EXHIBIT 10 (b)

 

ALBERTO-CULVER COMPANY

1994 SHAREHOLDER VALUE INCENTIVE PLAN

 

(as amended through April 28, 2005)

 

I. GENERAL

 

  1.1 Purpose of the SVIP

 

The 1994 Shareholder Value Incentive Plan (“SVIP”) of the Alberto-Culver Company
(“Company”) is intended to advance the best interests of the Company by
providing key salaried employees who have substantial responsibility for the
Company’s management and growth with additional incentives through the grant of
awards based upon Total Shareholder Return as defined in Section 1.2(o),
thereby: (1) more closely linking the interests of key salaried employees with
shareholders, (2) increasing the personal stake of such key salaried employees
in the continued success and growth of the Company, and (3) encouraging them to
remain in the employ of the Company.

 

  1.2 Definitions

 

The following definitions apply with respect to the SVIP:

 

  (a) “Change in Control” shall have the meaning assigned to such term in
Section 3.8(b).

 

  (b) “Committee” shall mean the Compensation and Leadership Development
Committee of the Board of Directors of the Company or, if any member of the
Compensation and Leadership Development Committee is not (i) an “outside
director” within the meaning of Section 162(m) of the Internal Revenue Code of
1986 and the rules and regulations thereunder (the “Code”) or (ii) a
“non-employee director” within the meaning of Section 16 of the Securities
Exchange Act of 1934 and the rules and regulations thereunder (“Section 16”),
the Committee shall set up a subcommittee comprised solely of outside directors
and non-employee directors for purposes of all matters arising under this SVIP
involving “officers” within the meaning of Rule 16a-1(f) under Section 16
(“Executive Officers”) and Covered Employees as defined herein.

 

  (c) Intentionally Omitted

 

  (d) “Common Stock” shall mean the Common Stock of the Company, $.22 par value
(formerly the Class B Common Stock of the Company, $.22 par value).

 

  (e) “Covered Employee” shall mean a Participant who is a “covered employee”
within the meaning of Section 162(m) of the Code during the plan year at issue.

 

  (f)

“Disability” shall have the meaning provided in the Company’s applicable
disability plan or, in the absence of such a definition, when a Participant
becomes totally disabled as determined by a physician mutually acceptable to the
Participant and the Committee before attaining his or her 65th birthday and if
such total disability continues for more than three

 

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months. Disability does not include any condition which is intentionally
self-inflicted or caused by illegal acts of the Participant.

 

  (g) “Exempt Person” and “Exempt Persons” shall have the meaning assigned to
such terms in Section 3.8(c).

 

  (h) “Incumbent Board” shall have the meaning assigned to such term in Section
3.8(d).

 

  (i) “Ownership Threshold” shall mean the dollar value of the ownership
guideline of the Common Stock for each Participant as set by the Committee from
time to time. In determining such ownership for each Participant, the Committee
may conclusively rely on the books and records of the Company.

 

  (j) “Participant” shall have the meaning assigned to it in Section 1.4.

 

  (k) “Performance Period” shall mean any three consecutive fiscal years as set
forth in the Participant’s Performance Unit Agreement, unless accelerated
pursuant to Section 3.8.

 

  (l) “Performance Unit” shall have the meaning assigned to it in Section
2.1(a).

 

  (m) “Performance Unit Agreement” shall have the meaning assigned to it in
Section 2.1(b).

 

  (n) “Retirement” shall be reached when a Participant’s employment terminates
and at the time of such termination the sum of such Participant’s age and years
of service as an employee of the Company equals or exceeds 75 years.

 

  (o) “Total Shareholder Return” or “TSR” means the percentage by which the
ending per share price of common stock (determined as the average closing price
for the ten trading days prior to and including the last date of the applicable
Performance Period), as adjusted for any stock split, reclassification, or other
recapitalization, plus reinvested dividends, exceeds the beginning per share
price of the common stock (determined as the average closing price for the ten
trading days prior to and including the first date of the applicable Performance
Period). For purposes of the Company, TSR shall be computed using the Common
Stock.

 

  1.3 Administration of the SVIP

 

The SVIP shall be administered by the Committee. The Committee shall have full
and final authority in its discretion to interpret conclusively the provisions
of the SVIP, to adopt such rules and regulations for carrying out the SVIP and
to make all other determinations necessary or advisable for the administration
of the SVIP.

 

The Committee shall meet at least once each fiscal year, and at such additional
times as it may determine to designate the eligible employees, if any, to be
granted Performance Units under the SVIP, the amount of such Performance Units
and the time when Performance Units will be granted. All

 

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Performance Units granted under the SVIP shall be on the terms and subject to
the conditions hereinafter provided.

 

  1.4 Eligible Participants

 

Key salaried employees of the Company and its subsidiaries as determined by the
Committee shall be eligible to participate in the SVIP (any employee receiving a
Performance Unit under the SVIP hereinafter referred to as a “Participant”).

 

  1.5 Limitation on Grants

 

The maximum amount payable under the SVIP to a single Participant may not exceed
$4.0 million per Performance Period.

 

II. PERFORMANCE UNITS

 

  2.1 Terms and Conditions of Grants

 

  (a) Performance Units may be granted to Participants prior to or within the
first ninety (90) days following the beginning of a Performance Period. Each
Performance Unit shall have a target value at the time of the grant of $1,000.
Except as provided in the following sentence, each Participant shall be
eligible, in his or her sole discretion, to receive such Participant’s award in
cash or shares of Common Stock or a combination thereof as set forth in Section
2.2, payable in each case following the end of a Performance Period, if the
Common Stock of the Company has met the objectives established by the Committee,
as set forth below (unless the Committee, pursuant to Section 2.1(c), determines
that no award will be payable because the Company’s TSR is negative for that
Performance Period). For grants made on or before April 28, 2005, Participants
owning less than their Ownership Threshold shall be required to receive at least
50% of their award in Common Stock, and for grants made after April 28, 2005,
Participants owning less than their Ownership Threshold shall be required to
receive 100% of their award in Common Stock (each, a “Required Election”).
Notwithstanding anything to the contrary contained in this Section 2.1(a), each
Participant shall be eligible to receive an award (payable only in cash) in the
event of a Change in Control at such time as set forth in Section 3.8, if the
Common Stock has met the objectives established by the Committee as set forth
below.

 

  (b)

At the time Performance Units are granted to Participants, the Committee shall
establish objectives based on the percentile rank of the Common Stock of the
Company measured by Total Shareholder Return among the companies comprising the
(i) Standard & Poor’s 500 Index, (ii) Standard & Poor’s MidCap 400 Index, (iii)
Standard & Poor’s Small Cap 600 Index, (iv) Standard & Poor’s Super Composite
1500 Index, (v) Russell 3000 Index, or (vi) Russell 2000 Index. The index chosen
by the Committee for a particular Performance Period shall be referred to as the
“Applicable Index.” In addition, the Committee shall establish a matrix to
determine the awards payable to Participants upon attainment of these
objectives. Within 90 days following the beginning of a Performance Period, each
Participant shall receive an agreement which shall set forth the Performance
Period, the number of Performance Units granted and the objectives and

 

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matrix established by the Committee (hereinafter referred to as a “Performance
Unit Agreement”).

 

  (c) No award will be payable if the Company’s TSR as a percentile among the
Applicable Index companies is less than the 40th percentile, the maximum award
payable is 200% of the target value, subject to the limitations set forth in
Section 1.5, and if the Company’s TSR is negative, the Committee may, in its
discretion, not pay any award or reduce an award otherwise payable,
notwithstanding the fact that the Company’s TSR as a percentile among the
Applicable Index companies is equal to or greater than the 40th percentile. If
the Company’s TSR as a percentile among the Applicable Index companies is not
specifically shown in the matrix established by the Committee and set forth in
the Performance Unit Agreement the amount of the award shall be calculated by
interpolating between the amounts shown.

 

  (d) At the end of each Performance Period, or earlier pursuant to Section
3.8(a) in the event of a Change in Control, the Common Stock will be ranked
based on Total Shareholder Return among the companies comprising the Applicable
Index. The Committee shall certify the Company’s ranking and the attainment of
the objectives established by the Committee for each Performance Period or, in
the event of a Change in Control, the elapsed portion of the Performance Period
in which such Change in Control shall have occurred. No award may be paid to
Covered Employees under this SVIP until the Committee has made such
certification.

 

  2.2 Payment

 

Awards approved by the Committee will be distributed on or before the 15th day
of the third month following the end of the Performance Period or, in the event
of a Change in Control, within 30 days following such Change in Control (but in
the event of a Change in Control, such award shall be payable only in cash).
Awards payable, in whole or in part, in Common Stock shall be the number of
shares of Common Stock that a Participant could have purchased at the ending per
share price of the Common Stock as calculated pursuant to Section 1.2(o) had
such Participant used the relevant percentage (pursuant to any election to
receive Common Stock) of his or her award, less applicable withholding taxes, to
purchase Common Stock. Elections to receive Common Stock in lieu of cash shall
be submitted to the Committee at such time as specified by the Committee, but in
no case after the end of the relevant Performance Period. Except for Required
Elections, failure to make a timely election shall be conclusively deemed to be
an election to receive all cash. For grants made on or before April 28, 2005,
failure to make a timely election to receive more than 50% of an award in Common
Stock pursuant to a Required Election shall be conclusively deemed to be an
election to receive 50% of such award in Common Stock. To the extent necessary
to secure an exemption under Section 16(b), voluntary elections by Executive
Officers to receive Common Stock shall be approved by the Committee following
the end of the Performance Period and prior to the distribution of such stock.

 

  2.3 Termination of Employment

 

  (a)

If a Participant’s employment is terminated prior to the end of a Performance
Period because of death, Retirement or Disability, the extent to which a
Performance Unit shall be deemed to have been earned and payable (solely in cash
and without regard to any elections to the contrary) shall

 

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be determined by multiplying (a) the cash value of the Performance Unit as
calculated in accordance with the matrix established by the Committee and set
forth in the Performance Unit Agreement by (b) a fraction, the numerator of
which is the number of full calendar months such Participant was employed during
the Performance Period and the denominator of which is the total number of full
calendar months in the Performance Period.

 

  (b) If a Participant’s employment terminates for any reason other than because
of death, Retirement or Disability, or a Change in Control (as defined in
Section 3.8), the Performance Unit and any and all rights to payment under such
Performance Unit shall be immediately canceled and the Performance Unit
Agreement with such terminated Participant shall be null and void.

 

III. ADDITIONAL PROVISIONS

 

  3.1 Nature of Participant’s Interests

 

A Participant’s benefits under the SVIP shall at all times be reflected on the
Company’s books and records as a general, unsecured and unfunded obligation of
the Company, and the SVIP shall not give any person any right or security
interest in any asset of the Company nor shall it imply a trust or segregation
of assets by the Company.

 

  3.2 Amendments

 

The Committee or the Board of Directors of the Company may amend the SVIP from
time to time, as it deems advisable and in the best interests of the Company,
provided that no such amendment will adversely affect or impair previously
issued grants.

 

  3.3 Withholding

 

The Company shall have the right to deduct from any distribution to any
Participant an amount equal to the federal, state and local income taxes and
other amounts as may be required by law to be withheld with respect to any grant
or distribution under the SVIP.

 

  3.4 Nonassignability

 

(a) Except as expressly provided in the SVIP, the rights of a Participant and
any awards under the SVIP may not be assigned or transferred except by will and
the laws of descent and distribution.

 

(b) A Participant may from time to time name in writing any person or persons to
whom his or her benefit is to be paid if he or she dies before complete payment
of such benefit has occurred. Each such beneficiary designation will revoke all
prior designations by the Participant with respect to the SVIP, shall not
require the consent of any previously named beneficiary, shall be in a form
prescribed by the Committee, and will be effective only when filed with the
Committee in care of the Secretary of the Company during the Participant’s
lifetime.

 

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(c) If the Participant fails to designate a beneficiary before his or her death,
as provided above, or if the beneficiary designated by the Participant dies
before the date of the Participant’s death or before complete payment of the
Participant’s benefit has occurred, the Company may pay the remaining unpaid
portion of the Participant’s benefit to the legal representative or
representatives of the estate of the Participant.

 

  3.5 Nonuniform Determinations

 

Determinations by the Committee under the SVIP regarding determinations of the
persons to receive grants, the form, amount and timing of such grants, and the
terms and provisions of such grants and the agreements evidencing the same need
not be uniform and may be made by it selectively among persons who receive, or
are eligible to receive, grants under the SVIP, whether or not such persons are
similarly situated.

 

  3.6 No Guarantee of Employment

 

Neither grants under the SVIP nor any action taken pursuant to the SVIP shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company or its subsidiaries shall retain the Participant for any period
of time or at any particular rate of compensation.

 

  3.7 Duration

 

The Committee or the Board of Directors will have the authority to terminate the
SVIP at any time. Termination of the SVIP will have no impact on Performance
Units granted prior to the SVIP termination date.

 

  3.8 Change in Control

 

(a)(1) Notwithstanding anything herein to the contrary but subject to the dollar
limitation payable per Performance Period as set forth in Section 1.5, in the
event of a Change in Control, all Performance Units shall become payable in cash
in accordance with the following sentence of this Section 3.8(a)(1) at the TSR
percentile rank of the Company calculated using the TSR of the Company as of the
date of the Change in Control as compared to the TSR among the Applicable Index
companies as of the last quarterly period for which such TSR information is
available. A Performance Unit shall be payable pursuant to this Section
3.8(a)(1) in an amount equal to the cash value of such Performance Unit
calculated in accordance with the preceding sentence, multiplied by a fraction,
the numerator of which is the number of full fiscal years of the Performance
Period in which the Change in Control shall have occurred which shall have
elapsed prior to such Change in Control, and the denominator of which is three.
For purposes of the preceding sentence of this Section 3.8(a)(1), if at least
six full calendar months of a fiscal year within a Performance Period shall have
elapsed, such entire fiscal year shall be deemed to have elapsed.

 

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(2) If any amount to be paid to a Participant (or beneficiary thereof) pursuant
to this Section 3.8(a) is not paid in full within 30 days following the Change
in Control (the “Payment Date”), then the Company shall also pay to that
Participant (or beneficiary) interest on the unpaid amount for the period
beginning on the Payment Date and ending on the date that the amount is paid in
full. The amount of interest to be paid to a Participant (or beneficiary
thereof) pursuant to this Section 3.8(a)(2) shall be computed using an annual
rate equal to two percent above the prime rate from time to time in effect, as
published under “Money Rates” in The Wall Street Journal, but in no event higher
than the maximum legal rate permissible under applicable law. Payments received
by a Participant (or beneficiary thereof) pursuant to this Section 3.8(a)(2)
shall be credited first against accrued interest until all accrued interest is
paid in full before any such payment is credited against the amount payable
pursuant to Section 3.8(a)(1).

 

(3) Solely for the purposes of the computation of payments under the SVIP and
notwithstanding any other provision of the SVIP, payments to any Participant
under the SVIP shall be reduced (but not below zero) so that the present value,
as determined in accordance with Section 280G(d)(4) of the Code, of such
payments plus any other payments that must be taken into account for purposes of
any computation relating to the Participant under Section 280G(b)(2)(A)(ii) of
the Code, shall not, in the aggregate, exceed 2.99 times the Participant’s “base
amount,” as such term is defined in Section 280G(b)(3) of the Code.
Notwithstanding any other provision of the SVIP, no reduction in payments under
the limitation contained in the immediately preceding sentence shall be applied
to payments under the SVIP which do not constitute “excess parachute payments”
within the meaning of the Code. Any payments in excess of the limitation of this
Section 3.8(a)(3) or otherwise determined to be “excess parachute payments” made
to any Participant under the SVIP shall be deemed to be overpayments which shall
constitute an amount owing from the Participant to the Company with interest
from the date of receipt by the Participant to the date of repayment (or offset)
at the applicable federal rate under Section 1274(d) of the Code, compounded
semi-annually, which shall be payable to the Company upon demand; provided,
however, that no repayment shall be required under this sentence if in the
written opinion of tax counsel satisfactory to the Participant and delivered to
the Participant and the Company such repayment does not allow such overpayment
to be excluded for federal income and excise tax purposes from the Participant’s
income for the year of receipt or afford the Participant a compensating federal
income tax deduction for the year of the repayment.

 

  (b) “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

 

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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 3.8(c); 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
3.8(b)(2)(A);

 

(ii) by the Company, except as otherwise provided in Section 3.8(b)(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 3.8(b)(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 3.8(d)) to constitute at least a majority of the
Board of Directors.

 

(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

 

(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 of Directors providing for such reorganization,
merger or consolidation.

 

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(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 of Directors 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 3.8(b)(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 3.8(b)(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 3.8(b)(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.

 

(c) “Exempt Person” (and collectively, the “Exempt Persons”) means:

 

(1) Leonard H. Lavin or Bernice E. Lavin;

 

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(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 3.8(c)(1) or (2);

 

(4) any trust or similar arrangement for the benefit of any person described in
Section 3.8(c)(1) or (2); or

 

(5) the Lavin Family Foundation or any other charitable organization established
by any person described in Section 3.8(c)(1) or (2).

 

(d) “Incumbent Board” means those individuals who, as of October 24, 2002,
constitute the Board of Directors, 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 solicitation by a Person other than the Board
or the Exempt Persons for the purpose of opposing a solicitation by any other
Person with respect to the election or removal of directors, or any other actual
or threatened solicitation of proxies or consents by or on behalf of any Person
other than the Board of Directors or the Exempt Persons shall be deemed to have
been a member of the Incumbent Board.

 

3.9 Stockholder Approval. Unless otherwise determined by the Board of Directors,
the SVIP shall be resubmitted to the stockholders for re-approval and
re-adoption no less often than every five years. The SVIP was last approved by
the stockholders on January 23, 2003.

 

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