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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 the Participant’s account not more than 30 days
after the matching contributions were forfeited under the
applicable 401(k) Plan. Matching contributions unde
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