EXHIBIT 10 (u)
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of
November 30, 2007 by and between Alberto-Culver Company, a
Delaware corporation, and Richard J. Hynes (the
“Executive”).
WHEREAS, the Executive currently
serves as a key employee of the Company (as defined in
Section 1) and his services and knowledge are valuable to the
Company in connection with the management of one or more of the
Company’s principal operating facilities, divisions,
departments or subsidiaries; and
WHEREAS, the Board (as defined in
Section 1) has determined that it is in the best interests of
the Company and its stockholders to secure the Executive’s
continued services and to ensure the Executive’s continued
dedication and objectivity in the event of any threat or occurrence
of, or negotiation or other action that could lead to, or create
the possibility of, a Change in Control (as defined in
Section 1) of the Company, without concern as to whether the
Executive might be hindered or distracted by personal uncertainties
and risks created by any such possible Change in Control, and to
encourage the Executive’s full attention and dedication to
the Company, the Board has authorized the Company to enter into
this Agreement.
WHEREAS, the Executive is a party to
a Severance Agreement dated December 14, 1998, as amended on
May 28, 1999, January 10, 2006, and June 18,
2006 (the “Old Severance Agreement”) and the parties
hereto desire that the Old Severance Agreement be terminated on the
date of this Agreement and that this Agreement constitute the
entire understanding between the parties hereto regarding the
subject matter hereof.
NOW, THEREFORE, for and in
consideration of the premises and the mutual covenants and
agreements herein contained, the Company and the Executive hereby
agree as follows:
1. Definitions . As used in
this Agreement, the following terms shall have the respective
meanings set forth below:
(a) “Board” means the
Board of Directors of the Company.
(b) “Cause means (1) a
material breach by the Executive of those duties and
responsibilities of the Executive which do not differ in any
material respect from the duties and responsibilities of the
Executive during the six-month period immediately prior to a Change
in Control (other than as a result of incapacity due to physical or
mental illness) which is demonstrably willful and deliberate on the
Executive’s part, which is committed in bad faith or without
reasonable belief that such breach is in the best interests of the
Company and which is not remedied in a reasonable period of time
after receipt of written notice from the Company specifying such
breach or (2) the commission by the Executive of a felony
involving moral turpitude.
(c) “Change in Control”
means:
(1) The occurrence of any one or
more of the following events:
(A) The acquisition by any
individual, entity or group (a “Person”), including any
“person” within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), of beneficial ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act of both
(x) 20% or more of the combined voting power of the then
outstanding securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting
Securities”) and (y) combined voting power of
Outstanding Company Voting Securities in excess of the combined
voting power of the Outstanding Company Voting Securities held by
the Exempt Persons (as such term is defined in Section 1(f));
provided , however , that a Change in Control shall
not result from an acquisition of Company Voting
Securities:
(i) directly from the Company,
except as otherwise provided in Section 1(c)(2)(A);
(ii) by the Company, except as
otherwise provided in Section 1(c)(2)(B);
(iii) by an Exempt
Person;
(iv) by an employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or
(v) by any corporation pursuant to a
reorganization, merger or consolidation involving the Company, if,
immediately after such reorganization, merger or consolidation,
each of the conditions described in clauses (i) and
(ii) of Section 1(c)(1)(C) shall be satisfied.
(B) The cessation for any reason of
the members of the Incumbent Board (as such term is defined in
Section 1(h)) to constitute at least a majority of the
Board.
(C) Consummation of a
reorganization, merger or consolidation unless, in any such case,
immediately after such reorganization, merger or
consolidation:
(i) more than 60% of the combined
voting power of the then outstanding securities of the corporation
resulting from such reorganization, merger or consolidation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals or entities who were the beneficial owners
of the combined voting power of all of the Outstanding Company
Voting Securities immediately prior to such reorganization, merger
or consolidation; and
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(ii) at least a majority of the
members of the board of directors of the corporation resulting from
such reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such reorganization,
merger or consolidation.
(D) Consummation of the sale or
other disposition of all or substantially all of the assets of the
Company other than (x) pursuant to a tax-free spin-off of a
subsidiary or other business unit of the Company or (y) to a
corporation with respect to which, immediately after such sale or
other disposition:
(i) more than 60% of the combined
voting power of the then outstanding securities thereof entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of the
combined voting power of all of the Outstanding Company Voting
Securities immediately prior to such sale or other disposition;
and
(ii) at least a majority of the
members of the board of directors thereof were members of the
Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other
disposition.
(E) Approval by the stockholders of
the Company of a plan of complete liquidation or dissolution of the
Company.
(2) Notwithstanding the provisions
of Section 1(c)(1)(A):
(A) no acquisition of Company Voting
Securities shall be subject to the exception from the definition of
Change in Control contained in clause (i) of
Section 1(c)(1)(A) if such acquisition results from the
exercise of an exercise, conversion or exchange privilege unless
the security being so exercised, converted or exchanged was
acquired directly from the Company; and
(B) for purposes of clause
(ii) of Section 1(c)(1)(A), if any Person (other than the
Company, an Exempt Person or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company) shall, by reason of an acquisition of
Company Voting Securities by the Company, become the beneficial
owner of (x) 20% or more of the combined voting power of the
Outstanding Company Voting Securities and (y) combined voting
power of Outstanding Company Voting Securities in excess of the
combined voting power of the Outstanding Company Voting Securities
held by the Exempt Persons, and such Person shall, after such
acquisition of Company Voting Securities by the Company, become the
beneficial owner of any additional Outstanding Company Voting
Securities and such beneficial ownership is publicly announced,
such additional beneficial ownership shall constitute a Change in
Control.
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(d) “Company” means
Alberto-Culver Company, a Delaware corporation.
(e) “Date of
Termination” means (1) the effective date on which the
Executive’s employment by the Company terminates as specified
in a prior written notice by the Company or the Executive, as the
case may be, to the other, delivered pursuant to Section 11 or
(2) if the Executive’s employment by the Company
terminates by reason of death, the date of death of the Executive,
provided, that if there is an agreement or understanding that the
Executive will continue to render services, as an employee,
consultant, independent contractor, or otherwise to the Company at
a level of more than 20 percent of the average level of bona fide
services performed (whether as an employee or an independent
contractor) over the immediately preceding 36-month period (or the
Executive's full period of employment if less than 36 months), the
Date of Termination shall be the date on which the Executive
permanently ceases to provide such services.
(f) “Exempt Person” (and
collectively, the “Exempt Persons”) means:
(1) Leonard H. Lavin or Bernice E.
Lavin;
(2) any descendant of Leonard H.
Lavin and Bernice E. Lavin or the spouse of any such
descendant;
(3) the estate of any of the persons
described in Section 1(f)(1) or (2);
(4) any trust or similar arrangement
for the benefit of any person described in Section 1(f)(1) or
(2); or
(5) the Lavin Family Foundation or
any other charitable organization established by any person
described in Section 1(f)(1) or (2).
(g) “Good Reason” means,
without the Executive’s express written consent, the
occurrence of any of the following events after a Change in
Control:
(1) any of (i) the assignment
to the Executive of any duties inconsistent in any material respect
with the Executive’s position(s), duties, responsibilities or
status with the Company immediately prior to such Change in
Control, (ii) a change in the Executive’s reporting
responsibilities, titles or offices with the Company as in effect
immediately prior to such Change in Control or (iii) any
removal or involuntary termination of the Executive from the
Company otherwise than as expressly permitted by this Agreement or
any failure to reelect the Executive to any position with the
Company held by the Executive immediately prior to such Change in
Control;
(2) a reduction by the Company in
the Executive’s rate of annual base salary as in effect
immediately prior to such Change in Control or as the same may be
increased from time to time thereafter or the failure by the
Company to increase such rate of base salary each year after such
Change in Control by an amount which at least equals, on a
percentage basis, the mean average percentage increase in the rate
of base salary for the Executive during the two full fiscal years
of the Company immediately preceding such Change in
Control;
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(3) any requirement of the Company
that the Executive (i) be based anywhere other than at the
facility where the Executive is located at the time of the Change
in Control or (ii) travel on Company business to an extent
substantially more burdensome than the travel obligations of the
Executive immediately prior to such Change in Control;
(4) the failure of the Company to
(i) continue in effect any employee benefit plan or
compensation plan in which the Executive is participating
immediately prior to such Change in Control, unless the Executive
is permitted to participate in other plans providing the Executive
with substantially comparable benefits, or the taking of any action
by the Company which would adversely affect the Executive’s
participation in or materially reduce the Executive’s
benefits under any such plan, (ii) provide the Executive and
the Executive’s dependents welfare benefits (including,
without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) in accordance with
the most favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for the Executive
immediately prior to such Change in Control or, if more favorable
to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its
affiliated companies, (iii) provide fringe benefits in
accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for
the Executive immediately prior to such Change in Control or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies, (iv) provide an office or offices of
a size and with furnishings and other appointments, together with
exclusive personal secretarial and other assistance, at least equal
to the most favorable of the foregoing provided to the Executive by
the Company and its affiliated companies immediately prior to such
Change in Control or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies,
(v) provide the Executive with paid vacation in accordance
with the most favorable plans, policies, programs and practices of
the Company and its affiliated companies as in effect for the
Executive immediately prior to such Change in Control or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies, or (vi) reimburse the Executive
promptly for all reasonable employment expenses incurred by the
Executive in accordance with the most favorable policies, practices
and procedures of the Company and its affiliated companies in
effect for the Executive immediately prior to such Change in
Control or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies;
or
(5) the failure of the Company to
obtain the assumption agreement from any successor as contemplated
in Section 10(b).
For purposes of this Agreement, any
good faith determination of Good Reason made by the Executive shall
be conclusive; provided , however , that an isolated,
insubstantial and inadvertent action taken in good faith and which
is remedied by the Company promptly after receipt of notice thereof
given by the Executive shall not constitute Good Reason.
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(h) “Incumbent Board”
means those individuals who, as of January 1, 2007, constitute
the Board, provided that:
(1) any individual who becomes a
director of the Company subsequent to such date whose election, or
nomination for election by the Company’s stockholders, was
approved either by the vote of at least a majority of the directors
then comprising the Incumbent Board or by the vote of at least a
majority of the combined voting power of the Outstanding Company
Voting Securities held by the Exempt Persons shall be deemed to
have been a member of the Incumbent Board; and
(2) no individual who was initially
elected as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act, or any other
actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board or the Exempt Persons
shall be deemed to have been a member of the Incumbent
Board.
(i) “Nonqualifying
Termination” means a termination of the Executive’s
employment (1) by the Company for Cause, (2) by the
Executive for any reason other than a Good Reason, (3) as a
result of the Executive’s death or (4) by the Company
due to the Executive’s absence from his duties with the
Company on a full-time basis for at least 180 consecutive days as a
result of the Executive’s incapacity due to physical or
mental illness.
(j) “Termination Period”
means the period of time beginning with a Change in Control and
ending on the earlier to occur of (1) two years following such
Change in Control or (2) the Executive’s
death.
2. Obligations of the
Executive . The Executive agrees that in the event of a Change
in Control, he shall not voluntarily leave the employ of the
Company without Good Reason until 90 days following such Change in
Control. The Executive further agrees that in the event that any
person or group attempts a Change in Control, he shall not
voluntarily leave the employ of the Company during such attempted
Change in Control unless an event occurs which would have
constituted Good Reason had it occurred following a Change in
Control (for purposes of determining whether such an event would
have constituted Good Reason had it occurred following a Change in
Control, the definition of Good Reason shall be interpreted as if a
Change in Control had occurred when such attempted Change in
Control became known to the Board). Except as provided in
Section 3(c), the Executive acknowledges that if he leaves the
employ of the Company for any reason prior to a Change in Control,
he shall not be entitled to any payment or benefit pursuant to this
Agreement.
3. Paym
