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EXHIBIT 10 (w)
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of November 30, 2007 by
and between Alberto-Culver Company, a Delaware corporation, and
Gary P. Schmidt (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 1, 1997, as amended on May 28,
1999, February 24, 2004, 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. Payments Upon Termination of Employment or Prior to
November 17, 2008 .
(a) If during the Termination Period the employment of the
Executive shall terminate, other than by reason of a Nonqu
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