EXHIBIT 10

 

ALBERTO-CULVER COMPANY

DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

 

(April 24, 2003)

 

1. Purpose. The principal purposes of the Deferred Compensation Plan for
Non-Employee Directors (“Plan”) are to (i) benefit Alberto-Culver Company
(“Company”) and its subsidiaries by offering its non-employee directors an
opportunity to become holders of Class B common stock, par value $.22 per share
(“Common Stock”), in order to enable them to represent the viewpoint of other
stockholders of the Company more effectively and (ii) permit non-employee
directors to defer all or a portion of the fees that they receive as directors
of the Company.

 

2. Plan Participants. Each director who is not an officer or employee of the
Company or any of its subsidiaries shall be a participant under the Plan
(“Participant”).

 

3. Administration. The Plan shall be administered by the Board of Directors of
the Company (“Board”). The Board shall have full power to construe, administer
and interpret the Plan. The Board’s decisions are final and binding on all
parties. All fees and expenses incurred by the Plan in connection with its
administration shall be paid by the Company.

 

4. Deferral Elections.

 

(a) Each Participant shall make one of the following elections in accordance
with Section 4(b) and/or 4(c) with respect to his or her annual retainer and
meeting fees (collectively, “Director Fees”):

 

(i) The Participant may elect to have the Director Fees paid to him or her in
cash. Director Fees payable with respect to meetings will be paid as soon as
reasonably practicable on or after the date of each such meeting and the annual
retainer shall be paid in equal installments on a quarterly basis; or

 

(ii) The Participant may elect to defer receipt of the Director Fees until (a)
one month after the date on which his or her service on the Board terminates for
any reason or (b) any specific date selected by the Participant, and have the
cash value of each such Director Fee credited to an interest bearing account
established for the Participant under the Plan (“Cash Account”) pursuant to the
provisions of Section 5. Participants may also elect to receive one lump sum
payment or equal annual installments, not to exceed five installments, of all
amounts deferred pursuant to such election. In the absence of an election to the
contrary, in whole or in part, deferred amounts will be paid in a single lump
sum one month after the date on which the Participant’s service on the Board
terminates for any reason; or

 

(iii) The Participant may elect to receive a distribution of the number of
shares of Common Stock equal to the cash value of all Director Fees payable
during the quarterly periods ending on the last day of March, June, September,
and December, divided by the Fair Market Value of a share of Common Stock on the
last day of each such quarterly period. Each distribution shall be evidenced by
a certificate representing the applicable number of shares of Common Stock,
registered in the name of the Participant, and distributed to the Participant on
or as soon as reasonably practicable after each quarterly date noted in the
preceding sentence. Such quarterly distributions of Common Stock will be made
only in whole-share increments. The cash value of any fractional share, based
upon the Fair Market Value for the applicable quarterly period as calculated
above, shall be paid to the Participant in cash at the time of the Common Stock
distribution; or

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(iv) The Participant may elect to defer receipt of the distribution of the
number of shares of Common Stock calculated at the same times and in the same
manner set forth in Section 4(a)(iii), as stock units on a
one-share-for-one-stock-unit basis (“Stock Units”), and such number of units,
including any fractional unit, shall be credited to a stock unit account
established pursuant to the provisions of Section 5, for each Participant so
electing (“Stock Unit Account”). Additional Stock Units equal to the cash
dividends (or fair market value of any dividend paid in property other than
capital stock of the Company) that the Participant would have received had he or
she been the owner on each such dividend record date of a number of shares of
Common Stock equal to the number of Stock Units in his or her Stock Unit
Account, divided by the Fair Market Value of the Common Stock on the last day of
March, June, September or December, as applicable, shall be credited to the
Participant’s Stock Unit Account as of the last day of such March, June,
September or December. In the case of a stock dividend, stock split, reverse
stock split, reclassification, recapitalization, exchange or conversion of
shares, or any other similar event, additional credits or equitable adjustments
shall be made (unless the Board determines no adjustment would be appropriate
under the circumstances) to each Participant’s Stock Unit Account of a number of
Stock Units equal to the number of shares of Common Stock or other capital stock
of the Company that the Participant would have received had he or she been the
owner on each record date of a number of shares of Common Stock equal to the
number of Stock Units in his or her Stock Unit Account on such date.

 

The Participant may defer receipt of the shares of Common Stock underlying the
Stock Units in his or her Stock Unit Account until (a) one month after the date
his or her service on the Board terminates for any reason or (b) a specific date
selected by the Participant. All deferred amounts shall be distributed on or as
soon as reasonably practicable after the date selected in accordance with the
preceding sentence, in shares of Common Stock equal to the number of Stock Units
contained in the Participant’s Stock Unit Account, rounded up to the next whole
Stock Unit in the case of any fractional units. In the absence of an election to
the contrary, all deferred amounts shall be distributed one month after the date
on which the Participant’s service on the Board terminates for any reason.

 

(b) Except as provided in the next sentence, on or before the beginning of each
calendar year, each Participant shall complete a form specifying the elections
described above with respect to Director Fees (“Election Form”) and deliver the
Election Form to the General Counsel of the Company (“General Counsel”).

 

An Election Form shall remain in effect for subsequent years until a subsequent
Election Form is delivered to the General Counsel before the first day of the
year in which the new Election Form is to become effective. Except as provided
in Section 4(c), an initial Election Form or a subsequent Election Form shall
only apply to those Director Fees payable to a Participant with respect to
services rendered after the end of the year in which such initial or subsequent
Election Form is delivered to the General Counsel. Any Election Form delivered
by a Participant shall be irrevocable with respect to any Director Fee covered
by the elections set forth therein (but may be amended by a subsequent Election
Form applicable to those Director Fees payable to a Participant with respect to
services rendered after the end of the year in which such form was delivered to
the General Counsel). If an Election Form is not in effect for a Participant for
a year (e.g., the Participant has not completed an initial Election Form), he or
she shall be deemed to have elected the option specified in this Section 4(a)(i)
until a completed Election Form has been delivered to the General Counsel and
has become effective.

 

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(c) Notwithstanding the preceding provisions of this Section 4, an election made
by a Participant in the year in which he or she first becomes eligible to
participate in the Plan may be made pursuant to an Election Form delivered to
the General Counsel within 60 days after the date on which he or she initially
becomes eligible to participate, and such Election Form shall be effective on
the first day of the first quarterly period commencing January 1, April 1, July
1, or October 1, as applicable, following the date such Election Form is
delivered to the General Counsel.

 

5. Participant Accounts.

 

(a) Director Fees deferred pursuant to Section 4(a)(ii) shall be credited to the
Participant’s Cash Account as of the date it would otherwise have been paid.
Director Fees and dividends deferred pursuant to Section 4(a)(iv) shall be
credited to the Stock Unit Account as of the last day of March, June, September,
and December. Until the entire balance of the Cash Account and Stock Unit
Account has been paid to the Participant (or his or her beneficiaries) such
balance shall be increased quarterly (i) to reflect accrued interest on such
balance in the Cash Account based on the interest rate set from time to time on
the Company’s Executive Deferred Compensation Plan (the “Executive Plan”) and
(ii) by any dividends paid on the Common Stock represented by Stock Units in
each Stock Unit Account. In the event the Company no longer maintains the
Executive Plan or a successor plan, the Board shall, from time to time, set the
interest rate with respect to the entire balance of Participants’ Cash Accounts.

 

(b) Each Cash Account and Stock Unit Account shall be maintained on the books of
the Company until full payment of the balance thereof has been made to the
applicable Participant (or his or her beneficiaries). No funds, assets or
capital stock may be set aside or earmarked for any Cash Account or Stock Unit
Account, which shall be purely a general unsecured obligation of the Company.

 

6. Distributions.

 

(a) Subject to Sections 6(b), 6(c) and 6(d), the entire balance of a
Participant’s Cash Account (payable in cash) and Stock Unit Account (payable in
Common Stock) shall be paid in accordance with such Participant’s deferral
election(s) made pursuant to Section 4.

 

(b) If a Participant’s service on the Board shall terminate by reason of his or
her death, or if he or she shall die after becoming entitled to a distribution
hereunder, but prior to receipt of his or her entire distribution, (i) all cash
then distributable hereunder with respect to such Participant’s Cash Account and
(ii) the number of shares of Common Stock equal to the number of Stock Units in
such Participant’s Stock Unit Account (rounded up to the next whole Stock Unit
in the case of any fractional units) shall in each case be distributed as soon
as reasonably practicable to such beneficiary or beneficiaries as such
Participant shall have designated by an instrument in writing last filed with
the General Counsel prior to his or her death, or in the absence of such
designation of any living beneficiary, to his or her spouse, or if not then
living, to his or her estate.

 

(c) The Participant may request an early distribution of all or a portion of the
balance of the Cash Account owed to the Participant. A single-sum payment will
be paid to Participants who request such distribution. An early distribution
paid to a Participant shall result in a penalty equal to 10% of such early
distribution. The Participant will forfeit all right, title and interest to an
amount equal to such penalty. The early distribution shall be paid to the
Participant net of the 10% penalty and any withholding or other applicable
taxes.

 

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(d) Notwithstanding any other provisions of the Plan, (i) the entire balance of
each Participant’s Cash Account shall be distributed to such Participant as soon
as reasonably practicable after the date of the occurrence of a Change in
Control in the form of a single lump sum cash payment and (ii) shares of Common
Stock equal to the entire number of Stock Units contained in each Participant’s
Stock Unit Account (rounded up to the next whole Stock Unit in the case of any
fractional units) shall be converted to Common Stock as of the date of the
Change in Control and distributed as soon as reasonably practicable after the
occurrence of the Change in Control. The cash value of any fees earned but not
yet distributed as Common Stock or credited to the Stock Unit Account pursuant
to Section 4(a)(iii) and 4(a)(iv), respectively, as of the date of a Change in
Control, shall be paid to the Participant in the form of a single lump sum
payment as soon as reasonably practicable after the occurrence of a Change in
Control. For purposes of this Section 6(d), the definition of a Change in
Control shall be the same as that definition of Change in Control found in the
Alberto-Culver Company 1994 Stock Option Plan For Non-Employee Directors, as
amended from time to time.

 

7. Amendment, Suspension or Termination. The Board may, at any time and from
time to time, suspend or terminate the Plan, in whole or in part, or amend the
Plan in such respects as the Board may deem proper and in the best interest of
the Company or as may be advisable, provided, however, that no suspension,
termination or amendment shall be made which would (i) directly or indirectly
deprive any current or former Participant or his or her beneficiaries of all or
any portion of his or her Cash Account or Stock Unit Account as determined as of
the effective date of such amendment, suspension or termination, or (ii)
directly or indirectly reduce the balance of any Cash Account or Stock Unit
Account held hereunder as of the effective date of such amendment, suspension or
termination. Notwithstanding anything to the contrary contained herein, upon
termination of the Plan, (i) distribution of balances in all Cash Accounts and
(ii) the number of shares of Common Stock represented by Stock Units in all
Stock Unit Accounts (rounded up to the next whole Stock Unit in the case of any
fractional units) shall be made to Participants or their beneficiaries in a
single lump sum cash payment or Common Stock distribution, as the case may be,
on or as soon as reasonably practicable following such termination. No
additional deferred Director Fees shall be credited to the Cash Accounts or
Stock Unit Accounts of Participants after termination of the Plan, but the
Company shall continue to credit interest to Cash Accounts and dividends to
Stock Unit Accounts, pursuant to Section 5, until the balances of such Cash
Accounts and Stock Unit Accounts have been fully distributed to Participants or
their beneficiaries.

 

8. General Provisions.

 

(a) All amounts paid under the Plan shall be paid from the general assets of the
Company. Such amounts shall be reflected on the accounting records of the
Company, but shall not be construed to create or require the creation of a
trust, custodial account or escrow account. No Participant shall have any right,
title, or interest in any assets, accounts or funds that the Company may
establish to aid in providing benefits under the Plan or otherwise. The Plan
does not create a trust or establish any fiduciary relationships between the
Company and the Participant or his or her beneficiary under the Plan, nor will
any interest other than that of an unsecured creditor exist.

 

(b) For all purposes of the Plan, the Fair Market Value of a share of Common
Stock as of a given date shall be the average of the high and low transaction
prices of a share of Common Stock as reported in the New York Stock Exchange
Composite Transactions on such date, or if there shall be no reported
transaction for such date, then on the next preceding date for which trades were
reported.

 

(c) Shares of Common Stock distributed under the Plan shall be treasury shares
of the Company.

 

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(d) Nothing contained in the Plan shall constitute a guaranty by the Company or
any other person or entity, that the assets of the Company will be sufficient to
pay any benefit hereunder. No Participant or beneficiary shall have any right to
receive a distribution under the Plan, except in accordance with the terms of
the Plan.

 

(e) Establishment of the Plan shall not be construed to give any Participant the
right to be retained as a member of the Board.

 

(f) Neither a Participant nor any other person shall have any right to commute,
sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are,
expressly declared to be nonassignable and nontransferable. No part of the
amounts payable shall, prior to actual payment, be subject to garnishment,
seizure or sequestration for the payment of any debts owed by a Participant or
any other person, nor be transferable by operation of law in the event of a
Participant’s or any other person’s bankruptcy or insolvency.

 

(g) The Board, General Counsel, employees, officers and directors of the Company
shall not be held liable for, and shall be indemnified and held harmless by the
Company against, any loss, expense or liability relating to the Plan which
arises from any action or determination made in good faith.

 

(h) The Company shall withhold from any deferred or nondeferred Director Fee, or
any distributions made pursuant to the Plan, any amounts required by applicable
federal, state and local tax laws and regulations thereunder to be withheld.

 

(i) If any provision of this Plan shall be held illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal or
invalid provision had never been inserted herein.

 

(j) Any notice under the Plan shall be in writing and shall be personally
delivered, mailed postage paid as first class U.S. Mail or sent by reliable
overnight courier. Notices shall be deemed given when actually received by the
recipient. Notices shall be directed to the Company at its offices at 2525
Armitage Avenue, Melrose Park, Illinois 60160-1163, Attention: General Counsel;
to a Participant at the address stated in his or her Election Form; and to a
beneficiary entitled to benefits at the address stated in the Participant’s
beneficiary designation, or to such other addresses any party may specify by
notice to the other parties.

 

(k) This Plan shall be governed by and construed in accordance with the laws of
the State of Illinois, without regard to its conflict of laws principles.

 

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