Company.
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(e)
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“Company”
-Alberto-Culver Company and any direct or indirect domestic
subsidiary which, with the consent of Alberto-Culver Company,
adopts this Plan by resolution of its board of directors. On the
date of this restatement, Sally Beauty Company, Inc., Beauty
Systems Group, Inc., Sally Beauty International Finance Company,
Inc., Sally Beauty Distribution, Inc., Armstrong McCall, LP,
Arnold’s, Inc., Pacific Salon Systems, Inc., Innovations
Successful Salon Services, Inc., Artistic Salon Services, Inc., XRG
Enterprises, Inc., Neka Salon Supply, Inc., Victory Beauty Systems,
Inc., Alberto-Culver
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(P.R.) Inc., Sally Beauty
Distribution of Ohio, Inc., Alberto-Culver USA, Inc., St. Ives
Laboratories, Inc., Pro-Line International, Inc., Alberto-Culver
Overseas, Inc., Alberto-Culver Research and Development, Inc., and
Alberto-Culver International, Inc. have adopted this Plan with the
consent of Alberto-Culver Company.
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(f)
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“Deferral Agreement
Form” -A written agreement between a Participant and the
Company to defer receipt of future Salary Compensation and/or Bonus
Compensation. The Plan Administrator may amend this form from time
to time. The Plan Administrator may adopt procedures providing for
the Deferral Agreement Form to consist of elections made by a
Participant using a website, telephone voice response system, or
other electronic means.
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(g)
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“Disability” –
A medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, and which entitles
the Participant to receive disability benefits for a period of not
less than 3 months under the Alberto-Culver Company Long Term
Disability Plan or any other plan maintained by the
Company.
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(h)
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“Eligible
Compensation” -The salary and commissions, where applicable,
of an employee as set by the Company for a Plan Year, exclusive of
any amounts payable under bonus and incentive plans, severance
plans, option plans, and any other benefit or welfare plan of the
Company now or hereafter existing.
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(i)
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“Excess Compensation”
-Compensation that cannot be taken into account under the 401(k)
Plans or the Profit-Sharing Plan because such Compensation exceeds
the limit on maximum includable compensation established under
Section 401(a)(17) of the Code.
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(j)
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“ERISA” -The Employee
Retirement Income Security Act of 1974, as amended.
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(k)
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“401(k) Plans” -The
Alberto-Culver 401(k) Savings Plan, the Sally Beauty 401(k) Savings
Plan, and, if so determined by the Compensation Committee, any
other plan sponsored by a participating Company that provides a
cash or deferred election under Section 401(k) of the
Code.
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(l)
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“Highly Compensated
Employee” -an employee of the Company whose Eligible
Compensation is greater than the dollar amount set forth in Code
Section 414(q) (or any successor provision), as adjusted by
the Internal Revenue Service from time to time.
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(m)
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“Key Employee”
– A Participant who is a “specified employee” as
defined in Section 409A of the Code. The status of
Participants as Key Employee shall be determined as of the last day
of each Plan Year, and shall apply for the 12-month period
beginning on the following April 1.
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(n)
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“Bonus Compensation”
– The annual cash bonus paid under either the Alberto-Culver
Company Management Incentive Plan (“MIP”) or Management
Bonus Plan (“MBP”).
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(o)
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Intentionally Omitted
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(p)
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“Salary Compensation”
– Salary and commissions, where applicable, of any employee
as set by the Company for a Plan Year.
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(q)
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“Participant” -A
Highly Compensated Employee who meets the participation
requirements set forth in Section 2.1 and either elects to
participate in the Plan in accordance herewith or is credited with
additional contributions pursuant to Section 2.8.
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(r)
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“Plan Administrator”
-An individual selected from time to time by the Compensation
Committee to administer the Plan and perform all accounting and
administrative functions in connection therewith. All or a portion
of the accounting and administrative functions may be delegated by
the Plan Administrator to a third party.
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(s)
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“Plan Year” -Each 12
consecutive month period commencing on January 1 and ending on
December 31.
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(t)
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“Profit-Sharing Plan”
-The Alberto-Culver Company Employees’ Profit Sharing
Plan.
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(u)
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“Termination of
Employment” –Any “separation from service”
within the meaning of Section 409A of the Code.
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Alberto-Culver Company and certain
of its domestic subsidiaries sponsor the 401(k) Plans for the
benefit of their U.S. employees and their beneficiaries. Each of
the 401(k) Plans operate as a “qualified plan”, as
defined under the Code, and therefore are subject to deferral
limitations contained therein. The Plan is established to mitigate
the effect of these limitations by allowing Participants to defer a
greater portion of their Compensation and the earnings thereon than
is permitted solely under the 401(k) Plans, and also, effective
January 1, 2004, to provide for certain other forms of
deferred compensation for Participants.
Beginning with bonuses paid for
fiscal years 2007 and beyond under the MIP and MBP, participants in
those plans will be entitled to defer a portion of their Bonus
Compensation under the terms of this Plan, provided such
participants qualify as a Highly Compensated Employee. All such
amounts deferred hereunder shall be governed by the terms of this
Plan and not by the terms of the MIP or MBP. In no event shall any
deferral of Bonus Compensation exceed the actual cash bonus paid
under the MIP or MBP, less all amounts withheld
therefrom.
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2.1
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Participation, Notification
and Election
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The Plan Administrator shall provide
notification to the Highly Compensated Employees of their
eligibility to participate in the Plan. The determination of
whether an employee is a Highly Compensated Employee will be
calculated based upon such employee’s applicable Eligible
Compensation in the preceding calendar year. The determination of
whether a new hire is a Highly Compensated Employee will be
calculated based upon such new hire’s initial annual salary
(without regard to commissions, if any) at the time of hire. The
Plan Administrator shall
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further provide eligible employees with a
Deferral Agreement Form. Eligible employees shall elect on the
Deferral Agreement Form for the applicable Plan Year, the
(i) percentage of Salary Compensation and/or Bonus
Compensation to be deferred in that Plan Year,
(ii) commencement date of distributions with respect to
deferrals made in such Plan Year, (iii) method of distribution
which may be either a single-sum distribution or annual
distribution installments which can be no more than ten, and
(iv) any other elections required by the Plan Administrator
and set forth on the Deferral Agreement Form. In the case of annual
installments, each installment shall be equal to the balance in the
Participant’s account immediately prior to the installment
divided by the number of remaining installments, and if any
distribution to a Key Employee is required to be deferred until six
months after his termination of employment, such deferral shall
apply only to the first installment and the remaining installments
shall be paid in accordance with the original schedule. A
Participant is not permitted to (i) defer Salary Compensation
or Bonus Compensation for a pay period which has commenced prior to
the date on which the Deferral Agreement Form is signed by the
Participant and delivered to the Plan Administrator and
(ii) with the exception of the Participant’s termination
of employment with the Company or a Change in Control as set forth
in Section 2.9, defer Salary Compensation or Bonus
Compensation for a period of time less than three years from the
commencement date of such deferrals. For those Participants that
have elected to defer all or a portion of their Salary Compensation
for calendar year 2005, such Participants may cancel or amend such
elections on or before December 31, 2005.
Deferral procedures with respect to
Bonus Compensation shall be governed by the applicable bonus plan.
Upon receipt of a properly completed and timely executed Deferral
Agreement Form, the Company will withhold from each paycheck, the
designated percentage of the Participant’s Salary
Compensation. Changes in salary during the Plan Year shall be
subject to the same Compensation deferral percentage as previously
elected and indicated on the Deferral Agreement Form. Subject to
applicable law, the deferral amount shall not be included as wages
subject to federal income tax on the Participant’s federal
income tax withholding statement. Participant deferrals shall be
subject to employment taxes, including Federal Insurance
Contributions Act contributions, and any state or local taxes as
required. The Participant must elect to defer not less than 1% and
not more than 100% of his/her Salary Compensation, provided that
under no circumstances shall the amount of Salary Compensation
deferred exceed 100% of the Participant’s Salary Compensation
less all amounts withheld therefrom. Such deferral percentages must
be in 1% increments.
All elections shall be made before
the beginning of the Plan Year in which the services are to be
performed with the exception of a new hire. A new hire will be
allowed to participate in the Plan provided such employee submits a
Deferral Agreement Form within 30 days of the date of hire. In such
an event, the new employee shall become a Participant on the first
day of the first payroll period beginning in the next calendar
quarter following the date on which the Deferral Agreement Form is
submitted to the Plan Administrator. If a new employee fails to
submit a Deferral Agreement Form within such 30 day period, the new
employee will not be allowed to participate in the Plan until the
beginning of the next Plan Year. Each Plan Year, Participants will
be required to complete a new Deferral Agreement Form prior to the
commencement of such Plan Year if they wish to defer income for
that Plan Year.
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If in any Plan Year the Company determines that
incentive pay, or any portion thereof, cannot be included in
Compensation under the Profit-Sharing Plan or any 401(k) Plan
without adversely affecting the tax qualified status of such Plan,
the Plan Administrator may adopt procedures consistent with
Section 409A of the Code to permit each Participant who is
otherwise a Highly Compensated Employee to elect to defer a
percentage of the net amount of such incentive pay.
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2.3
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Intentionally
Omitted
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2.4
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Establishment of
Accounts
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Each Participant shall have an
account established by the Plan Administrator and Participant
statements will be distributed to Participants in the Plan on not
less than a quarterly basis. The Company will maintain an accrual
for the aggregate amount of deferred benefits under the Plan on the
Company’s accounting records. A Participant’s account
may be divided into subaccounts as necessary to reflect different
payment or vesting terms, or for other purposes as the Plan
Administrator may determine.
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2.5
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Account Valuation and
Earnings
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The account established for each
Participant under Section 2.4 will be valued on not less than
a quarterly basis. Such account shall be adjusted quarterly to
reflect a reasonable fixed annual rate of interest as determined by
the Compensation Committee. This rate may be prospectively adjusted
on an annual or more frequent basis as deemed appropriate by the
Compensation Committee. The rate chosen by the Compensation
Committee from time to time shall apply to the entire balance of
all Participants’ accounts.
Except as otherwise provided in
Sections 2.7 and 2.8, the account established for each Participant
under Section 2.4 shall be payable to the Participant as
provided in the Deferral Agreement Form (or, in the case of a
Participant who is allocated a contribution without having entered
into a Deferral Agreement Form, in such manner as the Participant
may elect upon commencing participation in accordance with
procedures established by the Plan Administrator). The Plan
Administrator may allow, in its discretion, for amendments by
Participants to his Deferral Agreement Form with respect to the
timing of deferred payments thereunder, provided such amendments to
the timing of deferred payments are in accordance with
Section 409A of the Code, and provided further that for
purposes of Section 409A of the Code all installment payments
shall be treated as a single payment. In the event of any of the
following occurrences, the vested portion of the account
established for each Participant under Section 2.4 shall be
payable to the Participant or Beneficiary no later than 90 days
after the last day of the month in which the Plan Administrator
receives notification that:
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(a)
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The Participant’s
employment with the Company has terminated and the Participant has
not elected a future deferral payment date in his Deferral
Agreement Form, provided that if the Participant is a Key Employee
and the termination of employment did not result from death or
Disability, payment shall be deferred until six months after the
date of termination;
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or
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(b)
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a Change in Control occurs as set
forth in Section 2.9 (at which time the entire account shall
vest). In addition, upon liquidation of the Company, the Plan shall
be terminated and the vested portion of the accounts established
for each Participant under Section 2.4 shall be payable to
each Participant or Beneficiary as soon as reasonably practicable
following such liquidation.
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2.7
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Conditional Matching
Contributions
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If either of the following
conditions are satisfied for any Plan Year beginning with 2004,
Participants (other than Participants to whom Section 2.8(a)
applies) may be entitled to a matching contribution from the
Company:
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(a)
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A Participant, in the applicable
Plan Year, is required to and does receive a refund of a portion of
his elective deferrals under a 401(k) Plan in order for the 401(k)
Plan to satisfy the actual deferral percentage test contained in
Section 401(k)(3) of the Code, and the matching contribution
attributable to the excess elective deferrals is forfeited;
or
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(b)
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The Participant is required to
receive a refund of a portion of his matching contributions from a
401(k) Plan in order for the 401(k) Plan to satisfy the average
contribution percentage test contained in Section 401(m) of
the Code, and a portion of the excess matching contribution is
forfeited because it is not vested.
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If either of the foregoing
conditions have been satisfied, the Participant shall be credited a
matching contribution into his or her account maintained hereunder
equal to the portion of the matching contribution that is forfeited
under the applicable 401(k) Plan. Such matching contributions shall
be credited to
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