10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED:

SEPTEMBER 30, 2002

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¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-5050

ALBERTO-CULVER COMPANY

(Exact name of registrant as specified in its charter)

Delaware	36-2257936
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2525 Armitage Avenue Melrose Park, Illinois	60160
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (708) 450-3000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Class A Common Stock, par value $.22 per share	New York Stock Exchange
Class B Common Stock, par value $.22 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

The aggregate market value of common stock held by non-affiliates (assuming for this purpose only that all directors and

executive officers are affiliates) on November 15, 2002 was $1.10 billion for Class A Common Stock and $1.18 billion for Class B Common Stock.

At November 15, 2002, there were 26,106,585 shares of Class A Common Stock outstanding and 32,331,640 shares of Class B Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Parts I and II	Portions of annual report to stockholders for the year ended September 30, 2002, as specifically described herein.
Part III	Portions of proxy statement and notice of annual meeting of stockholders on January 23, 2003, as specifically described herein.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K and the documents incorporated by reference herein include certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on management’s current expectations and assessments of risks and uncertainties and reflect various assumptions concerning anticipated results, which may or may not prove to be correct. Some of the factors that could cause actual results to differ materially from estimates or projections contained in such forward-looking statements include: the pattern of brand sales, including variations in sales volume within periods; competition within the relevant product markets, including the ability to develop and successfully introduce new products, ensuring product quality, pricing, promotional activities, introduction of competing products and continuing customer acceptance of existing products; loss of distributorship rights; risks inherent in acquisitions and strategic alliances; the loss of one or more key employees; the effects of a prolonged United States or global economic downturn or recession; changes in costs, including changes in labor costs, raw material prices or advertising and marketing expenses; the costs and effects of unanticipated legal or administrative proceedings; and variations in political, economic or other factors such as currency exchange rates, inflation rates, tax changes, legal and regulatory changes or other external factors over which Alberto-Culver Company has no control. Alberto-Culver Company has no obligation to update any forward-looking statement in this Annual Report on Form 10-K or any incorporated document.

PART I

ITEM 1. BUSINESS

BUSINESS SEGMENTS AND GEOGRAPHIC AREA INFORMATION

Alberto-Culver Company and its consolidated subsidiaries (herein referred to collectively as the “company,” unless indicated otherwise) have three principal business segments. The company’s consumer products business includes two segments, “Alberto-Culver North America” and “Alberto-Culver International,” which develop, manufacture, distribute and market branded consumer products worldwide. These branded consumer products consist of beauty and health care products and food and household products. Alberto-Culver North America includes the company’s consumer products operations in the United States and Canada while Alberto-Culver International sells consumer products in more than 120 other countries. Beauty and health care products accounted for approximately 34%, 35% and 36% of the company’s consolidated net sales for the years ended September 30, 2002, 2001 and 2000, respectively. Food and household products accounted for approximately 4%, 5% and 5% of the company’s consolidated net sales for the years ended September 30, 2002, 2001 and 2000, respectively.

The company’s third segment, “Specialty distribution – Sally”, consists of Sally Beauty Company which is comprised of two operations: (1) Sally Beauty Supply, a domestic and international chain of cash-and-carry outlets offering professional beauty supplies to both salon professionals and retail consumers and (2) Beauty Systems Group (BSG), a full-service beauty products distributor offering professional brands directly to salons and through professional-only outlets in exclusive geographical territories. Sales of the Specialty distribution - Sally business segment accounted for approximately 62%, 60% and 59% of the company’s consolidated net sales for the years ended September 30, 2002, 2001 and 2000, respectively.

Effective October 1, 2002, the company’s consumer products business was reorganized into two divisions. A new division, Alberto-Culver Consumer Products Worldwide, is comprised of the former Alberto-Culver North America business segment and the former Alberto-Culver International business segment excluding the operations of Cederroth International. The second division is Cederroth International, which manufactures, markets and distributes beauty and health care products throughout Scandinavia and Europe. Beginning in fiscal year 2003, the company will have two segments for financial reporting: Global Consumer Products, which includes the two new consumer products divisions, and Specialty Distribution - Sally, which is the same as the former segment.

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Financial information about business segments and geographic area information is incorporated herein by reference to the “Business Segments and Geographic Area Information” note of the “Notes to Consolidated Financial Statements” in the company’s annual report to stockholders for the year ended September 30, 2002.

Alberto-Culver North America

The company’s major beauty and health care products marketed in the United States include the Alberto VO5, TRESemmé and Consort lines of hair care products, the St. Ives Swiss Formula line of hair and skin care products, FDS feminine deodorant sprays and the Soft & Beautiful, Just For Me, Comb-Thru, Motions and TCB lines of ethnic hair care products. Food and household products sold in the United States include Mrs. Dash salt-free seasoning blends, Molly McButter butter flavor sprinkles, SugarTwin sugar substitute and Static Guard anti-static spray.

In Canada, the company sells most of the products marketed in the United States along with the Alberto European and Alberto Balsam lines of hair care products.

The Alberto-Culver North America segment also includes the manufacturing of custom label personal care products in the United States for other companies.

Alberto-Culver International

In the United Kingdom and Europe, the company sells products such as the Alberto VO5, Advanced Alberto VO5 and Alberto Balsam lines of hair care products and the St. Ives Swiss Formula line of hair and skin care products. Indola professional hair colors, shampoos, conditioners and styling products are marketed throughout Europe and other international markets.

In Latin America, the significant products sold by the company include the Alberto VO5, Alberto Get Set and Antiall lines of hair care products, the St. Ives Swiss Formula line of hair and skin care products, Veritas soap and deodorant body powder products and Farmaco soap products. The company’s principal markets in Latin America are Mexico, Puerto Rico and the Caribbean, Argentina and Chile.

The company manufactures, markets and distributes beauty and health care products throughout Scandinavia and Europe through its Cederroth International subsidiary headquartered in Sweden. Such products include Salve adhesive bandages, Alberto VO5 hair care products, Samarin antacids, Seltin salt substitute, Topz cotton buds, Savette wet wipes, Bliw liquid soaps, Date anti-perspirants and cologne for women, Alberto Family Fresh shampoo and shower products, Suketter artificial sweetener, the St. Ives Swiss Formula line of hair and skin care products, HTH and L300 skin care products, Grumme Tvattsapa detergents and Pharbio natural pharmaceuticals. The company also distributes Jordan toothbrushes in Scandinavia. Soraya skin care products are sold in Poland and Eastern Europe.

The company’s products are also sold in Australia, Asia and Africa.

Specialty Distribution – Sally

Sally Beauty Company operates a network of cash-and-carry professional beauty supply stores under the name Sally Beauty Supply and also sells professional beauty products to hairdressers, beauticians and cosmetologists through its Beauty Systems Group full-service distribution business.

As of September 30, 2002, Sally Beauty Company, including its Beauty Systems Group, had 2,712 stores, including 130 franchise stores, in the United States, Puerto Rico, the United Kingdom, Canada, Japan, Germany and Mexico.

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Sally Beauty Supply stores provide salon owners, hairdressers and consumers with an extensive selection of hair care products, cosmetics, styling appliances and other beauty items, including brands such as Wella, Clairol, Revlon and L’Oreal. Sally Beauty Supply stores’ professional customers purchase salon supplies at a discount, while its retail customers purchase professional products at a higher price. As of September 30, 2002, there were 2,177 Sally Beauty Supply stores in the United States, Puerto Rico, the United Kingdom, Japan, Germany and Mexico.

Beauty Systems Group distributes professional beauty products to salons in exclusive, licensed territories in the Northeast, East, Southeast, Midwest, Midsouth and Southwest United States and portions of Canada and Mexico. Beauty Systems Group operates 535 stores, including 130 franchise stores, as of September 30, 2002 that are open exclusively to the salon professional and maintains a sales force that consists of over 900 professional distributor sales consultants who call on the salons directly. In addition to selling professional beauty products, these sales consultants train salon operators and owners in new styles, techniques and business practices. The brands sold in the Beauty Systems Group stores and through professional distributor sales consultants, such as Matrix, Paul Mitchell, Graham Webb, Redken, TIGI and Sebastian, are sold to consumers exclusively through salons and are not available at Sally Beauty Supply stores.

PRODUCT DEVELOPMENT AND MARKETING

Many of the company’s consumer products are developed in the company’s laboratories. In fiscal year 2002, the company opened a new research and development facility at its corporate headquarters. The company has established global structures for operations and research and development, which are designed to enable the company to implement cost-savings initiatives more quickly on a broad scale and to shorten the time that it takes to develop an idea into a market-ready product. New products introduced by the company are assigned product managers, who guide the products from development to the consumer. The product managers are responsible for the overall marketing plans for the products and coordinate advertising and marketing activities.

The company allocates a large portion of its revenues to the advertising and marketing of consumer beauty products. Net earnings are materially affected by these expenditures, which are charged against income in the period incurred. Advertising and marketing expenditures were $189.1 million, $179.0 million and $162.7 million in fiscal years 2002, 2001 and 2000, respectively.

The company regards television as the best medium for advertising and uses it to conduct extensive network, spot and cable television advertising campaigns. The company also advertises through other media such as newspapers, magazines and radio, as well as through Sally Beauty Company’s direct mailings to customers.

Extensive advertising and marketing are required to build and protect a branded consumer product’s market position. The company believes there is significant consumer awareness of its major brands and that such awareness is an important factor in the company’s operating results.

COMPETITION

The domestic and international markets for the company’s branded consumer products are highly competitive and sensitive to changes in consumer preferences and demands. The company’s competitors range in size from large, highly diversified companies (some of which have substantially greater financial resources than the company) to small, specialized producers. The company competes primarily on the basis of innovation, product quality and price and believes that brand loyalty and consumer acceptance are also important factors to the company’s success.

Sally Beauty Company experiences domestic and international competition from a wide range of retail outlets, including mass merchandisers, drug stores and supermarkets, carrying a full line of beauty and health care products. In addition, Sally Beauty Company competes with local and regional cash-and-carry beauty supply stores and full-service dealers selling directly to salons through both professional distributor sales consultants and outlets open only to salon professionals. Sally also faces competition from certain manufacturers which use their own sales forces to distribute their professional beauty products directly to salons.

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DISTRIBUTION

The company’s sales force and independent brokers sell its retail beauty and health care products and food and household products by calling upon retail outlets such as mass merchandisers, supermarkets, drug stores, dollar stores, wholesalers and variety stores.

The company’s sales representatives and brokers sell its professional hair care products primarily for the ethnic market in the United States to beauty supply outlets and to beauty distributors, who in turn sell to beauty salons, barber shops and beauty schools.

The company’s products are sold internationally in more than 120 countries, primarily through direct sales by its subsidiaries, independent distributors and licensees. The company’s foreign operations are subject to risks inherent in transactions involving foreign currencies and political uncertainties.

Sally Beauty Company, including its Beauty Systems Group, sells professional beauty supplies through its 2,712 stores, including 130 franchises, located in 48 states, Puerto Rico, the United Kingdom, Canada, Japan, Germany and Mexico. Sally Beauty Supply stores are self-service, cash-and-carry and are primarily located in strip shopping centers. Sally operates the largest domestic chain of cash-and-carry beauty supply stores and, as such, is a major customer of some of the company’s competitors in the personal care products industry. In addition, Beauty Systems Group distributes products in exclusive, licensed territories in the Northeast, Midwest, Midsouth, East, Southeast and Southwest United States and portions of Canada and Mexico to the professional market through its stores and over 900 professional distributor sales consultants. Sally sells Alberto-Culver’s professional hair care products, but these products represent only a small portion of Sally’s selection of salon brands.

EMPLOYEES

In its domestic and foreign operations, the company had approximately 16,900 full-time equivalent employees as of September 30, 2002, consisting of approximately 10,000 hourly personnel and 6,900 salaried employees. At September 30, 2001, the company had approximately 16,100 full-time equivalent employees. The increase in employees during fiscal year 2002 is principally due to the expansion of Sally’s Beauty Systems Group full-service operations and the growth in the number of Sally Beauty Supply stores.

Certain subsidiaries of the company have union contracts covering production, warehouse, shipping and maintenance personnel. The company considers relations with its employees to be satisfactory.

REGULATION

The company is subject to the regulations of a number of federal and state agencies, including the Food and Drug Administration and the Federal Trade Commission.

TRADEMARKS AND PATENTS

The company’s trademarks, certain of which are material to its business, are registered or legally protected in the United States, Canada and other countries throughout the world in which products of the company are sold. Although the company owns patents and has other patent applications pending, its business is not materially dependent upon patents or patent protection.

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ITEM 2. PROPERTIES

The company’s properties, plants and equipment are maintained in good condition and are suitable and adequate to support the business. The company’s principal properties and their general characteristics are described below:

Location	Type of Facility	Business Segment
Company-Owned Properties:
Melrose Park, Illinois
•      2525 Armitage Avenue	Corporate Office, Manufacturing, Warehouse	(1)
•      2020 and 2040 Indian Boundary Drive	Office, Warehouse	(1)
•      2150 N. 15th Avenue	Manufacturing, Warehouse	(1)
•      2100 N. 15th Avenue	Warehouse	(1)
Basingstoke, Hampshire, England	Office	(2)
Buenos Aires, Argentina	Office, Manufacturing, Warehouse	(2)
Columbus, Ohio	Warehouse	(3)
Dallas, Texas	Office, Manufacturing, Warehouse	(1)
Denton, Texas	Office, Warehouse	(3)
Falun, Sweden	Office, Manufacturing, Warehouse	(2)
Jacksonville, Florida	Warehouse	(3)
Madrid, Spain	Office, Manufacturing, Warehouse	(2)
Naguabo, Puerto Rico	Manufacturing, Warehouse	(1) (2)
Naucalpan de Juarez, Mexico	Office, Manufacturing, Warehouse	(2)
North Rocks, New South Wales, Australia	Office, Manufacturing, Warehouse	(2)
Radzymin, Poland	Office, Manufacturing, Warehouse	(2)
Reno, Nevada	Warehouse	(3)
Swansea, Wales, England	Office, Manufacturing, Warehouse	(2)
Toronto, Ontario, Canada	Office, Manufacturing, Warehouse	(1)
Leased Properties:
Albertslund, Denmark	Office, Warehouse	(2)
Atlanta, Georgia	Warehouse	(1)
Auckland, New Zealand	Office, Warehouse	(2)
Austin, Texas	Office, Warehouse	(3)
Blackburn, Lancashire, England	Warehouse	(3)
Carlisle, Pennsylvania	Office, Warehouse	(1)
Chatsworth, California	Office, Manufacturing, Warehouse	(1)
Espoo, Finland	Office, Warehouse	(2)
Geneva, Switzerland	Office	(2)
Greenville, Ohio	Office, Warehouse	(3)
Kitchener, Ontario, Canada	Office, Warehouse	(3)
Laurel, Maryland	Office, Warehouse	(3)
Macedonia, Ohio	Office, Warehouse	(3)
Macon, Georgia	Office, Warehouse	(3)
Mocksville, North Carolina	Office, Warehouse	(3)
Monroe, Connecticut	Office, Warehouse	(3)
Ontario, California	Warehouse	(1)
Paducah, Kentucky	Office, Warehouse	(3)
Rakkestad, Norway	Office, Warehouse	(2)
Reading, Berkshire, England	Office	(3)
Regina, Saskatchewan, Canada	Office, Warehouse	(3)
Spartanburg, South Carolina	Office, Warehouse	(3)
Stockholm, Sweden	Office, Manufacturing, Warehouse	(2)
Surrey, British Columbia, Canada	Office, Warehouse	(3)
Toronto, Ontario, Canada	Office, Warehouse	(3)
Various (2,582 locations in 48 states, Puerto Rico, the United Kingdom, Canada, Mexico, Japan and Germany)	Sally Beauty Company Stores	(3)

(1) Alberto-Culver North America

(2) Alberto-Culver International

(3) Specialty Distribution - Sally

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ITEM 3. LEGAL PROCEEDINGS

There are no material legal proceedings pending.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the year ended September 30, 2002.

EXECUTIVE OFFICERS

The following table sets forth the names and current positions of the registrant’s executive officers, including their five-year business history and ages. Executive officers of the company and its subsidiaries are elected annually.

Name _____	Current Position and Five-Year Business History __________________________________________	Age ___
Leonard H. Lavin (1)	Chairman	83
Howard B. Bernick (1)	President and Chief Executive Officer	50
Bernice E. Lavin (1)	Vice Chairman, Secretary and Treasurer	77
Carol L. Bernick (1)	Since June, 2002 – Vice Chairman and Assistant Secretary, Alberto-Culver Company, President, Alberto-Culver Consumer Products Worldwide, a division of the registrant, and President, Alberto-Culver USA, Inc., a subsidiary of the registrant; January, 1999 to June, 2002 – Vice Chairman and Assistant Secretary, Alberto-Culver Company, President, Alberto-Culver North America, a division of the registrant and President, Alberto-Culver USA, Inc; April, 1998 to January, 1999 – Vice Chairman and Assistant Secretary, Alberto-Culver Company and President, Alberto-Culver North America; October, 1994 to April, 1998 – Executive Vice President and Assistant Secretary, Alberto-Culver Company and President, Alberto-Culver USA, Inc.	50
William J. Cernugel	Since May, 2000 – Senior Vice President and Chief Financial Officer; previously Senior Vice President, Finance for more than five years.	60
John R. Berschied, Jr.	Since May, 2000 – Group Vice President, Worldwide Research and Development; January, 2000 to May, 2000 – Director Technology and Innovation Management, Arthur D. Little, Inc.; February, 1993 – December, 1999 – Senior Vice President, Global Research, Development and Engineering, S.C. Johnson and Son, Inc.	59
Michael H. Renzulli	President, Sally Beauty Company, Inc., a subsidiary of registrant.	62
Gary P. Schmidt	Vice President, General Counsel and Assistant Secretary	51

(1) Leonard H. Lavin and Bernice E. Lavin are husband and wife. Carol L. Bernick is the wife of Howard B. Bernick and the daughter of Mr. and Mrs. Lavin.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

On September 1, 2002, the company issued 221,271 Class A common shares to Wayne Clark in connection with the acquisition of all of the outstanding shares of Monarch Beauty Supply. Total consideration received by the company for these shares was $10.0 million. The sale of these shares was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 due to the fact that all the shares were sold to one individual who was financially sophisticated. The certificates for the Class A common shares have a legend that restricts transfers to those in compliance with the applicable securities laws and regulations.

Information regarding the market for common equity and related stockholder matters required by this Item are incorporated herein by reference to the section entitled “Market Price of Common Stock and Cash Dividends Per Share” and note 4 of the “Notes to Consolidated Financial Statements” in the registrant’s annual report to stockholders for the year ended September 30, 2002.

ITEM 6. SELECTED FINANCIAL DATA

Information required for this Item is incorporated herein by reference to the section entitled “Selected Financial Data” in the registrant’s annual report to stockholders for the year ended September 30, 2002.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information required for this Item is incorporated herein by reference to the section entitled “Management’s Discussion and Analysis of Results of Operations and Financial Condition” in the registrant’s annual report to stockholders for the year ended September 30, 2002.

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required for this Item is incorporated herein by reference to the section entitled “Management’s Discussion and Analysis of Results of Operations and Financial Condition” in the registrant’s annual report to stockholders for the year ended September 30, 2002.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required for this Item is incorporated herein by reference to the consolidated financial statements and notes and “Independent Auditors’ Report” of KPMG LLP in the registrant’s annual report to stockholders for the year ended September 30, 2002.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required for this Item regarding the directors of the company and regarding delinquent filers pursuant to Item 405 of Regulation S-K is incorporated herein by reference to the sections entitled “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance”, respectively, in the registrant’s proxy statement for its annual meeting of stockholders on January 23, 2003. Information concerning Executive Officers of the registrant is included in Part I of this report.

ITEM 11. EXECUTIVE COMPENSATION

Information required for this Item is incorporated herein by reference to the section entitled “Executive Compensation” in the registrant’s proxy statement for its annual meeting of stockholders on January 23, 2003.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required for this Item is incorporated herein by reference to the sections entitled “Share Ownership of Directors and Executive Officers,” “Principal Stockholders” and “Equity Compensation Plan Information” in the registrant’s proxy statement for its annual meeting of stockholders on January 23, 2003.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required for this Item is incorporated herein by reference to the section entitled “Certain Business Relationships” in the registrant’s proxy statement for its annual meeting of stockholders on January 23, 2003.

ITEM 14. CONTROLS AND PROCEDURES

(a) Within 90 days prior to the date of the filing of this annual report on Form 10- K, the company carried out an evaluation, under the supervision and with the participation of the company’s management, including the chief executive officer and the chief financial officer, of the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rules 13a-14(c) and 15d-14 under the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the chief executive officer and the chief financial officer of the company have concluded that Alberto-Culver Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b) There were no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. There were no significant deficiencies or material weaknesses and, therefore, there were no corrective actions taken.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)                          Documents filed as part of this report:

1.	Financial statements:
	The consolidated financial statements and notes to be included in Part II, Item 8 are incorporated by reference to the registrant’s annual report to stockholders for the year ended September 30, 2002, which is filed as an exhibit to this report.
2.	Financial statement schedules:

Description	Schedule
Valuation and Qualifying Accounts	II

	Schedules I, III, IV, and V are omitted as the information required by these schedules is not applicable.
3.	Exhibits:

Exhibit Number	Description
3(i)(a)	Copy of Restated Certificate of Incorporation of Alberto-Culver Company (filed as Exhibit 3(a) and incorporated herein by reference from the company’s Form 10-K Annual Report for the year ended September 30, 1988).
3(i)(b)	Copy of the amendment to the Restated Certificate of Incorporation of Alberto-Culver Company (filed as Exhibit 3(i)(c) and incorporated herein by reference from the company’s Form 10-Q Quarterly Report for the quarter ended March 31, 1997).
3(i)(c)	Copy of proposed Restated Certificate of Incorporation of Alberto-Culver Company, subject to shareholder approval at the annual meeting of shareholders on January 23, 2003 (filed as Annex A and incorporated herein by reference from the company’s proxy statement for its annual meeting of stockholders on January 23, 2003).
3(ii)	Copy of the By-Laws of Alberto-Culver Company, as amended (filed as Exhibit 3(ii) and incorporated herein by reference from the company’s Form 10-K Annual Report for the year ended September 30, 2000).
4	Certain instruments defining the rights of holders of long-term obligations of the registrant and certain of its subsidiaries (the total amount of securities authorized under each of which does not exceed ten percent of the registrant’s consolidated assets) are omitted pursuant to part 4 (iii) (A) of Item 601 (b) of Regulation S-K. The registrant agrees to furnish copies of any such instruments to the Securities and Exchange Commission upon request.

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   3. Exhibits: (continued)

Exhibit Number	Description
4 (a)	Copy of Indenture dated June 10, 1998 between Alberto-Culver Company and The First National Bank of Chicago, as Trustee (filed as Exhibit 4(a) and incorporated herein by reference from the company’s Form 10-Q Quarterly Report for the quarter ended June 30, 1998).
4 (b)	Copy of 6.375% Debentures due June 15, 2028 (filed as Exhibit 4(b) and incorporated herein by reference from the company’s Form 10-Q Quarterly Report for the quarter ended June 30, 1998).
4 (c)	Copy of 8.25% Notes due November 1, 2005 (filed as Exhibit 4 and incorporated herein by reference from the company’s Form 8-K dated March 28, 2000).
10 (a)	Copy of Alberto-Culver Company Management Incentive Plan, as amended*.
10 (b)	Copy of Alberto-Culver Company Employee Stock Option Plan of 1988, as amended*.
10 (c)	Copy of Alberto-Culver Company 1994 Shareholder Value Incentive Plan, as amended* (filed as Exhibit 10.4 and incorporated herein by reference from the company’s proxy statement for its annual meeting of stockholders on January 23, 2003).
10 (d)	Copy of Alberto-Culver Company 1994 Restricted Stock Plan, as amended*.
10 (e)	Copy of Alberto-Culver Company 1994 Stock Option Plan for Non-Employee Directors, as amended*.
10 (f)	Copy of Split Dollar Life Insurance Agreement dated September 30, 1993 between Alberto-Culver Company and the trustee of the Lavin Survivorship Insurance Trust* (filed as Exhibit 10(e) and incorporated herein by reference from the company’s Form 10-K Annual Report for the year ended September 30, 1993).
10 (g)	Form of Severance Agreement between Alberto-Culver Company and named executive officers* (filed as Exhibit 10(f) and incorporated herein by reference from the company’s Form 10-Q Quarterly Report for the quarter ended December 31, 1996).
10 (h)	Copy of Credit Agreement dated as of September 11, 2002 among Alberto-Culver Company, Bank of America, N.A. as administrative agent and the other financial institutions being parties thereto.
10 (i)	Copy of the Alberto-Culver Company Executive Deferred Compensation Plan, as amended* (filed as Exhibit 10(i) and incorporated herein by reference from the company’s Form 10-Q Quarterly Report for the quarter ended December 31, 1999).
10 (j)	Form of Amendment of Severance Agreement between Alberto-Culver Company and named executive officers* (filed as Exhibit 10(j) and incorporated herein by reference from the Company’s Form 10-K Annual Report for the year ended September 30, 1999).

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3.		Exhibits: (continued)
Exhibit Number		Description
10	(k)	Form of Key Executive Deferred Compensation Agreement between Alberto-Culver Company and certain of its officers, and schedule setting forth the registrant’s named executive officers (as defined in Item 402 of Regulation S-K) who are parties to such an agreement and the material terms of each such named executive officer’s agreement* (filed as Exhibit 10(k) and incorporated herein by reference from the company’s Form 8-K dated March 23, 2000).
10	(l)	Copy of the Alberto-Culver Company Deferred Compensation Plan for Non-Employee Directors* (filed as Exhibit 10(n) and incorporated herein by reference from the company’s Form 10-K Annual Report for the year ended September 30, 2001).
10	(m)	Copy of the Alberto-Culver Company Employee Stock Option Plan of 2003, subject to shareholder approval at the annual meeting of shareholders on January 23, 2003* (filed as Exhibit 10.1 and incorporated herein by reference from the company’s proxy statement for its annual meeting of stockholders on January 23, 2003).
10	(n)	Copy of Alberto-Culver Company 2003 Restricted Stock Plan, subject to shareholder approval at the annual meeting of shareholders on January 23, 2003* (filed as Exhibit 10.3 and incorporated herein by reference from the company’s proxy statement for its annual meeting of stockholders on January 23, 2003).
10	(o)	Copy of Alberto-Culver Company 2003 Stock Option Plan for Non-Employee Directors, subject to shareholder approval at the annual meeting of shareholders on January 23, 2003* (filed as Exhibit 10.2 and incorporated herein by reference from the company’s proxy statement for its annual meeting of stockholders on January 23, 2003).
13		Portions of annual report to stockholders for the year ended September 30, 2002 incorporated herein by reference.
21		Subsidiaries of the Registrant
23		Consent of KPMG LLP
99	(a)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99	(b)	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
		*    This exhibit is a management contract or compensatory plan or arrangement of the registrant.
(b)		Reports on Form 8-K:
		A Form 8-K was filed on August 9, 2002, under Item 9, attaching copies of sworn statements submitted to the Securities and Exchange Commission by Principal Executive Officer, Howard B. Bernick, and Principal Financial Officer, William J. Cernugel, of Alberto-Culver Company pursuant to Securities and Exchange Commission Order No. 4-460.

-12-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 12th day of December, 2002.

ALBERTO-CULVER COMPANY
By:	/s/    Howard B. Bernick
	Howard B. Bernick President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/    Leonard H. Lavin Leonard H. Lavin	Chairman of the Board and Director	December 12, 2002
/s/    Howard B. Bernick Howard B. Bernick	President, Chief Executive Officer and Director (Principal Executive Officer)	December 12, 2002
/s/    Bernice E. Lavin Bernice E. Lavin	Vice Chairman, Secretary, Treasurer and Director	December 12, 2002
/s/    Carol L. Bernick Carol L. Bernick	Vice Chairman, President, Alberto-Culver Consumer Products Worldwide, Assistant Secretary and Director	December 12, 2002
/s/    William J. Cernugel William J. Cernugel	Senior Vice President and Chief Financial Officer (Principal Financial & Accounting Officer)	December 12, 2002
/s/    A. Robert Abboud A. Robert Abboud	Director	December 12, 2002
/s/    A.G. Atwater, Jr. A.G. Atwater, Jr.	Director	December 12, 2002
/s/    James G. Brocksmith, Jr. James G. Brocksmith, Jr.	Director	December 12, 2002
/s/    Jim Edgar Jim Edgar	Director	December 12, 2002
/s/    King Harris King Harris	Director	December 12, 2002
/s/    John A. Miller John A. Miller	Director	December 12, 2002
/s/    Allan B. Muchin Allan B. Muchin	Director	December 12, 2002
/s/    Robert H. Rock Robert H. Rock	Director	December 12, 2002
/s/    Sam J. Susser Sam J. Susser	Director	December 12, 2002
/s/    William W. Wirtz William W. Wirtz	Director	December 12, 2002

-13-

CERTIFICATION PURSUANT TO

RULES 13a-14 and 15d-14 OF THE EXCHANGE ACT

I, Howard B. Bernick, certify that:

1. I have reviewed this annual report on Form 10-K of Alberto-Culver Company;

2. Based on my knowledge, this annual report on Form 10-K does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report on Form 10-K;

3. Based on my knowledge, the financial statements and other financial information included in this annual report on Form 10-K, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report on Form 10-K;

4. The company’s other certifying officer and I:

a) are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the company;

b) have designed such disclosure controls and procedures to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report on Form 10-K is being prepared;

c) have evaluated the effectiveness of the company’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report on Form 10-K (the “Evaluation Date”); and

d) have presented in this annual report on Form 10-K our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the company’s ability to record, process, summarize and report financial data and have identified for the company’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controls; and

6. The company’s other certifying officer and I have indicated in this annual report on Form 10-K whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: December 12, 2002

/s/    Howard B. Bernick         

Howard B. Bernick

President and Chief Executive Officer

CERTIFICATION PURSUANT TO

RULES 13a-14 and 15d-14 OF THE EXCHANGE ACT

I, William J. Cernugel, certify that:

1. I have reviewed this annual report on Form 10-K of Alberto-Culver Company;

2. Based on my knowledge, this annual report on Form 10-K does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report on Form 10-K;

3. Based on my knowledge, the financial statements and other financial information included in this annual report on Form 10-K, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report on Form 10-K;

4. The company’s other certifying officer and I:

a) are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the company;

b) have designed such disclosure controls and procedures to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report on Form 10-K is being prepared;

c) have evaluated the effectiveness of the company’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report on Form 10-K (the “Evaluation Date”); and

d) have presented in this annual report on Form 10-K our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the company’s ability to record, process, summarize and report financial data and have identified for the company’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controls; and

6. The company’s other certifying officer and I have indicated in this annual report on Form 10-K whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: December 12, 2002

/s/    William J. Cernugel         

William J. Cernugel

Senior Vice President and

Chief Financial Officer

Independent Auditors’ Report

The Board of Directors and Stockholders

Alberto-Culver Company:

On October 22, 2002, we reported on the consolidated balance sheets of Alberto-Culver Company and Subsidiaries as of September 30, 2002 and 2001 and the related consolidated statements of earnings, cash flows and stockholders’ equity for each of the years in the three-year period ended September 30, 2002, as contained in the 2002 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for fiscal year 2002. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedule as listed in Item 15(a)2 of the annual report on Form 10-K. That financial statement schedule is the responsibility of the company’s management. Our responsibility is to express an opinion on that financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in “note 1” to the consolidated financial statements, in the year ended September 30, 2002, the Company changed its method of accounting for goodwill and trade names.

/s/    KPMG LLP

KPMG LLP

Chicago, Illinois

October 22, 2002

Schedule II

ALBERTO-CULVER COMPANY AND SUBSIDIARIES

Valuation and Qualifying Accounts

(In thousands)

	Year Ended September 30,
	2002			2001		2000
Allowance for doubtful accounts:
Balance at beginning of period	$	11,387		10,135		8,441
Additions (deductions):
Charged to costs and expenses		10,974		7,331		4,910
Uncollectible accounts written off, net of recoveries		(5,052	)	(6,327	)	(4,112	)
Allowance for doubtful accounts of acquired companies		98		2		1,207
Other		143		246		(311	)
Balance at end of period	$	17,550		11,387		10,135

EX-10.(A)

                                                                 Exhibit 10 (a)
                            ALBERTO-CULVER COMPANY

                           MANAGEMENT INCENTIVE PLAN

               (as amended and restated through October 1, 2002)

1. Establishment. Alberto-Culver Company and its subsidiaries hereby establish
   the Management Incentive Plan ("MIP") for key salaried employees of the
   Company. The MIP provides for annual awards to be made to Participants based
   upon financial performance and achievement of Individual Bonus Objectives.
   This MIP is established as an unfunded, non-qualified incentive compensation
   plan intended for the benefit of employees who are among a select group of
   management and/or highly compensated participants. Nothing contained in this
   MIP and no action taken pursuant to the provisions of this MIP shall create
   or be construed to create a trust of any kind, or a fiduciary relationship
   between the Company and the Participant, his designated beneficiary or any
   other person. Any funds which may be invested under the provisions of this
   MIP shall continue for all purposes to be a part of the general assets of
   the Company and no person other than the Company shall by virtue of the
   provisions of this MIP have any interest in such funds. To the extent that
   any person acquires a right to receive payments from the Company under this
   MIP, such right shall be no greater than the right of any unsecured general
   creditor of the Company.

2. Purpose. The purpose of the MIP is to attract and retain in the employ of
   the Company persons possessing outstanding management skills and competence
   who will contribute substantially to the success of the Company. The MIP is
   intended to provide incentives to such persons to exert their maximum
   efforts on behalf of the Company by rewarding them with additional
   compensation when the Company or Profit Center and/or the Participant have
   achieved the financial performance and Individual Business Objectives,
   respectively, provided for in the MIP.

3. Effective Date and Performance Periods. The effective date of the amended
   and restated MIP is October 1, 2002. The Plan Year shall be the 12
   consecutive-month period ending September 30 of each year. The MIP will
   continue in effect until and unless terminated by the Board of Directors.

4. Definitions. The definition of key terms are as follows:

    a. "Base Salary" means the base salary, as set by the Company, paid to the
       Participant during the 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.

    b. "Bonus Award Opportunity" means 200% of Base Salary.

    c. "Change in Control" shall have the meaning set forth in Section 14.d.1.



    d. "Committee" means the Compensation Committee of the Board of Directors
       of the Company or, if any member of the Compensation 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
       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 MIP involving "officers"
       within the meaning of Rule 16a-1(f) under Section 16 ("Executive
       Officer") and Covered Employees as defined herein.

    e. "Company" means Alberto-Culver Company or a Subsidiary.

    f. "Covered Employee" means a Participant who is a "covered employee"
       within the meaning of Section 162(m) of the Internal Revenue Code of
       1986 and the rules and regulations thereunder during the Plan Year at
       issue.

    g. "Employee" means any person, including an officer or director, who is
       employed on a permanent basis by, and receives a regular salary from,
       the Company.

    h. "Exempt Person" and "Exempt Persons" shall have the meaning set forth in
       Section 14.d.2.

    i. "Incumbent Board" shall have the meaning set forth in Section 14.d.3.

    j. "Individual Business Objectives" means the objectives as set forth in a
       letter of recommendation prepared by the Participant and agreed upon by
       (i) the Chairman, any Vice Chairman or the President of the Company,
       (ii) the President of Alberto-Culver Consumer Products Worldwide or
       Sally Beauty Company, Inc. or (iii) the Committee.

    k. "Participant" means any Employee of the Company who has been selected to
       participate in the MIP.

    l. "Plan Year" shall be the Company's fiscal year for financial reporting
       purposes (i.e., the 12 consecutive-month period ended September 30).

    m. "Profit Center" means a division or Subsidiary of the Company which is
       responsible for preparing and submitting annual sales and pre-tax profit
       (loss) objectives.

    n. "Subsidiary" means any corporation in which the Company owns (directly
       or indirectly) 50% or more of the outstanding stock entitled to vote for
       directors.

                                      2



5. Eligibility. Participation in the MIP is limited to key salaried Employees
   of the Company and its Subsidiaries. Each Plan Year, the Committee shall
   designate those eligible Employees who will participate in the MIP during
   that Plan Year. In the event an employee who would be eligible to
   participate in the MIP is hired after the beginning of the Plan Year, the
   Committee may, but need not, designate such employee as a Participant for
   such Plan Year; provided, however, that no employee shall be eligible to
   participate in the MIP for any Plan Year in which he or she was employed
   with the Company for less than four months. In the event a new employee is
   designated as a Participant, the Committee shall notify the new Participant
   of his or her financial performance award opportunities and his or her
   Individual Business Objectives on which any cash award will be based. The
   Committee shall make such adjustments to the new Participant's actual cash
   award as the Committee deems necessary or appropriate to take into account
   the fact that such Participant was not employed for the entire Plan Year.

6. Award Opportunities. Actual awards can range from 0% to 100% of the Bonus
   Award Opportunity (a maximum of 200% of Base Salary or $4.0 million,
   whichever is less) based on actual performance compared to the performance
   objectives established for the Plan Year. The total Bonus Award Opportunity
   will relate to the financial performance of the Company, one or more Profit
   Centers, or Individual Business Objectives or any combination thereof.
   Notwithstanding anything to the contrary hereinabove set forth in this
   Section 6 or in Section 8 or 9 of the MIP, but subject in all respects to
   Sections 7 and 14 of the MIP, any Bonus Award Opportunity and the amount of
   any annual award, other than a Change in Control Award (as such term is
   defined in Section 14.b of the MIP), payable to any Participant other than a
   Covered Employee may be (i) increased or decreased by up to 25% of such
   Participant's Base Salary as the Committee, in its sole discretion, shall
   determine based on such factors and circumstances as the Committee shall
   deem appropriate or (ii) decreased by such amount as the Committee, in its
   sole discretion, shall determine in the event a Participant (a) is found to
   have violated any policy contained in the applicable Compliance Policy
   Manual, (b) is placed on probation at any time during the Plan Year, (c) has
   engaged in purposeful diversion, and/or (d) has engaged in activities
   intended to enhance current Plan Year awards to the detriment of future
   periods (e.g. inadequate marketing expenditures that artificially increase
   short-term profits, unnecessary year end loading shipments or promotions
   that build sales for the short-term, etc.)

7. Maximum Award Payable. The maximum award payable under the MIP to a single
   Participant may not exceed the lesser of $4.0 million or 200% of such
   Participant's Base Salary per fiscal year of the Company.

8. Financial Performance Award Opportunities. Each Participant will be assigned
   financial performance award opportunities for the Company and/or the Profit
   Center for the Plan Year. Financial performance award opportunities will be
   based upon sales, pre-tax earnings, and, except for Covered Employees, any
   other measurements the Committee shall deem appropriate.

                                      3



   Each Participant will be notified in writing ("Participant Letter") of his
   or her Bonus Award Opportunity, the Participant's financial performance
   opportunities set for the Company and/or his or her Profit Center, if
   applicable, and the portion of his or her Bonus Award Opportunity allocated
   to the Participant's Individual Business Objectives, if any. The Participant
   Letter will specify the percentage of the Bonus Award Opportunity that will
   be earned based upon the extent to which such objectives are achieved,
   subject to adjustment pursuant to Section 6.

   At the end of each Plan Year, the Committee shall certify the awards that
   have been attained by each Participant. Except as otherwise provided in
   Section 14 hereof, no award may be payable to a Participant prior to such
   certification.

   The Committee shall have the sole authority to set all financial performance
   opportunities and to modify such financial performance opportunities during
   the Plan Year as deemed appropriate; provided, however, that the Committee
   may not modify the performance objectives during a Plan Year to increase the
   award payable to a Covered Employee.

9. Individual Business Objectives. Except for Covered Employees, the Committee,
   at its sole discretion, may allocate a portion of a Participant's Bonus
   Award Opportunity for the Plan Year to the Participant's Individual Business
   Objectives. Subject to Section 7, awards for the achievement of these
   objectives can range from 0% to 150% of the Bonus Award Opportunity assigned
   thereto. The Committee shall determine the actual level of performance
   achieved by Participants for their Individual Business Objectives.

10. Administration--Powers and Duties of the Committee.

   a. Administration. The Committee shall be responsible for the administration
   of the MIP. The Committee, by majority action, is authorized to interpret
   the MIP, to prescribe, amend, and rescind rules and regulations relating to
   the MIP, to provide for conditions and assurances deemed necessary or
   advisable to protect the interest of the Company and to make all other
   determinations necessary or advisable for the administration of the MIP.
   Determinations, interpretations, or other actions made or taken by the
   Committee pursuant to the provisions of the MIP shall be final and binding
   and conclusive for all purposes and upon all persons whomsoever. No member
   of the Committee shall be liable for any action or determination made in
   good faith with respect to the MIP or any annual award made hereunder.

   b. Amendment, Modification, and Termination of MIP. The Board of Directors
   or the Committee may at any time terminate, and from time to time may amend
   or modify the MIP, except that no amendment by the Committee shall increase
   the amount of an annual award payable to a Covered Employee for performance
   achieved during the Plan Year of such amendment or any previous Plan Year or
   allow a member of the Committee to be a Participant. Termination of the MIP
   shall not be effective with respect to the Plan Year in which it occurs.

                                      4



11. Payment of Annual Award.

   a. Payment of Award. The Company shall pay the annual award to the
   Participant after the award has been determined and certified by the
   Committee, but no later than December 15th of each year.

   b. Changes in Employment Status. Except as set forth in the following
   sentence, if a Participant's employment terminates during a Plan Year or
   after the end of the Plan Year, but prior to the payment of the annual
   award, no award will be payable for that Plan Year. If the Participant's
   employment terminates during the Plan Year or after the end of the Plan Year
   but prior to the payment of the annual award due to death, disability or
   retirement, the Committee shall have the sole authority and discretion to
   award a Participant (or his or her beneficiary) a portion of the annual
   award that would otherwise be payable with respect to that Plan Year.

   c. Deferral of Award. A Participant may, in writing filed with the Committee
   within 30 days following the receipt of his or her Participant Letter (but
   in no event later than December 15, of the applicable Plan Year), elect to
   defer payment of all or a portion of his or her annual cash award so that it
   shall be paid in not more than ten equal annual installments commencing the
   January 15th, or such other date selected by the Participant and approved by
   the Committee, following his or her (i) retirement or termination of
   employment with the Company or (ii) attainment of the age specified by the
   Participant. Any election to defer until the attainment of a specified age
   shall have a payment commencement date no sooner than three years from the
   date of the applicable Participant Letter. Such election to defer shall
   designate the number of annual installments and the timing of such
   installments and shall, except as provided below, be irrevocable. If such
   election fails to specify a time for payment, such payment shall be paid in
   a lump sum on the January 15th following the Participant's retirement or
   termination of employment with the Company. The deferral of any annual award
   shall not be less than $10,000, which amount may be changed by the Committee
   from time to time in its sole discretion.

   The Participant may request to receive an early distribution of all or a
   portion of any amounts deferred hereunder. A single-sum payment will be paid
   to Participants who request such distribution. An early distribution paid to
   a Participant shall cause the Participant to forfeit all right, title or
   claim to an amount equal to 10% of such early distribution. Such 10% penalty
   shall first reduce the remaining balance of the amounts deferred hereunder
   immediately following the early distribution and then shall reduce the early
   distribution payable to the Participant.

   Notwithstanding the preceding paragraph, any request for an early
   distribution on account of an "unforeseeable emergency" shall not bear the
   10% early distribution penalty. For purposes of this Section 11(c), an
   unforeseeable emergency is a severe financial hardship to the Participant
   resulting from a sudden and unexpected illness or accident of the
   Participant or of a dependent (as defined in Section 152(a) of the Internal
   Revenue Code) of the

                                      5



   Participant, loss of the Participant's property due to casualty, or other
   similar extraordinary and unforeseeable circumstances beyond the control of
   the Participant. The determination of whether a request for an early
   distribution is on account of an unforeseeable emergency shall be made by
   the sole discretion of the Committee, who shall apply the standards of
   Section 457 of the Internal Revenue Code.

   Any early distribution on account of an unforeseeable emergency may not be
   made to the extent such hardship is or may be relieved by (i) reimbursement
   or compensation by insurance or otherwise, (ii) liquidation of the
   Participant's assets, to the extent the liquidation of such assets would not
   itself cause severe financial hardship, (iii) obtaining a loan either within
   the provisions of any benefit plan of the Company or its subsidiaries or
   from a third party lender or (iv) cessation of deferrals under the MIP.
   Early distributions because of an unforeseeable emergency will only be
   permitted to the extent reasonably needed to satisfy the emergency need in
   addition to any amounts necessary to pay any federal, state or local income
   taxes reasonably anticipated to result from the early distribution.

   d. Interest Payable on Deferred Payments. Any annual award to which a
   Participant shall have elected deferred payment hereunder shall bear
   interest, compounded annually, at the prime rate of interest as such rate is
   set, from time to time, by Bank One, NA or its successor, but in no event
   shall such rate exceed 10%. A separate accounting shall be maintained for
   each Participant with respect to the deferred payments hereunder.

   e. Investment in Alberto-Culver Company Stock. As an additional alternative
   to lump sum cash payment, a Participant may elect, within 30 days following
   the receipt of his or her Participant Letter (but in no event later than
   December 15, of the applicable Plan Year), to receive all or a portion of
   his or her annual award, less withholding taxes, in Alberto-Culver Company
   Class B Common Stock, but this shall not constitute a deferred payment for
   purposes of this MIP. Awards payable, in whole or in part, in Class B Common
   Stock shall be the number of shares of Class B Common Stock that a
   Participant could have purchased based upon the closing price of such shares
   on the last trading day of the applicable fiscal year. Participants who had
   made an election before October 1, 2002 (the effective date of the amended
   and restated MIP) to receive all or a portion of his or her annual award,
   less withholding taxes, in Alberto-Culver Company Class A common stock,
   shall not be affected by the amendments made to this Section 11(e) and shall
   receive Class A common stock under the terms of Section 11(e) prior to
   October 1, 2002.

12. Beneficiary. If a Participant dies before receiving the annual award and/or
    any previously deferred awards to which he or she is entitled to under the
    MIP, such awards shall be paid to such person whom the Participant has
    designated by an instrument in writing, and in a form acceptable to the
    Board of Directors, executed by the Participant and delivered to the Board
    of Directors in care of the Secretary of the Company during the
    Participant's lifetime. Such designation may be revoked or modified by the
    Participant from time to time by an instrument in writing in a form
    acceptable to the Board of Directors, executed by the Participant and
    delivered to the Board of Directors in care of the Secretary of the Company

                                      6



   during the Participant's lifetime. If no such designation is delivered to
   the Board of Directors, or if no such designated beneficiary is then living,
   the annual award shall be paid to the surviving spouse of the Participant,
   or in the event there is no such surviving spouse, to the estate of the
   Participant.

13. Withholding Payroll Taxes. To the extent required by the laws in effect at
    the time payments are made or earned, the Company shall withhold from the
    annual cash, stock or deferred award made hereunder an amount necessary to
    satisfy any taxes required to be withheld for federal, state, or local
    governmental purposes.

14. Change in Control.

   a. Application. Notwithstanding any other provision of the Plan, the
   provisions of this Section 14 shall apply on and after the date that a
   Change in Control (as defined in Section 14.d.1.) occurs. Any award payable
   to a Participant pursuant to this Section 14 for a Plan Year shall be in
   lieu of any award otherwise payable under the Plan.

   b. Determination of Awards. Upon the occurrence of a Change in Control, each
   Participant shall be eligible to receive an award (a "Change in Control
   Award") equal to an amount calculated by multiplying (i) the bonus award
   percentage obtained by taking (a) the financial performance of the Company
   or Profit Center, as the case may be, from the start of the applicable
   fiscal year to the date of the Change in Control (or, in the case of the
   date of the Change in Control not being as of a month end, to the end of the
   month immediately preceding the date of the Change in Control) and comparing
   it to the performance during the same period in the preceding fiscal year
   and assuming such financial performance (increases or decreases in sales and
   pre-tax earnings or other relevant measurements) has been achieved for the
   full fiscal year plus (b) the achievement of 100% of the Participant's
   Individual Business Objectives, if any, for such Plan Year by (ii) the Base
   Salary of the Participant up to and including the date of the Change in
   Control. The amount of any such Change in Control Award shall not be subject
   to revision or adjustment.

   c. Payment of Awards.

       1. Payment. Notwithstanding anything in this Plan to the contrary, each
       Participant (or Beneficiary thereof) shall be paid the Change in Control
       Award, determined pursuant to Section 14.b., no later than 30 days after
       the date of the occurrence of the Change in Control (the "Payment
       Date"), in the form of a single lump sum cash payment. Such award shall
       not be subject to forfeiture for any reason.

       2. Interest on Late Payment. If any amount to be paid to a Participant
       (or Beneficiary thereof) pursuant to Section 14.c.1. is not paid in full
       by 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

                                      7



       Beneficiary thereof) pursuant to this Section 14.c.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) under the Plan 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 14.c.1.

   d. Definitions.

       1. The term "Change in Control" means:

          A. The occurrence of any one or more of the following events:

              (i) 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 14.d.2.); provided, however,
              that a Change in Control shall not result from an acquisition of
              Company Voting Securities:

                 (a) directly from the Company, except as otherwise provided in
                 Section 14.d.1.B(i);

                 (b) by the Company, except as otherwise provided in Section
                 14.d.1.B(ii);

                 (c) by an Exempt Person;

                 (d) by an employee benefit plan (or related trust) sponsored
                 or maintained by the Company or any corporation controlled by
                 the Company; or

                 (e) 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 (a) and (b) of Section

                                      8



                 14.d.1.A(iii) shall be satisfied.

              (ii) The cessation for any reason of the members of the Incumbent
              Board (as such term is defined below) to constitute at least a
              majority of the Board of Directors.

              (iii) Consummation of a reorganization, merger or consolidation
              unless, in any such case, immediately after such reorganization,
              merger or consolidation:

                 (a) 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

                 (b) 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.

              (iv) 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:

                 (a) 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

                 (b) 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.

                                      9



              (v) Approval by the stockholders of the Company of a plan of
              complete liquidation or dissolution of the Company.

          B. Notwithstanding the provisions of Section 14.d.1.A(i):

              (i) no acquisition of Company Voting Securities shall be subject
              to the exception from the definition of Change in Control
              contained in clause (a) of Section 14.d.1.A(i) 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

              (ii) for purposes of clause (b) of Section 14.d.1.A(i), 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.

       2. The term "Exempt Person" (and collectively, the "Exempt Persons")
       means:

          A. Leonard H. Lavin or Bernice E. Lavin;

          B. any descendant of Leonard H. Lavin and Bernice E. Lavin or the
          spouse of any such descendant;

          C. the estate of any of the persons described in Section 14.d.2.A. or
          B.;

          D. any trust or similar arrangement for the benefit of any person
          described in Section 14.d.2.A. or B.; or

          E. the Lavin Family Foundation or any other charitable organization
          established by any person described in Section 14.d.2.A. or B.

       3. The term "Incumbent Board" means those individuals who, as of October
       24, 2002, constitute the Board of Directors, provided that:

          A. any individual who becomes a director of the Company subsequent to
          such

                                      10



          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

          B. 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.

15. No Employment Rights. Nothing in this MIP shall interfere with or limit in
    any way the right of the Company to terminate any Participant's employment
    at any time for any reason, or confer upon any Participant any right to
    continue in the employ of the Company or its Subsidiaries.

16. Non-Assignability. Except as provided herein upon the death of a
    Participant, no right or interest of a Participant in any annual award
    shall be (a) assignable or transferable in whole or in part, either
    directly or by operation of law or otherwise; (b) subject to any obligation
    or liability of any person; or (c) subject to seizure or assignment or
    transfer through execution, levy, garnishment, attachment, pledge,
    bankruptcy, or in any other manner.

17. Stockholder Adoption. The MIP was approved and adopted at the annual
    meeting of stockholders held on January 26, 1995 and re-approved at the
    annual meeting of stockholders held on January 28, 1999. Unless otherwise
    determined by the Board of Directors, the MIP shall be submitted to
    stockholders for re-approval no less often than every five years.

                                      11

EX-10.(B)

                                                                 Exhibit 10 (b)
                            ALBERTO-CULVER COMPANY
                      EMPLOYEE STOCK OPTION PLAN OF 1988

                     (as amended through October 24, 2002)

1. Purpose of ACSOP

   The Alberto-Culver Company Employee Stock Option Plan of 1988 (hereinafter
called the "ACSOP") is intended to encourage ownership of the Class A common
stock of Alberto-Culver Company (the "Company") by eligible key employees of
the Company and its subsidiaries and to provide incentives for them to make
maximum efforts for the success of the business. Options granted under the
ACSOP will be non-qualified options (not incentive options as defined in
Section 422 of the Internal Revenue Code of 1986 and the rules and regulations
promulgated thereunder (the "Code")).

2. Eligibility

   Key employees of the Company and its subsidiaries who perform services which
contribute materially to the management, operation and development of the
business ("Optionees") will be eligible to receive options under the ACSOP. At
their request, Mr. Leonard H. Lavin and Mrs. Bernice E. Lavin are ineligible to
receive options under the ACSOP.

3. Administration

   The Compensation Committee of the Board of Directors of the Company (the
"Committee") shall have full power and authority, subject to the express
provisions of the ACSOP, to determine the purchase price of the stock covered
by each option, the Optionees to whom and the time or times at which options
shall be granted, the terms and conditions of the options, including the terms
of payment thereof, and the number of shares of stock to be covered by each
option. The Committee shall have full power to construe, administer and
interpret the ACSOP, and full power to adopt such rules and regulations as the
Committee may deem desirable to administer the ACSOP. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the ACSOP or any option thereunder. The determination of the
Committee as to any disputed question arising under the ACSOP, including
questions of construction and interpretation, shall be final, conclusive and
binding.

   The Committee may, in its discretion, delegate to a committee of member(s)
of the Committee its authority with respect to such matters under the ACSOP and
options granted under the ACSOP as the Committee may specify.

   The Committee shall be comprised solely of members each of whom shall be an
"outside director" within the meaning of Section 162(m) of the Code, and 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"),
provided, however, that if any member of the Committee is not (i) an "outside
director" within the meaning of Section 162(m) of the Code or (ii) a
"non-employee director" within the meaning of 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 ACSOP involving
"officers"



within the meaning of Rule 16a-1(f) under Section 16, and "covered employees"
within the meaning of Section 162(m) of the Code for the plan year at issue.

4. Number of Shares of Stock to be Offered

   The Committee may authorize from time to time the issuance pursuant to the
ACSOP of shares not to exceed 15,400,000 of the Company's Class A common stock
in the aggregate, subject to adjustment under paragraph 10 hereof. Such shares
of Class A common stock which may be issued pursuant to options granted under
the ACSOP may be authorized and unissued shares or issued and reacquired shares
as the Committee from time to time may determine. If any option granted under
the ACSOP shall terminate or be surrendered or expire unexercised in whole or
in part, the shares of stock so released from such option may be made the
subject of additional options granted under the ACSOP. In addition, any shares
of Class A common stock withheld to pay, in whole or in part, the amount
required to be withheld under applicable tax laws in accordance with paragraph
7(d) hereof, may be made the subject of additional options granted under the
ACSOP. In the event the stockholders of the Company approve the Alberto-Culver
Company Employee Stock Option Plan of 2003 (the "2003 Employee Plan") at the
Annual Meeting of Stockholders to be held on January 23, 2003, or any
adjournment thereof (the "2003 Annual Meeting"), no more stock options shall be
granted hereunder. In the event stockholders do not approve the 2003 Employee
Plan at the 2003 Annual Meeting, stock option grants may continue under this
Plan.

5. Option Price

   The purchase price under each option granted pursuant to the ACSOP shall be
determined by the Committee but shall not be less than the Fair Market Value
(as defined below) of the Company's Class A common stock at the time the option
is granted. For purposes of the ACSOP, "Fair Market Value" shall mean the
average of the high and low transaction prices of a share of Class A common
stock or Class B common stock of the Company (the "Class B common stock"), as
the case may be, as reported in the New York Stock Exchange Composite
Transactions on the date as of which such value is being determined or, if
there shall be no reported transactions for such date, on the next preceding
date for which transactions were reported.

6. Grant of Options

   The Committee may not grant to any individual Optionee in any fiscal year an
option or options with respect to more than 400,000 shares of Class A common
stock.

7. Term and Exercise of Options

   (a) Each option granted shall provide that it is not exercisable after the
expiration of ten (10) years from the date the option is granted, or such
shorter period as the Committee determines, and each option shall be subject to
the following limitations upon its exercise:

   (i) Except as otherwise provided in paragraph 11(a) hereof, no option may be
       exercised until the day preceding the anniversary date of the grant of
       the option.

                                      2



  (ii) Except as otherwise provided in paragraph 11(a) hereof, on the day
       preceding the anniversary date of the grant of the option in each of the
       four calendar years immediately following the year of the grant of the
       option, the right to purchase twenty-five percent (25%) of the total
       number of shares of stock specified in the option shall accrue to the
       Optionee. Subject to paragraph 8 hereof, each such right to purchase
       such twenty-five percent (25%) may be exercised, in whole or in part, at
       any time after such right accrues and prior to the expiration of the
       term of the option.

   (b) Notwithstanding the foregoing or paragraph 8 hereof, the Committee may
in its discretion (i) specifically provide at the date of grant for another
time or times of exercise; (ii) at any time prior to the expiration or
termination of any option previously granted, accelerate the exercisability of
any option subject to such terms and conditions as the Committee deems
necessary or appropriate to effectuate the purpose of the ACSOP including,
without limitation, a requirement that the Optionee grant to the Company an
option to repurchase all or a portion of the number of shares acquired upon
exercise of the accelerated option for their Fair Market Value on the date of
grant; or (iii) at any time prior to the expiration or termination of any
option previously granted, extend the term of any option (including such
options held by officers or directors) for such additional period as the
Committee, in its discretion, shall determine. In no event, however, shall the
aggregate option period with respect to any option, including the original term
of the option and any extensions thereof, exceed ten years.

   (c) An option may be exercised (subject to the receipt of payment) by giving
written notice to the Secretary of the Company specifying the number of shares
to be purchased. The full purchase price for such shares may be paid (i) in
cash, (ii) by check, (iii) by delivery of previously owned shares of Class A
common stock, (iv) by delivery of previously owned shares of Class B common
stock, or (v) by a combination of these methods of payment. However, under no
circumstances may any Optionee deliver previously owned shares of Class A
common stock or Class B common stock obtained from the exercise of stock
options under any option plan of the Company or the vesting of shares
restricted under any restricted stock plan of the Company or the Management
Bonus Plan during the six months immediately preceding the exercise date.
Payment must be received by the Secretary of the Company before any exercise is
consummated. For purposes of the delivery of previously owned shares of Class A
common stock and/or Class B common stock, the per share value of such shares
shall be the Fair Market Value on the date of exercise.

   (d) At any time when an Optionee is required to pay to the Company an amount
required to be withheld under applicable tax laws in connection with the
exercise of an option (calculated by taking the minimum statutory withholding
rates for federal, state and local tax purposes including payroll taxes,
applicable to the income generated by the Optionee by such exercise), the
Optionee may satisfy this obligation (i) in cash, (ii) by check, (iii) by
delivery of previously owned shares of Class A common stock, (iv) by delivery
of previously owned shares of Class B common stock, (v) by making an election
to have the Company withhold shares of Class A common stock, or (vi) by a
combination of these methods of payment, in each case having a value equal to
the amount required to be withheld. The Optionee must specify the method of
satisfying this obligation on or before the date of exercise. The value of the
shares to be withheld or delivered shall be based on the Fair Market Value of
the Class A common stock and/or Class B common stock on the date of exercise.

                                      3



8. Continuity of Employment

   (a) Each option shall be subject to the following in addition to the
restrictions set forth in paragraphs 6 and 7 hereof:

   (i) If an Optionee dies without having fully exercised his or her option,
       the executors or administrators of his or her estate or legatees or
       distributees shall have the right during the one (1) year period
       following his or her death (but not after the expiration of the term of
       such option) to exercise such option in whole or in part but only to the
       extent that the Optionee could have exercised it at the date of his or
       her death.

  (ii) If an Optionee's termination of employment is due to retirement or
       disability, the Optionee's option shall terminate three (3) months after
       his or her termination of employment (but not after the expiration of
       the term of such option) and may be exercised only to the extent that
       such Optionee could have exercised it at the date of his or her
       termination of employment. For purposes of the ACSOP, (i) "retirement"
       shall have the meaning provided in the Company's Employees' Profit
       Sharing Plan or, in the absence of such a definition, termination of
       employment that occurs on or after the first day of the month following
       the month in which the Optionee attains his or her 65th birthday and
       (ii) "disability" shall have the meaning provided in the Company's
       applicable long-term disability plan and such disability continues for
       more than three months or, in the absence of such a definition, when an
       Optionee becomes totally disabled as determined by a physician mutually
       acceptable to the Optionee and the Committee before attaining his or her
       65th birthday and if such total disability continues for more than three
       months. Disability does not include any condition which is intentionally
       self-inflicted or caused by illegal acts of the Optionee.

 (iii) If an Optionee's termination of employment is for any reason other than
       death, retirement or physical disability, the Optionee's option shall
       terminate upon said termination of employment; provided, however, that
       if such termination of employment occurs following a Change in Control
       (as such term is defined in paragraph 11(b) hereof), the Optionee's
       option shall terminate three (3) months after his or her termination of
       employment (but not after the expiration of the term of such option) and
       may be exercised to the extent that such Optionee could have exercised
       it at the date of his or her termination of employment.

   (b) Nothing contained in the ACSOP or any option granted pursuant to the
ACSOP shall confer upon any Optionee any right to be continued in the
employment of the Company or any subsidiary or shall prevent the Company or any
subsidiary from terminating an Optionee's employment at any time, with or
without cause. The determination by the Committee of whether an authorized
leave of absence constitutes a termination of employment shall be final,
conclusive and binding.

9. Non-Transferability of Options

   An option granted under the ACSOP shall not be assignable or transferable by
an Optionee

                                      4



otherwise than by will or the laws of descent and distribution, and an option
shall be exercisable during the lifetime of the Optionee only by him or her. An
option transferred by will or the laws of descent and distribution may only be
exercised by the legatee or distributee during the one year period following
the Optionee's death and may only be exercised to the extent it was exercisable
by the Optionee prior to his or her death.

   10. Adjustment upon Change in Stock

   Each option, the number and kind of shares subject to future options and the
number of shares subject to options that may be granted to an Optionee in any
fiscal year under the ACSOP may be adjusted, as may be determined to be
equitable in the sole and absolute discretion of the Committee, in the event
there is any change in the outstanding Class A common stock, or any event that
could cause a change in the outstanding Class A common stock, including,
without limitation, by reason of a stock dividend, recapitalization,
reclassification, issuance of Class A common stock, issuance of rights to
purchase Class A common stock, issuance of securities convertible into or
exchangeable for Class A common stock, merger, consolidation, stock split,
reverse stock split, spin-off, combination, exchange or conversion of shares,
or any other similar type of event. The Committee's determination of any
adjustment pursuant to this paragraph 10 shall be final, conclusive and binding.

   11. Change in Control

   (a) (1) Notwithstanding any provision of the ACSOP, in the event of a Change
   in Control, all outstanding options shall immediately be exercisable in full
   and shall be subject to the provisions of paragraph 11(a)(2) or 11(a)(3), to
   the extent that either such paragraph is applicable.

      (2) Notwithstanding any provision of the ACSOP, in the event of a Change
   in Control in connection with which the holders of shares of the Company's
   Class A common stock receive shares of common stock that are registered
   under Section 12 of the Exchange Act, all outstanding options shall
   immediately be exercisable in full and there shall be substituted for each
   share of the Company's Class A common stock available under the ACSOP,
   whether or not then subject to an outstanding option, the number and class
   of shares into which each outstanding share of the Company's Class A common
   stock shall be converted pursuant to such Change in Control. In the event of
   any such substitution, the purchase price per share of each option shall be
   appropriately adjusted by the Committee or the committee to which authority
   has been delegated pursuant to paragraph 3 hereof, such adjustments to be
   made without an increase in the aggregate purchase price.

      (3) Notwithstanding any provision in the ACSOP, in the event of a Change
   in Control in connection with which the holders of the Company's Class A
   common stock receive consideration other than shares of common stock that
   are registered under Section 12 of the Exchange Act, each outstanding option
   shall be surrendered to the Company by the holder thereof, and each such
   option shall immediately be cancelled by the Company, and the holder shall
   receive, within ten (10) days of the occurrence of such Change in Control, a
   cash payment from the Company in an amount equal to the

                                      5



   number of shares of the Company's Class A common stock then subject to such
   option, multiplied by the excess, if any, of (i) the greater of (A) the
   highest per share price offered to stockholders of the Company in any
   transaction whereby the Change in Control takes place or (B) the Fair Market
   Value of a share of the Company's Class A common stock on the date of
   occurrence of the Change in Control over (ii) the purchase price per share
   of the Company's Class A common stock subject to the option. The Company
   may, but is not required to, cooperate with any person who is subject to
   Section 16 of the Exchange Act to assure that any cash payment in accordance
   with the foregoing to such person is made in compliance with Section 16 of
   the Exchange Act and the rules and regulations thereunder providing for an
   exemption from Section 16(b) of the Exchange Act.

   (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 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 paragraph 11(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
          paragraph 11(b)(2)(A);

             (ii) by the Company, except as otherwise provided in paragraph
          11(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 paragraph 11(b)(1)(C) shall be
          satisfied.

          (B) The cessation for any reason of the members of the

                                      6



       Incumbent Board (as such term is defined in paragraph 11(d)) to
       constitute at least a majority of the Board of Directors of the Company
       (hereinafter called 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

             (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

                                      7



       complete liquidation or dissolution of the Company.

      (2) Notwithstanding the provisions of paragraph 11(b)(1):

          (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 paragraph 11(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 paragraph 11(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;

      (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 paragraph 11(c)(1) or
   (2);

      (4) any trust or similar arrangement for the benefit of any person
   described in paragraph 11(c)(1) or (2); or

      (5) the Lavin Family Foundation or any other charitable organization
   established by any person described in paragraph 11(c)(1) or (2).

   (d) "Incumbent Board" means those individuals who, as of October 24, 2002,
constitute the Board, provided that:

      (1) any individual who becomes a director of the Company subsequent to
   such

                                      8



   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 or the Exempt Persons shall be
   deemed to have been a member of the Incumbent Board.

12. Amendment and Discontinuance

   The Committee or the Board, without further approval of the stockholders,
may, at any time and from time to time, suspend or discontinue the ACSOP in
whole or in part or amend the ACSOP in such respects as the Committee or the
Board may deem proper and in the best interests of the Company or as may be
advisable, provided, however, that no suspension or amendment shall be made
which would:

   (i) Adversely affect or impair any option previously granted under the ACSOP
       without the consent of the Optionee, or

  (ii) Except as specified in paragraph 10, increase the total number of shares
       for which options may be granted under the ACSOP or decrease the minimum
       price at which options may be granted under the ACSOP.

   In the event the stockholders of the Company approve the 2003 Employee Plan
at the 2003 Annual Meeting, neither the Committee or the Board may amend this
ACSOP to allow for the grant of stock options under this ACSOP after the date
of the 2003 Annual Meeting without the approval of stockholders.

                                      9

EX-10.(D)

                                                                 Exhibit 10 (d)
                            ALBERTO-CULVER COMPANY
                          1994 RESTRICTED STOCK PLAN

                     (as amended through October 24, 2002)

SECTION 1.  ESTABLISHMENT AND PURPOSE

   1.1  Establishment.  The Alberto-Culver Company (the "Company") hereby
establishes a restricted stock plan for Key Employees, as defined herein, which
shall be known as the Alberto-Culver Company 1994 Restricted Stock Plan (the
"RSP").

   1.2  Purpose.  The purpose of the RSP is to enable the Company to attract,
retain, motivate, and reward Key Employees by providing them with a means to
acquire an equity interest or to increase such interest in the Company in
return for high levels of individual contribution and continued service.

   1.3  Definitions.  Whenever used herein, the following terms shall have the
meanings set forth below:

   (a) "Board" means the Board of Directors of the Company.

   (b) "Change in Control" shall have the meaning set forth in Section 7.2(a).

   (c) "Committee" means the Compensation Committee of the Board or, if any
       member of the Compensation 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 RSP involving "officers" within the
       meaning of Rule 16a-1(f) under Section 16, and "covered employees"
       within the meaning of Section 162(m) of the Code for the plan year at
       issue.

   (d) "Disability" shall have the meaning provided in the Company's applicable
       long-term disability plan and such disability continues for more than
       three months 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 Company before attaining his or
       her 65th birthday and if such total disability continues for more than
       three months. Disability does not include any condition which is
       intentionally self-inflicted or caused by illegal acts of the
       Participant.

   (e) "Exempt Person" and "Exempt Persons" shall have the meaning set forth in
       Section 7.2(b)

   (f) "Fair Market Value" shall mean the average of the high and low
       transaction prices of a share of Class A common stock as reported in the
       New York Stock Exchange Composite Transactions on the date as of which
       such value is being determined or, if



          there shall be no reported transactions for such date, on the next
          preceding date for which transactions were reported.

      (g) "Key Employee" means an active, salaried employee (including officers
          and directors who also are employees) of the Company or its
          subsidiaries with direct impact on the performance of the Company.

      (h) "Incumbent Board" shall have the meaning set forth in Section 7.2(c).

      (i) "Participant" means a Key Employee designated by the Committee who is
          awarded and holds Restricted Stock pursuant to the RSP.

      (j) "Restricted Stock" shall mean the Class A common stock of the
          Company, $.22 par value, with restrictions as described in Section 6.

      (k) "Restricted Stock Agreement" shall have the meaning set forth in
          Section 6.1.

      (l) "Retirement" shall have the meaning provided in the Company's
          Employees' Profit Sharing Plan or, in the absence of such a
          definition, termination of employment that occurs on or after the
          first day of the month following the month in which the Participant
          attains his or her 65th birthday.

SECTION 2.  ADMINISTRATION

   2.1  Administration.  The RSP shall be administered by the Committee. The
Committee shall have full power to construe, administer and interpret the RSP,
and full power to adopt such rules and regulations as the Committee may deem
desirable to administer the RSP. No member of the Committee shall be liable for
any action or determination made in good faith with respect to the RSP or any
Restricted Stock thereunder.

   2.2  Finality of Determination.  The determination of the Committee as to
any disputed questions arising under this RSP, including questions of
construction and interpretation, shall be final, conclusive and binding.

SECTION 3.  ELIGIBILITY AND PARTICIPATION

   3.1  Eligibility.  Key Employees of the Company and its subsidiaries are
eligible to receive Restricted Stock under the RSP, in such amounts and on as
many occasions as the Committee in its sole discretion may determine.

   3.2  Participation.  The Committee shall designate the Key Employees to
receive Restricted Stock, the time or times and the size and terms of each
individual grant of Restricted Stock under the RSP.

                                      2



SECTION 4.  STOCK SUBJECT TO THE RSP

   4.1  Number.  The total number of shares of Restricted Stock that may be
granted under the RSP shall not exceed 1,000,000. These shares may consist, in
whole or in part, of authorized but unissued shares of stock or shares of stock
reacquired by the Company and not reserved for any other purpose. In the event
the Stockholders of the Company approve the Alberto-Culver Company 2003
Restricted Stock Plan (the "2003 RSP") at the Annual Meeting of Stockholders to
be held on January 23, 2003, or any adjournment thereof (the "2003 Annual
Meeting"), no more grants of Restricted Stock shall be granted hereunder. In
the event that the Stockholders do not approve the 2003 RSP at the 2003 Annual
Meeting, grants of Restricted Stock may continue in accordance with the terms
of the RSP.

   4.2  Reacquired and Withheld Shares.  If, at any time, shares of Restricted
Stock issued pursuant to the RSP shall have been reacquired by the Company in
connection with the restrictions herein imposed on such shares, such reacquired
shares again shall become available for issuance under the RSP at any time
prior to its termination. In addition, any shares of Restricted Stock withheld
to pay, in whole or in part, the amount required to be withheld under
applicable tax laws in accordance with Section 6.12 hereof, shall become
available for issuance under the RSP at any time prior to its termination.

   4.3  Adjustment upon Change in Stock.  The Committee may take such action
with regard to adjustment of the number of shares of Restricted Stock that may
be granted hereunder as it considers to be equitable in its sole and absolute
discretion in the event there is any change in the outstanding Class A common
stock, or any event that could cause a change in the outstanding Class A common
stock, including, without limitation, by reason of a stock dividend, stock
split, reverse stock split, spin-off, recapitalization, reclassification,
merger, consolidation, combination, issuance of securities convertible into or
exchangeable for Class A common stock, exchange or conversion of shares, or any
other similar type of event. The Committee's determination of any adjustment
pursuant to this Section 4.3 shall be final, conclusive and binding.

SECTION 5.  DURATION OF THE RSP

   The RSP shall continue until all Restricted Stock subject to it shall have
been granted and vested under the RSP, subject to the provisions of the RSP
regarding amendments thereto and termination thereof.

SECTION 6.  SHARES OF RESTRICTED STOCK

   6.1  Grant of Shares of Restricted Stock.  Awards of Restricted Stock to
Participants shall be granted under a Restricted Stock Agreement between the
Company and the Participant which shall provide that the shares subject to any
such award shall be subject to such forfeiture and other conditions, including
the provisions of Section 6.7 hereof, as the Committee shall designate.

   6.2  Vesting.  Except as otherwise provided in Section 7.1 hereof,
Restricted Stock granted to Participants before July 26, 2001 will vest on a
cumulative basis in equal annual

                                      3



increments of one-fourth of the shares granted, commencing on the day preceding
the fourth anniversary of the grant of the Restricted Stock. Those shares will
be fully vested after a period of seven (7) years from the day preceding the
date of grant. Except as otherwise provided in Section 7.1 hereof, Restricted
Stock granted to Participants on or after July 26, 2001 will vest on a
cumulative basis in equal annual increments of one-fourth of the shares
granted, commencing on the day preceding the second anniversary of the grant of
the Restricted Stock. Those shares will be fully vested after a period of five
(5) years from the day preceding the date of grant. The Committee, however, may
(i) accelerate the vesting of any Restricted Stock granted hereunder subject to
such terms and conditions as the Committee deems necessary or desirable to
effectuate the purpose of the RSP or (ii) specifically provide at the date of
grant for another vesting schedule which is different than the vesting schedule
set forth in the first two sentences of this Section 6.2.

   6.3  Transferability.  Subject to Section 6.8 hereof, a Participant's rights
under the RSP may not be assigned and any Restricted Stock granted to a
Participant may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated as long as the shares are subject to forfeiture or
other conditions as provided in this RSP, and as set forth in the Restricted
Stock Agreement pursuant to which such shares were granted.

   6.4  Removal of Restrictions.  Except as otherwise provided herein, or as
may be required by applicable law, shares of Restricted Stock covered by each
Restricted Stock Agreement made under this RSP will become freely transferable
by the Participant upon vesting in accordance with Section 6.2 or Section 7.1.

   6.5  Other Restrictions.  The Committee may impose such other restrictions
on any shares granted pursuant to this RSP as it may deem advisable, including,
without limitation, restrictions required by (1) federal securities laws, (2)
requirements of any stock exchange upon which such shares of the same class are
listed and (3) any state securities laws applicable to such shares.

   6.6  Certificates.  In addition to any legends placed on certificates
pursuant to Section 6.5, the Company reserves the right to place on each
certificate representing shares of Restricted Stock a restrictive legend, which
legend may be in the following form:

   "The sale or other transfer of shares of stock represented by this
   certificate, whether voluntary, involuntary, or by operation of law, is
   subject to the restrictions on transfer and forfeiture conditions (which
   include the satisfaction of certain employment service requirements) set
   forth in the Alberto-Culver Company 1994 Restricted Stock Plan and
   Restricted Stock Agreement. A copy of such agreement may be inspected at the
   offices of the Secretary of the Company."

All certificates representing shares of Restricted Stock shall be held by the
Secretary of the Company in escrow on behalf of the Participant awarded such
shares, together with a Power of Attorney (if any) executed by the Participant,
in the form satisfactory to the Committee and authorizing the Company to
transfer such shares as provided in the Restricted Stock Agreement, until such
time as all restrictions imposed on such shares pursuant to the RSP and the
Restricted Stock Agreement have expired or been earlier terminated.

                                      4



   6.7  Termination of Employment.  In the event that, prior to the removal of
restrictions on shares of Restricted Stock as contemplated by Section 6.4, a
Participant's employment with the Company terminates for any reason other than
death, Retirement, Disability, or a Change in Control, any shares subject to
time period restrictions or other forfeiture conditions at the date of such
termination shall automatically be forfeited to the Company. A Participant
shall not forfeit any rights to Restricted Stock previously granted to him,
solely because he ceases to qualify as a Key Employee.

   6.8  Death, Retirement or Disability

   (a) In the event that, prior to the removal of restrictions on shares of
Restricted Stock as contemplated by Section 6.4, a Participant's employment
with the Company terminates because of death, Retirement or Disability, any
uncompleted portion of a time period restriction or other forfeiture
conditions, as set forth in the terms of the Restricted Stock Agreement, may be
waived by the Committee. The shares released from such restrictions pursuant to
this Section 6.8 thereafter shall be freely transferable by the Participant,
subject to any applicable legal requirements.

   (b) A Participant may from time to time name in writing any person or
persons to whom his or her Restricted Stock should be given if the Participant
dies, subject to the waiver of any applicable forfeiture conditions by the
Committee pursuant to Section 6.8(a) hereof. Each such beneficiary designation
will revoke all prior designations by the Participant with respect to the RSP,
shall not require the consent of any previously named beneficiary, shall be in
a form prescribed by the Committee (if the Committee so prescribes), and will
be effective only when filed with the Committee in care of the Secretary of the
Company during the Participant's lifetime.

   (c) If a Participant fails to designate a beneficiary before his or her
death, as provided above, or if the beneficiary designated by the Participant
dies prior to receiving the Restricted Stock hereunder, the Company may
transfer the Restricted Stock to the legal representative or representatives of
the estate of the Participant.

   6.9  Voting Rights.  Participants shall have full voting rights with respect
to shares of Restricted Stock.

   6.10  Dividend Rights.  Except as the Committee may otherwise determine,
Participants shall have full dividend rights with any such dividends being paid
currently. Dividends paid on shares of Restricted Stock prior to the shares
vesting will be treated as wages for federal income tax purposes and will be
subject to withholding taxes by the Company. If all or part of a dividend is
paid in shares of stock, the dividend shares shall be subject to the same
restrictions on transferability as the shares of Restricted Stock that are the
basis for the dividend.

   6.11  Security Interest in Shares.  In connection with the execution of any
Restricted Stock Agreement, the Committee may require that a Participant grant
to the Company a security interest in the shares of Restricted Stock issued or
granted pursuant to this RSP to secure the payment of any sums (e.g.: income
withholding taxes due when restrictions lapse) then owing or thereafter coming
due to the Company by such Participant. This security interest shall continue
for such period of time as the certificates representing shares of Restricted
Stock are held by the Secretary of the Company in escrow

                                      5



on behalf of the Participant pursuant to Section 6.6.

   6.12  Withholding Taxes Due.  At any time when a Participant is required to
pay to the Company an amount required to be withheld under applicable tax laws
in connection with the vesting of Restricted Stock (calculated by taking the
minimum statutory withholding rates for federal, state and local tax purposes
including payroll taxes, applicable to the income generated by the vesting of
such Restricted Stock), the Participant may satisfy this obligation in whole or
in part by making an election to have the Company withhold shares of Restricted
Stock having a value equal to the amount required to be withheld. The value of
shares to be withheld shall be based on the Fair Market Value of the Restricted
Stock on the date the Participant vests in such shares.

SECTION 7.  CHANGE IN CONTROL

   7.1  Vesting Upon Change in Control.  Notwithstanding any provision of the
RSP, all outstanding shares of Restricted Stock shall immediately become fully
vested upon the occurrence of a Change in Control.

   7.2  Definitions

   (a) The term "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 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 7.2(b)); 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 7.2(a)(2)(A);

            (ii) by the Company, except as otherwise provided in Section
                 7.2(a)(2)(B);

           (iii) by an Exempt Person;

            (iv) by an employee benefit plan (or related trust) sponsored or

                                      6



          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 7.2(a)(1)(C) shall be
          satisfied.

          (B) The cessation for any reason of the members of the Incumbent
       Board (as such term is defined below) 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

             (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

                                      7



             (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 7.2(a)(1):

          (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 7.2(a)(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 7.2(a)(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.

      (b) The term "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 7.2(b)(1) or
   (2);

      (4) any trust or similar arrangement for the benefit of any person
   described in Section 7.2(b)(1) or (2); or

      (5) the Lavin Family Foundation or any other charitable organization

                                      8



   established by any person described in Section 7.2(b)(1) or (2).

   (c) The term "Incumbent Board" means those individuals who, as of October
24, 2002, 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 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 or the Exempt Persons shall be
   deemed to have been a member of the Incumbent Board.

SECTION 8.   EMPLOYMENT RIGHTS OF EMPLOYEES

   Nothing in this RSP or in any grant of Restricted Stock shall interfere with
or limit in any way the right of the Company to terminate any Key Employee's or
Participant's employment at any time, or confer upon any Key Employee or
Participant any right to continue in the employ of the Company or its
subsidiaries.

SECTION 9.   STOCKHOLDER APPROVAL, AMENDMENT AND TERMINATION

   9.1   Amendment.   This RSP may be amended at any time by the Committee or
the Board; provided that no such amendment shall permit the granting of
Restricted Stock to anyone other than as provided in Section 3 hereof, or
increase the maximum number of shares of stock that may be granted pursuant to
this RSP except pursuant to Section 4.3 hereof, without the further approval of
the Company's stockholders. In the event the stockholders of the Company
approve the 2003 RSP at the 2003 Annual Meeting, neither the Committee or the
Board may amend this RSP to allow for the grant of Restricted Stock under this
RSP after the date of the 2003 Annual Meeting without the approval of
stockholders.

   9.2   Termination.  The Company reserves the right to terminate the RSP at
any time by action of the Committee or the Board.

   9.3   Existing Restrictions.   Neither amendment nor termination of this RSP
shall adversely affect any shares previously granted or issued pursuant to this
RSP.

                                      9

EX-10.(E)

                                                                 Exhibit 10 (e)
                            ALBERTO-CULVER COMPANY

                            1994 STOCK OPTION PLAN
                          FOR NON-EMPLOYEE DIRECTORS

                     (as amended through October 24, 2002)

                               -----------------

   1. Purpose. The principal purpose of the 1994 Stock Option Plan for
Non-Employee Directors (the "Director Plan") is to benefit Alberto-Culver
Company (the "Company") and its subsidiaries by offering its non-employee
directors an opportunity to become holders of the Company's Class A common
stock, par value $.22 per share, in order to enable them to represent the
viewpoint of other stockholders of the Company more effectively and to
encourage them to continue serving as directors of the Company.

   2. Administration. The Director Plan shall be administered by the Board of
Directors, whose interpretation of the terms and provisions of the Director
Plan shall be final, conclusive and binding. No member of the Board of
Directors shall be liable for any action or determination made in good faith
with respect to the Director Plan or any option thereunder.

   3. Eligibility. Options shall be granted under this Director Plan only to
members of the Board of Directors who are not officers or employees of the
Company or any of its subsidiaries.

   4. Granting of Options.

   (a) An option to purchase 7,500 shares of Class A common stock from the
Company shall be automatically granted by the Board of Directors, without
further action required, to each director of the Company upon his or her
initial election or appointment as a director of the Company and to each person
who is an incumbent director on October 27, 1994 ("Initial Grant"); provided
such director is eligible at that time under the terms of paragraph 3 of this
Director Plan. No person may be granted more than one option pursuant to this
paragraph 4(a) of this Director Plan. In the event the Stockholders of the
Company approve the Alberto-Culver Company 2003 Stock Option Plan For
Non-Employee Directors (the "2003 Director Plan") at the Annual Meeting of
Stockholders to be held on January 23, 2003, or any adjournment thereof (the
"2003 Annual Meeting"), no more stock options shall be granted under this
paragraph 4(a) of this Director Plan. In the event that Stockholders do not
approve the 2003 Director Plan at the 2003 Annual Meeting, stock option grants
may continue pursuant to this paragraph 4(a).

   (b) An option to purchase 2,500 shares of Class A common stock from the
Company shall be automatically granted by the Board of Directors, without
further action required, at every Annual Meeting of the Stockholders of the
Company commencing on the Annual Meeting of the Stockholders of the Company
scheduled to occur in January, 2002, to each director of the Company
("Subsequent Grant"); provided such director is eligible at that time under the
terms of paragraph 3 of this Director Plan. No director who has received an
Initial Grant shall be entitled to receive a



Subsequent Grant during the same fiscal year of the Company. In the event the
Stockholders of the Company approve the 2003 Director Plan at the 2003 Annual
Meeting, no more stock options shall be granted under this paragraph 4(b) of
this Director Plan. In the event that Stockholders do not approve the 2003
Director Plan at the 2003 Annual Meeting, stock option grants may continue
pursuant to this paragraph 4(b).

   (c) An aggregate of 210,000 shares of Class A common stock shall be
available under this Director Plan. Such number of shares, and the number of
shares subject to options outstanding under this Director Plan, shall be
subject in all cases to adjustment as provided in paragraph 10. Shares subject
to options may be made available from unissued or treasury shares of stock. If
any option granted under the Director Plan shall terminate or be surrendered or
expire unexercised, in whole or in part, the shares so released from such
option may be made the subject of additional options granted under the Director
Plan. In the event the Stockholders of the Company approve the 2003 Director
Plan at the 2003 Annual Meeting, no more stock options shall be granted under
this Director Plan. In the event that Stockholders do not approve the 2003
Director Plan at the 2003 Annual Meeting, stock option grants may continue
pursuant to this Director Plan.

   (d) Nothing contained in this Director Plan or in any option granted
pursuant hereto shall confer upon any optionee any right to continue serving as
a director of the Company or interfere in any way with any right of the Board
of Directors or stockholders of the Company to remove such director pursuant to
the certificate of incorporation or by-laws of the Company or applicable law.

   5. Option Price. Subject to adjustment under paragraph 10, the option price
shall be the Fair Market Value (as defined below) of the Company's Class A
common stock on the date the option is granted. For purposes of the Director
Plan, "Fair Market Value" shall mean the average of the high and low
transaction prices of a share of Class A common stock or Class B common stock
of the Company (the "Class B common stock"), as the case may be, as reported in
the New York Stock Exchange Composite Transactions on the date as of which such
value is being determined or, if there shall be no reported transactions for
such date, on the next preceding date for which transactions were reported.

   6. Duration of Options, Increments and Extensions. Subject to the provisions
of paragraph 8, each option shall be for a term of ten (10) years. Subject to
the provisions of paragraph 11, each option shall become exercisable with
respect to 25% of the total number of shares on the day preceding the one (1)
year anniversary of the date of grant and with respect to an additional 25% at
the end of each twelve-month period thereafter during the succeeding three
years.

   7. Exercise of Option. An option may be exercised by giving written notice
to the Company, attention of the Secretary, specifying the number of shares of
Class A common stock to be purchased, accompanied by the full purchase price
for such number of shares, (i) in cash, (ii) by check, (iii) by delivery of
previously owned shares of Class A common stock, (iv) by delivery of previously
owned shares of Class B common stock or (v) by a combination of these methods
of payment. However, under no circumstances may any optionee deliver previously
owned shares of Class A common stock or Class B common stock obtained from the
exercise of options under any option plan of the Company during the six months
immediately preceding the exercise date. The per share value of the Class A
common stock and/or Class B common stock delivered in payment of the option
price shall be the Fair Market Value of the Class A common stock and/or Class B
common stock on the date

                                      2



of exercise.

   8. Termination--Exercise Thereafter.

   (a) If an optionee dies without having fully exercised his or her options,
the executors or administrators of his or her estate or legatees or
distributees shall have the right during the one (1) year period following his
or her death (but not after the expiration of the term of any such options) to
exercise such options in whole or in part but only to the extent that the
optionee could have exercised each such option at the date of his or her death.

   (b) If any optionee resigns from the Board of Directors due to disability or
retirement, the optionee's options shall terminate three (3) months after his
or her resignation (but not after the expiration of the term of any such
option) and may be exercised only to the extent that such optionee could have
exercised each such option at the date of his or her resignation.

   (c) If the optionee's termination from service on the Board of Directors is
for any reason other than death, disability or retirement, the optionee's
options shall terminate upon said termination; provided, however, that if such
termination occurs following a Change in Control (as such term is defined in
paragraph 11(b) hereof), the optionee's options shall terminate three (3)
months after his or her termination (but not after the expiration of the term
of any such option) and may be exercised to the extent that such optionee could
have exercised each such option at the date of his or her termination.

   9. Non-Transferability of Options. No option shall be transferable by the
optionee otherwise than by will or the laws of descent and distribution, and
each option shall be exercisable during an optionee's lifetime only by the
optionee.

   10. Adjustment upon Change in Stock. Each option, the number and kind of
shares subject to future options and the number of shares subject to options
that shall be automatically granted by the Board of Directors under the
Director Plan may be adjusted, as may be determined to be equitable in the sole
and absolute discretion of the Board of Directors, in the event there is any
change in the outstanding Class A common stock, or any event that could cause a
change in the outstanding Class A common stock, including, without limitation,
by reason of a stock dividend, recapitalization, reclassification, issuance of
Class A common stock, issuance of rights to purchase Class A common stock,
issuance of securities convertible into or exchangeable for Class A common
stock, merger, consolidation, stock split, reverse stock split, spin-off,
combination, exchange or conversion of shares, or any other similar type of
event. The Board of Director's determination of any adjustment pursuant to this
paragraph 10 shall be final, conclusive and binding.

   11. Change in Control

   (a) (1) Notwithstanding any provision of the Director Plan, in the event of
   a Change in Control, all outstanding options shall immediately be
   exercisable in full and shall be subject to the provisions of paragraph
   11(a)(2) or 11(a)(3), to the extent that either such paragraph is applicable.

      (2) Notwithstanding any provision of the Director Plan, in the event of a
   Change in

                                      3



   Control in connection with which the holders of shares of the Company's
   Class A common stock receive shares of common stock that are registered
   under Section 12 of the Securities Exchange Act of 1934 (the "Exchange
   Act"), all outstanding options shall immediately be exercisable in full and
   there shall be substituted for each share of the Company's Class A common
   stock available under the Director Plan, whether or not then subject to an
   outstanding option, the number and class of shares into which each
   outstanding share of the Company's Class A common stock shall be converted
   pursuant to such Change in Control. In the event of any such substitution,
   the purchase price per share of each option shall be appropriately adjusted
   by the Board of Directors, such adjustments to be made without an increase
   in the aggregate purchase price.

      (3) Notwithstanding any provision in the Director Plan, in the event of a
   Change in Control in connection with which the holders of the Company's
   Class A common stock receive consideration other than shares of common stock
   that are registered under Section 12 of the Exchange Act, each outstanding
   option shall be surrendered to the Company by the holder thereof, and each
   such option shall immediately be cancelled by the Company, and the holder
   shall receive, within ten (10) days of the occurrence of such Change in
   Control, a cash payment from the Company in an amount equal to the number of
   shares of the Company's Class A common stock then subject to such option,
   multiplied by the excess, if any, of (i) the greater of (A) the highest per
   share price offered to stockholders of the Company in any transaction
   whereby the Change in Control takes place or (B) the Fair Market Value of a
   share of the Company's Class A common stock on the date of occurrence of the
   Change in Control over (ii) the purchase price per share of the Company's
   Class A common stock subject to the option. The Company may, but is not
   required to, cooperate with any person who is subject to Section 16 of the
   Exchange Act to assure that any cash payment in accordance with the
   foregoing to such person is made in compliance with Section 16 of the
   Exchange Act and the rules and regulations thereunder providing for an
   exemption from Section 16(b) of the Exchange Act.

   (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 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 paragraph 11(c)); provided,
       however, that a Change in Control shall not result from an acquisition
       of Company Voting Securities:

                                      4



             (i) directly from the Company, except as otherwise provided in
          paragraph 11(b)(2)(A);

             (ii) by the Company, except as otherwise provided in paragraph
          11(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 paragraph 11(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 paragraph 11(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.

          (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

                                      5



       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 paragraph 11(b)(1):

          (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 paragraph 11(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 paragraph 11(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;

                                      6



      (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 paragraph 11(c)(1) or
   (2);

      (4) any trust or similar arrangement for the benefit of any person
   described in paragraph 11(c)(1) or (2); or

      (5) the Lavin Family Foundation or any other charitable organization
   established by any person described in paragraph 11(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.

   12.   Amendment of Director Plan. The Board of Directors may amend or
discontinue this Director Plan at any time; provided, however, that no such
amendment or discontinuance shall, without the approval of the stockholders
except as provided in paragraph 10, (i) increase the total number of shares for
which options may be granted to eligible directors pursuant to this Director
Plan or (ii) change the purchase price. In addition, no amendment or
discontinuance of the Director Plan shall adversely affect or impair any option
previously granted, without the consent of the optionee.

   In the event the stockholders of the Company approve the 2003 Director Plan
at the 2003 Annual Meeting, the Board of Directors may not amend this Director
Plan to allow for the grant of stock options under this Director Plan after the
date of the 2003 Annual Meeting without the approval of stockholders.

                                      7

EX-10.(H)

                                                                 EXHIBIT 10 (h)

================================================================================

                               CREDIT AGREEMENT

                        Dated as of September 10, 2002

                                     among

                            ALBERTO-CULVER COMPANY,

                          THE BORROWING SUBSIDIARIES
                        FROM TIME TO TIME PARTY HERETO,

                            BANK OF AMERICA, N.A.,
                            as Administrative Agent

                                      and

                        THE OTHER LENDERS PARTY HERETO

                        BANC OF AMERICA SECURITIES LLC,
                                      as
                   Sole Lead Arranger and Sole Book Manager

================================================================================



                               TABLE OF CONTENTS



Section                                                                     Page
- -------                                                                     ----
                                                                      
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.................................   1

1.01      Defined Terms                                                       1

1.02      Other Interpretive Provisions                                      16

1.03      Accounting Terms                                                   17

1.04      Rounding                                                           17

1.05      References to Agreements and Laws                                  17

1.06      Times of Day                                                       17

1.07      Exchange Rates; Currency Equivalents                               17

1.08      Additional Permitted Foreign Currencies                            18

1.09      Redenomination of Certain Permitted Foreign Currencies             18

ARTICLE II THE COMMITMENTS AND BORROWINGS..................................  18

2.01      Committed Loans                                                    18

2.02      Borrowings, Conversions and Continuations of Committed Loans       19

2.03      Bid Loans                                                          20

2.04      Designation of Additional Borrowing Subsidiaries; Termination of
          Borrowing Subsidiaries                                             23

2.05      Prepayments                                                        24

2.06      Termination or Reduction of Commitments                            25

2.07      Repayment of Loans                                                 25

2.08      Interest                                                           25

2.09      Fees                                                               26

2.10      Computation of Interest and Fees                                   26

2.11      Evidence of Debt                                                   27

2.12      Payments Generally                                                 27

2.13      Sharing of Payments                                                29

2.14      Company Guaranty                                                   29

ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY.........................  32

3.01      Taxes                                                              32

3.02      Illegality                                                         33

3.03      Inability to Determine Rates                                       34

3.04      Increased Cost; Capital Adequacy; Reserves on Eurodollar Rate
          Loans                                                              34

3.05      Funding Losses                                                     35

3.06      Matters Applicable to all Requests for Compensation                36

3.07      Survival                                                           36

ARTICLE IV CONDITIONS PRECEDENT TO BORROWINGS..............................  36

4.01      Conditions of Initial Borrowing                                    36

4.02      Conditions to all Borrowings                                       37

ARTICLE V REPRESENTATIONS AND WARRANTIES...................................  38

5.01      Corporate Existence and Power                                      38

5.02      Corporate Authorization; No Contravention                          38

5.03      Governmental Authorization                                         38

5.04      Binding Effect                                                     39

5.05      Litigation                                                         39

5.06      No Default                                                         39

5.07      ERISA Compliance                                                   39


                                      i



                                                                      
5.08      Use of Proceeds; Margin Regulations                               40

5.09      Title to Properties                                               40

5.10      Taxes                                                             40

5.11      Financial Condition                                               40

5.12      Environmental Matters                                             41

5.13      Regulated Entities                                                41

5.14      Copyrights, Patents, Trademarks and Licenses, etc.                41

5.15      Subsidiaries/Investments                                          41

5.16      Insurance                                                         41

5.17      Full Disclosure                                                   42

ARTICLE VI AFFIRMATIVE COVENANTS........................................... 42

6.01      Financial Statements                                              42

6.02      Certificates; Other Information                                   42

6.03      Notices                                                           43

6.04      Preservation of Corporate Existence, Etc.                         44

6.05      Maintenance of Property                                           44

6.06      Insurance                                                         44

6.07      Payment of Obligations                                            44

6.08      Compliance with Laws                                              45

6.09      Compliance with ERISA                                             45

6.10      Inspection of Property and Books and Records                      45

6.11      Environmental Laws                                                45

6.12      Use of Proceeds                                                   46

ARTICLE VII NEGATIVE COVENANTS............................................. 46

7.01      Limitation on Liens                                               46

7.02      Disposition of Assets                                             47

7.03      Consolidations and Mergers                                        48

7.04      Margin Stock                                                      48

7.05      Restricted Payments                                               49

7.06      ERISA                                                             49

7.07      Accounting Changes                                                49

7.08      Consolidated Interest Coverage Ratio                              49

7.09      Consolidated Leverage Ratio                                       49

7.10      Consolidated Fixed Charge Coverage Ratio                          49

7.11      Subsidiary Indebtedness                                           49

7.12      Transactions with Affiliates                                      50

7.13      Burdensome Agreements                                             50

ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES................................ 50

8.01      Events of Default                                                 50

8.02      Remedies Upon Event of Default                                    52

8.03      Application of Funds                                              53

ARTICLE IX ADMINISTRATIVE AGENT............................................ 54

9.01      Appointment and Authorization of Administrative Agent             54

9.02      Delegation of Duties                                              54

9.03      Liability of Administrative Agent                                 54

9.04      Reliance by Administrative Agent                                  54



                                      ii



                                                                       

 9.05      Notice of Default                                                 55

 9.06      Credit Decision; Disclosure of Information by Administrative
           Agent                                                             55

 9.07      Indemnification of Administrative Agent                           56

 9.08      Administrative Agent in its Individual Capacity                   56

 9.09      Successor Administrative Agent                                    56

 9.10      Administrative Agent May File Proofs of Claim                     57

 9.11      Other Agents; Arrangers and Managers                              58

ARTICLE X MISCELLANEOUS..................................................... 58

10.01      Amendments, Etc                                                   58

10.03      No Waiver; Cumulative Remedies                                    60

10.04      Attorney Costs, Expenses and Taxes                                60

10.05      Indemnification                                                   61

10.06      Payments Set Aside                                                62

10.07      Successors and Assigns                                            62

10.08      Confidentiality                                                   64

10.09      Set-off                                                           65

10.10      Interest Rate Limitation                                          65

10.11      Counterparts                                                      66

10.12      Integration                                                       66

10.13      Survival of Representations and Warranties                        66

10.14      Severability                                                      66

10.15      Tax Forms                                                         66

10.16      Replacement of Lenders                                            68

10.17      Governing Law                                                     68

10.18      Waiver of Right to Trial by Jury                                  69

10.19      Judgment Currency                                                 70

10.20      Subordination of Intercompany Indebtedness                        70



                                      iii



       
   SCHEDULES

    1.01     Mandatory Cost Rate

    2.01     Commitments and Pro Rata Shares

    5.15     List of Material Subsidiaries and Material Equity Investments

   10.02     Administrative Agent's Office, Certain Addresses for Notices

   EXHIBITS

             Form of

    2.02     Committed Loan Notice

    2.03(b)  Bid Request

    2.03(c)  Competitive Bid

    2.04(a)  Borrowing Subsidiary Agreement

    2.04(b)  Borrowing Subsidiary Termination

    2.11     Note

    6.02     Compliance Certificate

   10.07     Assignment and Assumption

   

                                      iv



                               CREDIT AGREEMENT

    This CREDIT AGREEMENT ("Agreement") is entered into as of September 10,
2002, among ALBERTO-CULVER COMPANY, a Delaware corporation (the "Company"),
ALBERTO-CULVER USA, INC., a Delaware corporation ("A-C USA"), as a Borrowing
Subsidiary, SALLY BEAUTY COMPANY, INC., a Delaware corporation ("Sally
Beauty"), as a Borrowing Subsidiary, BEAUTY SYSTEMS GROUP, INC., a Delaware
corporation ("Beauty Systems Group"), as a Borrowing Subsidiary, each lender
from time to time party hereto (collectively, the "Lenders" and individually, a
"Lender"), and BANK OF AMERICA, N.A., as Administrative Agent.

    The Company has requested that the Lenders provide a $300,000,000 revolving
credit facility, and the Lenders are willing to do so on the terms and
conditions set forth herein.

    In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:

                                   ARTICLE I
                       DEFINITIONS AND ACCOUNTING TERMS

1.01  Defined Terms.

    As used in this Agreement, the following terms shall have the meanings set
forth below:

    "Absolute Rate" means a fixed rate of interest expressed in multiples of
1/100th of one basis point.

    "Absolute Rate Loan" means a Bid Loan that bears interest at a rate
determined with reference to an Absolute Rate. All Absolute Rate Loans shall be
denominated in Dollars.

    "A-C USA" has the meaning specified in the introductory paragraph hereto.

    "Acquisition" means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the equity
securities of a Person entitled to vote, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other combination
with another Person (other than a Person that is a Subsidiary) provided that
the Company or the Subsidiary is the surviving entity.

    "Administrative Agent" means Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

    "Administrative Agent's Office" means, with respect to any Available
Currency, the Administrative Agent's address and, as appropriate, account as
set forth on Schedule 10.02 with respect to such Available Currency, or such
other address or account with respect to such Available Currency as the
Administrative Agent may from time to time notify the Company and the Lenders;
provided that in no event shall any such address or account change be made
without 2 Business Days prior written notice to the Company.

    "Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.

                                      1



    "Affiliate" means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. "Control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. "Controlled" has a
meaning correlative thereto.

    "Agent-Related Persons" means the Administrative Agent, together with its
Affiliates (including, in the case of Bank of America in its capacity as the
Administrative Agent, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.

    "Aggregate Commitments" means the Commitments of all the Lenders. As of the
Closing Date, the Aggregate Commitments are $300,000,000.

    "Agreement" means this Credit Agreement.

    "Applicable Rate" means, from time to time, the following percentages per
annum, based upon the Debt Rating as set forth below:

                                Applicable Rate



                   Debt Ratings
          Pricing      S&P/      Facility Utilization Eurodollar Base
           Level     Moody's       Fee        Fee        Rate    Rate
          ------- -------------- -------- ----------- ---------- ----
                                                  
             1    A/A2 or better  0.080%     0.100%     0.220%    0%
             2        A-/A3       0.100%     0.100%     0.300%    0%
             3      BBB+/Baa1     0.125%     0.100%     0.425%    0%
             4       BBB/Baa2     0.150%     0.125%     0.600%    0%
             5     BBB-/Baa3 or
                      worse       0.200%     0.125%     0.800%    0%


    Initially, the Applicable Rate shall be determined based upon the Debt
Rating specified in the certificate delivered pursuant to Section 4.01(a)(vi).
Thereafter, each change in the Applicable Rate resulting from a publicly
announced change in the Debt Rating shall be effective during the period
commencing on the date of the public announcement thereof and ending on the
date immediately preceding the effective date of the next such change.

    If a Debt Rating is issued by both Moody's and S&P, then the higher of such
Debt Ratings shall apply (with the Debt Rating for Pricing Level 1 being the
highest and the Debt Rating for Pricing Level 5 being the lowest), unless there
is a split in Debt Ratings of more than one Pricing Level, in which case the
Pricing Level that is one level lower than the Pricing Level of the higher Debt
Rating shall apply.

    "Applicable Time" means, with respect to any borrowings and payments in
Permitted Foreign Currencies, the local times in the place of settlement for
such Permitted Foreign Currencies as may be reasonably determined by the
Administrative Agent to be necessary for timely settlement on the relevant date
in accordance with normal banking procedures in the place of payment.

    "Arranger" means Banc of America Securities LLC, in its capacity as sole
lead arranger and sole book manager.

                                      2



    "Assignment and Assumption" means an Assignment and Assumption
substantially in the form of Exhibit 10.07.

    "Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel.

    "Attributable Indebtedness" means, on any date, (a) in respect of any
capital lease of any Person, the capitalized amount thereof that would appear
on a balance sheet of such Person prepared as of such date in accordance with
GAAP and (b) in respect of any Permitted Receivables Financing of any Person,
the Investment Amount of such financing.

    "Audited Financial Statements" means the audited consolidated balance sheet
of the Company and its Subsidiaries for the fiscal year ended September 30,
2001, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such fiscal year of the Company and its
Subsidiaries, including the notes thereto.

    "Available Currency" means Dollars and any Permitted Foreign Currency.

    "Availability Period" means the period from and including the Closing Date
to the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.06, and (c) the date of termination
of the Commitment of each Lender to make Loans pursuant to Section 8.02.

    "Bank of America" means Bank of America, N.A. and its successors.

    "Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its "prime rate." The "prime rate" is a rate set by Bank of
America based upon various factors including Bank of America's costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.

    "Base Rate Loan" means a Loan that bears interest based on the Base Rate.
All Base Rate Loans shall be denominated in Dollars.

    "Beauty Systems Group" has the meaning specified in the introductory
paragraph hereto.

    "Bid Borrowing" means a borrowing consisting of simultaneous Bid Loans of
the same Type from each of the Lenders whose offer to make one or more Bid
Loans as part of such borrowing has been accepted under the auction bidding
procedures described in Section 2.03.

    "Bid Loan" has the meaning specified in Section 2.03(a). All Bid Loans
shall be denominated in Dollars.

    "Bid Loan Lender" means, in respect of any Bid Loan, the Lender making such
Bid Loan to a Loan Party.

    "Bid Request" means a written request for one or more Bid Loans
substantially in the form of Exhibit 2.03(b).

                                      3



    "Borrowing" means a Committed Borrowing or a Bid Borrowing, as the context
may require.

    "Borrowing Subsidiary" means any of A-C USA, Sally Beauty, Beauty Systems
Group and any other Subsidiary designated as a Borrowing Subsidiary by the
Company from time to time pursuant to Section 2.04(a) that has not ceased to be
a Borrowing Subsidiary pursuant to such Section 2.04(b).

    "Borrowing Subsidiary Agreement" means a Borrowing Subsidiary Agreement,
substantially in the form of Exhibit 2.04(a).

    "Borrowing Subsidiary Termination" means a Borrowing Subsidiary
Termination, substantially in the form of Exhibit 2.04(b).

    "Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are required to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent's Office with respect to
Obligations denominated in Dollars is located and (a) if such day relates to
any Eurodollar Rate Loan denominated in any Available Currency other than Euro,
means any such day on which dealings in deposits in the applicable Available
Currency are conducted by and between banks in the applicable offshore
interbank market for such Available Currency or (b) if such day relates to any
Eurodollar Rate Loan denominated in Euro, means a TARGET Day.

    "Closing Date" means September 10, 2002.

    "Code" means the Internal Revenue Code of 1986.

    "Commitment" means, as to each Lender, its obligation to make Committed
Loans to the Loan Parties pursuant to Section 2.01, in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth opposite
such Lender's name on Schedule 2.01 or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable, as such
amount may be adjusted from time to time in accordance with this Agreement.

    "Committed Borrowing" means a borrowing consisting of simultaneous
Committed Loans of the same Type, in the same Available Currency and, in the
case of Eurodollar Rate Committed Loans, having the same Interest Period made
by each of the Lenders pursuant to Section 2.01.

    "Committed Loan" has the meaning specified in Section 2.01.

    "Committed Loan Notice" means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other, or (c) a continuation
of Committed Loans as the same Type, pursuant to Section 2.02(a), which, if in
writing, shall be substantially in the form of Exhibit 2.02.

    "Company" has the meaning specified in the introductory paragraph hereto.

    "Competitive Bid" means a written offer by a Lender to make one or more Bid
Loans, substantially in the form of Exhibit 2.03(c), duly completed and signed
by a Lender.

    "Compliance Certificate" means a certificate substantially in the form of
Exhibit 6.02.

    "Consolidated EBIT" means, for any period, for the Company and its
Subsidiaries on a consolidated basis, the sum of (a) Consolidated Net Income
for such period, plus (b) Consolidated Interest

                                      4



Charges for such period, plus (c) all taxes accrued for such period on or
measured by income to the extent included in the determination of Consolidated
Net Income.

    "Consolidated EBITR" means, for any period, for the Company and its
Subsidiaries on a consolidated basis, the sum of (a) Consolidated EBIT for such
period, plus (b) Consolidated Rental Expense for such period to the extent
included in the determination of Consolidated Net Income.

    "Consolidated Fixed Charge Coverage Ratio" means, as of any date of
determination, the ratio of (a) Consolidated EBITR for the fiscal year ending
on such date to (b) the sum of (i) Consolidated Interest Charges for such
period plus (ii) Consolidated Rental Expense for such period.

    "Consolidated Interest Charges" means, without duplication, for any period,
for the Company and its Subsidiaries on a consolidated basis, all amounts
treated as interest expense for such period to the extent included in the
determination of Consolidated Net Income for such period and the actual or
implied interest component of Permitted Receivables Financings, each as
determined in accordance with GAAP.

    "Consolidated Interest Coverage Ratio" means, as of any date of
determination, the ratio of (a) Consolidated EBIT for the period of the four
prior fiscal quarters ending on such date to (b) Consolidated Interest Charges
for such period.

    "Consolidated Leverage Ratio" means, as of any date of determination, the
ratio of (a) Consolidated Total Funded Indebtedness as of such date to (b)
Consolidated Total Capitalization as of such date.

    "Consolidated Net Income" means, for any period, for the Company and its
Subsidiaries on a consolidated basis, the net income (or loss) of the Company
and its Subsidiaries (excluding extraordinary or non-recurring gains or losses
and, to the extent included in net income (or loss), non-cash expenses relating
to stock options granted by the Company) for such period, as determined in
accordance with GAAP.

    "Consolidated Rental Expense" means, for any period, for the Company and
its Subsidiaries on a consolidated basis, rental expense under operating leases
for such period, as determined in accordance with GAAP.

    "Consolidated Total Capitalization" means, as of any date of determination,
the sum of (a) Consolidated Total Funded Indebtedness plus (b) the sum of the
amounts set forth on the consolidated balance sheet of the Company and its
Subsidiaries as shareholders' equity, as determined in accordance with GAAP.

    "Consolidated Total Funded Indebtedness" means, without duplication, as of
any date of determination, for the Company and its Subsidiaries on a
consolidated basis, the sum of (a) the outstanding principal amount of all
obligations, whether current or long-term, for borrowed money (including
Obligations hereunder) and all obligations evidenced by bonds, debentures,
notes, loan agreements or other similar instruments, (b) all purchase money
Indebtedness, (c) all non-contingent obligations arising under letters of
credit (including standby and commercial), bankers' acceptances, bank
guaranties, surety bonds and similar instruments, (d) all obligations in
respect of the deferred purchase price of property or services (other than
accounts payable in the ordinary course of business), (e) Attributable
Indebtedness, (f) without duplication, all Guarantees with respect to
outstanding Indebtedness of the types specified in clauses (a) through (e)
above of Persons other than the Company or any Subsidiary, and (g) all
Indebtedness of the types referred to in clauses (a) through (f) above of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability

                                      5



company) in which the Company or a Subsidiary is a general partner or joint
venturer, unless such Indebtedness is expressly made non-recourse to the
Company or such Subsidiary.

    "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

    "Control" has the meaning specified in the definition of "Affiliate".

    "Debt Rating" means, as of any date of determination, the rating as
determined by either S&P or Moody's (collectively, the "Debt Ratings") of the
Company's non-credit-enhanced, senior unsecured long-term debt.

    "Debtor Relief Laws" means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights
of creditors generally.

    "Default" means any event or condition that constitutes an Event of Default
or that, with the giving of any notice, the passage of time, or both, would be
an Event of Default.

    "Default Rate" means an interest rate equal to (a) the Base Rate plus (b)
the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per
annum; provided, however, that with respect to a Eurodollar Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including
any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in
each case to the fullest extent permitted by applicable Laws.

    "Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Committed Loans required to be funded by it hereunder within one
Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Administrative Agent or any other Lender
any other amount required to be paid by it hereunder within one Business Day of
the date when due, or (c) has been deemed insolvent or become the subject of a
bankruptcy or insolvency proceeding.

    "Dollar" and "$" mean lawful money of the United States.

    "Dollar Equivalent" means, at any time, (a) with respect to any amount
denominated in Dollars, such amount, and (b) with respect to any amount
denominated in any Permitted Foreign Currency, the equivalent amount thereof in
Dollars as reasonably determined by the Administrative Agent at such time on
the basis of the Spot Rate (determined in respect of the most recent
Revaluation Date) for the purchase of Dollars with such Permitted Foreign
Currency.

    "Eligible Assignee" has the meaning specified in Section 10.07(f).

    "EMU" means the economic and monetary union in accordance with the Treaty
of Rome 1957, as amended by the Single European Act 1986, the Maastricht Treaty
of 1992 and the Amsterdam Treaty of 1998, as amended from time to time.

    "EMU Legislation" means the legislative measures of the European Council
for the introduction of, changeover to or operation of a single or unified
European currency (whether known as the "euro" or otherwise).

                                      6



    "Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.

    "Environmental Laws" means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

    "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of the Company or any of its Subsidiaries
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials
into the environment or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.

    "ERISA" means the Employee Retirement Income Security Act of 1974.

    "ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with the Company within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

    "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Company
or any ERISA Affiliate.

    "Euro" and "EUR" mean the lawful currency of the Participating Member
States introduced in accordance with the EMU Legislation.

    "Eurodollar Bid Margin" means the margin above or below the Eurodollar Rate
to be added to or subtracted from the Eurodollar Rate, which margin shall be
expressed in multiples of 1/100/th/ of one basis point.

    "Eurodollar Margin Bid Loan" means a Bid Loan that bears interest at a rate
based upon the Eurodollar Rate. All Eurodollar Margin Bid Loans shall be
denominated in Dollars.

    "Eurodollar Rate" means, (a) for any Interest Period with respect to any
Eurodollar Rate Loan other than one referred to in clause (b) of this
definition:

                                      7



        (i)  the rate per annum equal to the rate determined by the
    Administrative Agent to be the offered rate that appears on the page of the
    Telerate screen (or any successor thereto) that displays an average British
    Bankers Association Interest Settlement Rate for deposits in the applicable
    Available Currency (for delivery on the first day of such Interest Period)
    with a term equivalent to such Interest Period, determined as of
    approximately 11:00 a.m. (London time) two Business Days prior to (or in
    the case of Pounds Sterling, on) the first day of such Interest Period, or

        (ii)  if the rate referenced in the preceding clause (i) does not
    appear on such page or service or such page or service shall not be
    available, the rate per annum equal to the rate determined by the
    Administrative Agent to be the offered rate on such other page or other
    service that displays an average British Bankers Association Interest
    Settlement Rate for deposits in the applicable Available Currency (for
    delivery on the first day of such Interest Period) with a term equivalent
    to such Interest Period, determined as of approximately 11:00 a.m. (London
    time) two Business Days prior to (or in the case of Pounds Sterling, on)
    the first day of such Interest Period, or

        (iii)  if the rates referenced in the preceding clauses (i) and (ii)
    are not available, the rate per annum reasonably determined by the
    Administrative Agent as the rate of interest at which deposits in the
    applicable Available Currency for delivery on the first day of such
    Interest Period in same day funds in the approximate amount of the
    Eurodollar Rate Loan being made, continued or converted by Bank of America
    (or, in the case of a Bid Loan, the applicable Bid Loan Lender) and with a
    term equivalent to such Interest Period would be offered by Bank of
    America's (or such Bid Loan Lender's) London Branch to major banks in the
    London interbank eurodollar market at their request at approximately 4:00
    p.m. (London time) two Business Days prior to (or in the case of Pounds
    Sterling, on) the first day of such Interest Period; and

    (b)  for any Interest Period with respect to any Eurodollar Rate Loan
advanced by a Lender required to comply with the relevant requirements of the
Bank of England and the Financial Services Authority of the United Kingdom, the
sum of (i) the rate determined in accordance with subsection (a) of this
definition and (ii) the Mandatory Cost Rate for such Interest Period.

    The Eurodollar Rate shall be rounded to the next 1/100%.

    "Eurodollar Rate Committed Loan" means a Committed Loan that bears interest
at a rate based on the Eurodollar Rate. Eurodollar Rate Committed Loans may be
denominated in any Available Currency.

    "Eurodollar Rate Loan" means a Eurodollar Rate Committed Loan or a
Eurodollar Margin Bid Loan.

    "Event of Default" means any of the events or circumstances specified in
Section 8.01.

    "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
regulations promulgated thereunder.

    "Existing Credit Agreement" means that certain Multicurrency Credit
Agreement dated as of September 11, 1997 among the Company, the borrowing
subsidiaries party thereto, Bank of America, N.A., formerly Bank of America
National Trust and Savings Association, as agent, and a syndicate of lenders.

                                      8



    "Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as reasonably determined by the
Administrative Agent.

    "Fee Letter" means the letter agreement, dated July 30, 2002, among the
Company, the Administrative Agent and the Arranger.

    "Foreign Currency Committed Loan" means a Eurodollar Rate Committed Loan
denominated in a Permitted Foreign Currency.

    "Foreign Lender" has the meaning specified in Section 10.15(a)(i).

    "FRB" means the Board of Governors of the Federal Reserve System of the
United States.

    "GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S.
accounting profession) or that are promulgated by any Governmental Authority
having appropriate jurisdiction.

    "Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

    "Granting Lender" has the meaning specified in Section 10.07(g).

    "Guarantee" means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith. The term "Guarantee" as a verb has a corresponding
meaning.

                                      9



    "Guaranteed Obligations" has the meaning specified in Section 2.14(a).

    "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

    "Indebtedness" means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP: (a) all obligations of such Person for
borrowed money and all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments; (b) all
non-contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers' acceptances, bank guaranties,
surety bonds and similar instruments; (c) aggregate net obligations, if any, of
such Person under all outstanding Swap Contracts; (d) all obligations of such
Person to pay the deferred purchase price of property or services (other than
accounts payable in the ordinary course of business); (e) indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse;
(f) all Attributable Indebtedness of such Person and (g) all Guarantees of such
Person in respect of any of the kinds of indebtedness or obligations described
in the foregoing clauses (a) through (f). For all purposes hereof, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture (other than a joint venture that is itself a corporation or
limited liability company) in which such Person is a general partner or a joint
venturer, unless such Indebtedness is expressly made non-recourse to such
Person. The amount of any net obligation under any outstanding Swap Contract on
any date shall be deemed to be the Swap Termination Value thereof as of such
date.

    "Indemnified Liabilities" has the meaning set forth in Section 10.05.

    "Indemnitees" has the meaning set forth in Section 10.05.

    "Insolvency Proceeding" means, with respect to any Person, (a) any case,
action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or (b)
any general assignment for the benefit of creditors, composition, marshalling
of assets for creditors, or other similar arrangement in respect of its
creditors generally or any substantial portion of its creditors, in each case
undertaken under federal, state or foreign law, including the Bankruptcy Code
of the United States.

    "Interest Payment Date" means, (a) as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and the
Maturity Date; provided, however, that if any Interest Period for a Eurodollar
Rate Loan exceeds three months, the respective dates that fall every three
months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each
March, June, September and December and the Maturity Date.

    "Interest Period" means (a) as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or (in the case
of any Eurodollar Rate Committed Loan) converted to or continued as a
Eurodollar Rate Loan and ending on the date one, two, three, six, nine or
twelve months thereafter, as selected by the Company (on behalf of itself or
any Borrowing Subsidiary) in its Committed Loan Notice or Bid Request, as the
case may be, subject to availability of such period; and

                                      10



(b) as to each Absolute Rate Loan, a period of not less than 7 days and not
more than 180 days as selected by the Company (on behalf of itself or any
Borrowing Subsidiary) in its Bid Request; provided that:

        (i)  any Interest Period that would otherwise end on a day that is not
    a Business Day shall be extended to the next succeeding Business Day
    unless, in the case of a Eurodollar Rate Loan, such Business Day falls in
    another calendar month, in which case such Interest Period shall end on the
    next preceding Business Day;

        (ii)  any Interest Period pertaining to a Eurodollar Rate Loan that
    begins on the last Business Day of a calendar month (or on a day for which
    there is no numerically corresponding day in the calendar month at the end
    of such Interest Period) shall end on the last Business Day of the calendar
    month at the end of such Interest Period; and

        (iii)  no Interest Period shall extend beyond the Maturity Date.

    "Investment Amount" means, at any time, the aggregate amount of Permitted
Receivables sold, secured or pledged in connection with Permitted Receivables
Financings as reported in the Company's most recent Compliance Certificate,
which amount is reflected in the Company's most recent internal, unaudited
consolidated balance sheet as "receivables sold", "long-term debt" or
"short-term debt."

    "IRS" means the United States Internal Revenue Service.

    "Laws" means, collectively, all international, foreign, federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

    "Lender" has the meaning specified in the introductory paragraph hereto.

    "Lending Office" means, as to any Lender, the office or offices of such
Lender described as such in such Lender's Administrative Questionnaire, or such
other office or offices as a Lender may from time to time notify the Company
and the Administrative Agent.

    "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever in respect of any asset (including any conditional sale or
other title retention agreement, and any financing lease having substantially
the same economic effect as any of the foregoing).

    "Loan" means an extension of credit by a Lender to any Loan Party under
Article II in the form of a Committed Loan or a Bid Loan.

    "Loan Documents" means this Agreement, each Note, the Fee Letter, and each
Borrowing Subsidiary Agreement.

    "Loan Parties" means, collectively, the Company and each Borrowing
Subsidiary.

    "Mandatory Cost Rate" means, with respect to any period, a rate per annum
determined in accordance with Schedule 1.01.

                                      11



    "Mandatory Cost Rate Reference Lender" means each of Bank of America and
such other Lender as may be identified by the Administrative Agent from time to
time.

    "Margin Stock" means "margin stock" as such term is defined in Regulation
T, U or X of the FRB.

    "Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Company and its consolidated
Subsidiaries taken as a whole, which change or effect shall exceed 15% of the
Company's total consolidated assets as shown on its consolidated balance sheet
for its most recent prior fiscal quarter; or (b) a material adverse effect upon
the legality, validity, binding effect or enforceability against the Company or
any Borrowing Subsidiary of any Loan Document which material adverse effect was
not caused by any Lender.

    "Material Subsidiary" means, at any time, any Subsidiary having at such
time either (i) total (net) revenues for the last fiscal year in excess of 15%
of total (net) revenues of the Company and its consolidated Subsidiaries for
such period or (ii) total assets, as of the last day of the preceding fiscal
year, having a net book value in excess of 15% of the total assets of the
Company and its consolidated Subsidiaries as of such day, in each case, based
upon the Company's most recent annual financial statements delivered to the
Administrative Agent under Section 6.01.

    "Maturity Date" means September 9, 2005.

    "Moody's" means Moody's Investors Service, Inc. and any successor thereto.

    "Multiemployer Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

    "Note" means a promissory note made by the Loan Parties in favor of a
Lender evidencing Loans made by such Lender, substantially in the form of
Exhibit 2.11.

    "Obligations" means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document,
whether direct or indirect (including those acquired by assumption), absolute
or contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against
any Loan Party or any Affiliate thereof of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.

    "Organization Documents" means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

                                      12



    "Overnight Rate" means, for any day, (a) with respect to any amount
denominated in Dollars, the Federal Funds Rate and (b) with respect to any
amount denominated in a Permitted Foreign Currency, the rate of interest per
annum at which overnight deposits in the applicable Permitted Foreign Currency,
in an amount approximately equal to the amount with respect to which such rate
is being determined, would be offered for such day by a branch or Affiliate of
Bank of America located in the applicable interbank market for such currency to
major banks in such interbank market.

    "Participant" has the meaning specified in Section 10.07(d).

    "Participating Member State" means each state so described in any EMU
Legislation.

    "PBGC" means the Pension Benefit Guaranty Corporation.

    "Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Company or
any ERISA Affiliate or to which the Company or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

    "Permitted Foreign Currency" means each of (i) Australian Dollars, (ii)
Canadian Dollars, (iii) British Pounds Sterling, (iv) the Euro, (v) Swedish
Krona, (vi) Mexican Pesos and (vii) each other lawful currency (other than
Dollars) that is freely available and freely transferable and convertible into
Dollars and which is approved by all the Lenders in accordance with Section
1.08.

    "Permitted Foreign Currency Equivalent" means, at any time, with respect to
any amount denominated in Dollars, the equivalent amount thereof in the
applicable Permitted Foreign Currency as determined by the Administrative Agent
at such time on the basis of the Spot Rate (determined in respect of the most
recent Revaluation Date) for the purchase of such Permitted Foreign Currency
with Dollars.

    "Permitted Liens" has the meaning specified in Section 7.01.

    "Permitted Receivables" shall mean all obligations of any obligor (whether
now existing or hereafter arising) under a contract for sale of goods or
services by the Company or any of its Subsidiaries, which shall include any
obligation of such obligor (whether now existing or hereafter arising) to pay
interest, finance charges or amounts with respect thereto, and, with respect to
any of the foregoing receivables or obligations, (a) all of the interest of the
Company or any of its Subsidiaries in the goods (including returned goods) the
sale of which gave rise to such receivable or obligation after the passage of
title thereto to any obligor, (b) all other Liens and property subject thereto
from time to time purporting to secure payment of such receivables or
obligations, and (c) all guarantees, insurance, letters of credit and other
agreements or arrangements of whatever character from time to time supporting
or securing payment of any such receivables or obligations.

    "Permitted Receivables Financing" shall mean any financing transaction or
series of financing transactions (including factoring arrangements) pursuant to
which the Company or any of its Subsidiaries may sell, pledge, convey or
otherwise transfer, or grant a security interest in, Permitted Receivables to a
special purpose subsidiary or Affiliate or any other Person.

    "Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

                                      13



    "Peso Sublimit" means $150,000,000.

    "Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by the Company or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

    "Pro Rata Share" means, with respect to each Lender at any time, a fraction
(expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is the amount of the Commitment of such Lender at such time
and the denominator of which is the amount of the Aggregate Commitments at such
time; provided that if the Commitment of each Lender to make Loans has been
terminated pursuant to Section 8.02, then the Pro Rata Share of each Lender
shall be determined based on the Pro Rata Share of such Lender immediately
prior to such termination and after giving effect to any subsequent assignments
made pursuant to the terms hereof. The initial Pro Rata Share of each Lender is
set forth opposite the name of such Lender on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable.

    "Register" has the meaning set forth in Section 10.07(c).

    "Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

    "Request for Credit Extension" means (a) with respect to a Borrowing,
conversion or continuation of Committed Loans, a Committed Loan Notice and (b)
with respect to a Bid Loan, a Bid Request.

    "Required Lenders" means, as of any date of determination, Lenders having
more than 50% of the Aggregate Commitments or, if the Commitment of each Lender
to make Loans has been terminated pursuant to Section 8.02, Lenders holding in
the aggregate more than 50% of the Total Outstandings; provided that the
Commitment of, and the portion of the Total Outstandings held or deemed held
by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Lenders.

    "Responsible Officer" means the chairman, any vice chairman, the chief
executive officer, president, chief financial officer, controller, treasurer,
any assistant treasurer, or any executive vice president, senior vice president
or group vice president of a Loan Party. Any document delivered hereunder that
is signed by a Responsible Officer of a Loan Party shall be conclusively
presumed to have been authorized by all necessary corporate, partnership and/or
other action on the part of such Loan Party and such Responsible Officer shall
be conclusively presumed to have acted on behalf of such Loan Party.

    "Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any capital stock or other
equity interest of the Company or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such capital stock or other equity interest
or of any option, warrant or other right to acquire any such capital stock or
other equity interest.

    "Revaluation Date" means each of the following: (a) each date of a
Borrowing of a Foreign Currency Committed Loan, (b) each date of a continuation
of a Foreign Currency Committed Loan pursuant to Section 2.02; and (c) the last
Business Day of each calendar month.

    "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and any successor thereto.

                                      14



    "Sally Beauty" has the meaning specified in the introductory paragraph
hereto.

    "Same Day Funds" means (a) with respect to disbursements and payments in
Dollars, immediately available funds, and (b) with respect to disbursements and
payments in a Permitted Foreign Currency, same day or other funds as may be
determined by the Administrative Agent to be customary in the place of
disbursement or payment for the settlement of international banking
transactions in the relevant Permitted Foreign Currency.

    "SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

    "SPC" has the meaning specified in Section 10.07(g).

    "Spot Rate" for a currency means the rate quoted by Bank of America, in
good faith, as the spot rate for the purchase by Bank of America of such
currency with another currency through its principal foreign exchange trading
office at approximately 11:00 a.m., on the date two Business Days prior to the
date as of which the foreign exchange computation is made.

    "Subsidiary" of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a
Subsidiary or Subsidiaries of the Company.

    "Swap Contract" means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other similar master
agreement (any such master agreement, together with any related schedules, a
"Master Agreement"), including any such obligations or liabilities under any
Master Agreement.

    "Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).

    "TARGET Day" means any day on which the Trans-European Automated Real-time
Gross Settlement Express Transfer (TARGET) System (or, if such clearing system
ceases to be operative, such

                                      15



other clearing system (if any) determined by the Administrative Agent to be a
suitable replacement) is operating.

    "Total Outstandings" means with respect to the Loans on any date, the
Dollar Equivalent of the aggregate outstanding principal amount thereof after
giving effect to any borrowings and prepayments or repayments of Committed
Loans and Bid Loans, as the case may be, occurring on such date.

    "Type" means (a) with respect to a Committed Loan, its character as a Base
Rate Loan or a Eurodollar Rate Committed Loan, and (b) with respect to a Bid
Loan, its character as an Absolute Rate Loan or a Eurodollar Margin Bid Loan.

    "Unfunded Pension Liability" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

    "United States" and "U.S." mean the United States of America.

    "Wholly-Owned Subsidiary" means any Subsidiary in which (other than
directors' qualifying shares or similar nominal shares required or permitted by
law) 80% or more of the equity securities of each class having ordinary voting
power, and 80% or more of the equity securities of every other class, in each
case, at the time as of which any determination is being made, is owned,
beneficially and of record, by the Company, or by one or more of the other
Wholly-Owned Subsidiaries, or both.

1.02  Other Interpretive Provisions.

    With reference to this Agreement and each other Loan Document, unless
otherwise specified herein or in such other Loan Document:

        (a)  The meanings of defined terms are equally applicable to the
    singular and plural forms of the defined terms.

        (b)  (i)  The words "herein," "hereto," "hereof" and "hereunder" and
    words of similar import when used in any Loan Document shall refer to such
    Loan Document as a whole and not to any particular provision thereof.

            (ii)  Article, Section, Exhibit and Schedule references are to the
         Loan Document in which such reference appears.

           (iii)  The term "including" is by way of example and not limitation.

            (iv)  The term "documents" includes any and all instruments,
         documents, agreements, certificates, notices, reports, financial
         statements and other writings, however evidenced, whether in physical
         or electronic form.

        (c)  In the computation of periods of time from a specified date to a
    later specified date, the word "from" means "from and including;" the words
    "to" and "until" each mean "to but excluding;" and the word "through" means
    "to and including."

                                      16



       (d)  Section headings herein and in the other Loan Documents are
    included for convenience of reference only and shall not affect the
    interpretation of this Agreement or any other Loan Document.

1.03  Accounting Terms.

       (a)  All accounting terms not specifically or completely defined herein
    shall be construed in conformity with, and all financial data (including
    financial ratios and other financial calculations) required to be submitted
    pursuant to this Agreement shall be prepared in conformity with GAAP,
    applied on a consistent basis, as in effect from time to time, except as
    otherwise specifically prescribed herein.

       (b)  If at any time any change in GAAP would affect the computation of
    any financial ratio or requirement set forth in any Loan Document, and
    either the Company or the Required Lenders shall so request, the
    Administrative Agent, the Lenders and the Company shall negotiate in good
    faith to amend such ratio or requirement to preserve the original intent
    thereof in light of such change in GAAP (subject to the approval of the
    Required Lenders); provided that, until so amended, (i) such ratio or
    requirement shall continue to be computed in accordance with GAAP prior to
    such change therein and (ii) the Company shall provide to the
    Administrative Agent and the Lenders financial statements and other
    documents required under this Agreement or as reasonably requested
    hereunder setting forth a reconciliation between calculations of such ratio
    or requirement made before and after giving effect to such change in GAAP.

1.04  Rounding.

    Any financial ratios required to be maintained by the Company pursuant to
this Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of
places by which such ratio is expressed herein and rounding the result up or
down to the nearest number (with a rounding-up if there is no nearest number).

1.05  References to Agreements and Laws.

    Unless otherwise expressly provided herein, (a) references to Organization
Documents, agreements (including the Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, but only to the extent
that such amendments, restatements, extensions, supplements and other
modifications are not prohibited by any Loan Document; and (b) references to
any Law shall include all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such Law.

1.06  Times of Day.

    Unless otherwise specified, all references herein to times of day shall be
references to Eastern time (daylight or standard, as applicable).

1.07  Exchange Rates; Currency Equivalents.

    (a)  The Administrative Agent shall determine the Spot Rates as of each
Revaluation Date to be used for calculating Dollar Equivalent amounts of
Borrowings and Obligations denominated in Permitted Foreign Currencies. Such
Spot Rates shall become effective as of such Revaluation Date and shall be the
Spot Rates employed in converting any amounts between the applicable currencies
until the next Revaluation Date to occur. Except for purposes of financial
statements delivered by Loan Parties

                                      17



hereunder or calculating financial covenants hereunder or except as otherwise
provided herein, the applicable amount of any currency for purposes of the Loan
Documents shall be such Dollar Equivalent amount as so determined by the
Administrative Agent.

    (b)  Wherever in this Agreement in connection with a Borrowing, conversion,
continuation or prepayment of a Loan, an amount, such as a required minimum or
multiple amount, is expressed in Dollars, but such Borrowing or Loan is
denominated in a Permitted Foreign Currency, such amount shall be the relevant
Permitted Foreign Currency Equivalent of such Dollar amount (rounded to the
nearest 1,000 units of such Permitted Foreign Currency), as determined by the
Administrative Agent.

1.08  Additional Permitted Foreign Currencies.

    The Company may from time to time request that Eurodollar Rate Committed
Loans be made in a currency other than those specifically listed in the
definition of "Permitted Foreign Currency"; provided that such requested
currency otherwise meets the requirements set forth in such definition. Any
such request shall be made to the Administrative Agent (which shall promptly
notify each Lender thereof) not later than 11:00 a.m., fifteen (15) Business
Days prior to the date of the desired Borrowing. Each Lender shall notify the
Administrative Agent, not later than 11:00 a.m., ten (10) Business Days after
receipt of such request whether it consents, in its sole discretion, to making
Eurodollar Rate Committed Loans in such requested currency. Any failure by a
Lender to respond to such request within the time period specified in the
preceding sentence shall be deemed to be a refusal by such Lender to make
Eurodollar Rate Committed Loans in such requested currency. If all the Lenders
consent to making Eurodollar Rate Committed Loans in such requested currency,
the Administrative Agent shall so notify the Company and such currency shall
thereupon be deemed for all purposes to be a Permitted Foreign Currency
hereunder. If a Lender does not consent to making Eurodollar Rate Committed
Loans in such requested currency, the Company may replace such Lender in
accordance with Section 10.16.

1.09  Redenomination of Certain Permitted Foreign Currencies.

    (a)  Each obligation of any Loan Party to make a payment denominated in the
national currency unit of any member state of the EMU that adopts the Euro as
its lawful currency after the date hereof shall be redenominated into Euro at
the time of such adoption (in accordance with the EMU Legislation). If, in
relation to the currency of any such member state, the basis of accrual of
interest expressed in this Agreement in respect of that currency shall be
inconsistent with any convention or practice in the London interbank market for
the basis of accrual of interest in respect of the Euro, such expressed basis
shall be replaced by such convention or practice with effect from the date on
which such member state adopts the Euro as its lawful currency; provided that
if any Borrowing in the currency of such member state is outstanding
immediately prior to such date, such replacement shall take effect, with
respect to such Borrowing, at the end of the then current Interest Period.

    (b)  If the Administrative Agent reasonably believes that changes to this
Agreement are required to reflect the adoption of the Euro by any member state
of the EMU and any relevant market conventions or practices relating to the
Euro, the Administrative Agent shall propose such changes in writing to the
Company and the Lenders, and the parties shall negotiate in good faith with
respect to the making of such changes.

                                  ARTICLE II
                        THE COMMITMENTS AND BORROWINGS

2.01  Committed Loans.

                                      18



    Subject to the terms and conditions set forth herein, each Lender severally
agrees to make loans in Available Currencies (each such loan, a "Committed
Loan") to the Loan Parties from time to time, on any Business Day during the
Availability Period, in an aggregate amount not to exceed at any time
outstanding the amount of such Lender's Commitment; provided, however, that
after giving effect to any Committed Borrowing, (i) the Total Outstandings
shall not exceed the Aggregate Commitments, (ii) the Dollar Equivalent of the
aggregate outstanding principal amount of the Foreign Currency Committed Loans
denominated in Mexican Pesos shall not exceed the Peso Sublimit and (iii) the
Dollar Equivalent of the aggregate outstanding principal amount of the
Committed Loans of any Lender shall not exceed such Lender's Commitment. Within
the limits of each Lender's Commitment, and subject to the other terms and
conditions hereof, the Loan Parties may borrow under this Section 2.01, prepay
under Section 2.05, and reborrow under this Section 2.01. Committed Loans
denominated in Dollars may be Base Rate Loans or Eurodollar Rate Committed
Loans. Committed Loans denominated in Permitted Foreign Currencies shall be
Eurodollar Rate Committed Loans.

2.02  Borrowings, Conversions and Continuations of Committed Loans.

        (a)  Each Committed Borrowing, each conversion of Committed Loans from
    one Type to the other, and each continuation of Eurodollar Rate Committed
    Loans shall be made upon the Company's irrevocable notice (on behalf of
    itself or any Borrowing Subsidiary) to the Administrative Agent, which may
    be given by telephone. Each such notice must be received by the
    Administrative Agent not later than 11:00 a.m. (i) three Business Days
    prior to the requested date of any Borrowing of, conversion to or
    continuation of Eurodollar Rate Committed Loans denominated in Dollars,
    (ii) four Business Days (five Business Days in the case of Austrialian
    Dollars and other "Pacific-Rim" currencies) prior to the requested date of
    any Borrowing of or continuation of Eurodollar Rate Committed Loans
    denominated in a Permitted Foreign Currency, and (iii) on the requested
    date of any Borrowing of Base Rate Loans or of any conversion of Eurodollar
    Rate Committed Loans denominated in Dollars to Base Rate Loans. Each
    telephonic notice by the Company (on behalf of itself or any Borrowing
    Subsidiary) pursuant to this Section 2.02(a) must be confirmed promptly by
    delivery to the Administrative Agent of a written Committed Loan Notice,
    appropriately completed and signed by a Responsible Officer of the Company.
    Each Borrowing of, conversion to or continuation of Eurodollar Rate
    Committed Loans shall be in a principal amount of $5,000,000 or a whole
    multiple of $1,000,000 in excess thereof. Each Borrowing of or conversion
    to Base Rate Loans shall be in a principal amount of $500,000 or a whole
    multiple of $100,000 in excess thereof. Each Committed Loan Notice (whether
    telephonic or written) shall specify (i) whether the Company is requesting
    a Committed Borrowing, a conversion of Committed Loans from one Type to the
    other, or a continuation of Eurodollar Rate Committed Loans, (ii) the
    identity of the Loan Party, (iii) the Available Currency of the Loans to be
    borrowed, (iv) the requested date of the Borrowing, conversion or
    continuation, as the case may be (which shall be a Business Day), (v) the
    principal amount of Committed Loans to be borrowed, converted or continued,
    (vi) the Type of Committed Loans to be borrowed or to which existing
    Committed Loans are to be converted, and (vii) if applicable, the duration
    of the Interest Period with respect thereto. If the Company fails to
    specify a currency in a Committed Loan Notice requesting a Borrowing, then
    the Committed Loans so requested shall be made in Dollars. If the Company
    fails to specify a Type of Committed Loan in a Committed Loan Notice, such
    notice shall be deemed invalid and the Administrative Agent shall promptly
    notify the Company of the same. If the Company fails to give a timely
    notice requesting a conversion or continuation of an outstanding Committed
    Loan, then the applicable Committed Loan shall be continued as the same
    Type of Committed Loan denominated in the same Available Currency with, in
    the case of a Eurodollar Committed Loan, an Interest Period of one month.
    If the Company (on behalf of itself or any Borrowing Subsidiary) requests a
    Borrowing of, conversion to, or continuation of Eurodollar Rate Committed
    Loans in any such

                                      19



    Committed Loan Notice, but fails to specify an Interest Period, it will be
    deemed to have specified an Interest Period of one month. No Committed Loan
    may be converted into or continued as a Committed Loan denominated in a
    different currency, but instead must be prepaid in the original currency of
    such Loan and reborrowed in the other currency.

        (b)  Following receipt of a Committed Loan Notice, the Administrative
    Agent shall promptly notify each Lender of the amount of its Pro Rata Share
    of the applicable Committed Loans, and if no timely notice of a conversion
    or continuation is provided by the Company (on behalf of itself or any
    Borrowing Subsidiary), the Administrative Agent shall notify each Lender of
    the details of any automatic continuation of such Committed Loans, in each
    case as described in the preceding subsection. In the case of a Committed
    Borrowing, each Lender shall make the amount of its Committed Loan
    available to the Administrative Agent in Same Day Funds at the
    Administrative Agent's Office for the applicable Available Currency not
    later than 1:00 p.m., in the case of any Committed Loan denominated in
    Dollars, and not later than the Applicable Time specified by the
    Administrative Agent in the case of any Committed Loan denominated in a
    Permitted Foreign Currency, in each case on the Business Day specified in
    the applicable Committed Loan Notice. Upon satisfaction of the applicable
    conditions set forth in Section 4.02, the Administrative Agent shall make
    all funds so received available to the applicable Loan Party in like funds
    as received by the Administrative Agent either by (i) crediting the account
    of the applicable Loan Party on the books of Bank of America with the
    amount of such funds or (ii) wire transfer of such funds, in each case in
    accordance with instructions provided to (and reasonably acceptable to) the
    Administrative Agent by the Company (on behalf of itself or any Borrowing
    Subsidiary).

        (c)  Except as otherwise provided herein, a Eurodollar Rate Committed
    Loan may be continued or converted only on the last day of an Interest
    Period for such Eurodollar Rate Committed Loan. During the existence of a
    Default, no Loans may be requested as, converted to or continued as
    Eurodollar Rate Committed Loans with Interest Periods exceeding one month
    without the consent of the Required Lenders.

        (d)  The Administrative Agent shall promptly notify the Company and the
    Lenders of the interest rate applicable to any Interest Period for
    Eurodollar Rate Committed Loans upon determination of such interest rate.
    The determination of the Eurodollar Rate by the Administrative Agent shall
    be conclusive in the absence of manifest error. At any time that Base Rate
    Loans are outstanding, the Administrative Agent shall notify the Company
    and the Lenders of any change in Bank of America's prime rate used in
    determining the Base Rate promptly following the public announcement of
    such change.

        (e)  After giving effect to all Committed Borrowings, all conversions
    of Committed Loans from one Type to the other, and all continuations of
    Committed Loans as the same Type, there shall not be more than ten (10)
    Interest Periods in effect with respect to Committed Loans.

2.03  Bid Loans.

        (a)  General.  Subject to the terms and conditions set forth herein,
    each Lender agrees that the Company (on behalf of itself or any Borrowing
    Subsidiary) may from time to time request the Lenders to submit offers to
    make loans in Dollars (each such loan, a "Bid Loan") to any Loan Party
    prior to the Maturity Date pursuant to this Section 2.03; provided,
    however, that after giving effect to any Bid Borrowing, the Total
    Outstandings shall not exceed the Aggregate Commitments. There shall not be
    more than eight (8) different Interest Periods in effect with respect to
    Bid Loans at any time.

                                      20



        (b)  Requesting Competitive Bids.  The Company (on behalf of itself or
    any Borrowing Subsidiary) may request the submission of Competitive Bids by
    delivering a Bid Request to the Administrative Agent not later than 12:00
    noon (i) two Business Days prior to the requested date of any Bid Borrowing
    that is to consist of Absolute Rate Loans, or (ii) five Business Days prior
    to the requested date of any Bid Borrowing that is to consist of Eurodollar
    Margin Bid Loans. Each Bid Request shall specify (i) the requested date of
    the Bid Borrowing (which shall be a Business Day), (ii) the identity of the
    Loan Party, (iii) the aggregate principal amount of Bid Loans requested
    (which must be $5,000,000 or a whole multiple of $1,000,000 in excess
    thereof), (iv) the Type of Bid Loans requested, and (v) the duration of the
    Interest Period with respect thereto, and shall be signed by a Responsible
    Officer of the Company. No Bid Request shall contain a request for (i) more
    than one Type of Bid Loan or (ii) Bid Loans having more than three
    different Interest Periods. Unless the Administrative Agent otherwise
    agrees in its sole and absolute discretion, the Company (on behalf of
    itself or any Borrowing Subsidiary) may not submit a Bid Request if it has
    submitted another Bid Request within the prior five Business Days.

        (c)  Submitting Competitive Bids.

            (i)  The Administrative Agent shall promptly notify each Lender of
         each Bid Request received by it from the Company and the contents of
         such Bid Request.

            (ii)  Each Lender may (but shall have no obligation to) submit a
         Competitive Bid containing an offer to make one or more Bid Loans in
         response to such Bid Request. Such Competitive Bid must be delivered
         to the Administrative Agent not later than 10:30 a.m. (A) one Business
         Day prior to the requested date of any Bid Borrowing that is to
         consist of Absolute Rate Loans, and (B) three Business Days prior to
         the requested date of any Bid Borrowing that is to consist of
         Eurodollar Margin Bid Loans; provided, however, that any Competitive
         Bid submitted by Bank of America in its capacity as a Lender in
         response to any Bid Request must be submitted to the Administrative
         Agent not later than 10:15 a.m. on the date on which Competitive Bids
         are required to be delivered by the other Lenders in response to such
         Bid Request. Each Competitive Bid shall specify (A) the proposed date
         of the Bid Borrowing; (B) the principal amount of each Bid Loan for
         which such Competitive Bid is being made, which principal amount (x)
         may be equal to, greater than or less than the Commitment of the
         bidding Lender, (y) must be $5,000,000 or a whole multiple of
         $1,000,000 in excess thereof, and (z) may not exceed the principal
         amount of Bid Loans for which Competitive Bids were requested; (C) if
         the proposed Bid Borrowing is to consist of Absolute Rate Bid Loans,
         the Absolute Rate offered for each such Bid Loan and the Interest
         Period applicable thereto; (D) if the proposed Bid Borrowing is to
         consist of Eurodollar Margin Bid Loans, the Eurodollar Bid Margin with
         respect to each such Eurodollar Margin Bid Loan and the Interest
         Period applicable thereto; and (E) the identity of the bidding Lender.

            (iii)  Any Competitive Bid shall be disregarded if it (A) is
         received after the applicable time specified in clause (ii) above, (B)
         is not substantially in the form of a Competitive Bid as specified
         herein, (C) contains qualifying, conditional or similar language, (D)
         proposes terms other than or in addition to those set forth in the
         applicable Bid Request, or (E) is otherwise not responsive to such Bid
         Request. Any Lender may correct a Competitive Bid containing a
         manifest error by submitting a corrected Competitive Bid (identified
         as such) not later than the applicable time required for submission of
         Competitive Bids. Any such submission of a corrected Competitive Bid

                                      21



        shall constitute a revocation of the Competitive Bid that contained the
        manifest error. The Administrative Agent may, but shall not be required
        to, notify any Lender of any manifest error it detects in such Lender's
        Competitive Bid.

           (iv)  Subject only to the provisions of Sections 3.02, 3.03 and 4.02
        and clause (iii) above, each Competitive Bid shall be irrevocable.

       (d)  Notice to Company of Competitive Bids.  Not later than 11:00 a.m.
    (i) on the requested date of any Bid Borrowing that is to consist of
    Absolute Rate Loans, or (ii) three Business Days prior to the requested
    date of any Bid Borrowing that is to consist of Eurodollar Margin Bid
    Loans, the Administrative Agent shall notify the Company of the identity of
    each Lender that has submitted a Competitive Bid that complies with Section
    2.03(c) and of the terms of the offers contained in each such Competitive
    Bid.

       (e)  Acceptance of Competitive Bids.  Not later than 11:45 a.m. (i) on
    the requested date of any Bid Borrowing that is to consist of Absolute Rate
    Loans, and (ii) three Business Days prior to the requested date of any Bid
    Borrowing that is to consist of Eurodollar Margin Bid Loans, the Company
    (on behalf of itself or any Borrowing Subsidiary) shall notify the
    Administrative Agent of its acceptance or rejection of the offers notified
    to it pursuant to Section 2.03(d). The Company shall be under no obligation
    to accept any Competitive Bid and may choose to reject all Competitive
    Bids. In the case of acceptance, such notice shall specify the aggregate
    principal amount of Competitive Bids for each Interest Period that is
    accepted. The Company (on behalf of itself or any Borrowing Subsidiary) may
    accept any Competitive Bid in whole or in part; provided that:

           (i)  the aggregate principal amount of each Bid Borrowing may not
        exceed the applicable amount set forth in the related Bid Request;

           (ii)  the principal amount of each Bid Loan must be $5,000,000 or a
        whole multiple of $1,000,000 in excess thereof;

           (iii)  the acceptance of offers may be made only on the basis of
        ascending Absolute Rates or Eurodollar Bid Margins within each Interest
        Period, as the case may be; and

           (iv)  the Company (on behalf of itself or any Borrowing Subsidiary)
        may not accept any offer that is described in Section 2.03(c)(iii) or
        that otherwise fails to comply with the requirements hereof.

       (f)  Procedure for Identical Bids.  If two or more Lenders have
    submitted Competitive Bids at the same Absolute Rate or Eurodollar Bid
    Margin, as the case may be, for the same Interest Period, and the result of
    accepting all of such Competitive Bids in whole (together with any other
    Competitive Bids at lower Absolute Rates or Eurodollar Bid Margins, as the
    case may be, accepted for such Interest Period in conformity with the
    requirements of Section 2.03(e)(iii)) would be to cause the aggregate
    outstanding principal amount of the applicable Bid Borrowing to exceed the
    amount specified therefor in the related Bid Request, then, unless
    otherwise agreed by the Company, the Administrative Agent and such Lenders,
    such Competitive Bids shall be accepted as nearly as possible in proportion
    to the amount offered by each such Lender in respect of such Interest
    Period, with such accepted amounts being rounded to the nearest whole
    multiple of $1,000,000.

                                      22



       (g)  Notice to Lenders of Acceptance or Rejection of Bids.  The
    Administrative Agent shall promptly notify each Lender having submitted a
    Competitive Bid whether or not its offer has been accepted and, if its
    offer has been accepted, of the amount of the Bid Loan or Bid Loans to be
    made by it on the date of the applicable Bid Borrowing. Any Competitive Bid
    or portion thereof that is not accepted by the Company (on behalf of itself
    or any Borrowing Subsidiary) by the applicable time specified in Section
    2.03(e) shall be deemed rejected.

       (h)  Notice of Eurodollar Rate.  If any Bid Borrowing is to consist of
    Eurodollar Margin Loans, the Administrative Agent shall determine the
    Eurodollar Rate for the relevant Interest Period, and promptly after making
    such determination, shall notify the Company and the Lenders that will be
    participating in such Bid Borrowing of such Eurodollar Rate.

       (i)  Funding of Bid Loans.  Each Lender that has received notice
    pursuant to Section 2.03(g) that all or a portion of its Competitive Bid
    has been accepted by the Company (on behalf of itself or any Borrowing
    Subsidiary) shall make the amount of its Bid Loan(s) available to the
    Administrative Agent in Same Day Funds at the Administrative Agent's Office
    not later than 1:00 p.m. on the date of the requested Bid Borrowing. Upon
    satisfaction of the applicable conditions set forth in Section 4.02, the
    Administrative Agent shall make all funds so received available to the
    applicable Loan Party in like funds as received by the Administrative Agent.

       (j)   Notice of Range of Bids.  After each Competitive Bid auction
    pursuant to this Section 2.03, the Administrative Agent shall notify each
    Lender that submitted a Competitive Bid in such auction of the ranges of
    bids submitted (without the bidder's name) and accepted for each Bid Loan
    and the aggregate amount of each Bid Borrowing.

2.04  Designation of Additional Borrowing Subsidiaries; Termination of
Borrowing Subsidiaries.

    (a)  Designation.  In addition to A-C USA, Sally Beauty and Beauty Systems
Group, the Company may from time to time designate any of its Subsidiaries that
is a Wholly-Owned Subsidiary to be a Borrowing Subsidiary hereunder subject to
the satisfaction of the following conditions precedent:

       (i)  the Administrative Agent shall have received the Borrowing
    Subsidiary Agreement with respect to such Borrowing Subsidiary executed and
    delivered by the Company and such Borrowing Subsidiary;

       (ii)  the Administrative Agent shall have received such documents and
    certificates as the Administrative Agent may reasonably request relating to
    the organization, existence and good standing of such Borrowing Subsidiary,
    the authorization of the transactions contemplated hereby relating to such
    Borrowing Subsidiary and any other legal matters relating to such Borrowing
    Subsidiary, its Borrowing Subsidiary Agreement or such transactions, all in
    form and substance reasonably satisfactory to the Administrative Agent; and

       (iii)  the Administrative Agent shall have received a favorable written
    opinion of the Company's counsel for such Borrowing Subsidiary (which
    counsel, in the case of any foreign Subsidiary, shall be licensed in the
    jurisdiction of such foreign Subsidiary's organization), covering such
    matters (including, without limitation, matters of the type described in
    Sections 5.01, 5.02, 5.03, 5.04 and 5.13) relating to such Borrowing
    Subsidiary or its Borrowing Subsidiary Agreement as the Administrative
    Agent shall reasonably request.

       Upon satisfaction of such conditions precedent, such Subsidiary shall
    for all purposes be a party hereto as a Borrowing Subsidiary as fully as if
    it had executed and delivered this Agreement.

                                      23



    (b)  Termination.  The Company may terminate a Borrowing Subsidiary by
delivering to the Administrative Agent a Borrowing Subsidiary Termination with
respect to such Borrowing Subsidiary. Notwithstanding the foregoing or any
contrary provision contained in this Agreement, no Lender shall be obligated to
make, continue or convert any Committed Loan to or for any Borrowing Subsidiary
if the Company shall have executed and delivered to the Administrative Agent a
Borrowing Subsidiary Termination with respect to such Borrowing Subsidiary
(whether or not such Borrowing Subsidiary has agreed to such Borrowing
Subsidiary Termination). Prior to termination of a Borrowing Subsidiary, all
Loans outstanding to such Borrowing Subsidiary must be repaid.

2.05  Prepayments.

       (a)  The Loan Parties may, upon notice from the Company to the
    Administrative Agent, at any time or from time to time voluntarily prepay
    Committed Loans in whole or in part without premium or penalty; provided
    that (i) such notice must be received by the Administrative Agent not later
    than 11:00 a.m. (A) three Business Days prior to any date of prepayment of
    Eurodollar Rate Committed Loans or (B) on the date of prepayment of Base
    Rate Loans; (ii) except in the circumstances contemplated by Section
    2.05(c), any prepayment of Eurodollar Rate Committed Loans shall be in a
    principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
    thereof or, if less, the entire principal amount thereof then outstanding;
    and (iii) except in the circumstances contemplated by Section 2.05(c), any
    prepayment of Base Rate Loans shall be in a principal amount of $500,000 or
    a whole multiple of $100,000 in excess thereof or, if less, the entire
    principal amount thereof then outstanding. Each such notice shall specify
    the date and amount of such prepayment and the Type(s) of Committed Loans
    to be prepaid. The Administrative Agent will promptly notify each Lender of
    its receipt of each such notice, and of the amount of such Lender's Pro
    Rata Share of such prepayment. If such notice is given by the Company (on
    behalf of itself or any Borrowing Subsidiary), the applicable Loan Party
    shall make such prepayment and the payment amount specified in such notice
    shall be due and payable on the date specified therein. Any prepayment of a
    Eurodollar Rate Loan shall be accompanied by all accrued interest thereon,
    together with any additional amounts required pursuant to Section 3.05.
    Each such prepayment shall be applied to the Committed Loans of the Lenders
    in accordance with their respective Pro Rata Shares.

       (b)  No Bid Loan may be prepaid without the prior consent of the
    applicable Bid Loan Lender.

       (c)  If for any reason the Total Outstandings at any time exceed the
    Aggregate Commitments then in effect, then upon written notice from the
    Administrative Agent, the Loan Parties shall immediately prepay Loans in an
    aggregate amount equal to such excess; provided, however, (i) if such
    prepayment obligation is a result of changes in the Spot Rate on any
    Revaluation Date and the amount of such prepayment obligation does not
    exceed $1,000,000, no such prepayment shall be required pursuant to this
    Section 2.05(c) and (ii) if such prepayment obligation is a result of
    changes in the Spot Rate on any Revaluation Date and the amount of such
    prepayment obligation exceeds $1,000,000, the Loan Parties may defer such
    prepayment obligation until the next Revaluation Date (a "Deferral Date").
    On any Deferral Date, the Loan Parties shall prepay Loans in an aggregate
    amount equal to the amount by which the Total Outstandings (calculated
    using current Spot Rates) on such Deferral Date exceeds the Aggregate
    Commitments then in effect.

       (d)  If for any reason the Dollar Equivalent of the aggregate
    outstanding principal amount of the Foreign Currency Committed Loans
    denominated in Mexican Pesos exceeds the

                                      24



    Peso Sublimit then in effect, then upon written notice from the
    Administrative Agent, the Loan Parties shall immediately prepay Foreign
    Currency Committed Loans denominated in Mexican Pesos in an aggregate
    amount equal to such excess; provided, however, (i) if such prepayment
    obligation is a result of changes in the Spot Rate on any Revaluation Date
    and the amount of such prepayment obligation does not exceed $1,000,000, no
    such prepayment shall be required pursuant to this Section 2.05(d) and (ii)
    if such prepayment obligation is a result of changes in the Spot Rate on
    any Revaluation Date and the amount of such prepayment obligation exceeds
    $1,000,000, the Loan Parties may defer such prepayment obligation until the
    next Deferral Date. On any Deferral Date, the Loan Parties shall prepay
    Foreign Currency Committed Loans denominated in Mexican Pesos in an
    aggregate amount equal to the amount by which the Dollar Equivalent of the
    aggregate outstanding principal amount of the Foreign Currency Committed
    Loans denominated in Mexican Pesos (calculated using current Spot Rates) on
    such Deferral Date exceeds the Peso Sublimit then in effect.

2.06  Termination or Reduction of Commitments.

    The Company may, upon notice to the Administrative Agent, terminate the
Aggregate Commitments, or from time to time permanently reduce the Aggregate
Commitments; provided that (i) any such notice shall be received by the
Administrative Agent not later than 11:00 a.m. five Business Days prior to the
date of termination or reduction, (ii) any such partial reduction shall be in
an aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess
thereof, and (iii) the Company shall not terminate or reduce the Aggregate
Commitments if, after giving effect thereto and to any concurrent prepayments
hereunder, the Total Outstandings would exceed the Aggregate Commitments. The
Administrative Agent will promptly notify the Lenders of any such notice of
termination or reduction of the Aggregate Commitments. Any reduction of the
Aggregate Commitments shall be applied to the Commitment of each Lender
according to its Pro Rata Share. All facility fees accrued in respect of the
Aggregate Commitments to be terminated through the effective date of such
termination shall be paid on the effective date of such termination.

2.07  Repayment of Loans.

       (a)  Each Loan Party shall repay to the Lenders on the Maturity Date the
    aggregate principal amount of its Committed Loans outstanding on such date.

       (b)  Each Loan Party shall repay each of its Bid Loans on the earlier to
    occur of (i) the last day of the Interest Period in respect thereof or (ii)
    the Maturity Date.

2.08  Interest.

       (a)  Subject to the provisions of subsection (b) below, (i) each
    Eurodollar Rate Committed Loan shall bear interest on the outstanding
    principal amount thereof for each Interest Period at a rate per annum equal
    to the applicable Eurodollar Rate for such Interest Period plus the
    Applicable Rate; (ii) each Base Rate Loan shall bear interest on the
    outstanding principal amount thereof from the applicable borrowing date at
    a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii)
    each Bid Loan shall bear interest on the outstanding principal amount
    thereof for the Interest Period therefor at a rate per annum equal to the
    applicable Eurodollar Rate for such Interest Period plus (or minus) the
    applicable Eurodollar Bid Margin, or at the applicable Absolute Rate for
    such Interest Period, as the case may be.

       (b)  After the occurrence and continuation of an Event of Default under
    Section 8.01(a) or (c), or commencing five (5) days after the occurrence
    and continuation of any other

                                      25



     Event of Default, the Loan Parties shall pay interest on the principal
     amount of all outstanding Obligations hereunder at a fluctuating interest
     rate per annum at all times equal to the Default Rate to the fullest
     extent permitted by applicable Laws. Accrued and unpaid interest on past
     due amounts (including interest on past due interest) shall be due and
     payable upon demand.

        (c)  Interest on each Loan shall be due and payable in arrears on each
     Interest Payment Date applicable thereto and at such other times as may be
     specified herein. Interest hereunder shall be due and payable in
     accordance with the terms hereof before and after judgment, and before and
     after the commencement of any proceeding under any Debtor Relief Law.

2.09   Fees.

        (a)  Facility Fee.  The Company shall pay to the Administrative Agent,
     for the account of each Lender in accordance with its Pro Rata Share, a
     facility fee in Dollars equal to the Applicable Rate for Facility Fees
     times the actual daily amount of the Aggregate Commitments (or, if the
     Aggregate Commitments have terminated, on the aggregate outstanding
     principal amount of all Committed Loans), regardless of usage. The
     facility fee shall accrue at all times during the Availability Period (and
     thereafter so long as any Committed Loans remain outstanding) and shall be
     due and payable quarterly in arrears on the last Business Day of each
     March, June, September and December, commencing with the first such date
     to occur after the Closing Date, and on the Maturity Date (and, if
     applicable, thereafter on demand). The facility fee shall be calculated
     quarterly in arrears, and if there is any change in the Applicable Rate
     during any quarter, the daily amount of the facility fee for each day
     during such quarter shall be computed and multiplied by the Applicable
     Rate in effect on such day.

        (b)  Utilization Fee.  The Company shall pay to the Administrative
     Agent, for the account of each Lender in accordance with its Pro Rata
     Share, a utilization fee in Dollars equal to the Applicable Rate for
     Utilization Fees times the Total Outstandings on each day that the Total
     Outstandings exceed 50% of the actual amount of the Aggregate Commitments
     on such day. The utilization fee shall be due and payable quarterly in
     arrears on the last Business Day of each March, June, September and
     December, commencing with the first such date to occur after the Closing
     Date, and on the Maturity Date. The utilization fee shall be calculated
     quarterly in arrears and if there is any change in the Applicable Rate
     during any quarter, the daily amount of the utilization fee for each day
     during such quarter shall be computed and multiplied by the Applicable
     Rate in effect on such day.

        (c)  Other Fees.  The Company shall pay to the Arranger and the
     Administrative Agent, for their own respective accounts, the fees in the
     amounts and at the times specified in the Fee Letter. Such fees shall be
     fully earned when paid and shall not be refundable for any reason
     whatsoever.

2.10   Computation of Interest and Fees.

     All computations of interest for Base Rate Loans when the Base Rate is
determined by Bank of America's "prime rate" shall be made on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed. All
computations of interest for Foreign Currency Committed Loans denominated in
Pounds Sterling shall be made on the basis of a year of 365 days and actual
days elapsed. All other computations of fees and interest shall be made on the
basis of a 360-day year and actual days elapsed (which results in more fees or
interest, as applicable, being paid than if computed on the basis of a 365-day
year), or, in the case of interest in respect of Foreign Currency Committed
Loans as to which

                                      26



market practice differs from the foregoing, in accordance with such market
practice. Interest shall accrue on each Loan for the day on which the Loan is
made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is repaid
on the same day on which it is made shall, subject to Section 2.12(a), bear
interest for one day.

    If applicable, for the purposes of the Interest Act (Canada), (a) whenever
a rate of interest or fee rate hereunder is calculated on the basis of a year
(the "deemed year") that contains fewer days than the actual number of days in
the calendar year of calculation, such rate of interest or fee rate shall be
expressed as a yearly rate by multiplying such rate of interest or fee rate by
the actual number of days in the calendar year of calculation and dividing it
by the number of days in the deemed year, (b) the principle of deemed
reinvestment of interest shall not apply to any interest calculation hereunder
and (c) the rates of interest stipulated herein are intended to be nominal
rates and not effective rates or yields.

2.11  Evidence of Debt.

    The Borrowings made by each Lender shall be evidenced by one or more
accounts or records maintained by such Lender and by the Administrative Agent
in the ordinary course of business. The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent demonstrable
error of the amount of the Borrowings made by the Lenders to the Loan Parties
and the interest and payments thereon. Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligations of the
Loan Parties hereunder to pay any amount owing with respect to the Obligations
or of the Lenders to make any Borrowings required hereunder. In the event of
any conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters,
the accounts and records of the Administrative Agent shall control in the
absence of demonstrable error. Upon the request of any Lender made through the
Administrative Agent, the Loan Parties shall execute and deliver to such Lender
(through the Administrative Agent) a Note, which shall evidence such Lender's
Loans in addition to such accounts or records. Each Lender may attach schedules
to its Note and endorse thereon the date, Type, amount and maturity of its
Loans and payments with respect thereto and the relevant Loan Party to which
such Loan was made.

2.12  Payments Generally.

       (a)  All payments to be made by the Loan Parties shall be made without
    condition or deduction for any counterclaim, defense, recoupment or setoff.
    Except as otherwise expressly provided herein and except with respect to
    principal of and interest on Foreign Currency Committed Loans, all payments
    by the Loan Parties hereunder shall be made to the Administrative Agent,
    for the account of the respective Lenders to which such payment is owed, at
    the applicable Administrative Agent's Office in Dollars and in Same Day
    Funds not later than 2:00 p.m. on the date specified herein. Except as
    otherwise expressly provided herein, all payments by the Loan Parties
    hereunder with respect to principal and interest on Foreign Currency
    Committed Loans shall be made to the Administrative Agent, for the account
    of the respective Lenders to which such payment is owed, at the applicable
    Administrative Agent's Office in such Permitted Foreign Currency and in
    Same Day Funds not later than the Applicable Time specified by the
    Administrative Agent on the dates specified herein. The Administrative
    Agent will promptly distribute to each Lender its Pro Rata Share (or other
    applicable share as provided herein) of such payment in like funds as
    received by wire transfer to such Lender's Lending Office. All payments
    received by the Administrative Agent (i) after 2:00 p.m. in the case of
    payments in Dollars, or (ii) after the Applicable Time specified by the
    Administrative Agent in the case of payments in a Permitted Foreign
    Currency, shall in each case be deemed

                                      27



     received on the next succeeding Business Day and any applicable interest
  or fee shall continue to accrue.

        (b)  Subject to the definition of "Interest Period", if any payment to
     be made by a Loan Party shall come due on a day other than a Business Day,
     payment shall be made on the next following Business Day, and such
     extension of time shall be reflected in computing interest or fees, as the
     case may be.

        (c)  Unless the Company or any Lender has notified the Administrative
     Agent, prior to the date any payment is required to be made by it to the
     Administrative Agent hereunder, that any Loan Party or such Lender, as the
     case may be, will not make such payment, the Administrative Agent may
     assume that such Loan Party or such Lender, as the case may be, has timely
     made such payment and may (but shall not be so required to), in reliance
     thereon, make available a corresponding amount to the Person entitled
     thereto. If and to the extent that such payment was not in fact made to
     the Administrative Agent in Same Day Funds, then:

            (i)  if such Loan Party failed to make such payment, each Lender
         shall forthwith on demand repay to the Administrative Agent the
         portion of such assumed payment that was made available to such Lender
         in Same Day Funds, together with interest thereon in respect of each
         day from and including the date such amount was made available by the
         Administrative Agent to such Lender to the date such amount is repaid
         to the Administrative Agent in Same Day Funds, at the applicable
         Overnight Rate from time to time in effect; and

            (ii)  if any Lender failed to make such payment, such Lender shall
         forthwith on demand pay to the Administrative Agent the amount thereof
         in Same Day Funds, together with interest thereon for the period from
         the date such amount was made available by the Administrative Agent to
         the applicable Loan Party to the date such amount is recovered by the
         Administrative Agent (the "Compensation Period") at a rate per annum
         equal to the applicable Overnight Rate from time to time in effect. If
         such Lender pays such amount to the Administrative Agent, then such
         amount shall constitute such Lender's Committed Loan or Bid Loan, as
         the case may be, included in the applicable Borrowing. If such Lender
         does not pay such amount forthwith upon the Administrative Agent's
         demand therefor, the Administrative Agent may make a demand therefor
         upon the applicable Loan Party, and such Loan Party shall pay such
         amount to the Administrative Agent, together with interest thereon for
         the Compensation Period at a rate per annum equal to the rate of
         interest applicable to the applicable Borrowing. Nothing herein shall
         be deemed to relieve any Lender from its obligation to fulfill its
         Commitment or to prejudice any rights which the Administrative Agent
         or the Loan Parties may have against any Lender as a result of any
         default by such Lender hereunder.

        A notice of the Administrative Agent to any Lender or the Loan Parties
     with respect to any amount owing under this subsection (c) shall be
     conclusive, absent manifest error.

        (d)  If any Lender makes available to the Administrative Agent funds
     for any Loan to be made by such Lender as provided in the foregoing
     provisions of this Article II, and such funds are not made available to
     the applicable Loan Party by the Administrative Agent because the
     conditions to the applicable Borrowing set forth in Article IV are not
     satisfied or waived in accordance with the terms hereof, the
     Administrative Agent shall return such funds (in like funds as received
     from such Lender) to such Lender, without interest.

                                      28



        (e)  The obligations of the Lenders hereunder to make Committed Loans
     are several and not joint. The failure of any Lender to make any Committed
     Loan on any date required hereunder shall not relieve any other Lender of
     its corresponding obligation to do so on such date, and no Lender shall be
     responsible for the failure of any other Lender to so make its Committed
     Loan.

        (f)  Nothing herein shall be deemed to obligate any Lender to obtain
     the funds for any Loan in any particular place or manner or to constitute
     a representation by any Lender that it has obtained or will obtain the
     funds for any Loan in any particular place or manner.

2.13   Sharing of Payments.

     If, other than as expressly provided elsewhere herein (including in
Section 10.16), any Lender shall obtain on account of the Committed Loans made
by it, any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder) thereof, such Lender shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Lenders such
participations in the Committed Loans made by them as shall be necessary to
cause such purchasing Lender to share the excess payment in respect of such
Committed Loans pro rata with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from the purchasing
Lender under any of the circumstances described in Section 10.06 (including
pursuant to any settlement entered into by the purchasing Lender in its
discretion), such purchase shall to that extent be rescinded and each other
Lender shall repay to the purchasing Lender the purchase price paid therefor,
together with an amount equal to such paying Lender's ratable share (according
to the proportion of (i) the amount of such paying Lender's required repayment
to (ii) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered, without further interest thereon. Each Loan
Party agrees that any Lender so purchasing a participation from another Lender
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.09) with respect to
such participation as fully as if such Lender were the direct creditor of such
Loan Party in the amount of such participation. The Administrative Agent will
keep records (which shall be conclusive and binding in the absence of manifest
error) of participations purchased under this Section and will in each case
notify the Lenders following any such purchases or repayments. Each Lender that
purchases a participation pursuant to this Section shall from and after such
purchase have the right to give all notices, requests, demands, directions and
other communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased.

2.14   Company Guaranty.

     (a)  Guarantee.

        (i)  To induce the Administrative Agent and the Lenders to execute and
     deliver this Agreement and to make the extensions of credit provided for
     herein to the Borrowing Subsidiaries, the Company hereby unconditionally
     and irrevocably guarantees to the Administrative Agent and the Lenders and
     their respective successors, permitted transferees and permitted assigns,
     as a primary obligor and not merely as a surety, the prompt and complete
     payment and performance by the Borrowing Subsidiaries when due (whether at
     the stated maturity, by acceleration or otherwise) of all of the
     Obligations of the Borrowing Subsidiaries from time to time (the
     "Guaranteed Obligations"). The Company further agrees to pay any and all
     reasonable expenses (including, without limitation, all Attorney Costs)
     which may be paid or incurred by the Administrative Agent or any Lender in
     enforcing any rights with respect to, or

                                      29



     collecting, any or all of the Guaranteed Obligations or enforcing any
     rights with respect to, or collecting against, the Company under this
     Section 2.14. This Guarantee shall remain in full force and effect until
     all such Obligations are paid in full and the Commitments are terminated,
     notwithstanding that from time to time prior thereto the Borrowing
     Subsidiaries may be free from any Obligations.

        (ii)  No payment or payments made by any Borrowing Subsidiary or any
     other Person or received or collected by the Administrative Agent or any
     Lender from any Borrowing Subsidiary or any other Person by virtue of any
     action or proceeding or any set-off or appropriation or application, at
     any time or from time to time, in reduction of or in payment of the
     Guaranteed Obligations shall be deemed to modify, reduce, release or
     otherwise affect the liability of the Company under this Section 2.14
     (other than to the extent of such payment) which shall, notwithstanding
     any such payment or payments, remain in full force and effect until the
     Guaranteed Obligations are paid in full and the Commitments are
     terminated. The Company agrees that whenever, at any time, or from time to
     time, it shall make any payment to the Administrative Agent or any Lender
     on account of its liability under this Section 2.14, it will notify the
     Administrative Agent and such Lender in writing that such payment is made
     under this Section 2.14 for such purpose.

     (b)  No Subrogation, Contribution, Reimbursement or
Indemnity.  Notwithstanding anything to the contrary in this Section 2.14, the
Company shall not be entitled to be subrogated to any of the rights of the
Administrative Agent or any Lender against any Borrowing Subsidiary or any
other guarantor or any collateral security or guarantee or right of offset held
by any Lender for the payment of the Guaranteed Obligations, nor shall the
Company seek or be entitled to seek any contribution or reimbursement from any
Borrowing Subsidiary or any other guarantor in respect of payments made by the
Company hereunder, until all amounts owing to the Administrative Agent and the
Lenders by the Borrowing Subsidiaries on account of the outstanding Guaranteed
Obligations are paid in full. If any amount shall be paid to the Company on
account of such subrogation rights at any time when all of the Guaranteed
Obligations shall not have been paid in full, such amount shall be held by the
Company in trust for the Administrative Agent and the Lenders, segregated from
other funds of the Company, and shall, forthwith upon receipt by the Company,
be turned over to the Administrative Agent in the exact form received by the
Company (duly endorsed by the Company to Administrative Agent, if required), to
be applied against the Guaranteed Obligations, whether matured or unmatured, in
such order as the Administrative Agent and the Required Lenders may determine.
The provisions of this subsection shall survive the termination of the
guarantee contained in this Section 2.14.

     (c)  Amendments, etc. with Respect to the Obligations; Waiver of
Rights.  The Company shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Company, and without notice to or
further assent by the Company, any demand for payment of any of the Guaranteed
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender, and any of the Guaranteed Obligations
continued, and the Guaranteed Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Administrative Agent or any Lender, and
this Agreement, the other Loan Documents, and any other documents executed and
delivered in connection herewith or therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent
(or the Required Lenders, as the case may be) or such Lender may deem advisable
from time to time, and any collateral security, guarantee or right of offset at
any time held by the Administrative Agent or any Lender for the payment of the
Guaranteed Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Administrative Agent nor any Lender (or its Affiliates) shall have
any obligation to protect,

                                      30



secure, perfect or insure any Lien at any time held by it as security for the
Guaranteed Obligations or for the guarantee contained in this Section 2.14 or
any property subject thereto. When making any demand hereunder against the
Company, the Administrative Agent or any Lender may, but shall be under no
obligation to, make a similar demand on the relevant Borrowing Subsidiary or
any other guarantor, and any failure by the Administrative Agent or any Lender
to make any such demand or to collect any payments from such Borrowing
Subsidiary or any such other guarantor or any release of such Borrowing
Subsidiary or such other grantor shall not relieve the Company of its
obligations or liabilities under this Section 2.14, and shall not impair or
affect the rights and remedies, express or implied, or as a matter of law, of
the Administrative Agent or any Lender against the Company. For the purposes
hereof "demand" shall include the commencement and continuance of any legal
proceedings.

     (d)  Guarantee Absolute and Unconditional.  The Company waives, to the
fullest extent permitted by applicable law, any and all notice of the creation,
renewal, extension or accrual of any of the Guaranteed Obligations and notice
of or proof of reliance by the Administrative Agent or any Lender upon the
guarantee contained in this Section 2.14 or acceptance of the guarantee
contained in this Section 2.14, the Guaranteed Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon the guarantee contained
in this Section 2.14 and all dealings between the Company or any Borrowing
Subsidiary, on the one hand, and the Administrative Agent and the Lenders, on
the other hand, shall likewise be conclusively presumed to have been had or
consummated in full reliance upon the guarantee contained in this Section 2.14.
The Company waives, to the fullest extent permitted by applicable law,
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrowing Subsidiaries with respect to the Guaranteed
Obligations. This Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity,
regularity or enforceability of this Agreement, any note, any other Loan
Document, any of the Guaranteed Obligations or any guarantee or right of offset
with respect thereto at any time or from time to time held by the
Administrative Agent or any Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by the Borrowing Subsidiaries against the
Administrative Agent or any Lender or (c) any other circumstance whatsoever
(with or without notice to or knowledge of the Company) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the
Borrowing Subsidiaries for the Guaranteed Obligations, or of the Company under
the guarantee contained in this Section 2.14, in bankruptcy or in any other
instance. When pursuing its rights and remedies hereunder against the Company,
the Administrative Agent and any Lender may, but shall be under no obligation
to, pursue such rights and remedies as it may have against the Borrowing
Subsidiaries or any other Person or against any guarantee for the Guaranteed
Obligations or any right of offset with respect thereto, and any failure by the
Administrative Agent or any Lender to pursue such other rights or remedies or
to collect any payments from the Borrowing Subsidiaries or any such other
Person or to realize upon any such guarantee or to exercise any such right of
offset, or any release of the Borrowing Subsidiaries or any such other Person
or of any such guarantee or right of offset, shall not relieve the Company of
any liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against the Company. The guarantee contained
in this Section 2.14 shall remain in full force and effect and be binding in
accordance with and to the extent of its terms upon the Company and its
successors, permitted transferees and permitted assigns, until all the
Guaranteed Obligations and the obligations of the Company under this Section
2.14 shall have been satisfied and by payment in full and the Commitments shall
be terminated, notwithstanding that from time to time during the term of this
Agreement the Borrowing Subsidiaries may be free from any Obligations.

     (e)  Reinstatement.  The guarantee contained in this Section 2.14 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Guaranteed Obligations is rescinded
or must otherwise be restored or returned by the Administrative

                                      31



Agent or any Lender upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of any Borrowing Subsidiary or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, such Borrowing Subsidiary or any substantial part of its property,
or otherwise, all as though such payments had not been made.

                                  ARTICLE III
                    TAXES, YIELD PROTECTION AND ILLEGALITY

3.01   Taxes.

        (a)  Subject to Section 10.15, any and all payments by the Loan Parties
     to or for the account of the Administrative Agent or any Lender under any
     Loan Document shall be made free and clear of and without deduction for
     any and all present or future taxes, duties, levies, imposts, deductions,
     assessments, fees, withholdings or similar charges, and all liabilities
     with respect thereto, excluding, in the case of the Administrative Agent
     and each Lender, taxes imposed on or measured by its net income, branch
     profits taxes and franchise taxes imposed on it, by a jurisdiction (or any
     political subdivision thereof) under the Laws of which the Administrative
     Agent or such Lender, as the case may be, is organized, maintains a
     lending office or conducts business (all such non-excluded taxes, duties,
     levies, imposts, deductions, assessments, fees, withholdings or similar
     charges, and liabilities being hereinafter referred to as "Taxes"). If any
     Loan Party shall be required by any Laws to deduct any Taxes from or in
     respect of any sum payable under any Loan Document to the Administrative
     Agent or any Lender, (i) the sum payable shall be increased as necessary
     so that after making all such required deductions (including deductions
     applicable to additional sums payable under this Section), each of the
     Administrative Agent and such Lender receives an amount equal to the sum
     it would have received had no such deductions been made, (ii) such Loan
     Party shall make such deductions, (iii) such Loan Party shall pay the full
     amount deducted to the relevant taxation authority or other authority in
     accordance with applicable Laws, and (iv) within 30 days after the date of
     such payment to the relevant tax authority, the Company shall furnish to
     the Administrative Agent (which shall forward the same to such Lender) the
     original or a certified copy of a receipt evidencing payment thereof or,
     if no such receipt is available, other evidence of payment reasonably
     satisfactory to the Administrative Agent.

        (b)  In addition, the Loan Parties agree to pay any and all present or
     future stamp, court or documentary taxes and any other excise or property
     taxes or charges or similar levies which arise from any payment made under
     any Loan Document or from the execution, delivery, performance,
     enforcement or registration of, or otherwise with respect to, any Loan
     Document (hereinafter referred to as "Other Taxes").

        (c)  If any Loan Party shall be required to deduct or pay any Taxes or
     Other Taxes from or in respect of any sum payable under any Loan Document
     to the Administrative Agent or any Lender, such Loan Party shall also pay
     to the Administrative Agent or to such Lender, as the case may be, at the
     time interest is paid, such additional amount that the Administrative
     Agent or such Lender reasonably specifies as is necessary to preserve the
     after-tax yield (after factoring in all taxes, including taxes imposed on
     or measured by net income) that the Administrative Agent or such Lender
     would have received if such Taxes or Other Taxes had not been deducted or
     paid. The Administrative Agent or any Lender entitled to any payment under
     this Section 3.01(c) shall provide the Company with any evidence
     reasonably requested by the Company necessary to substantiate the
     calculation of such payment in accordance with the provisions hereof.

                                      32



        (d)  The Loan Parties agree to indemnify the Administrative Agent and
     each Lender for (i) the full amount of Taxes and Other Taxes (including
     any Taxes or Other Taxes imposed by any jurisdiction on amounts payable
     under this Section) paid by the Administrative Agent and such Lender, (ii)
     amounts payable under Section 3.01(c) and (iii) any liability (including
     additions to tax, penalties, interest and expenses) arising therefrom or
     with respect thereto. Payment under this subsection (d) shall be made
     within 30 days after the date the Lender or the Administrative Agent makes
     a written demand therefor.

        (e)  If the Company (or any other Loan Party) is required to pay any
     amount to any Lender or the Administrative Agent pursuant to subsection
     (c) or (d) of this Section, then such Lender shall use reasonable efforts
     (consistent with legal and regulatory restrictions) to change the
     jurisdiction of its Lending Office so as to eliminate any such additional
     payment which may thereafter accrue, if such change in the reasonable
     judgment of such Lender is not otherwise disadvantageous to such Lender.

        (f)  Each Lender agrees to promptly notify the Company of the first
     written assessment of any Taxes, Other Taxes or additional amount
     specified under Section 3.01(c) payable by the Company (or any other Loan
     Party) hereunder which is received by such Lender, provided that failure
     to give such notice shall not prejudice the Lender's rights under Section
     3.01 hereof unless and to the extent the Company (or any such other Loan
     Party) shall be prejudiced by failure to give such notice. The Company
     shall not be obligated to pay any Taxes, Other Taxes or such additional
     amount under this Section 3.01 which are assessed against any Lender if
     the statute of limitations applicable thereto (as same may be extended
     from time to time by agreement between such Lender and the relevant
     Governmental Authority) has lapsed.

        (g)  If a Lender is entitled to and actually claims a U.S. foreign tax
     credit for Taxes paid by the Loan Parties and received an additional
     amount from the Loan Parties with respect to those Taxes pursuant to
     Section 3.01(c), then (i) such Lender shall use its best efforts to
     reimburse the Loan Parties for such additional amount to the extent that
     such Lender determines, in its sole discretion, that it received an
     identifiable benefit for such foreign tax credits; and (ii) any amounts
     payable under subparagraph (i) hereof shall be due no earlier than the
     time when the IRS is time-barred by statute from taking any action to
     reduce or eliminate these foreign tax credits.

3.02   Illegality.

     If any Lender reasonably determines that the introduction of any Law, or
any change in any Law, or in the interpretation or administration of any Law,
occurring after the date of this Agreement has made it unlawful, or that any
Governmental Authority has asserted after the date of this Agreement that it is
unlawful, for any Lender or its applicable Lending Office to make, maintain or
fund Eurodollar Rate Loans in any Available Currency, or to determine or charge
interest rates based upon the Eurodollar Rate, or any Governmental Authority
has imposed after the date of this Agreement material restrictions on the
authority of such Lender to purchase or sell, or to take deposits of, any
Available Currency in the applicable interbank market, then, on notice thereof
by such Lender to the Company through the Administrative Agent, any obligation
of such Lender to make or continue Eurodollar Rate Loans in the affected
Available Currency or, where the affected Available Currency is Dollars, to
convert Base Rate Loans to Eurodollar Rate Committed Loans shall be suspended
until such Lender notifies the Administrative Agent and the Company that the
circumstances giving rise to such determination no longer exist. Upon receipt
of such notice, the Loan Parties shall, upon demand from such Lender (with a
copy to the Administrative Agent), prepay or, if applicable and such Loans are
denominated in Dollars, convert such Eurodollar Rate Loans of such Lender to
Base Rate Loans, either on the last day of the

                                      33



Interest Period therefor, if such Lender may lawfully continue to maintain such
Eurodollar Rate Loans to such day, or immediately, if such Lender may not
lawfully continue to maintain such Eurodollar Rate Loans. Upon any such
prepayment or conversion, the Loan Parties shall also pay accrued interest on
the amount so prepaid or converted. Each Lender agrees to designate a different
Lending Office if such designation will avoid the need for such notice and will
not, in the good faith judgment of such Lender, otherwise be materially
disadvantageous to such Lender.

3.03  Inability to Determine Rates.

    (a)  If the Required Lenders reasonably determine that in connection with
any request for a Eurodollar Rate Committed Loan or a conversion to or
continuation thereof for any reason (i) deposits in the relevant Available
Currency are not being offered to banks in the applicable offshore interbank
market for such Available Currency for the applicable amount and Interest
Period of such Eurodollar Rate Committed Loan or (ii) adequate and reasonable
means do not exist for determining the Eurodollar Rate for any requested
Interest Period with respect to such Available Currency for such Eurodollar
Rate Committed Loan, or (b) if all of the Lenders reasonably determine that in
connection with any request for a Eurodollar Rate Committed Loan or a
conversion to or continuation thereof for any reason, the Eurodollar Rate for
any requested Interest Period with respect to such Eurodollar Rate Committed
Loan does not adequately and fairly reflect the cost to such Lenders of funding
such Loan, then, in each case, the Administrative Agent will promptly so notify
the Company and each Lender. Thereafter, the obligation of the Lenders to make
or maintain Eurodollar Rate Committed Loans in the affected Available Currency
shall be suspended until the Administrative Agent (upon the instruction of the
Required Lenders) revokes such notice, which instructions and ensuing
revocation notice shall be promptly given upon a change in circumstances. Upon
receipt of such notice, the Company (on behalf of itself or any Borrowing
Subsidiary) may revoke any pending request for a Borrowing of, conversion to or
continuation of Eurodollar Rate Committed Loans in the affected Available
Currency or, failing that, will be deemed to have converted such request into a
request for a Committed Borrowing of Base Rate Loans in the amount specified
therein (or in the case of request involving a Permitted Foreign Currency, the
Dollar Equivalent of such amount).

3.04   Increased Cost; Capital Adequacy; Reserves on Eurodollar Rate Loans.

        (a)  If any Lender determines that as a result of the introduction of
     or any change in or in the interpretation of any Law, in any such case
     after the Closing Date, there shall be any increase in the cost to such
     Lender of agreeing to make or making, funding or maintaining Eurodollar
     Rate Loans, or a reduction in the amount received or receivable by such
     Lender in connection with any of the foregoing (excluding for purposes of
     this subsection (a) any such increased costs or reduction in amount
     resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall
     govern), (ii) changes in the basis of branch profits or franchise taxes
     and changes in the taxation of net income or gross income by the United
     States or any foreign jurisdiction or any political subdivision of either
     thereof under the Laws of which such Lender is organized or has its
     Lending Office or conducts business, and (iii) reserve requirements
     contemplated by Section 3.04(c)), then from time to time upon demand of
     such Lender (with a copy of such demand to the Administrative Agent), the
     Loan Parties shall pay to such Lender such additional amounts as will
     compensate such Lender for such increased cost or reduction.

        (c)  If any Lender determines that the introduction of any Law
     regarding capital adequacy or any change therein or in the interpretation
     thereof, in any such case after the Closing Date, affects or would
     increase the amount of capital required or expected to be maintained by
     such Lender or any corporation controlling such Lender as a consequence of
     such Lender's obligations hereunder (taking into consideration its
     policies with respect to capital adequacy),

                                      34



    then from time to time upon demand of such Lender (with a copy of such
    demand to the Administrative Agent), the Loan Parties shall pay to such
    Lender such additional amounts as will compensate such Lender for such
    increase.

       (c)  The Loan Parties shall pay to each Lender (to the extent such
    Lender has not otherwise been compensated therefor hereunder), as long as
    such Lender shall be required to maintain reserves with respect to
    liabilities or assets consisting of or including Eurocurrency funds or
    deposits (currently known as "Eurocurrency liabilities"), additional
    interest on the unpaid principal amount of each Eurodollar Rate Loan equal
    to the actual costs of such reserves allocated to such Loan by such Lender
    (as determined by such Lender in good faith, which determination shall be
    conclusive absent demonstrable error), which shall be due and payable on
    each date on which interest is payable on such Loan, provided the Loan
    Parties shall have received at least 15 days' prior notice (with a copy to
    the Administrative Agent) of such additional interest from such Lender. If
    a Lender fails to give notice 15 days prior to the relevant Interest
    Payment Date, such additional interest shall be due and payable 15 days
    from receipt of such notice.

3.05  Funding Losses.

    Upon demand of any Lender (with a copy to the Administrative Agent) from
time to time, the Loan Parties shall promptly compensate such Lender for and
hold such Lender harmless from any direct loss, cost or expense incurred by it
as a result of:

       (a)  any continuation, conversion, payment or prepayment of any Loan
    other than a Base Rate Loan on a day other than the last day of the
    Interest Period for such Loan (whether voluntary, mandatory, automatic, by
    reason of acceleration, or otherwise);

       (b)  any failure by the Loan Parties (for a reason other than the
    failure of such Lender to make a Loan) to prepay, or, other than as a
    result of Section 3.02 or 3.03, to borrow, continue or convert any Loan
    other than a Base Rate Loan on the date or in the amount notified by the
    Company;

       (c)  any failure by the Loan Parties to make payment of any Loan (or
    interest due thereon) denominated in a Permitted Foreign Currency on its
    scheduled due date or any payment thereof in a different currency; or

       (d)  any assignment of a Eurodollar Rate Loan on a day other than the
    last day of the Interest Period therefor as a result of a request by the
    Company pursuant to Section 10.16;

including any foreign exchange losses and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were
obtained. The Loan Parties shall also pay any customary administrative fees
charged by such Lender in connection with the foregoing.

    For purposes of calculating amounts payable by the Loan Parties to the
Lenders under this Section 3.05, each Lender shall be deemed to have funded
each Eurodollar Rate Committed Loan made by it at the Eurodollar Rate for such
Loan by a matching deposit or other borrowing in the applicable offshore
interbank market for such Available Currency for a comparable amount and for a
comparable period, whether or not such Eurodollar Rate Committed Loan was in
fact so funded.

                                      35



3.06  Matters Applicable to all Requests for Compensation.

       (a)  Any Lender claiming reimbursement or compensation under this
    Article III shall deliver to the Company (with a copy to the Administrative
    Agent) a certificate setting forth in reasonable detail the amount payable
    to the Lender hereunder.

       (b)  Upon (i) any Lender's making a claim for compensation under Section
    3.01 or 3.04, (ii) any Lender's collecting of a Mandatory Cost Rate with
    respect to any outstanding Loan or (iii) any Lender's giving of the notice
    described in the first sentence of Section 3.02 (which notice has not been
    revoked), the Company may replace such Lender in accordance with Section
    10.16.

3.07  Survival.

    All of the Loan Parties' obligations under this Article III shall survive
termination of the Aggregate Commitments and repayment of all other Obligations
hereunder.

                                  ARTICLE IV
                      CONDITIONS PRECEDENT TO BORROWINGS

4.01  Conditions of Initial Borrowing.

    The obligation of each Lender to make its initial Loans hereunder is
subject to satisfaction of the following conditions precedent:

       (a)  The Administrative Agent's receipt of the following, each of which
    shall be originals or facsimiles (followed promptly by originals) unless
    otherwise specified, each properly executed, where applicable, by a
    Responsible Officer of the signing Loan Party, each dated the Closing Date
    (or, in the case of certificates of governmental officials, a recent date
    before the Closing Date) and each in form and substance reasonably
    satisfactory to the Administrative Agent and its legal counsel:

           (i)  executed counterparts of this Agreement, sufficient in number
        for distribution to the Administrative Agent, each Lender and the
        Company;

           (ii)  a Note executed by the Loan Parties in favor of each Lender
        requesting a Note;

           (iii)  such certificates of resolutions or other action, incumbency
        certificates and/or other certificates of Responsible Officers of each
        Loan Party as the Administrative Agent may require evidencing the
        identity, authority and capacity of each Responsible Officer thereof
        authorized to act as a Responsible Officer in connection with this
        Agreement and the other Loan Documents to which such Loan Party is a
        party;

           (iv)  the Organization Documents of each Loan Party and such other
        certifications as the Administrative Agent may reasonably require to
        evidence that each Loan Party is duly organized or formed, and that
        each Loan Party is validly existing, in good standing and qualified to
        engage in business in the jurisdiction of its organization;

                                      36



           (v) favorable opinions of Bell Boyd & Lloyd LLC and internal counsel
        to the Loan Parties, addressed to the Administrative Agent and each
        Lender, in form and substance satisfactory to the Lenders;

           (vi) a certificate signed by a Responsible Officer of the Company
        certifying (A) that the conditions specified in Sections 4.02(a) and
        (b) have been satisfied, (B) that there has been no event or
        circumstance since the date of the Audited Financial Statements that
        has had or would be reasonably expected to have, either individually or
        in the aggregate, a Material Adverse Effect; (C) the current Debt
        Ratings; and (D) no consents, licenses and approvals are required in
        connection with the execution, delivery and performance by the Loan
        Parties and the validity against each Loan Party of the Loan Documents
        to which it is a party; and

           (vii) such other assurances, certificates, documents, consents or
        opinions as the Administrative Agent or the Required Lenders reasonably
        may require.

       (b)  The Existing Credit Agreement shall have been terminated and all
    obligations thereunder shall have been satisfied in full.

       (c)  Subject to the terms of the Fee Letter, any fees and expenses,
    including Attorney Costs of the Administrative Agent, required to be paid
    on or before the Closing Date shall have been paid.

4.02  Conditions to all Borrowings.

    The obligation of each Lender to honor any Request for Credit Extension
(other than a Committed Loan Notice requesting only a conversion of Committed
Loans to the other Type, or a continuation of Eurodollar Rate Committed Loans)
is subject to the following conditions precedent:

       (a)  The representations and warranties of the Company and each other
    Loan Party contained in Article V and each other Loan Document shall be
    true and correct on and as of the date of such Borrowing, except to the
    extent that such representations and warranties specifically refer to an
    earlier date, in which case they shall be true and correct as of such
    earlier date, and except that for purposes of this Section 4.02, the
    representations and warranties contained in Sections 5.11(a) and (c) shall
    be deemed to refer to the most recent statements furnished pursuant to
    clauses (a) and (b), respectively, of Section 6.01.

       (b)  No Default shall exist, or would result from such proposed
    Borrowing.

       (c)  The Administrative Agent shall have received a Request for Credit
    Extension in accordance with the requirements hereof.

    Each Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Committed Loans to the other Type or a
continuation of Eurodollar Rate Committed Loans) submitted by the Company (on
behalf of itself or any Borrowing Subsidiary) shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.02(a)
and (b) have been satisfied on and as of the date of the applicable Borrowing.

                                      37



                                   ARTICLE V
                        REPRESENTATIONS AND WARRANTIES

    The Company represents and warrants (and each other Loan Party severally
represents and warrants for itself with respect to the following sections,
except for Sections 5.07, 5.11, 5.16 and 5.17) to the Administrative Agent and
each Lender that:

5.01  Corporate Existence and Power.

    The Company, each Loan Party and each of their Material Subsidiaries:

        (a)  is duly organized, validly existing and in good standing under the
     laws of the jurisdiction of its organization;

        (b)  has the power and authority and all governmental licenses,
    authorizations, consents and approvals to own its assets, carry on its
    business (except where the failure to have any such governmental license,
    authorization, consent or approval would not reasonably be expected to have
    a Material Adverse Effect) and to execute, deliver, and as to the Loan
    Parties only, to perform their obligations under the Loan Documents;

        (c)  is duly qualified as a foreign corporation and is licensed and in
    good standing under the laws of each jurisdiction where its ownership,
    lease or operation of property or the conduct of its business requires such
    qualification or license except when the failure to so qualify or be so
    licensed or in good standing would not preclude it from enforcing its
    rights with respect to any of its assets or expose it to any liability,
    which in either case would reasonably be expected to have a Material
    Adverse Effect; and

        (d)  is in all material respects in compliance with all Laws except to
    the extent that the failure to do so would not reasonably be expected to
    have a Material Adverse Effect.

5.02  Corporate Authorization; No Contravention.

    The execution, delivery and performance by each Loan Party of this
Agreement and each other Loan Document to which such Loan Party is party, have
been duly authorized by all necessary corporate action, and do not and will not:

        (a)  contravene the terms of any of such Loan Party's Organization
     Documents;

        (b)  conflict with or result in any breach or contravention of, or the
    creation of any Lien under, any document evidencing any Contractual
    Obligation to which such Loan Party is a party or any order, injunction,
    writ or decree of any Governmental Authority to which such Loan Party or
    its property is subject except where such conflict, breach, contravention
    or Lien would not reasonably be expected to have a Material Adverse Effect;
    or

        (c)  violate any Law.

5.03  Governmental Authorization.

    No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of the Agreement or any other Loan Document.

                                      38



5.04  Binding Effect.

    This Agreement and each other Loan Document to which any Loan Party is a
party constitute the legal, valid and binding obligations of such Loan Party,
enforceable against such Loan Party in accordance with their respective terms,
except as enforceability may be limited by applicable Debtor Relief Laws or by
equitable principles relating to enforceability.

5.05  Litigation.

    There are no actions, suits, proceedings, claims or disputes pending, or to
the best knowledge of the Company, threatened or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, against the
Company, or its Subsidiaries or any of their respective properties which:

        (a)  purport to affect or pertain to this Agreement or any other Loan
    Document, or any of the transactions contemplated hereby or thereby; or

        (b)  would reasonably be expected to have a Material Adverse Effect.

    No injunction, writ, temporary restraining order or any order of any nature
has been issued by any court or other Governmental Authority purporting to
enjoin or restrain the execution, delivery or performance of this Agreement or
any other Loan Document, or directing that the transactions provided for herein
or therein not be consummated as herein or therein provided.

5.06  No Default.

    At the Closing Date and at the time of any Borrowing, no Default exists or
would result from the incurring of any Obligations by the Loan Parties. As of
the Closing Date, neither the Company nor any Material Subsidiary is in default
under or with respect to any Contractual Obligation in any respect which,
individually or together with all such defaults, would reasonably be expected
to have a Material Adverse Effect, or that would, if such default had occurred
after the Closing Date, create an Event of Default under Section 8.01(e).

5.07  ERISA Compliance.

        (a)  Each Plan is in compliance in all material respects with the
    applicable provisions of ERISA, the Code and other federal or state law
    except where non-compliance would not reasonably be expected to result in a
    Material Adverse Effect. Each Plan which is intended to qualify under
    Section 401(a) of the Code has received a favorable determination letter
    from the IRS and to the best knowledge of the Company, nothing has occurred
    which would cause the loss of such qualification and which, upon the loss
    of such qualification, would reasonably be expected to result in a Material
    Adverse Effect. The Company and each ERISA Affiliate has made all required
    contributions to any Plan subject to Section 412 of the Code, and no
    application for a funding waiver or an extension of any amortization period
    pursuant to Section 412 of the Code has been made with respect to any Plan
    where the failure to make such contribution or where such application or
    extension would, in each case, reasonably be expected to result in a
    Material Adverse Effect.

        (b)  There are no pending or, to the best knowledge of Company,
    threatened claims, actions or lawsuits, or action by any Governmental
    Authority, with respect to any Plan which has resulted or would reasonably
    be expected to result in a Material Adverse Effect. There has been

                                      39



    no prohibited transaction or violation of the fiduciary responsibility
    rules with respect to any Plan which has resulted or would reasonably be
    expected to result in a Material Adverse Effect.

       (c)  (i)  No ERISA Event has occurred or is reasonably expected to
    occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii)
    neither the Company nor any ERISA Affiliate has incurred, or reasonably
    expects to incur, any liability under Title IV of ERISA with respect to any
    Pension Plan (other than premiums due and not delinquent under Section 4007
    of ERISA); (iv) neither the Company nor any ERISA Affiliate has incurred,
    or reasonably expects to incur, any liability (and no event has occurred
    which, with the giving of notice under Section 4219 of ERISA, would result
    in such liability) under Section 4201 or 4243 of ERISA with respect to a
    Multiemployer Plan; and (v) neither the Company nor any ERISA Affiliate has
    engaged in a transaction that could be subject to Section 4069 or 4212(c)
    of ERISA; that, in the case of any of clauses (i) through (v), would
    reasonably be expected to result in a Material Adverse Effect.

5.08  Use of Proceeds; Margin Regulations.

    The proceeds of the Loans are to be used solely for the purposes set forth
in and permitted by Section 6.12 and Section 7.04.

5.09  Title to Properties.

    The Company and each Material Subsidiary have good record and marketable
title in fee simple to, or to their knowledge valid leasehold interests in, all
real property necessary for the ordinary conduct of their respective
businesses, except for such defects in title or invalidity of leasehold
interests as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. As of the Closing Date and to the
best knowledge of the Company, the property of the Company and its Material
Subsidiaries is subject to no Liens, other than Permitted Liens.

5.10  Taxes.

    The Company and its Material Subsidiaries have filed all federal and other
material tax returns and reports required to be filed, and have paid all
federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided
in accordance with GAAP or where failure to file such return or to pay any such
tax would not reasonably be expected to have a Material Adverse Effect. To the
best knowledge of the Company, there is no proposed tax assessment against the
Company or any Subsidiary that would, if made, have a Material Adverse Effect.

5.11  Financial Condition.

       (a)  The Audited Financial Statements and the unaudited consolidated
    financial statements dated June 30, 2002:

           (i)  were prepared in accordance with GAAP consistently applied
        throughout the period covered thereby, except as otherwise expressly
        noted therein, subject to normal year end audit adjustments in the case
        of such unaudited statements; and

                                      40



           (ii)  fairly present the financial condition of the Company and its
        consolidated Subsidiaries as of the date thereof and results of
        operations for the period covered thereby.

       (b)  As of the Closing Date, there has been no Material Adverse Effect
    since September 30, 2001.

       (c)  Since the date of the most recent statements furnished pursuant to
    clause (a) or (b) of Section 6.01, there has been no Material Adverse
    Effect.

5.12  Environmental Matters.

    The Company conducts in the ordinary course of business a review of the
effect of existing Environmental Laws and existing Environmental Claims on its
business, operations and properties, and as a result thereof the Company has
reasonably concluded that to the best of its knowledge, such Environmental Laws
and Environmental Claims would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

5.13  Regulated Entities.

    None of the Company, any Person controlling the Company, or any Subsidiary,
is an "Investment Company" within the meaning of the Investment Company Act of
1940.

5.14  Copyrights, Patents, Trademarks and Licenses, etc.

    To the best knowledge of the Company, the Company or its Material
Subsidiaries own or are licensed or otherwise have the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person except where the failure to own, be licensed to or
otherwise have the right to use the same would not have a Material Adverse
Effect. To the best knowledge of the Company, no material slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Company or any
Material Subsidiary infringes upon any rights held by any other Person where
any such infringement would reasonably be expected to have a Material Adverse
Effect. No claim or litigation regarding any of the foregoing is pending or to
the knowledge of the Company threatened, which would reasonably be expected to
have a Material Adverse Effect.

5.15  Subsidiaries/Investments.

    As of the Closing Date, the Company has no Material Subsidiaries other than
those specifically disclosed in part (a) of Schedule 5.15 hereto and has no
equity investments in excess of $l00,000,000 in any other Person (excluding
Subsidiaries) other than those specifically disclosed in part (b) of Schedule
5.15.

5.16  Insurance.

    To the best knowledge of the Company, the properties of the Company and its
Material Subsidiaries are insured with financially sound and reputable
insurance or reinsurance companies, in such amounts, with such deductibles and
covering such risks as are believed by the Company to be adequate in the
exercise of its reasonable business judgment.

                                      41



5.17  Full Disclosure.

    None of the representations or warranties made by the Company in the Loan
Documents as of the date such representations and warranties are made or deemed
made, and none of the statements contained in any exhibit, financial report or
statements or certificate furnished by or on behalf of the Company in
connection with the Loan Documents, contains any untrue statement of a material
fact or omits any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which
they are made, not misleading as of the time when made or delivered.

                                  ARTICLE VI
                             AFFIRMATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Required
Lenders waive compliance in writing:

6.01  Financial Statements.

    The Company shall deliver to the Administrative Agent, with sufficient
copies for each requesting Lender:

        (a)  as soon as available, but not later than the date which is 120
    days after the end of each fiscal year, a copy of the Company's Annual
    Report on Form 10K as filed with the SEC, and accompanied by the opinion of
    a nationally-recognized independent public accounting firm ("Independent
    Auditor"), which opinion shall not be a qualified opinion or limited
    because of a restricted or limited examination by the Independent Auditor
    of any material portion of the Company's or any Subsidiary's records;

        (b)  as soon as available, but not later than 60 days after the end of
    each of the first three fiscal quarters of each fiscal year, a copy of the
    Company's Form 10Q as filed with the SEC; and

        (c)  promptly, copies of all financial statements and reports that the
    Company sends to its shareholders, and copies of all Form 8K's that the
    Company or any Subsidiary files with the SEC.

6.02  Certificates; Other Information.

    The Company shall furnish to the Administrative Agent, with sufficient
copies for each requesting Lender:

        (a)  concurrently with the delivery of the financial statements
    referred to in Sections 6.01(a) and (b), a Compliance Certificate executed
    by a Responsible Officer on behalf of the Company which certifies that no
    Default has occurred and is continuing (except as described therein); and

        (b)  promptly, such additional information regarding the business,
    financial or corporate affairs of the Company or any Material Subsidiary as
    the Administrative Agent may from time to time reasonably request and which
    relates to the ability of the Company (or any other Loan Party) to perform
    under this Agreement or any other Loan Document.

                                      42



6.03  Notices.

     Except as contemplated by Section 6.03(d), upon obtaining knowledge of any
event described below, the Company shall promptly notify the Administrative
Agent (but, in no event later than five days after obtaining such knowledge):

      (a)  of the occurrence of any Default;

      (b)  of any of the following matters of which a Responsible Officer
   obtains knowledge that would result in a Material Adverse Effect: (i) breach
   or non-performance of, or any default under, a Contractual Obligation of the
   Company or any Material Subsidiary; (ii) any dispute, litigation,
   investigation, proceeding or suspension between the Company or any Material
   Subsidiary and any Governmental Authority; or (iii) the commencement of, or
   any material development in, any litigation or proceeding affecting the
   Company or any Material Subsidiary, including pursuant to any applicable
   Environmental Laws;

      (c)  of the occurrence of any of the following events affecting the
   Company or any ERISA Affiliate which would reasonably be expected to result
   in a Material Adverse Effect, and deliver to the Administrative Agent a copy
   of any notice with respect to such event that is filed with a Governmental
   Authority and any notice delivered by a Governmental Authority to the
   Company or any ERISA Affiliate with respect to such event:

          (i)    an ERISA Event;

          (ii)   a material increase in the Unfunded Pension Liability of any
       Pension Plan;

          (iii)   the adoption of, or the commencement of contributions to, any
       Plan subject to Section 412 of the Code by the Company or any ERISA
       Affiliate; or

          (iv)   the adoption of any amendment to a Plan subject to Section 412
       of the Code, if such amendment results in a material increase in
       contributions or Unfunded Pension Liability;

      (d)  of any material change in accounting policies or financial reporting
   practices other than those required or permitted by GAAP by the Company or
   any of its consolidated Subsidiaries which would reasonably be expected to
   materially affect the Company's consolidated financial reports (it being
   understood that the disclosure of such changes in the financial statements
   described in Section 6.01 shall satisfy the requirements of this clause
   (d)); and

      (e)  of any change in the Company's Debt Rating, or the fact that such
   Debt Ratings are no longer being publicly announced by S&P or Moody's,
   provided that any failure by the Company to give notice of such change or
   such unavailability of ratings shall not affect the payment obligations
   hereunder of any Loan Party.

   Each notice under this Section shall be accompanied by a written statement
by a Responsible Officer setting forth details of the occurrence referred to
therein, and stating what action the Company or any affected Subsidiary
proposes to take with respect thereto and at what time. Each notice under
Section 6.03(a) shall describe with particularity any and all provisions of
this Agreement or other Loan Document (if any) that have been breached or
violated.

                                      43



6.04  Preservation of Corporate Existence, Etc.

    The Company shall, and shall cause each Material Subsidiary and each other
Loan Party to:

       (a)  except as permitted by Section 7.03, preserve and maintain in full
    force and effect its corporate existence and good standing under the laws
    of its state or jurisdiction of incorporation;

       (b)  to the extent practicable, using reasonable efforts, preserve and
    maintain in full force and effect all governmental rights, privileges,
    qualifications, permits, licenses and franchises necessary or desirable in
    the normal conduct of its business except (x) when the non-preservation and
    non-maintenance of such rights, privileges, qualifications, permits,
    licenses or franchises would reasonably be expected not to have a Material
    Adverse Effect or (y) in connection with transactions permitted by Section
    7.03 and sales of assets permitted by Section 7.02

       (c)  use reasonable efforts, in the ordinary course of business, to
    preserve its business organization and goodwill except where the failure to
    do so would not reasonably be expected to have a Material Adverse Effect;
    and

       (d)  to the extent practicable, using reasonable efforts, preserve or
    renew all of its registered patents, trademarks, trade names and service
    marks, except when non-preservation or non-renewal of such patents,
    trademarks, trade names or service marks would reasonably be expected not
    to have a Material Adverse Effect.

6.05  Maintenance of Property.

    The Company shall maintain, and shall cause each Material Subsidiary to
maintain, and preserve all its property which is used or useful in its business
in good working order and condition, ordinary wear and tear and casualty loss
excepted and make all necessary repairs thereto and renewals and replacements
thereof except where the failure to do so would not reasonably be expected to
have a Material Adverse Effect.

6.06  Insurance.

    The Company shall maintain, and shall cause each Material Subsidiary to
maintain, with financially sound and reputable insurers or independent
reinsurers, insurance with respect to its properties and business against loss
or damage of the kinds and in the amounts determined by the Company to be
necessary or desirable in the exercise of its reasonable business judgment.

6.07  Payment of Obligations.

    The Company shall, and shall cause each Material Subsidiary to, pay and
discharge as the same shall become due and payable, all their respective
obligations and liabilities, including:

       (a) all tax liabilities, assessments and governmental charges or levies
    upon it or its properties or assets, unless the same are being contested in
    good faith by appropriate proceedings and adequate reserves in accordance
    with GAAP are being maintained by the Company or such Material Subsidiary
    or unless the failure to pay or discharge would not have a Material Adverse
    Effect;

                                      44



       (b)  all lawful claims (except for such claims which are contested by
    the Company or Material Subsidiary in good faith) which, if unpaid, would
    by law become a Lien upon its property except when the failure to pay or
    discharge would not have a Material Adverse Effect; and

       (c)  all Indebtedness, as and when due and payable (except for such
    Indebtedness which is contested by the Company or any Material Subsidiary
    in good faith or where the failure to pay or discharge would not reasonably
    be expected to result in a Material Adverse Effect), but subject to any
    subordination provisions contained in any instrument or agreement
    evidencing such Indebtedness.

6.08  Compliance with Laws.

    The Company shall comply, and shall cause each Material Subsidiary to
comply, in all material respects with all Laws of any Governmental Authority
having jurisdiction over it or its business, except such as may be contested in
good faith or as to which a bona fide dispute may exist or where the failure to
comply would not have a Material Adverse Effect.

6.09  Compliance with ERISA.

    The Company shall, and shall cause each of its ERISA Affiliates to: (a)
maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law except where
non-compliance would not reasonably be expected to result in a Material Adverse
Effect; and (b) make all required contributions to any Plan subject to Section
412 of the Code except where failure to make any contribution would not
reasonably be expected to result in a Material Adverse Effect.

6.10  Inspection of Property and Books and Records.

    The Company shall maintain and shall cause each Material Subsidiary to
maintain accurate and proper books of record and account of all material
financial transactions and matters involving the assets and business of the
Company and such Material Subsidiary. Subject to reasonable safeguards to
protect confidential information, the Company shall permit representatives of
the Administrative Agent to discuss the affairs and finances of the Company
with its Responsible Officers, all at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Company; provided, however, when an Event of Default
exists the Company shall permit, and shall cause each Material Subsidiary to
permit, representatives of the Administrative Agent to visit and inspect any of
their respective properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, all at
the expense of the Company at any time during normal business hours and with
reasonable advance notice. The Administrative Agent shall promptly advise the
Lenders of its findings after any such visit, inspection, examination or
discussion.

6.11  Environmental Laws.

    The Company shall, and shall cause each Material Subsidiary to, conduct its
operations and keep and maintain its property in compliance with all
Environmental Laws except where the failure to comply would not have a Material
Adverse Effect.

                                      45



6.12  Use of Proceeds.

    The Company and the other Loan Parties shall use the proceeds of the Loans
for general corporate purposes including, without limitation, working capital
and Acquisitions, not in contravention of any Laws or of this Agreement.

                                 ARTICLE VII.
                              NEGATIVE COVENANTS

    So long as any Lender shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Required
Lenders waive compliance in writing:

7.01  Limitation on Liens.

    The Company shall not, and shall not suffer or permit any Material
Subsidiary to, directly or indirectly, make, create, incur, assume or suffer to
exist any Lien upon or with respect to any part of its property, whether now
owned or hereafter acquired, other than the following ("Permitted Liens"):

        (a)  any Lien existing on property of the Company or any Subsidiary on
    the Closing Date;

        (b)  any Lien created under any Loan Document to secure the Obligations;

        (c)  Liens for taxes, fees, assessments or other governmental charges
    which are not delinquent or remain payable without penalty, or to the
    extent that non-payment thereof is permitted by Section 6.07;

        (d)  carriers', warehousemen's, mechanics', landlords', materialmen's,
    repairmen's or other similar Liens arising in the ordinary course of
    business which are not delinquent or remain payable without penalty or
    which are being contested in good faith and by appropriate proceedings,
    which proceedings are reasonably anticipated to have the effect of
    preventing the forfeiture or sale of the property subject thereto;

        (e)  Liens consisting of pledges or deposits required in the ordinary
    course of business in connection with workers' compensation, unemployment
    insurance and other social security legislation;

        (f)  Liens on the property of the Company or any of its Subsidiaries
    securing (i) the non-delinquent performance of bids, trade contracts (other
    than for borrowed money), leases, statutory obligations, (ii) contingent
    obligations on surety and appeal bonds, and (iii) other non-delinquent
    obligations of a like nature; in each case, incurred in the ordinary course
    of business, provided all such Liens in the aggregate would not (even if
    enforced) cause a Material Adverse Effect;

        (g)  easements, rights-of-way, restrictions and other similar
    encumbrances incurred in the ordinary course of business which do not in
    any case materially detract from the value of the property subject thereto
    or interfere with the ordinary conduct of the businesses of the Company and
    its Subsidiaries taken as a whole;

                                      46



       (h)  Liens on assets of Subsidiaries acquired by the Company after the
    date of this Agreement, provided, however, that such Liens existed at the
    time of the respective acquisition and were not incurred in anticipation
    thereof;

       (i)  purchase money security interests on any property acquired or held
    by the Company or its Subsidiaries in the ordinary course of business,
    securing Indebtedness incurred or assumed for the purpose of financing all
    or any part of the cost of acquiring such property; provided that (i) such
    Lien attaches solely to the property so acquired in such transaction, and
    (ii) the principal amount of the Indebtedness secured thereby does not
    exceed 100% of the cost of such property;

       (j)  Liens securing obligations in respect of capital leases on assets
    subject to such leases;

       (k)  Liens arising solely by virtue of any statutory or common law
    provision relating to banker's liens, rights of set-off or similar rights
    and remedies as to deposit accounts or other funds maintained with a
    creditor depository institution; provided that (i) such deposit account is
    not a dedicated cash collateral account and is not subject to restrictions
    against access by the Company in excess of those set forth by regulations
    promulgated by the FRB, and (ii) such deposit account is not intended by
    the Company or any Material Subsidiary to provide collateral to the
    depository institution except in either case when such deposit accounts are
    established or required in the ordinary course of business and would not
    have a Material Adverse Effect; and

       (l)  Liens on Permitted Receivables subject to a Permitted Receivables
    Financings;

       (m)  Liens on real property (i) acquired after the Closing Date by the
    Company or any Subsidiary, provided that such Liens existed at the time
    such property was acquired and were not created in anticipation thereof or
    (ii) acquired or held by the Company or its Subsidiaries in the ordinary
    course of business, securing Indebtedness incurred or assumed for the
    purpose of financing all or any part of the cost of acquiring such
    property, provided that (x) such Liens attach solely to the property so
    acquired in such transaction, and (y) the principal amount of the
    Indebtedness secured thereby does not exceed 100% of the cost of such
    property; and

       (n)  Notwithstanding the provisions of Sections 7.01(a) through (m),
    there shall be permitted Liens on property (including Liens which would
    otherwise be in violation of such subsections), provided that the sum of
    the aggregate Indebtedness of the Company and its Subsidiaries secured by
    all Liens permitted under this Section 7.01(n), excluding the Liens
    permitted under Sections 7.01(a) through (m), shall not exceed an amount
    equal to 3% of the Company's total consolidated assets as shown on its
    consolidated balance sheet for its most recent prior fiscal quarter.

7.02  Disposition of Assets.

     Except as otherwise permitted by any other provision of this Agreement,
the Company shall not, and shall not suffer or permit any Material Subsidiary
to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise
dispose of (whether in one or a series of transactions) any property (including
accounts and notes receivable, with or without recourse) or enter into any
agreement to do any of the foregoing, except:

       (a)  dispositions of inventory, or used, worn-out or surplus equipment,
    all in the ordinary course of business;

                                      47



       (b)  dispositions or spinoffs on reasonable commercial terms and for
    fair value or which would not have a Material Adverse Effect, provided that
    dispositions or spinoffs of the capital stock of any Material Subsidiary or
    any Borrowing Subsidiary to a non-Affiliated Person shall not be permitted
    under this Section 7.02(b) unless after giving effect thereto the affected
    Material Subsidiary or Borrowing Subsidiary would be a Wholly-Owned
    Subsidiary;

       (c)  dispositions of property (including equity securities) between the
    Company and any consolidated Subsidiary or among consolidated Subsidiaries;

       (d)  dispositions of Permitted Receivables pursuant to Permitted
    Receivables Financings, provided that the aggregate Investment Amount with
    respect thereto shall not exceed $75,000,000 at any time; and

       (e)  other dispositions of property during any fiscal year (excluding
    dispositions permitted under Sections 7.02(a) through (d)) whose net book
    value in the aggregate shall not exceed 3% of the Company's total
    consolidated assets as shown on its consolidated balance sheet for its most
    recent prior fiscal year.

7.03  Consolidations and Mergers.

     The Company shall not, and shall not suffer or permit any Material
Subsidiary or any Borrowing Subsidiary to, merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to or in favor of any Person, except:

       (a)  any Person may merge with the Company, provided that the Company
    shall be the continuing or surviving corporation;

       (b)  any Subsidiary may merge (i) with the Company, provided that the
    Company shall be the continuing or surviving corporation, or (ii) with any
    one or more Subsidiaries, provided that (A) if any transaction shall be
    between a Subsidiary which is not a Wholly-Owned Subsidiary and a
    Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be the
    continuing or surviving Person and (B) if any transaction shall be between
    a Subsidiary which is not a Borrowing Subsidiary and a Borrowing
    Subsidiary, the Borrowing Subsidiary shall be the continuing or surviving
    Person (unless in connection therewith, the Company shall have complied
    with Section 2.04(b) to terminate such Borrowing Subsidiary);

       (c)  any Subsidiary may sell all or substantially all of its assets
    (upon voluntary liquidation or otherwise), to the Company or another
    Wholly-Owned Subsidiary; and

       (d)  any Subsidiary may merge with any Person and any Person may merge
    with any Subsidiary, provided that after giving effect thereto (i) the
    resulting Person shall be a Wholly-Owned Subsidiary and (ii) if a Borrowing
    Subsidiary is a party to such merger, the resulting Person is a Borrowing
    Subsidiary (unless in connection therewith, the Company shall have complied
    with Section 2.04(b) to terminate such Borrowing Subsidiary).

7.04  Margin Stock.

     The Company shall not, and shall not suffer or permit any Subsidiary to,
use any portion of the Loan proceeds, directly or indirectly, in a manner which
violates any applicable Law and which would

                                      48



have a Material Adverse Effect (provided that this Section 7.04 shall not be
deemed to permit the use of Loan proceeds in violation of any Law applicable to
any Lender, including Regulation T, U or X of the FRB). Notwithstanding the
foregoing, at no time shall more than 25% of the value (as determined by any
reasonable method) of the Company's assets consist of Margin Stock.

7.05  Restricted Payments.

     During the existence of a Default, the Company shall not, and shall not
suffer or permit any Subsidiary to, declare or make any Restricted Payment;
provided that this Section 7.05 shall not restrict (a) any Restricted Payments
to a Loan Party, (b) any such Restricted Payments made by any Subsidiary (other
than a Borrowing Subsidiary) to the owners of capital stock or other equity
interests of such Subsidiary on a pro rata basis based on their relative
ownership interests), (c) the payment by the Company of dividends to its
shareholders provided that such dividend was declared when no Default existed
or (d) any such Restricted Payments permitted under any written benefit plans
of the Company or any Material Subsidiary now or hereafter existing so long as
such Restricted Payments do not exceed $10,000,000 in the aggregate during the
existence of any such Default.

7.06  ERISA.

    The Company shall not, and shall not suffer or permit any of its ERISA
Affiliates to: (a) engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted or
would reasonably be expected to result in a Material Adverse Effect; or (b)
engage in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA and which would reasonably be expected to result in a Material Adverse
Effect.

7.07  Accounting Changes.

    Subject to Section 1.03, the Company shall not, and shall not suffer or
permit any Material Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required or permitted by GAAP, or
change the fiscal year of the Company or of any such Material Subsidiary, if
such change would reasonably be expected to result in a Material Adverse Effect.

7.08  Consolidated Interest Coverage Ratio.

    The Company shall not permit, as of the last day of any fiscal quarter of
the Company, the Consolidated Interest Coverage Ratio to be less than 2.0 to
1.0.

7.09  Consolidated Leverage Ratio.

    The Company shall not permit, as of the last day of any fiscal quarter of
the Company, the Consolidated Leverage Ratio to be greater than 0.6 to 1.0.

7.10  Consolidated Fixed Charge Coverage Ratio.

    The Company shall not permit, as of the last day of any fiscal year of the
Company, the Consolidated Fixed Charge Coverage Ratio to be less than 1.50 to
1.0.

7.11  Subsidiary Indebtedness.

    The Company shall not permit, as of the last day of any fiscal quarter, the
aggregate Indebtedness (excluding intercompany Indebtedness among the Company
and its Subsidiaries or between Subsidiaries)

                                      49



of its consolidated Subsidiaries to exceed 25% of shareholders' equity as set
forth on the consolidated balance sheet of the Company and its consolidated
Subsidiaries as determined in accordance with GAAP and as reflected in its most
recent annual or quarterly financial statements delivered to the Administrative
Agent under Section 6.01. For purposes of this Section 7.11, the term
"Indebtedness" shall be deemed to exclude (i) Indebtedness of a Person which
becomes a Subsidiary after the date hereof, provided that such excluded
Indebtedness existed at the time such Person became a Subsidiary and was not
created in anticipation thereof, and (ii) outstanding Loans of Borrowing
Subsidiaries under this Agreement.

7.12  Transactions with Affiliates.

     The Company shall not, and shall not suffer or permit any Material
Subsidiary to, enter into any transaction of any kind with any Affiliate of the
Company, whether or not in the ordinary course of business, other than on fair
and reasonable terms substantially as favorable (considered as a whole) to the
Company or such Material Subsidiary as would be obtainable by the Company or
such Material Subsidiary at the time in a comparable arm's length transaction
with a Person other than an Affiliate, provided that the foregoing restriction
shall not apply to (a) unless otherwise expressly prohibited by this Agreement,
transactions between or among the Company and any of its Subsidiaries or
between and among any Subsidiaries, (b) compensation, indemnification and other
benefits and perquisites paid or made available to any Affiliate of the Company
who is an officer, director, employee, or consultant of the Company or a
Subsidiary (including reimbursement of out-of-pocket expenses and provision of
directors' and officers' liability insurance), (c) transactions under any
benefit plan of the Company, (d) transactions approved by a majority of the
independent members of the board of directors of the Company (or a committee
composed of independent members of the board of directors) (e) any Restricted
Payments not prohibited by Section 7.05 and (f) other transactions between the
Company or a Material Subsidiary and an Affiliate of the Company not otherwise
permitted by this Section 7.12, provided that all such transactions do not
involve aggregate consideration paid to affiliates in excess of $1,000,000 in
any fiscal year of the Company.

7.13  Burdensome Agreements.

     The Company shall not, and shall not suffer or permit any Subsidiary to,
enter into any Contractual Obligation (other than this Agreement or any other
Loan Document) that expressly limits the ability of any Subsidiary to make
Restricted Payments, directly or indirectly, to the Company or any other Loan
Party except for (a) encumbrances or restrictions existing under or by reason
of this Loan Agreement, (b) those imposed by applicable Laws, (c) agreements in
existence and as in effect on the Closing Date (and any refundings,
replacements or refinancing of the same not in excess of the then outstanding
amount of the obligations thereunder and containing restrictions which are not
less favorable to the Company and its Subsidiaries), (d) restrictions
applicable to special purpose Subsidiaries pursuant to documentation governing
any Permitted Receivables Financing, (e) restrictions applicable to any Person
acquired by the Company or any Subsidiary provided that such restrictions (i)
existed at the time of such Acquisition, (ii) were not incurred in
contemplation thereof and (iii) are not applicable to any other Person and (f)
pursuant to customary restrictions and conditions contained in any agreement
relating to any sale of assets not prohibited hereunder pending the
consummation of such sale.

                                 ARTICLE VIII
                        EVENTS OF DEFAULT AND REMEDIES

8.01  Events of Default.

Any of the following shall constitute an Event of Default:

                                      50



   (a)  Non-Payment.  The Company or any other Loan Party fails to pay, (i)
within one Business Day after the same becomes due, any amount of principal of
any Loan, or (ii) within five Business Days after the same becomes due, any fee
payable under Section 2.09 or interest (including any Guaranteed Obligations)
or under any other Loan Document; or

   (b)  Representation or Warranty.  Any representation or warranty by the
Company, any other Loan Party or any other Material Subsidiary made or deemed
made herein, in any other Loan Document, or which is contained in any
certificate, document or financial or other statement by the Company, any other
Loan Party or any other Material Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the date made or
deemed made; or

   (c)  Specific Defaults.  The Company fails to perform or observe any term,
covenant or agreement contained in any of Sections 6.04(with respect to any
Loan Party's existence), 7.03, 7.05, 7.06, 7.08, 7.09, 7.10 or 7.11; or

   (d)  Other Defaults.  The Company or any other Loan Party fails to perform
or observe any other material term or covenant contained in this Agreement or
any other Loan Document (other than as provided in Sections 8.01(a),(b) and
(c)), and such default shall continue unremedied for a period of 30 days after
the earlier of (i) the date upon which a Responsible Officer knew of such
failure or (ii) the date upon which written notice thereof is received by the
Company from the Administrative Agent; or

   (e)  Cross-Default.  (i) The Company or any Subsidiary fails to perform or
observe any condition or covenant, or any other event shall occur or condition
shall exist, under any agreement or instrument relating to any Indebtedness of
the Company or any Subsidiary having an aggregate principal amount (including
amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $50,000,000, and such failure continues after the
applicable grace or notice period, if any, specified in the relevant document
on the date of such failure if (A) the effect of such failure, event or
condition is to cause such Indebtedness to be declared to be due and payable
prior to its stated maturity or (B) such failure is the failure to pay
principal or interest on the final stated maturity date of such Indebtedness;
or (ii) if there shall occur any default or event of default, however
denominated, under any cross default provision under any agreement or
instrument relating to any Indebtedness of the Company or any Subsidiary of
more than $50,000,000 and the effect of such default or event of default is to
permit such Indebtedness to be declared to be due and payable prior to its
stated maturity; or

   (f)  Insolvency; Voluntary Proceedings.  The Company, any other Loan Party
or any Material Subsidiary (i) ceases to be solvent, or generally fails to pay
its debts, or admits in writing its inability to pay its debts as they become
due, subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing; or

   (g)  Involuntary Proceedings.  (i) Any involuntary Insolvency Proceeding is
commenced or filed against the Company, any other Loan Party or any Material
Subsidiary, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Company's or any
such Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, stayed, vacated or fully bonded within 60 days
after commencement, filing, issuance or levy; (ii) the Company, any other Loan
Party or any Material Subsidiary admits the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or similar
order under non-U.S. law involving a material portion of the Company's or such
Subsidiary's total assets) is ordered in any

                                      51



Insolvency Proceeding involving the Company or any such Subsidiary; or (iii)
the Company, any other Loan Party or any Material Subsidiary acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; or

     (h)  ERISA.  (i) An ERISA Event shall occur with respect to a Pension Plan
or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Company under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $50,000,000;
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $50,000,000; or (iii) the Company or any ERISA Affiliate
shall fail to pay when due, after the expiration of any applicable grace
period, any installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $50,000,000; or

     (i)  Monetary Judgments.  One or more non-interlocutory judgments,
non-interlocutory orders, non-interlocutory decrees or arbitration awards is
entered against the Company, any other Loan Party or any Material Subsidiary
involving in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage) as to any single or related series of transactions, incidents or
conditions, of $50,000,000 or more, and the same shall not have been vacated,
discharged, stayed or appealed within the applicable period for appeal from the
date of entry thereof or paid within ten Business Days after the same becomes
non-appealable; or

     (j)  Non-Monetary Judgments.  Any non-monetary judgment, order or decree
is entered against the Company, any other Loan Party or any Subsidiary which
has or would reasonably be expected to have a Material Adverse Effect; or

     (k)  Change of Control.  There occurs any Change of Control. For purposes
of this Section 8.01(k), a "Change of Control" shall occur if any Person
(including any syndicate or group deemed to be a "person" under Section
13(d)(3) of the Exchange Act), other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any Family Member, is or
becomes the beneficial owner, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of transactions, of shares of
capital stock of the Company entitling such Person to exercise 25% (or, if
greater, the aggregate percentage held by the Family Members) or more of the
total voting power of all shares of capital stock of the Company entitled to
vote generally in the election of directors. "Family Member" means (i) any of
Leonard H. Lavin, Bernice E. Lavin, Carol L. Bernick, Howard B. Bernick, their
estates, their respective descendants or spouses, trusts for their benefit or
Persons Controlled by any of the foregoing and (ii) any syndicate or group
deemed to be a "person" under Section 13(d)(3) of the Exchange Act which is
Controlled by any person or entity referred to in clause (i); or

     (l)  Invalidity of Loan Documents.  Any Loan Document (including the
Guarantee provided by the Company pursuant to Section 2.14), at any time after
its execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder or satisfaction in full of all the Obligations, ceases
to be in full force and effect; or any Loan Party affirmatively asserts the
invalidity of any Loan Document.

8.02    Remedies Upon Event of Default.

     If any Event of Default occurs and is continuing, the Administrative Agent
shall, at the request of, or may, with the consent of, the Required Lenders,
take any or all of the following actions:

                                      52



        (a)  declare the Commitment of each Lender to make Loans to be
     terminated, whereupon such Commitments shall be terminated;

        (b)  declare the unpaid principal amount of all outstanding Loans, all
     interest accrued and unpaid thereon, and all other amounts owing or
     payable hereunder or under any other Loan Document to be immediately due
     and payable, without presentment, demand, protest or other notice of any
     kind, all of which are hereby expressly waived by the Loan Parties; and

        (c)  exercise on behalf of itself and the Lenders all rights and
     remedies available to it and the Lenders under the Loan Documents or
     applicable law;

provided, however, that upon the occurrence of an Event of Default specified in
Section 8.01(f) or (g), the obligation of each Lender to make Loans shall
automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically
become due and payable, in each case without further act of the Administrative
Agent or any Lender.

Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agent, each Lender has, to the extent permitted by law, a
separate right of payment and shall be considered a separate "creditor" holding
a separate "claim" within the meaning of Section 101(5) of the United States
Bankruptcy Code or any other insolvency statute.

8.03   Application of Funds.

     After the exercise of remedies provided for in Section 8.02 (or after the
Loans have automatically become immediately due and payable), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:

     First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs and amounts
payable under Article III) payable to the Administrative Agent in its capacity
as such;

     Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to
the Lenders (including Attorney Costs and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second
payable to them;

     Third, to payment of that portion of the Obligations constituting accrued
and unpaid interest on the Loans, ratably among the Lenders in proportion to
the respective amounts described in this clause Third payable to them;

     Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Fourth held by them; and

     Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Company or as otherwise required by Law.

                                      53



                                  ARTICLE IX
                             ADMINISTRATIVE AGENT

9.01    Appointment and Authorization of Administrative Agent.

     Each Lender hereby irrevocably appoints, designates and authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" herein and in the other Loan
Documents with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable Law. Instead, such term is used merely as a matter
of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.

9.02    Delegation of Duties.

     The Administrative Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects in the absence of gross
negligence or willful misconduct.

9.03   Liability of Administrative Agent.

     No Agent-Related Person shall (a) be liable to any Lender or Participant
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein), or (b) be
responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by any Loan Party or any officer
thereof, contained herein or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of any Loan Party or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender or participant to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party or any Affiliate thereof.

9.04   Reliance by Administrative Agent.

       (a)  The Administrative Agent shall be entitled to rely, and shall be
    fully protected in relying, upon any writing,  communication, signature,
    resolution, representation, notice, consent,

                                      54



    certificate, affidavit, letter, telegram, facsimile, telex or telephone
    message, electronic mail message, statement or other document or
    conversation believed by it to be genuine and correct and to have been
    signed, sent or made by the proper Person or Persons, and upon advice and
    statements of legal counsel (including counsel to any Loan Party),
    independent accountants and other experts selected by the Administrative
    Agent. The Administrative Agent shall be fully justified in failing or
    refusing to take any action under any Loan Document unless it shall first
    receive such advice or concurrence of the Required Lenders as it deems
    appropriate and, if it so requests, it shall first be indemnified to its
    satisfaction by the Lenders against any and all liability and expense which
    may be incurred by it by reason of taking or continuing to take any such
    action. The Administrative Agent shall in all cases be fully protected in
    acting, or in refraining from acting, under this Agreement or any other
    Loan Document in accordance with a request or consent of the Required
    Lenders (or such greater number of Lenders as may be expressly required
    hereby in any instance) and such request and any action taken or failure to
    act pursuant thereto shall be binding upon all the Lenders.

       (b)  For purposes of determining compliance with the conditions
    specified in Section 4.01, each Lender that has signed this Agreement shall
    be deemed to have consented to, approved or accepted or to be satisfied
    with, each document or other matter required thereunder to be consented to
    or approved by or acceptable or satisfactory to a Lender unless the
    Administrative Agent shall have received notice from such Lender prior to
    the proposed Closing Date specifying its objection thereto.

9.05  Notice of Default.

    The Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default, except with respect to defaults in the payment
of principal, interest and fees required to be paid to the Administrative Agent
for the account of the Lenders, unless the Administrative Agent shall have
received written notice from a Lender or the Company referring to this
Agreement, describing such Default and stating that such notice is a "notice of
default." The Administrative Agent will notify the Lenders of its receipt of
any such notice. The Administrative Agent shall take such action with respect
to such Default as may be directed by the Required Lenders in accordance with
Article VIII; provided, however, that unless and until the Administrative Agent
has received any such direction, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable or in the best interest of
the Lenders.

9.06  Credit Decision; Disclosure of Information by Administrative Agent.

     Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereafter taken, including any consent to and acceptance of any assignment or
review of the affairs of any Loan Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Company and the other Loan Parties hereunder. Each
Lender also represents that it will, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action

                                      55



under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company and the other Loan Parties. Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Administrative Agent herein, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any of the Loan Parties or any of
their respective Affiliates which may come into the possession of any
Agent-Related Person.

9.07  Indemnification of Administrative Agent.

    Whether or not the transactions contemplated hereby are consummated, the
Lenders shall indemnify upon demand each Agent-Related Person (to the extent
not reimbursed by or on behalf of any Loan Party and without limiting the
obligation of any Loan Party to do so), pro rata, and hold harmless each
Agent-Related Person from and against any and all Indemnified Liabilities
incurred by it; provided, however, that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent-Related
Person's own gross negligence or willful misconduct; provided, however, that no
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of
this Section. Without limitation of the foregoing, each Lender shall reimburse
the Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Loan Parties. The undertaking in this Section shall survive termination of the
Aggregate Commitments, the payment of all other Obligations and the resignation
of the Administrative Agent.

9.08  Administrative Agent in its Individual Capacity.

    Bank of America and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in
and generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with each of the Loan Parties and their
respective Affiliates as though Bank of America were not the Administrative
Agent hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, Bank of America or its
Affiliates may receive information regarding any Loan Party or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of such Loan Party or such Affiliate) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information
to them. With respect to its Loans, Bank of America shall have the same rights
and powers under this Agreement as any other Lender and may exercise such
rights and powers as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" include Bank of America in its individual capacity.

9.09  Successor Administrative Agent.

    The Administrative Agent may, or at the request of the Company (so long as
no Default exists) shall, resign as Administrative Agent upon 30 days' notice
to the Lenders. If the Administrative Agent resigns under this Agreement, the
Company shall (unless a Default exists, in which case the Required Lenders
shall) appoint from among the Lenders a successor administrative agent for the
Lenders. If no

                                      56



successor administrative agent is appointed prior to the effective date of the
resignation of the Administrative Agent, the Administrative Agent may appoint,
after consulting with the Lenders and the Company, a successor administrative
agent from among the Lenders. Upon the acceptance of its appointment as
successor administrative agent hereunder, the Person acting as such successor
administrative agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term "Administrative Agent" shall mean
such successor administrative agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article IX and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is 30 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.

9.10  Administrative Agent May File Proofs of Claim.

    In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Loan Party, the Administrative Agent
(irrespective of whether the principal of any Loan shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Loan
Parties) shall be entitled and empowered, by intervention in such proceeding or
otherwise

      (a)  to file and prove a claim for the whole amount of the principal and
   interest owing and unpaid in respect of the Loans and all other Obligations
   that are owing and unpaid and to file such other documents as may be
   necessary or advisable in order to have the claims of the Lenders and the
   Administrative Agent (including any claim for the reasonable compensation,
   expenses, disbursements and advances of the Lenders and the Administrative
   Agent and their respective agents and counsel and all other amounts due the
   Lenders and the Administrative Agent under Sections 2.09 and 10.04) allowed
   in such judicial proceeding; and

      (b)  to collect and receive any monies or other property payable or
   deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.09 and 10.04.

    Nothing contained herein shall be deemed to authorize the Administrative
Agent to authorize or consent to or accept or adopt on behalf of any Lender any
plan of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

                                      57



9.11    Other Agents; Arrangers and Managers.

      None of the Lenders or other Persons identified on the facing page or
signature pages of this Agreement as a "syndication agent," "documentation
agent," "co-agent," "book manager," "lead manager," "arranger," "lead arranger"
or "co-arranger" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than, in the case of such
Lenders, those applicable to all Lenders as such. Without limiting the
foregoing, none of the Lenders or other Persons so identified shall have or be
deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders
or other Persons so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.

                                   ARTICLE X
                                 MISCELLANEOUS

10.01  Amendments, Etc.

      No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent to any departure by the Company or any other Loan
Party therefrom, shall be effective unless in writing signed by the Required
Lenders (or by the Administrative Agent upon the written consent of the
Required Lenders) and the Company or the applicable Loan Party, as the case may
be, and received by the Administrative Agent, and each such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no such amendment, waiver or consent
shall:

      (a)  extend or increase the Commitment of any Lender (or reinstate any
   Commitment terminated pursuant to Section 8.02) without the written consent
   of such Lender;

      (b)  postpone any date fixed by this Agreement or any other Loan Document
   for any payment of principal, interest, fees or other material amounts due
   to the Lenders (or any of them) hereunder or under any other Loan Document
   without the written consent of each Lender directly affected thereby;

      (c)  reduce the principal of, or the rate of interest specified herein
   on, any Loan, or (subject to clause (iii) of the second proviso to this
   Section 10.01) any fees or other material amounts payable hereunder or under
   any other Loan Document without the written consent of each Lender directly
   affected thereby; provided, however, that only the consent of the Required
   Lenders shall be necessary to amend the definition of "Default Rate" or to
   waive any obligation of the Loan Parties to pay interest at the Default Rate;

      (d)  change Section 2.13 or Section 8.03 in a manner that would alter the
   pro rata sharing of payments required thereby without the written consent of
   each Lender directly affected thereby;

      (e)  change any provision of this Section or the definition of "Required
   Lenders" or any other provision hereof specifying the number or percentage
   of Lenders required to amend, waive or otherwise modify any rights hereunder
   or make any determination or grant any consent hereunder, without the
   written consent of each Lender;

                                      58



        (f)  amend the definition of "Permitted Foreign Currency" without the
   written consent of each Lender; or

        (g)  release the Company from its Guarantee pursuant to Section 2.14
   without the written consent of each Lender;

and, provided further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document; (ii) Section 10.07(h) may not be
amended, waived or otherwise modified without the consent of each Granting
Lender all or any part of whose Loans are being funded by an SPC at the time of
such amendment, waiver or other modification; and (iii) the Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed only
by the parties thereto. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder, except that the Commitment of such Lender may not
be increased or extended without the consent of such Lender.

   10.02  Notices and Other Communications; Facsimile Copies.

        (a)  General.  Unless otherwise expressly provided herein, all notices
   and other communications provided for hereunder shall be in writing
   (including by facsimile transmission). All such written notices shall be
   mailed, faxed or delivered to the applicable address, facsimile number or
   (subject to subsection (c) below) electronic mail address, and all notices
   and other communications expressly permitted hereunder to be given by
   telephone shall be made to the applicable telephone number, as follows:

            (i)  if to the Company or any other Loan Party or the
         Administrative Agent, to the address, facsimile number, electronic
         mail address or telephone number specified for such Person on Schedule
         10.02 or to such other address, facsimile number, electronic mail
         address or telephone number as shall be designated by such party in a
         notice to the other parties; and

            (ii)  if to any other Lender, to the address, facsimile number,
         electronic mail address or telephone number specified in its
         Administrative Questionnaire or to such other address, facsimile
         number, electronic mail address or telephone number as shall be
         designated by such party in a notice to the Company and the
         Administrative Agent.

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto
and (ii) (A) if delivered by hand or by courier, when signed for by or on
behalf of the relevant party hereto; (B) if delivered by mail, four Business
Days after deposit in the mails, postage prepaid; (C) if delivered by
facsimile, when sent and receipt has been confirmed by telephone; and (D) if
delivered by electronic mail (which form of delivery is subject to the
provisions of subsection (c) below), when delivered; provided, however, that
notices and other communications to the Administrative Agent pursuant to
Article II shall not be effective until actually received by such Person and
notices and other communications to the Company pursuant to Article VIII shall
not be effective until actually received by such Person. In no event shall a
voicemail message be effective as a notice, communication or confirmation
hereunder.

        (b)  Effectiveness of Facsimile Documents and Signatures.  Loan
   Documents may be transmitted and/or signed by facsimile. The effectiveness
   of any such documents and signatures shall, subject to applicable Law, have
   the same force and effect as manually-signed originals and shall be binding
   on all Loan Parties, the Administrative Agent and the Lenders. The

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     Administrative Agent may also require that any such documents and
     signatures be confirmed by a manually-signed original thereof; provided,
     however, that the failure to request or deliver the same shall not limit
     the effectiveness of any facsimile document or signature.

        (c)  Limited Use of Electronic Mail.  Electronic mail and Internet and
     intranet websites may be used only to distribute routine communications,
     such as financial statements and other information as provided in Section
     6.02, and to distribute Loan Documents for execution by the parties
     thereto, and may not be used for any other purpose.

        (d)  Reliance by Administrative Agent and Lenders.  The Administrative
     Agent and the Lenders shall be entitled to rely and act upon any notices
     (including telephonic Committed Loan Notices) purportedly given by a
     Responsible Officer of the Company or any other Loan Party even if (i)
     such notices were not made in a manner specified herein, were incomplete
     (except for Committed Loan Notices that are deemed invalid pursuant to
     Section 2.02) or were not preceded or followed by any other form of notice
     specified herein, or (ii) the terms thereof, as understood by the
     recipient, varied from any confirmation thereof. The Loan Parties shall
     indemnify each Agent-Related Person and each Lender from all losses,
     costs, expenses and liabilities resulting from the reliance by such Person
     on each notice purportedly given by or on behalf of the Loan Parties;
     provided that such indemnity shall not be available to the extent that
     such losses, costs, expenses and liabilities resulted from the gross
     negligence or willful misconduct of such Agent-Related Person or Lender.
     All telephonic notices to and other communications with the Administrative
     Agent may be recorded by the Administrative Agent, and each of the parties
     hereto hereby consents to such recording.

10.03  No Waiver; Cumulative Remedies.

     No failure by any Lender or the Administrative Agent to exercise, and no
delay by any such Person in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any other rights, remedies, powers and
privileges provided by law.

10.04  Attorney Costs, Expenses and Taxes.

     The Loan Parties agree (a) to pay or reimburse the Administrative Agent
for all reasonable out-of-pocket costs and expenses incurred in connection with
any amendment, waiver, consent or other modification of the provisions of this
Agreement or any other Loan Document, and the administration of the
transactions contemplated hereby and thereby, including all Attorney Costs but
excluding costs and expenses incurred in connection with transactions described
in Section 10.07 unless such transactions result from the Company's exercise of
its rights in Section 10.16, and (b) to pay or reimburse the Administrative
Agent and each Lender for all out-of-pocket costs and expenses incurred in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or the other Loan Documents (including
all such costs and expenses incurred during any "workout" or restructuring in
respect of the Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs. The
foregoing costs and expenses shall include all search, filing, recording, title
insurance and appraisal charges and fees and taxes (provided that the payment
of Taxes and Other Taxes shall be subject to Section 3.01) related thereto, and
other out-of-pocket expenses incurred by the Administrative Agent and the cost
of independent public accountants and other outside experts retained by the
Administrative Agent or any Lender. All amounts due under this Section 10.04
shall be payable within ten Business Days after written demand therefor.

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The agreements in this Section shall survive the termination of the Aggregate
Commitments and repayment of all other Obligations.

10.05  Indemnification.

     (a)  Whether or not the transactions contemplated hereby are consummated,
the Loan Parties shall indemnify and hold harmless each Agent-Related Person,
each Lender and their respective Affiliates, directors, officers, employees,
counsel, agents and attorneys-in-fact (collectively the "Indemnitees") from and
against any and all liabilities, obligations, losses, damages, penalties,
claims, demands, actions, judgments, suits, costs, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time be imposed on, incurred by or asserted against any such Indemnitee in any
way directly relating to or directly arising out of or directly in connection
with (i) the execution, delivery, enforcement, performance or administration of
any Loan Document or any other agreement, letter or instrument delivered in
connection with the transactions contemplated thereby or the consummation of
the transactions contemplated thereby, (ii) any Commitment or Loan or the use
or proposed use of the proceeds therefrom, or (iii) any actual or prospective
claim, litigation, investigation or proceeding directly relating to any of the
foregoing and brought by any Person other than an Indemnitee, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation
or proceeding) and regardless of whether any Indemnitee is a party thereto (all
the foregoing, collectively, the "Indemnified Liabilities"), in all cases,
whether or not caused by or arising, in whole or in part, out of the negligence
of the Indemnitee; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such liabilities, obligations,
losses, damages, penalties, claims, demands, actions, judgments, suits, costs,
expenses or disbursements have resulted from the gross negligence or willful
misconduct of such Indemnitee. No party hereto shall have any liability for any
indirect or consequential damages relating to this Agreement or any other Loan
Document or arising out of its activities in connection herewith or therewith
(whether before or after the Closing Date). All amounts due under this Section
10.05 shall be payable within ten Business Days after demand therefor and
receipt by the Company of reasonably appropriate supporting documentation
therefor. The agreements in this Section shall survive the resignation of the
Administrative Agent, the replacement of any Lender, the termination of the
Aggregate Commitments and the repayment, satisfaction or discharge of all the
other Obligations.

     (b)  An Indemnitee shall give prompt written notice to the Company of any
actual or prospective claim, litigation, investigation or proceeding that is,
in each case, commenced or asserted in writing and in respect of which
indemnification may be sought hereunder (a "Third Party Claim"), provided that
the omission to so notify the Company will not relieve a Loan Party from any
liability it may have under this Section 10.05 unless and to the extent the
Loan Party shall have been materially damaged by the delay in notification or
the failure to be notified. Each Indemnitee shall assist the Loan Parties in
the defense of any such Third Party Claim by providing reasonable access to the
Indemnitee or relevant officers, directors, employees and agents of the
Indemnitee, as the case may be, including for purposes of giving testimony, and
to relevant books and records of the Indemnitee. The indemnifying Loan Party
shall have the right to, and shall at the request of the Indemnitee,
participate in, and assume the defense of, any Third Party Claim at its own
expense using counsel mutually acceptable to the Indemnitee and such Loan
Party. In any such Third Party Claim which a Loan Party has participated in or
assumed the defense of, the Indemnitee shall have the right to retain separate
counsel, but the Attorney Costs of such counsel shall be at the expense of the
Indemnitee unless the named parties in such Third Party Claim (including any
impleaded parties) include both a Loan Party and the Indemnitee and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. No Loan Party shall be
liable under this Section 10.05 for any settlement of any Third Party Claim
effected without its consent.

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10.06  Payments Set Aside.

     To the extent that any payment by or on behalf of the any Loan Party is
made to the Administrative Agent or any Lender, or the Administrative Agent or
any Lender exercises its right of set-off, and such payment or the proceeds of
such set-off or any part thereof (or the Dollar Equivalent amount thereof) is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the
Administrative Agent or such Lender in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any proceeding under
any Debtor Relief Law or otherwise, then (a) to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such set-off had not occurred, and (b) each Lender severally agrees to
pay to the Administrative Agent upon demand its applicable share of any amount
so recovered from or repaid by the Administrative Agent, plus interest thereon
from the date of such demand to the date such payment is made at a rate per
annum equal to the Federal Funds Rate from time to time in effect, in the
applicable currency of such recovery or payment.

10.07  Successors and Assigns.

        (a)  The provisions of this Agreement shall be binding upon and inure
     to the benefit of the parties hereto and their respective successors and
     assigns permitted hereby, except that the Company may not assign or
     otherwise transfer any of its rights or obligations hereunder without the
     prior written consent of each Lender and no Lender may assign or otherwise
     transfer any of its rights or obligations hereunder except (i) to an
     Eligible Assignee in accordance with the provisions of subsection (b) of
     this Section, (ii) by way of participation in accordance with the
     provisions of subsection (d) of this Section, (iii) by way of pledge or
     assignment of a security interest subject to the restrictions of
     subsection (f) or (i) of this Section, or (iv) to an SPC in accordance
     with the provisions of subsection (h) of this Section (and any other
     attempted assignment or transfer by any party hereto shall be null and
     void). Nothing in this Agreement, expressed or implied, shall be construed
     to confer upon any Person (other than the parties hereto, their respective
     successors and assigns permitted hereby and, to the extent expressly
     contemplated hereby, the Indemnitees) any legal or equitable right, remedy
     or claim under or by reason of this Agreement.

        (b)  Any Lender may at any time assign to one or more Eligible
     Assignees all or a portion of its rights and obligations under this
     Agreement (including all or a portion of its Commitment and the Loans at
     the time owing to it); provided that (i) except in the case of an
     assignment of the entire remaining amount of the assigning Lender's
     Commitment and the Loans at the time owing to it or in the case of an
     assignment to a Lender or an Affiliate of a Lender, the aggregate amount
     of the Commitment (which for this purpose includes Loans outstanding
     thereunder) subject to each such assignment, determined as of the date the
     Assignment and Assumption with respect to such assignment is delivered to
     the Administrative Agent or, if "Trade Date" is specified in the
     Assignment and Assumption, as of the Trade Date, shall not be less than
     $5,000,000 unless each of the Administrative Agent and, so long as no
     Event of Default has occurred and is continuing, the Company otherwise
     consents (each such consent not to be unreasonably withheld or delayed);
     (ii) each partial assignment shall be made as an assignment of a
     proportionate part of all the assigning Lender's rights and obligations
     under this Agreement with respect to the Loans or the Commitment assigned,
     except that this clause (ii) shall not apply to rights in respect of Bid
     Loans; (iii) any assignment of a Commitment must be approved by the
     Administrative Agent (such approval not to be unreasonably withheld or
     delayed) unless the Person that is the proposed assignee is itself a
     Lender (whether or not the proposed assignee would otherwise qualify as an
     Eligible Assignee); and (iv) the parties to each assignment shall

                                      62



     execute and deliver to the Administrative Agent an Assignment and
     Assumption, together with a processing and recordation fee of $3,500.
     Subject to acceptance and recording thereof by the Administrative Agent
     pursuant to subsection (c) of this Section, from and after the effective
     date specified in each Assignment and Assumption, the Eligible Assignee
     thereunder shall be a party to this Agreement and, to the extent of the
     interest assigned by such Assignment and Assumption, have the rights and
     obligations of a Lender under this Agreement, and the assigning Lender
     thereunder shall, to the extent of the interest assigned by such
     Assignment and Assumption, be released from its obligations under this
     Agreement (and, in the case of an Assignment and Assumption covering all
     of the assigning Lender's rights and obligations under this Agreement,
     such Lender shall cease to be a party hereto but shall continue to be
     entitled to the benefits of Sections 3.01, 3.04, 3.05, 10.04 and 10.05
     with respect to facts and circumstances occurring prior to the effective
     date of such assignment). Upon request, the Loan Parties shall execute and
     deliver a Note to the assignee Lender. Any assignment or transfer by a
     Lender of rights or obligations under this Agreement that does not comply
     with this subsection shall be treated for purposes of this Agreement as a
     sale by such Lender of a participation in such rights and obligations in
     accordance with subsection (d) of this Section.

        (c)  The Administrative Agent, acting solely for this purpose as an
     agent of the Loan Parties, shall maintain at the Administrative Agent's
     Office a copy of each Assignment and Assumption delivered to it and a
     register for the recordation of the names and addresses of the Lenders,
     and the Commitments of, and principal amounts of the Loans owing to, each
     Lender pursuant to the terms hereof from time to time (the "Register").
     The entries in the Register shall be conclusive, and the Loan Parties, the
     Administrative Agent and the Lenders may treat each Person whose name is
     recorded in the Register pursuant to the terms hereof as a Lender
     hereunder for all purposes of this Agreement, notwithstanding notice to
     the contrary. The Register shall be available for inspection by the
     Company and any Lender, at any reasonable time and from time to time upon
     reasonable prior notice.

        (d)  Any Lender may at any time, without the consent of, or notice to,
     the Loan Parties or the Administrative Agent, sell participations to any
     Person (other than (1) a natural person, (2) the Company or any of the
     Company's Affiliates or Subsidiaries or (3) any competitor of the Company
     and its Subsidiaries) (each, a "Participant") in all or a portion of such
     Lender's rights and/or obligations under this Agreement (including all or
     a portion of its Commitment and/or the Loans owing to it); provided that
     (i) such Lender's obligations under this Agreement shall remain unchanged,
     (ii) such Lender shall remain solely responsible to the other parties
     hereto for the performance of such obligations and (iii) the Loan Parties,
     the Administrative Agent and the other Lenders shall continue to deal
     solely and directly with such Lender in connection with such Lender's
     rights and obligations under this Agreement.

        (e)  Any Lender may at any time pledge or assign a security interest in
     all or any portion of its rights under this Agreement (including under its
     Note, if any) to secure obligations to a Federal Reserve Bank; provided
     that no such pledge or assignment shall release such Lender from any of
     its obligations hereunder or substitute any such pledgee or assignee for
     such Lender as a party hereto.

        (f)  As used herein, the following term has the following meaning:

        "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender
     (which Affiliate is a commercial bank having capital of at least
     $100,000,000); and (c) any other Person (other than a natural person)
     approved in writing by (i) the Administrative Agent and (ii) unless an
     Event of Default has occurred and is continuing, the Company (each such
     approval not to be unreasonably

                                      63



     withheld or delayed); provided that notwithstanding the foregoing,
     "Eligible Assignee" shall not include (1) the Company or any of the
     Company's Affiliates or Subsidiaries or (2) any competitor of the Company
     and its Subsidiaries.

        (g)  Notwithstanding anything to the contrary contained herein, any
     Lender (a "Granting Lender") may grant to a special purpose funding
     vehicle identified as such in writing from time to time by the Granting
     Lender to the Administrative Agent and the Company (an "SPC") the option
     to provide all or any part of any Committed Loan that such Granting Lender
     would otherwise be obligated to make pursuant to this Agreement; provided
     that (i) nothing herein shall constitute a commitment by any SPC to fund
     any Committed Loan, and (ii) if an SPC elects not to exercise such option
     or otherwise fails to make all or any part of such Committed Loan, the
     Granting Lender shall be obligated to make such Committed Loan pursuant to
     the terms hereof. Each party hereto hereby agrees that (i) neither the
     grant to any SPC nor the exercise by any SPC of such option shall increase
     the costs or expenses or otherwise increase or change the obligations of
     the Loan Parties under this Agreement (including its obligations under
     Section 3.04), (ii) no SPC shall be liable for any indemnity or similar
     payment obligation under this Agreement for which a Lender would be
     liable, and (iii) the Granting Lender shall for all purposes, including
     the approval of any amendment, waiver or other modification of any
     provision of any Loan Document, remain the lender of record hereunder. The
     making of a Committed Loan by an SPC hereunder shall utilize the
     Commitment of the Granting Lender to the same extent, and as if, such
     Committed Loan were made by such Granting Lender. In furtherance of the
     foregoing, each party hereto, solely in its capacity as such, hereby
     agrees (which agreement shall survive the termination of this Agreement)
     that, prior to the date that is one year and one day after the payment in
     full of all outstanding commercial paper or other senior debt of any SPC,
     it will not institute against, or join any other Person in instituting
     against, such SPC any bankruptcy, reorganization, arrangement, insolvency,
     or liquidation proceeding under the laws of the United States or any State
     thereof. Notwithstanding anything to the contrary contained herein, any
     SPC may (i) with notice to, but without prior consent of the Company and
     the Administrative Agent and with the payment of a processing fee of
     $3,500, assign all or any portion of its right to receive payment with
     respect to any Committed Loan to the Granting Lender and (ii) disclose on
     a confidential basis any non-public information relating to its funding of
     Committed Loans to any rating agency, commercial paper dealer or provider
     of any surety or Guarantee or credit or liquidity enhancement to such SPC.
     The Granting Lender shall indemnify the Loan Parties from any losses,
     costs or expenses directly arising out of or directly resulting from the
     use of an SPC as contemplated by this Section 10.07(g).

10.08  Confidentiality.

     Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors on a
need-to-know basis (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential); (b) to the
extent requested by any regulatory authority to which the Administrative Agent
or a Lender is subject; (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, provided that the
Administrative Agent or such Lender will promptly notify the Company of any
such required disclosure and shall cooperate with the Company, at the Company's
expense, in obtaining a suitable order protecting the confidentiality of such
information; (d) to any other

                                      64



party to this Agreement; (e) to the extent reasonably necessary in connection
with the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or the enforcement of rights hereunder; (f) subject
to an agreement containing provisions substantially the same as those of this
Section, to any Person (other than a competitor of the Company and its
Subsidiaries that is (i) an Eligible Assignee of or Participant in, or a
prospective Eligible Assignee of or Participant in, any of its rights or
obligations under this Agreement or (ii) a direct or indirect contractual
counterparty or prospective counterparty (or such contractual counterparty's or
prospective counterparty's professional advisor) to any credit derivative
transaction relating to obligations of the Loan Parties; (g) with the prior
written consent of the Company; or (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section
or (ii) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Company. In addition, the
Administrative Agent and the Lenders may disclose the existence of this
Agreement and information about this Agreement to market data collectors,
similar service providers to the lending industry, and service providers to the
Administrative Agent and the Lenders in connection with the administration and
management of this Agreement, the other Loan Documents, the Commitments, and
the Borrowings. For the purposes of this Section, "Information" means all
information received from any Loan Party relating to any Loan Party or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by any Loan Party; provided that, in the case of information
received from a Loan Party after the date hereof, such information is clearly
identified in writing at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

10.09  Set-off.

     In addition to any rights and remedies of the Lenders provided by law,
upon the occurrence and during the continuance of any Event of Default, each
Lender is authorized at any time and from time to time, without prior notice to
the Company or any other Loan Party, any such notice being waived by the
Company (on its own behalf and on behalf of each Loan Party) to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the respective Loan Parties against any and all Obligations owing to
such Lender hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not the Administrative Agent or such
Lender shall have made demand under this Agreement or any other Loan Document
and although such Obligations may be contingent or unmatured or denominated in
a currency different from that of the applicable deposit or indebtedness. Each
Lender agrees promptly to notify the Company and the Administrative Agent after
any such set-off and application made by such Lender; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application.

10.10  Interest Rate Limitation.

     Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not
exceed the maximum rate of non-usurious interest permitted by applicable Law
(the "Maximum Rate"). If the Administrative Agent or any Lender shall receive
interest in an amount that exceeds the Maximum Rate, the excess interest shall
be applied to the principal of the Loans or, if it exceeds such unpaid
principal, refunded to the Loan Parties. In determining whether the interest
contracted for, charged, or received by the Administrative Agent or a Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread

                                      65



in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.

10.11  Counterparts.

     This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

10.12  Integration.

     This Agreement, together with the other Loan Documents, comprises the
complete and integrated agreement of the parties on the subject matter hereof
and thereof and supersedes all prior agreements, written or oral, on such
subject matter. In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or
remedies in favor of the Administrative Agent or the Lenders in any other Loan
Document shall not be deemed a conflict with this Agreement. Each Loan Document
was drafted with the joint participation of the respective parties thereto and
shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.

10.13  Survival of Representations and Warranties.

     All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery
hereof and thereof. Such representations and warranties have been or will be
relied upon by the Administrative Agent and each Lender, regardless of any
investigation made by the Administrative Agent or any Lender or on their behalf
and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default at the time of any Borrowing, and shall
continue in full force and effect as long as any Loan or any other Obligation
hereunder shall remain unpaid or unsatisfied.

10.14  Severability.

     If any provision of this Agreement or the other Loan Documents is held to
be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan
Documents shall not be affected or impaired thereby and (b) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

10.15  Tax Forms.

         (a)  (i)  Each Lender that is not a "United States person" within the
         meaning of Section 7701(a)(30) of the Code (a "Foreign Lender") shall
         deliver to the Administrative Agent, prior to receipt of any payment
         subject to withholding under the Code (or upon accepting an assignment
         of an interest herein), two true and accurate duly signed completed
         copies of either IRS Form W-8BEN or any successor thereto (relating to
         such Foreign Lender and entitling it to an exemption from U.S.
         withholding tax on all payments to be made to such Foreign Lender by a
         Loan Party pursuant to this Agreement) or IRS Form W-8ECI or any
         successor thereto (relating to all payments to be made to such Foreign
         Lender by a Loan Party pursuant to this Agreement) or such other

                                      66



         evidence satisfactory to the Company and the Administrative Agent that
         such Foreign Lender is entitled to an exemption from U.S. withholding
         tax on all payments of principal, interest, and other amounts owing
         under this Agreement or any of the Loan Documents, including any
         exemption pursuant to Section 881(c) of the Code. Thereafter and from
         time to time, each such Foreign Lender shall (a) promptly submit to
         the Administrative Agent such additional duly completed and signed
         copies of one of such forms (or such successor forms as shall be
         adopted from time to time by the relevant United States taxing
         authorities) as may then be available under then current United States
         laws and regulations to avoid, or such evidence as is satisfactory to
         the Company and the Administrative Agent of any available exemption
         from or reduction of, United States withholding taxes in respect of
         all payments to be made to such Foreign Lender by the Loan Parties
         pursuant to this Agreement, (b) promptly notify the Administrative
         Agent of any change in circumstances which would modify or render
         invalid any previously claimed exemption or reduction, and (c) take
         such steps as shall not be materially disadvantageous to it, in the
         reasonable judgment of such Lender, and as may be reasonably necessary
         (including the re-designation of its Lending Office) to avoid any
         requirement of applicable Laws that the Loan Parties make any
         deduction or withholding for taxes from amounts payable to such
         Foreign Lender.

            (ii) Each Foreign Lender, to the extent it does not act or ceases
         to act for its own account with respect to any portion of any sums
         paid or payable to such Lender under any of the Loan Documents (for
         example, in the case of a typical participation by such Lender), shall
         deliver to the Administrative Agent on the date when such Foreign
         Lender ceases to act for its own account with respect to any portion
         of any such sums paid or payable, and at such other times as may be
         necessary in the determination of the Administrative Agent (in the
         reasonable exercise of its discretion), (a) two true and accurate duly
         signed completed copies of the forms or statements required to be
         provided by such Lender as set forth above, to establish the portion
         of any such sums paid or payable with respect to which such Lender
         acts for its own account that is not subject to U.S. withholding tax,
         and (b) two true and accurate duly signed completed copies of IRS Form
         W-8IMY (or any successor thereto), together with any information such
         Lender chooses to transmit with such form, and any other certificate
         or statement of exemption required under the Code, to establish that
         such Lender is not acting for its own account with respect to a
         portion of any such sums payable to such Lender.

            (iii) The Loan Parties shall not be required to pay any additional
         amount to any Foreign Lender under Section 3.01 (a) with respect to
         any Taxes required to be deducted or withheld on the basis of the
         information, certificates or statements of exemption such Lender
         transmits with an IRS Form W-8IMY pursuant to this Section 10.15(a) or
         (b) if such Lender shall have failed to satisfy the foregoing
         provisions of this Section 10.15(a); provided that if such Lender
         shall have satisfied the requirement of this Section 10.15(a) on the
         date such Lender became a Lender or ceased to act for its own account
         with respect to any payment under any of the Loan Documents, nothing
         in this Section 10.15(a) shall relieve the Loan Parties of their
         obligations to pay any amounts pursuant to Section 3.01 in the event
         that, as a result of any change in any applicable law, treaty or
         governmental rule, regulation or order, or any change in the
         interpretation, administration or application thereof, such Lender is
         no longer properly entitled to deliver forms, certificates or other
         evidence at a subsequent date establishing the fact that such Lender
         or other Person for the account of which such Lender receives any sums
         payable under any of the Loan Documents is not subject to withholding
         or is subject to withholding at a reduced rate.

                                      67



            (iv) The Administrative Agent may, without reduction, withhold any
         Taxes required to be deducted and withheld from any payment under any
         of the Loan Documents with respect to which the Loan Parties are not
         required to pay additional amounts under this Section 10.15(a).

        (b)  Upon the request of the Administrative Agent, each Lender that is
     a "United States person" within the meaning of Section 7701(a)(30) of the
     Code shall deliver to the Administrative Agent two true and accurate duly
     signed completed copies of IRS Form W-9. If such Lender fails to deliver
     such forms, then the Administrative Agent may withhold from any interest
     payment to such Lender an amount equivalent to the applicable back-up
     withholding tax imposed by the Code, without reduction.

        (c)  If any Governmental Authority asserts that the Administrative
     Agent or the Company did not properly withhold or backup withhold, as the
     case may be, any tax or other amount from payments made to or for the
     account of any Lender, such Lender shall indemnify the Administrative
     Agent or the Company, as the case may be, therefor, including all
     penalties and interest, any taxes imposed by any jurisdiction on the
     amounts payable to the Administrative Agent under this Section, and costs
     and expenses (including Attorney Costs) of the Administrative Agent or the
     Company, as the case may be. The obligation of the Lenders under this
     Section shall survive the termination of the Aggregate Commitments,
     repayment of all other Obligations hereunder and the resignation of the
     Administrative Agent.

10.16  Replacement of Lenders.

     Under any circumstances set forth herein providing that the Company shall
have the right to replace a Lender as a party to this Agreement, the Company
may, upon notice to such Lender and the Administrative Agent, replace such
Lender by causing such Lender to assign its Commitment (with the assignment fee
to be paid by the Company in such instance) pursuant to Section 10.07(b) to one
or more other Lenders or Eligible Assignees procured by the Company; provided,
however, that if the Company elects to exercise such right with respect to any
Lender pursuant to Section 3.06(b), it shall be obligated to replace all
Lenders that have made similar requests for compensation pursuant to Section
3.01 or 3.04. The Loan Parties shall (y) pay in full all principal, interest,
fees and other amounts owing to such Lender through the date of replacement
(including any amounts payable pursuant to Section 3.05), and (z) release such
Lender from its obligations under the Loan Documents. Any Lender being replaced
shall execute and deliver an Assignment and Assumption with respect to such
Lender's Commitment and outstanding Loans.

10.17  Governing Law.

        (a)  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
     WITH, THE LAW OF THE STATE OF ILLINOIS APPLICABLE TO AGREEMENTS MADE AND
     TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE
     ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER
     FEDERAL LAW.

        (b)  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
     ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
     ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF SUCH STATE,
     AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY, THE
     ADMINISTRATIVE AGENT AND EACH

                                      68



     LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
     NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH LOAN PARTY, THE
     ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION,
     INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
     FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING
     OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN
     DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH LOAN PARTY, THE
     ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY
     SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
     PERMITTED BY THE LAW OF SUCH STATE.

        (c)  EACH BORROWING SUBSIDIARY WHICH IS NOT INCORPORATED OR ORGANIZED
     UNDER THE LAWS OF ANY STATE OF THE UNITED STATES OF AMERICA OR THE
     DISTRICT OF COLUMBIA HEREBY IRREVOCABLY APPOINTS THE COMPANY, WITH AN
     ADDRESS ON THE DATE HEREOF AS SPECIFIED ON SCHEDULE 10.02 (OR SUCH OTHER
     PERSONS AS MAY FROM TIME TO TIME BE IDENTIFIED TO THE ADMINISTRATIVE AGENT
     IN WRITING AND IS DEEMED SATISFACTORY TO THE ADMINISTRATIVE AGENT) AS ITS
     TRUE AND LAWFUL ATTORNEY-IN-FACT (THE "SERVICE OF PROCESS AGENT") IN ITS
     NAME, PLACE AND STEAD TO ACCEPT SERVICE OF ANY AND ALL WRITS, SUMMONS AND
     OTHER LEGAL PROCESS AND ANY SUCH ENFORCEMENT PROCEEDING BROUGHT IN THE
     STATE OF ILLINOIS AND AGREES THAT SERVICE BY THE MAILING, OF COPIES
     THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE
     ADDRESS FOR NOTICES PURSUANT TO SECTION 10.02, SUCH SERVICE TO BECOME
     EFFECTIVE 30 DAYS AFTER SUCH MAILING, OF ANY ENFORCEMENT PROCEEDING MAY BE
     MADE UPON SUCH SERVICE OF PROCESS AGENT AND THAT IT WILL TAKE SUCH ACTION
     AS NECESSARY TO CONTINUE SUCH APPOINTMENT IN FULL FORCE AND EFFECT OR TO
     APPOINT ANOTHER SUCH SERVICE OF PROCESS AGENT SATISFACTORY TO THE
     ADMINISTRATIVE AGENT FOR SERVICE OF PROCESS. THE COMPANY HEREBY
     IRREVOCABLY ACCEPTS SUCH APPOINTMENT AND AGREES TO SERVE IN THE CAPACITY
     OF SERVICE OF PROCESS AGENT.

10.18  Waiver of Right to Trial by Jury.

     EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN
DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

                                      69



10.19  Judgment Currency.

     If, for the purposes of obtaining judgment in any court, it is necessary
to convert a sum due hereunder or any other Loan Document in one currency into
another currency, the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the first currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of the Loan
Parties in respect of any such sum due from them to the Administrative Agent or
the Lenders hereunder or under the other Loan Documents shall, notwithstanding
any judgment in a currency (the "Judgment Currency") other than that in which
such sum is denominated in accordance with the applicable provisions of this
Agreement (the "Agreement Currency"), be discharged only to the extent that on
the Business Day following receipt by the Administrative Agent of any sum
adjudged to be so due in the Judgment Currency, the Administrative Agent may in
accordance with normal banking procedures purchase the Agreement Currency with
the Judgment Currency. If the amount of the Agreement Currency so purchased is
less than the sum originally due to the Administrative Agent from the Loan
Parties in the Agreement Currency, the Loan Parties agree, as a separate
obligation and notwithstanding any such judgment, to indemnify the
Administrative Agent or the Person to whom such obligation was owing against
such loss. If the amount of the Agreement Currency so purchased is greater than
the sum originally due to the Administrative Agent in such currency, the
Administrative Agent agrees to return the amount of any excess to the Loan
Parties (or to any other Person who may be entitled thereto under applicable
law).

10.20  Subordination of Intercompany Indebtedness.

     The Loan Parties hereby agree that all intercompany Indebtedness owing
from the Company to any Borrowing Subsidiary (whether now existing or hereafter
created) is hereby subordinated to the payment in full of the Obligations. The
Company shall be permitted to make payments with respect to such Indebtedness
other than during the existence of a Default.

                                      70



   IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

                                         
COMPANY:                                    ALBERTO-CULVER COMPANY

                                            By:
                                                   ----------------------------------
                                            Name:
                                                   ----------------------------------
                                            Title:
                                                   ----------------------------------

BORROWING SUBSIDIARIES:                     ALBERTO-CULVER USA, INC.

                                            SALLY BEAUTY COMPANY, INC.

                                            BEAUTY SYSTEMS GROUP, INC.

                                            By:
                                                   ----------------------------------
                                            Name:
                                                   ----------------------------------
                                            Title:
                                                   ----------------------------------









                                           BANK OF AMERICA, N.A., as
                                           Administrative Agent

                                           By:
                                                  -----------------------------
                                           Name:
                                                  -----------------------------
                                           Title:
                                                  -----------------------------




                                           BANK OF AMERICA, N.A., as a Lender

                                           By:
                                                  -----------------------------
                                           Name:
                                                  -----------------------------
                                           Title:
                                                  -----------------------------



                                           BANK ONE, NA, as a Lender

                                           By:
                                                  -----------------------------
                                           Name:
                                                  -----------------------------
                                           Title:
                                                  -----------------------------



                                           LASALLE BANK NATIONAL ASSOCIATION,
                                           as a Lender

                                           By:
                                                  -----------------------------
                                           Name:
                                                  -----------------------------
                                           Title:
                                                  -----------------------------



                                           CITIBANK, NA, as a Lender

                                           By:
                                                  -----------------------------
                                           Name:
                                                  -----------------------------
                                           Title:
                                                  -----------------------------

EX-13

Consolidated Statements of Earnings

Alberto-Culver Company and Subsidiaries

	Year ended September 30,
	2002		2001	2000
(In thousands, except per share data)
Net sales	$	2,650,976	2,379,117	2,137,737
Cost of products sold		1,356,530	1,228,509	1,120,079
Gross profit		1,294,446	1,150,608	1,017,658
Advertising, marketing, selling and administrative		1,060,018	961,542	853,425
Non-recurring gain (note 9)		—	—	(9,257	)
Operating earnings		234,428	189,066	173,490
Interest expense, net of interest income of $3,377 in 2002, $5,479 in 2001 and $4,538 in 2000		22,636	21,830	19,209
Earnings before provision for income taxes		211,792	167,236	154,281
Provision for income taxes		74,127	56,860	51,097
Net earnings	$	137,665	110,376	103,184
Net earnings per share:
Basic	$	2.40	1.96	1.85
Diluted	$	2.32	1.91	1.83

See accompanying notes to consolidated financial statements.

Consolidated Balance Sheets

Alberto-Culver Company and Subsidiaries

	September 30,
	2002			2001
(In thousands, except share data)
Assets
Current assets:
Cash and cash equivalents	$	217,485		201,970
Short-term investments		—		869
Receivables, less allowance for doubtful accounts of     $17,550 in 2002 and $11,387 in 2001 (note 3)		209,010		169,657
Inventories:
Raw materials		39,932		41,521
Work-in-process		5,545		4,782
Finished goods		476,731		432,008
Total inventories		522,208		478,311
Other current assets		35,514		26,142
Total current assets		984,217		876,949
Property, plant and equipment:
Land		12,981		13,593
Buildings and leasehold improvements		166,700		151,306
Machinery and equipment		339,338		306,958
Total property, plant and equipment		519,019		471,857
Accumulated depreciation		271,169		236,035
Property, plant and equipment, net		247,850		235,822
Goodwill, net		343,431		264,339
Trade names, net		79,681		79,532
Other assets		74,312		59,859
Total assets	$	1,729,491		1,516,501
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings	$	2,513		2,482
Current maturities of long-term debt		1,189		404
Accounts payable		233,942		191,410
Accrued expenses		208,311		165,525
Income taxes		14,492		30,482
Total current liabilities		460,447		390,303
Long-term debt		320,181		321,183
Deferred income taxes		38,337		39,086
Other liabilities		48,067		29,920
Stockholders’ equity:
Common stock, par value $.22 per share:
Class A authorized 75,000,000 shares; 30,612,798 shares     issued at September 30, 2002 and 2001		6,735		6,735
Class B authorized 75,000,000 shares; 37,710,655 shares     issued at September 30, 2002 and 2001		8,296		8,296
Additional paid-in capital		205,470		190,368
Retained earnings		897,106		779,792
Unearned compensation		(5,849	)	(4,826	)
Accumulated other comprehensive income – foreign currency translation		(77,603	)	(61,284	)
		1,034,155		919,081
Less treasury stock, at cost (Class A common stock: 2002 – 4,765,673 shares and     2001 – 6,741,946 shares; Class B common stock: 2002 – 5,379,015 shares     and 2001 – 4,753,184 shares)		(171,696	)	(183,072	)
Total stockholders’ equity		862,459		736,009
Total liabilities and stockholders’ equity	$	1,729,491		1,516,501

See accompanying notes to consolidated financial statements.

2

Consolidated Statements of Cash Flows

Alberto-Culver Company and Subsidiaries

	Year ended September 30,
	2002			2001		2000
(In thousands)
Cash Flows from Operating Activities:
Net earnings	$	137,665		110,376		103,184
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		43,415		37,315		36,575
Amortization of goodwill, trade names and other assets		3,799		14,090		13,063
Non-recurring gain		—		—		(9,257	)
Deferred income taxes		(6,011	)	738		73
Cash effects of changes in (exclusive of acquisitions):
Receivables, net		9,668		(14,582	)	(9,612	)
Inventories		(20,286	)	(28,246	)	(5,056	)
Other current assets		(1,913	)	43		(3,236	)
Accounts payable and accrued expenses		66,050		37,771		(3,085	)
Income taxes		(7,128	)	14,541		1,655
Other assets		(6,654	)	(6,713	)	(4,644	)
Other liabilities		13,088		(128	)	(530	)
Net cash provided by operating activities		231,693		165,205		119,130
Cash Flows from Investing Activities:
Short-term investments		881		(538	)	1,538
Capital expenditures		(55,464	)	(36,752	)	(37,527	)
Payments for purchased businesses, net of acquired companies’ cash		(110,133	)	(18,791	)	(144,832	)
Proceeds from sale of trademark		—		—		10,000
Proceeds from disposals of assets		6,002		1,340		3,172
Net cash used by investing activities		(158,714	)	(54,741	)	(167,649	)
Cash Flows from Financing Activities:
Short-term borrowings		(2	)	(1,073	)	464
Proceeds from issuance of long-term debt		177		42		308,508
Debt issuance costs		—		—		(1,544	)
Repayments of long-term debt		(398	)	(20,512	)	(189,028	)
Termination of interest rate swap		2,772		—		—
Proceeds from sale of accounts receivable		—		—		5,000
Repurchase of previously sold accounts receivable		(40,000	)	—		—
Proceeds from exercise of stock options		36,771		15,490		2,712
Cash dividends paid		(20,351	)	(18,215	)	(16,182	)
Stock purchased for treasury		(35,650	)	(1,348	)	(3,460	)
Net cash provided (used) by financing activities		(56,681	)	(25,616	)	106,470
Effect of foreign exchange rate changes on cash		(783	)	2,485		755
Net increase in cash and cash equivalents		15,515		87,333		58,706
Cash and cash equivalents at beginning of year		201,970		114,637		55,931
Cash and cash equivalents at end of year	$	217,485		201,970		114,637
Supplemental Cash Flow Information:
Cash paid for:
Interest	$	26,704		27,673		16,687
Income taxes	$	86,225		40,659		48,711
Non-cash investing activities:
Issuance of Class A common shares for acquisition	$	10,010		—		1,959

See accompanying notes to consolidated financial statements.

3

Consolidated Statements of Stockholders’ Equity

Alberto-Culver Company and Subsidiaries

	Number of Shares						Dollars
	Common Stock Issued		Treasury Stock				Common Stock Issued		Additional Paid-in Capital		Retained Earnings		Unearned Compensation		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders’ Equity
	Class A	Class B	Class A		Class B		Class A	Class B
(In thousands)
Balance at September 30, 1999	30,613	37,711	(7,845	)	(4,753	)	$6,735	$8,296	$191,063		$600,629		$(3,040	)	$(31,160	)	$(206,743	)	$565,780
Comprehensive income (loss):
Net earnings											103,184								103,184
Foreign currency translation															(23,240	)			(23,240	)
Total comprehensive income (loss)											103,184				(23,240	)			79,944
Cash dividends											(16,182	)							(16,182	)
Stock options exercised			193						(1,048	)							4,169		3,121
Stock issued pursuant to employee     incentive plans			15						(19	)							317		298
Stock issued for acquisition			75						343								1,616		1,959
Restricted stock issued, net			101						(202	)			(2,104	)			2,183		(123	)
Restricted stock amortization													923						923
Stock purchased for treasury			(170	)													(3,460	)	(3,460	)
Balance at September 30, 2000	30,613	37,711	(7,631	)	(4,753	)	6,735	8,296	190,137		687,631		(4,221	)	(54,400	)	(201,918	)	632,260
Comprehensive income (loss):
Net earnings											110,376								110,376
Foreign currency translation															(6,884	)			(6,884	)
Total comprehensive income (loss)											110,376				(6,884	)			103,492
Cash dividends											(18,215	)							(18,215	)
Stock options exercised			850						(117	)							18,382		18,265
Stock issued pursuant to employee     incentive plans			17						65								371		436
Restricted stock issued, net			67						283				(1,819	)			1,441		(95	)
Restricted stock amortization													1,214						1,214
Stock purchased for treasury			(45	)													(1,348	)	(1,348	)
Balance at September 30, 2001	30,613	37,711	(6,742	)	(4,753	)	6,735	8,296	190,368		779,792		(4,826	)	(61,284	)	(183,072	)	736,009
Comprehensive income (loss):
Net earnings											137,665								137,665
Foreign currency translation															(16,319	)			(16,319	)
Total comprehensive income (loss)											137,665				(16,319	)			121,346
Cash dividends											(20,351	)							(20,351	)
Stock options exercised			1,820						8,596								39,468		48,064
Stock issued pursuant to employee     incentive plans			43						505								932		1,437
Stock issued for acquisition			221						5,076								4,934		10,010
Restricted stock issued, net			78						925				(2,705	)			1,692		(88	)
Restricted stock amortization													1,682						1,682
Stock purchased for treasury			(186	)	(626	)											(35,650	)	(35,650	)
Balance at September 30, 2002	30,613	37,711	(4,766	)	(5,379	)	$6,735	$8,296	$205,470		$897,106		$(5,849	)	$(77,603	)	$(171,696	)	$862,459

See accompanying notes to consolidated financial statements.

4

Notes to the Consolidated Financial Statements

Alberto-Culver Company and Subsidiaries

(1) Summary of Significant Accounting Policies

Principles of Consolidation and Use of Estimates

The consolidated financial statements include the accounts of Alberto-Culver Company and its subsidiaries (“company”). All significant intercompany accounts and transactions have been eliminated. Certain amounts for prior periods have been reclassified to conform to the current year’s presentation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements. Actual results may differ from these estimates. Management believes these estimates and assumptions are reasonable.

Financial Instruments

All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. These investments are stated at cost which approximates market value.

Short-term investments are stated at cost which approximates market value.

The carrying amounts of accounts receivable, accounts payable and short-term borrowings approximate fair value due to the short maturities of these financial instruments.

The fair value of long-term debt was approximately $336.9 million at September 30, 2002. Fair value estimates are calculated using the present value of the projected debt cash flows based on the current market interest rates of comparable debt instruments.

Allowance for Doubtful Accounts

The allowance for doubtful accounts requires management to estimate future amounts of receivables to be collected. Management records allowances for doubtful accounts based on historical collection statistics and current customer credit information.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or market (net realizable value). When necessary, the company provides allowances to adjust the carrying value of inventories to the lower of cost or market, including costs to sell or dispose, and for estimated inventory shrinkage. Estimates of the future demand for the company’s products, anticipated product re-launches, changes in formulas and packaging and reductions of stock-keeping units are key factors used by management in assessing the net realizable value of inventories. The company estimates inventory shrinkage based on historical experience.

Property, Plant and Equipment

Property, plant and equipment are carried at cost. Depreciation is recorded primarily on the straight-line method over the estimated useful lives of the respective classes of assets. Buildings and building improvements are depreciated over periods of 20-40 years. Leasehold improvements are depreciated over the lives of the related leases. The depreciation of machinery and equipment is over periods of 5-15 years. Expenditures for maintenance and repairs are expensed as incurred.

Goodwill and Trade Names

Prior to October 1, 2001, the cost of goodwill and trade names was amortized on a straight-line basis over periods ranging from ten to forty years. As required, the company implemented the Financial Accounting Standards Board’s (FASB) Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets,” for previously acquired intangibles and discontinued the amortization of goodwill effective October 1, 2001. In accordance with SFAS No. 142, the company determined that its trade names have indefinite lives and, therefore, ceased amortization of trade names effective October 1, 2001.

Goodwill and trade names are tested for impairment annually or more frequently if significant events or changes indicate possible impairment in accordance with the provisions of SFAS No. 142. For impairment testing purposes, fair values of reporting units are estimated based on the company’s best estimate of the present value of expected future cash flows and are compared with the corresponding carrying value of the reporting unit, including goodwill.

5

Notes to the Consolidated Financial Statements (continued)

Alberto-Culver Company and Subsidiaries

Foreign Currency Translation

Foreign currency balance sheet accounts are translated at the rates of exchange in effect at the balance sheet date. Results of operations are translated using the average exchange rates during the period.

Revenue Recognition

The company recognizes revenue on merchandise sold at the time products are shipped to customers. The company’s specialty distribution segment also recognizes revenue when a customer consummates a point-of-sale transaction in a store. Appropriate provisions for sales returns, cash discounts and doubtful accounts are made at the time sales are recorded.

Sales Incentives

Sales incentives primarily include trade promotion activities and consumer coupons. The company records accruals for sales incentives based on estimates of the ultimate cost of each program. The company tracks its commitments for sales incentive programs and, using historical experience, records an accrual at the end of each period for the estimated incurred, but unpaid, costs of these programs.

Shipping and Handling

Amounts invoiced to customers for shipping and handling are included in net sales with the related expense reported on the advertising, marketing, selling and administrative line of the consolidated statements of earnings.

Costs of Products Sold

The company’s consumer products segments include direct material costs and direct and indirect expenses incurred to manufacture products in cost of products sold. The company’s specialty distribution segment includes the cost of merchandise purchased from suppliers in the cost of products sold.

Advertising and Marketing

Advertising and marketing costs are expensed as incurred and amounted to $189.1 million, $179.0 million and $162.7 million in fiscal years 2002, 2001 and 2000, respectively.

Research and Development

Research and development costs are expensed as incurred and amounted to $9.8 million in 2002, $9.6 million in 2001 and $8.5 million in 2000.

Income Taxes

Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are estimated to be recovered or settled.

Weighted Average Shares Outstanding

The following table provides information about basic and diluted weighted average shares outstanding:

	2002	2001	2000
(In thousands)
Basic weighted average shares outstanding	57,380	56,176	55,790
Assumed exercise of stock options	1,457	1,299	564
Assumed vesting of restricted stock	377	363	—
Other	—	—	56
Diluted weighted average shares outstanding	59,214	57,838	56,410

No stock options were anti-dilutive in fiscal years 2002 or 2001. Stock options for 722,200 shares were excluded from the computation of diluted net earnings per share in fiscal year 2000 as the options’ exercise prices were greater than the average market price and, therefore, were anti-dilutive.

6

Notes to the Consolidated Financial Statements (continued)

Alberto-Culver Company and Subsidiaries

Stock-Based Compensation

The company uses the intrinsic method of accounting for its stock-based compensation plans.

New Accounting Standards

In November, 2001, the FASB’s Emerging Issues Task Force (EITF) released Issue No. 01-09, “Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor’s Products.” EITF No. 01-09 consolidates EITF No. 00-14, “Accounting for Certain Sales Incentives,” which addresses the recognition, measurement and income statement classification for various types of sales incentives including coupons, rebates and free products, and EITF No. 00-25, “Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor’s Products,” which addresses the income statement classification for various types of consideration paid by a vendor to a retailer. EITF No. 01-09 does not change the accounting treatment set forth by EITF Nos. 00-14 and 00-25. As required, the company adopted the provisions of EITF No. 01-09 in the first quarter of fiscal year 2002. In accordance with EITF No. 01-09, the company reclassified certain amounts for fiscal years 2001 and 2000 to conform to the current year’s presentation resulting in a $115.1 million reduction in net sales, an $11.1 million increase in cost of products sold and a $126.2 million decrease in promotion expense for fiscal year 2001 and a $109.4 million reduction in net sales, a $14.3 million increase in cost of products sold and a $123.7 million decrease in promotion expense for fiscal year 2000. Consolidated net earnings were not affected by these reclassifications.

In June, 2001, the FASB issued SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 addresses financial accounting and reporting for business combinations. SFAS No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets, requires companies to discontinue the amortization of goodwill and certain other intangible assets and requires an impairment test of existing goodwill and certain other intangible assets based on a fair value method. As required, the company adopted SFAS No. 141 in the fourth quarter of fiscal year 2001. The company also adopted SFAS No. 142 as required in the fourth quarter of fiscal year 2001 for new acquisitions and in the first quarter of fiscal year 2002 for previously acquired intangibles. In accordance with SFAS No. 142, the company determined that its trade names have indefinite lives and, therefore, the amortization of trade names was discontinued effective October 1, 2001. Based on the results of the company’s transitional impairment testing, no impairment of indefinite-lived trade names existed at October 1, 2001. In addition, as required by SFAS No. 142, the company ceased the amortization of goodwill effective October 1, 2001. In accordance with the adoption provisions of SFAS No. 142, the company has completed the required transitional goodwill impairment tests and has determined that goodwill was not impaired as of October 1, 2001, the date of adoption. Prospectively, goodwill and trade names will be reviewed for impairment at least annually, with ongoing recoverability monitored based on applicable reporting unit performance and consideration of significant events or changes in the overall business environment.

In accordance with SFAS No. 142, the consolidated statements of earnings for fiscal years 2001 and 2000 have not been restated for the effects of ceasing goodwill and trade name amortization. Had goodwill and trade name amortization been discontinued effective October 1, 1999, net earnings and net earnings per share for the fiscal years ended September 30, 2002, 2001 and 2000 would have been as follows:

	2002		2001	2000*
(In thousands, except per share data)
Reported net earnings	$	137,665	110,376	103,184
Elimination of goodwill and trade name amortization, net of income taxes		—	8,759	7,832
Pro-forma net earnings	$	137,665	119,135	111,016
Reported basic net earnings per share	$	2.40	1.96	1.85
Elimination of goodwill and trade name amortization, net of income taxes		—	.16	.14
Pro-forma basic net earnings per share	$	2.40	2.12	1.99
Reported diluted net earnings per share	$	2.32	1.91	1.83
Elimination of goodwill and trade name amortization, net of income taxes		—	.15	.14
Pro-forma diluted net earnings per share	$	2.32	2.06	1.97

* Fiscal year 2000 includes a non-recurring gain from the sale of a trademark. The non-recurring gain increased net earnings by $6.0 million and basic and diluted net earnings per share by 11 cents.

7

Notes to the Consolidated Financial Statements (continued)

Alberto-Culver Company and Subsidiaries

The change in the carrying amount of goodwill by operating segment for the fiscal year ended September 30, 2002 is as follows:

	Consumer Products					Specialty Distribution-Sally		Total
	North America			International
(In thousands)
Balance at September 30, 2001	$	69,379		79,648		115,312		264,339
Additions, net of purchase price adjustments		(214	)	—		92,240		92,026
Foreign currency translation effect		—		(12,906	)	(28	)	(12,934	)
Balance at September 30, 2002	$	69,165		66,742		207,524		343,431

Indefinite-lived trade names by operating segment at September 30, 2002 and 2001 are as follows:

	2002		2001
(In thousands)
Consumer products:
Alberto-Culver North America	$	45,414	45,414
Alberto-Culver International		30,145	33,857
Total consumer products		75,559	79,271
Specialty distribution - Sally		4,122	261
	$	79,681	79,532

(2) Accrued Expenses

Accrued expenses consist of the following:

	2002		2001
(In thousands)
Compensation and benefits	$	103,449	83,403
Advertising and promotions		38,943	35,125
Other		65,919	46,997
	$	208,311	165,525

(3) Long-Term Debt and Other Financing Arrangements

Long-term debt, exclusive of current maturities, consists of the following:

	2002		2001
(In thousands)
8.25% notes due November, 2005	$	200,000	200,000
6.375% debentures due June, 2028		120,000	120,000
Other		181	1,183
	$	320,181	321,183

Maturities of long-term debt for the next five fiscal years are as follows (in thousands): 2003 - $1,189; 2004 - $96; 2005 - $63; 2006 - $200,021; 2007 - $1; 2008 and later - $120,000.

In June, 1998, the company issued $120 million of 6.375% debentures due June 15, 2028. The debentures are subject to repayment, in whole or in part, on June 15, 2008 at the option of the holders. In addition, the company has the option to redeem the debentures at any time, in whole or in part, at a price equal to 100% of the principal amount plus accrued interest and, if applicable, a make-whole premium.

In April, 2000, the company issued $200 million of 8.25% senior notes due November 1, 2005. The company has the option to redeem the notes at any time, in whole or in part, at a price equal to 100% of the principal amount plus accrued interest and, if applicable, a make-whole premium.

8

Notes to the Consolidated Financial Statements (continued)

Alberto-Culver Company and Subsidiaries

The company has a $300 million, three-year revolving credit facility expiring in September, 2005. The previous credit facility, which was for $250 million, expired in September, 2002. No borrowings were outstanding under the revolving credit facilities at September 30, 2002 or 2001. The revolving credit facility has an interest rate based on a fixed spread over LIBOR and may be drawn in U.S. dollars or certain foreign currencies.

The $300 million revolving credit facility imposes restrictions on such items as total debt, liens and interest expense. At September 30, 2002, the company was in compliance with the covenants of the revolving credit facility.

The company also has a 400 million Swedish krona revolving credit facility (approximately $43.2 million at September 30, 2002) which expires in April, 2003. The facility had no borrowings outstanding at September 30, 2002 or 2001. The interest rate for the facility is based on a fixed spread over the Stockholm Interbank Offered Rate.

In May, 2002, the company entered into an interest rate swap agreement with a notional amount of $100 million in order to convert a portion of its fixed rate 8.25% senior notes into a variable rate obligation. In July, 2002, the company terminated the interest rate swap resulting in a gain of $2.8 million, which is being amortized over the remaining term of the 8.25% senior notes as a reduction of interest expense. The unamortized portion of the gain is included in other liabilities and totaled $2.6 million as of September 30, 2002.

The company had an agreement to sell, without recourse, up to $40 million of designated trade receivables on an ongoing basis. Costs related to this arrangement were included in administrative expenses. In March, 2002, the company repurchased the $40 million of accounts receivable previously sold under this facility. The facility subsequently expired in September, 2002. The agreement involved the sale of accounts receivable to a wholly-owned, consolidated special purpose entity (SPE), which in turn sold an undivided interest in a revolving pool of eligible receivables to a financial institution. The SPE was a separate corporate entity with its own creditors that were entitled to be satisfied out of the SPE’s assets prior to those assets becoming available to its parent. At September 30, 2001, the facility was fully utilized. As a result of the repurchase of receivables previously sold under the facility, accounts receivable at September 30, 2002 increased $40 million compared to the prior year. As of September 30, 2002, the company has no off-balance sheet financing arrangements other than operating leases incurred in the ordinary course of business as disclosed in “note 8.”

(4) Stockholders’ Equity

The company has two classes of common stock, both of which are listed on the New York Stock Exchange. Except for voting, dividend and conversion rights, the Class A and Class B common stock are identical. Class A has one-tenth vote per share and Class B has one vote per share. No dividend may be paid on the Class B unless an equal or greater dividend is paid on the Class A, and dividends may be paid on the Class A in excess of dividends paid, or without paying dividends, on the Class B. All, and not less than all, of the Class A may at any time be converted into Class B on a share-for-share basis at the option of the company. The Class B is convertible at any time into Class A on a share-for-share basis at the option of the holders.

Cash dividends for Class B common stock in fiscal years 2002, 2001 and 2000 were $11.4 million or $.3525 per share, $10.6 million or $.3225 per share and $9.6 million or $.29 per share, respectively. Cash dividends for Class A common stock in fiscal years 2002, 2001 and 2000 were $8.9 million or $.3525 per share, $7.6 million or $.3225 per share and $6.6 million or $.29 per share, respectively. Class A common stock dividends per share have been equal to those of Class B common stock since the Class A shares were issued in April, 1986.

During fiscal years 1998 and 1999, the Board of Directors authorized the company to purchase up to 9.0 million shares of its Class A common stock. Prior to the fourth quarter of fiscal year 2002, the company had purchased 7.3 million Class A common shares under this program at a total cost of $162.9 million with the last purchase occurring in October, 1999. In July, 2002, the Board of Directors re-authorized the company to purchase up to 1.7 million shares of Class A common stock remaining under this program. In the fourth quarter of fiscal year 2002, the company purchased 164,200 Class A shares at a total cost of $7.4 million. A total of 1,535,800 Class A shares remain available for purchase under this program as of September 30, 2002. During fiscal year 2002, the company also acquired $28.3 million of Class A and Class B common shares surrendered by employees in connection with the exercises of stock options and the payment of withholding taxes as provided under the terms of certain incentive plans. Shares acquired under these plans are not subject to the company’s stock repurchase program.

9

Notes to the Consolidated Financial Statements (continued)

Alberto-Culver Company and Subsidiaries

(5) Stock Option and Restricted Stock Plans

Pursuant to its stock option plans, the company is authorized to issue non-qualified options to employees and non-employee directors to purchase a limited number of shares of the company’s Class A common stock at a price not less than the fair market value of the stock on the date of grant. Options under the plans expire ten years from the date of grant and are exercisable on a cumulative basis in four equal annual increments commencing one year after the date of grant. A total of 15.6 million shares have been authorized to be issued under the plans, of which 5.1 million shares remain available for future grants at September 30, 2002.

SFAS No. 123, “Accounting for Stock-Based Compensation,” requires either the adoption of a fair value based method of accounting for stock-based compensation or the continuance of the intrinsic value method with pro-forma disclosures as if the fair value method was adopted. The company has elected to continue measuring compensation expense for its stock-based plans, using the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and, accordingly, no compensation cost related to stock options has been recognized in the consolidated statements of earnings.

Had compensation expense for these stock option plans been determined based upon the fair value of stock options on the dates of grant and recognized over the vesting period consistent with SFAS No. 123, the company’s pro-forma net earnings and net earnings per share for the fiscal years ended September 30, 2002, 2001 and 2000 would have been as follows (in thousands, except per share amounts):

	2002		2001	2000
Net earnings:
As reported	$	137,665	110,376	103,184
Pro-forma	$	130,685	104,591	98,633
Basic net earnings per share:
As reported	$	2.40	1.96	1.85
Pro-forma	$	2.28	1.86	1.77
Diluted net earnings per share:
As reported	$	2.32	1.91	1.83
Pro-forma	$	2.21	1.81	1.75

The weighted average fair value of options at the date of grant in fiscal years 2002, 2001 and 2000 was $8.83, $7.49 and $5.77 per option, respectively. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

	2002	2001	2000
Expected life	5 years	5 years	5 years
Volatility	25.5%	25.4%	24.8%
Risk-free interest rate	3.5%-4.5%	4.6%-5.9%	5.8%-6.5%
Dividend yield	0.8%-1.0%	1.0%-1.2%	1.1%-1.4%

Summarized information on the company’s outstanding stock options at September 30, 2002 is as follows (options in thousands):

	Options Outstanding			Options Exercisable
Range of Exercise Prices	Number of Options	Average Remaining Contractual Life	Weighted Average Option Price	Number of Options	Weighted Average Option Price
$  9.75-$13.38	394	2.6 years	$12.40	394	$12.40
$19.75-$23.19	1,650	6.4 years	$20.39	1,280	$20.48
$24.94-$26.19	1,598	7.6 years	$25.12	821	$25.28
$29.44-$32.66	1,694	9.0 years	$32.64	420	$32.64
$38.64-$42.46	31	9.6 years	$40.77	—	—

10

Notes to the Consolidated Financial Statements (continued)

Alberto-Culver Company and Subsidiaries

Stock option activity under the plans is summarized as follows (options in thousands):

	Number of Options		Weighted Average Option Price
Outstanding at September 30, 1999	3,710		$	19.01
Granted	1,590		$	19.93
Exercised	(193	)	$	14.05
Canceled	(153	)	$	21.42
Outstanding at September 30, 2000	4,954		$	19.42
Granted	1,716		$	24.98
Exercised	(850	)	$	18.22
Canceled	(290	)	$	22.29
Outstanding at September 30, 2001	5,530		$	21.18
Granted	1,728		$	32.81
Exercised	(1,820	)	$	20.20
Canceled	(71	)	$	26.13
Outstanding at September 30, 2002	5,367		$	25.19
Exercisable at September 30:
2000	2,912		$	18.40
2001	3,357		$	20.04
2002	2,915		$	22.50

The company is also authorized to grant up to 1,000,000 shares of Class A common stock to employees under its restricted stock plan. The restricted shares vest on a cumulative basis in four equal annual installments commencing four years after the date of grant for grants made prior to July 26, 2001 and in four equal annual installments commencing two years after the date of grant for all subsequent grants. The total value of restricted shares is recorded as unearned compensation at the time of grant based on the fair market value of the shares on the date of grant. The unearned compensation balance is amortized into expense over the vesting period. During fiscal year 2002, employees were granted 85,800 restricted shares at a weighted average fair value of $32.66 per share on the date of grant. At September 30, 2002, there were 363,950 restricted shares outstanding and 539,200 Class A shares remained authorized for future issuance. The unearned compensation balance included as a separate component of stockholders’ equity was $5.8 million at September 30, 2002.

The company is seeking authorization from shareholders at the January, 2003 annual meeting of shareholders for two new Class B stock option plans and a new Class B restricted stock plan. If approved, the new plans will be authorized to grant up to 6.15 million non-qualified stock options to employees and non-employee directors to purchase the company’s Class B shares and up to 600,000 restricted shares of Class B common stock to employees. If these new plans are approved, the company will no longer be authorized to grant stock options or restricted shares of Class A common stock under the current stock option and restricted stock plans.

(6) Income Taxes

The provision for income taxes consists of the following:

	2002			2001		2000
	(In thousands)
Current:
Federal	$	67,802		45,989		35,739
Foreign		9,193		7,624		12,000
State		3,143		2,509		3,285
		80,138		56,122		51,024
Deferred:
Federal		(9,364	)	808		(874	)
Foreign		3,008		134		1,327
State		345		(204	)	(380	)
		(6,011	)	738		73
	$	74,127		56,860		51,097

11

Notes to the Consolidated Financial Statements (continued)

Alberto-Culver Company and Subsidiaries

The difference between the United States statutory federal income tax rate and the effective income tax rate is summarized below:

	2002		2001		2000
U.S. statutory tax rate	35.0	%	35.0	%	35.0	%
Effect of foreign income tax rates	(1.0	)	(.5	)	(2.6	)
State income taxes, net of federal tax benefit	1.1		.9		1.2
Tax exempt interest income	(.3	)	(.6	)	(.3	)
Other, net	.2		(.8	)	(.2	)
Effective tax rate	35.0	%	34.0	%	33.1	%

Significant components of the company’s deferred tax assets and liabilities at September 30, 2002 and 2001 are as follows:

	2002		2001
(In thousands)
Deferred tax assets attributable to:
Accrued expenses	$	20,653	15,052
Long-term liabilities		7,555	1,757
Other		2,057	1,288
Total deferred tax assets		30,265	18,097
Deferred tax liabilities attributable to:
Depreciation and amortization		47,275	41,802
Inventory adjustments		375	1,617
State income taxes		674	329
Total deferred tax liabilities		48,324	43,748
Net deferred tax liabilities	$	18,059	25,651

Other current assets at September 30, 2002 and 2001 include $20.3 million and $13.4 million, respectively, of net deferred tax assets. Management believes that it is more likely than not that results of future operations will generate sufficient taxable income to realize the deferred tax assets. Accordingly, there is no valuation allowance recorded at September 30, 2002 and 2001.

Domestic earnings before provision for income taxes were $171.1 million, $140.7 million and $124.4 million in fiscal years 2002, 2001 and 2000, respectively. Foreign operations had earnings before provision for income taxes of $40.7 million, $26.5 million and $29.9 million (including the 2000 non-recurring gain) in fiscal years 2002, 2001 and 2000, respectively.

Undistributed earnings of the company’s foreign operations amounting to $235.6 million at September 30, 2002 are intended to remain permanently invested to finance future growth and expansion. Accordingly, no U.S. income taxes have been provided on those earnings at September 30, 2002. Should such earnings be distributed, the company estimates that the credits for foreign income taxes paid would substantially offset applicable U.S. income taxes.

(7) Business Segments and Geographic Area Information

The presentation of segment information reflects the manner in which management organizes segments for making operating decisions and assessing performance. The company’s consumer products business includes two segments, “Alberto-Culver North America” and “Alberto-Culver International,” and includes developing, manufacturing, distributing and marketing branded consumer products worldwide. The Alberto-Culver North America segment also includes the manufacturing of custom label products for other companies. The “Specialty distribution - Sally” business segment consists of Sally Beauty Company, a distributor of professional beauty supplies through its Sally Beauty Supply stores and its Beauty Systems Group full-service operations.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in “note 1.” The company accounts for sales between segments as if the sales were to a third party, however, sales between segments are eliminated in consolidation.

12

Notes to the Consolidated Financial Statements (continued)

Alberto-Culver Company and Subsidiaries

Segment data for the years ended September 30, 2002, 2001 and 2000 is as follows:

Business Segments Information

(In thousands)	2002			2001		2000
Net sales:
Consumer products:
Alberto-Culver North America	$	617,014		562,427		498,769
Alberto-Culver International		398,983		392,795		386,851
Total consumer products		1,015,997		955,222		885,620
Specialty distribution - Sally		1,667,052		1,452,539		1,275,475
Eliminations		(32,073	)	(28,644	)	(23,358	)
	$	2,650,976		2,379,117		2,137,737
Earnings before provision for income taxes (1):
Consumer products:
Alberto-Culver North America	$	71,070		52,511		37,284
Alberto-Culver International		16,710		15,945		15,874
Total consumer products		87,780		68,456		53,158
Specialty distribution - Sally		172,750		144,688		125,640
Segment operating profit		260,530		213,144		178,798
Non-recurring gain (note 9)		—		—		9,257
Unallocated expenses, net (2)		(26,102	)	(24,078	)	(14,565	)
Interest expense, net of interest income		(22,636	)	(21,830	)	(19,209	)
	$	211,792		167,236		154,281
Identifiable assets:
Consumer products:
Alberto-Culver North America	$	330,188		324,495		316,656
Alberto-Culver International		359,081		361,144		374,206
Total consumer products		689,269		685,639		690,862
Specialty distribution - Sally		835,026		655,825		589,955
Corporate (3)		205,196		175,037		104,781
	$	1,729,491		1,516,501		1,385,598
Depreciation and amortization expense (1):
Consumer products:
Alberto-Culver North America	$	13,197		14,849		14,587
Alberto-Culver International		9,231		12,197		12,471
Total consumer products		22,428		27,046		27,058
Specialty distribution - Sally		21,972		22,132		20,527
Corporate		2,814		2,227		2,053
	$	47,214		51,405		49,638
Capital expenditures:
Consumer products:
Alberto-Culver North America	$	20,766		13,237		10,259
Alberto-Culver International		11,553		5,785		10,337
Total consumer products		32,319		19,022		20,596
Specialty distribution - Sally		23,145		17,730		16,931
	$	55,464		36,752		37,527

(1) As required, the company implemented SFAS No. 142 in fiscal year 2002 and, accordingly, discontinued amortization of goodwill and trade names. In accordance with SFAS No. 142, earnings before provision for income taxes and depreciation and amortization expense for fiscal years 2001 and 2000 have not been restated and, therefore, include amortization of goodwill and trade names. See “note 1” for further discussion.

(2) “Unallocated expenses, net” principally consists of general corporate expenses.

(3) Corporate identifiable assets are primarily cash, cash equivalents, short-term investments and equipment.

13

Notes to the Consolidated Financial Statements (continued)

Alberto-Culver Company and Subsidiaries

Geographic data for the years ended September 30, 2002, 2001 and 2000 is as follows:

Geographic Area Information

	2002			2001		2000
(In thousands)
Net sales:
United States	$	2,121,633		1,884,278		1,652,800
Foreign		541,219		513,199		507,182
Eliminations		(11,876	)	(18,360	)	(22,245	)
	$	2,650,976		2,379,117		2,137,737
Segment operating profit (1):
United States	$	216,931		178,177		147,021
Foreign		43,599		34,967		31,777
	$	260,530		213,144		178,798
Identifiable assets:
United States	$	1,084,552		935,874		871,727
Foreign		439,743		405,590		409,090
Corporate (2)		205,196		175,037		104,781
	$	1,729,491		1,516,501		1,385,598

(1) As required, the company implemented SFAS No. 142 in fiscal year 2002 and, accordingly, discontinued amortization of goodwill and trade names. In accordance with SFAS No. 142, segment operating profit for fiscal years 2001 and 2000 has not been restated and, therefore, includes amortization of goodwill and trade names. See “note 1” for further discussion.

(2) Corporate identifiable assets are primarily cash, cash equivalents, short-term investments and equipment.

(8) Lease Commitments

The major portion of the company’s leases are for Sally Beauty Company stores. Other leases cover certain manufacturing and warehousing properties, office facilities and data processing equipment. At September 30, 2002, future minimum payments under non-cancelable leases by fiscal year are as follows:

	Operating Leases		Capital Leases
(In thousands)
2003	$	67,635	115
2004		56,353	73
2005		41,750	58
2006		30,177	15
2007		16,212	—
2008 and later		34,030	—
Total minimum lease payments	$	246,157	261

Total rental expense for operating leases amounted to $92.3 million in 2002, $82.7 million in 2001 and $74.9 million in 2000. Certain leases require the company to pay real estate taxes, insurance, maintenance and special assessments.

9) Non-Recurring Gain

In the first quarter of fiscal year 2000, the company sold a European trademark with a nominal carrying value for $10.0 million. The transaction resulted in a non-recurring pre-tax gain of $9.3 million and an increase in net earnings of $6.0 million. The non-recurring gain added 11 cents to the company’s basic and diluted net earnings per share in fiscal year 2000.

14

Notes to the Consolidated Financial Statements (continued)

Alberto-Culver Company and Subsidiaries

(10) Quarterly Financial Data

Unaudited quarterly consolidated statement of earnings information for the fiscal years ended September 30, 2002 and 2001 is summarized below (in thousands, except per share amounts):

	1st Quarter		2nd Quarter	3rd Quarter	4th Quarter
2002:
Net sales	$	614,260	657,762	681,074	697,880
Gross profit	$	300,672	317,838	332,396	343,540
Net earnings	$	29,294	32,650	36,401	39,320
Net earnings per share:
Basic	$	.52	.57	.63	.68
Diluted	$	.50	.55	.61	.66
2001:
Net sales	$	563,867	592,942	605,047	617,261
Gross profit	$	269,610	289,981	293,497	297,520
Net earnings	$	23,626	25,892	29,071	31,787
Net earnings per share:
Basic	$	.42	.46	.52	.56
Diluted	$	.41	.45	.50	.55

(11) Acquisitions

The company made acquisitions during fiscal years 2002, 2001 and 2000 which individually were insignificant to the consolidated financial statements. The total amount paid for the acquisitions in fiscal years 2002, 2001 and 2000 were $120.1 million, $18.8 million and $146.8 million, respectively. The acquisitions were accounted for using the purchase method, and accordingly, the results of operations of the acquired businesses have been included in the consolidated financial statements from the dates of acquisition. Total goodwill of $92.0 million, $11.6 million and $101.9 million was recorded in fiscal years 2002, 2001 and 2000, respectively, as a result of the acquisitions. The company acquired $3.9 million and $16.5 million of trade names with indefinite lives in fiscal years 2002 and 2000, respectively. No trade names were acquired in fiscal year 2001.

15

Independent Auditors’ Report

Alberto-Culver Company and Subsidiaries

The Board of Directors and Stockholders

Alberto-Culver Company:

We have audited the accompanying consolidated balance sheets of Alberto-Culver Company and Subsidiaries as of September 30, 2002 and 2001 and the related consolidated statements of earnings, cash flows and stockholders’ equity for each of the years in the three-year period ended September 30, 2002. These consolidated financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Alberto-Culver Company and Subsidiaries as of September 30, 2002 and 2001 and the results of their operations and their cash flows for each of the years in the three-year period ended September 30, 2002, in conformity with accounting principles generally accepted in the United States of America.

As discussed in “note 1” to the consolidated financial statements, in the year ended September 30, 2002, the company changed its method of accounting for goodwill and trade names.

/s/  KPMG LLP

KPMG LLP

Chicago, Illinois

October 22, 2002

16

Management’s Discussion and Analysis of Results of Operations and Financial Condition

Alberto-Culver Company and Subsidiaries

Results of Operations

Fiscal year 2002 marked the company’s eleventh consecutive year of record sales and record operating earnings. Net sales for the year ended September 30, 2002 were $2.65 billion, an increase of 11.4% over prior year sales of $2.38 billion. Net sales in 2000 were $2.14 billion.

Record net earnings of $137.7 million in 2002 increased 24.7% from the prior year’s net earnings of $110.4 million. Basic net earnings per share of $2.40 in fiscal year 2002 were 44 cents or 22.4% higher than 2001. Diluted net earnings per share increased 21.5% to $2.32 in fiscal year 2002 from $1.91 in fiscal year 2001.

As discussed later under “New Accounting Standards,” the company discontinued the amortization of goodwill and trade names at the beginning of fiscal year 2002. Had last year’s results been restated to eliminate goodwill and trade name amortization, net earnings for the year ended September 30, 2002 would have increased $18.5 million or 15.6% compared to the prior year. Basic net earnings per share would have increased 28 cents or 13.2% versus the prior year while diluted net earnings per share would have increased 26 cents or 12.6%.

As described in “note 9” to the consolidated financial statements, the company sold a European trademark for $10.0 million in fiscal year 2000. As a result, the company recognized a non-recurring pre-tax gain of $9.3 million and an increase in net earnings of $6.0 million. Accordingly, basic and diluted net earnings per share increased 11 cents as a result of the gain. Excluding the fiscal year 2000 non-recurring gain, fiscal year 2001 net earnings increased 13.6% and basic and diluted net earnings per share were 12.6% and 11.0% higher than 2000, respectively. Fiscal year 2001 net earnings increased $7.2 million or 7.0% compared to fiscal year 2000 net earnings including the non-recurring gain.

Sales of Alberto-Culver North America consumer products in fiscal year 2002 increased 9.7% to $617.0 million from $562.4 million in 2001. The current year sales increase was primarily due to higher sales of TRESemmé shampoos, conditioners and styling products, including TRESemmé Hydrology, St. Ives Swiss Formula apricot scrubs, lotions and body washes, Alberto VO5 shampoos and conditioners and Pro-Line’s ethnic hair care products including Soft & Beautiful, TCB and Motions, along with increased sales for custom label filling operations. In fiscal year 2001, sales increased 12.8% compared to 2000 sales of $498.8 million primarily due to the Pro-Line business acquired in March, 2000, the introduction of TRESemmé Hydrology and higher sales for St. Ives Swiss Formula facial products and body washes, the Motions line of hair care products and the Alberto VO5 line of shampoos and conditioners.

Alberto-Culver International consumer products sales increased 1.6% to $399.0 million in 2002 compared to $392.8 million in 2001. The fiscal year 2002 results were negatively impacted by the effect of foreign exchange rates. Had foreign exchange rates in fiscal year 2002 been the same as 2001, Alberto-Culver International sales would have increased 3.1%, primarily due to sales increases for the company’s European and Latin American businesses. In fiscal year 2001, International sales increased 1.5% to $392.8 million from $386.9 million in fiscal year 2000.

Sales of the “Specialty distribution - Sally” business segment increased to $1.67 billion in fiscal year 2002, compared to $1.45 billion and $1.28 billion in 2001 and 2000, respectively. The sales increases of 14.8% in 2002 and 13.9% in 2001 were attributable to the expansion of Sally’s full-service operations, including acquisitions, higher sales for established Sally Beauty Company outlets and the addition of stores during the year. The number of Sally stores increased 25.7% during the last three fiscal years to a total of 2,712, including 130 franchise stores, at September 30, 2002 compared to 2,428 and 2,325 at the end of fiscal years 2001 and 2000, respectively.

Cost of products sold as a percentage of sales was 51.2% in fiscal year 2002 compared to 51.6% in 2001 and 52.4% in 2000. The lower cost of products sold percentages in fiscal years 2002 and 2001 were primarily due to increased sales of higher margin products and lower costs.

Advertising, marketing, selling and administrative expenses increased 10.2% in fiscal year 2002 and 12.7% in 2001. The increases in fiscal years 2002 and 2001 primarily resulted from the higher selling and administration costs associated with the growth of the Sally Beauty Company business, including acquisitions, and higher expenditures for advertising and marketing.

17

Management’s Discussion and Analysis of Results of Operations and Financial Condition (continued)

Alberto-Culver Company and Subsidiaries

Advertising and marketing expenditures were $189.1 million, $179.0 million and $162.7 million in fiscal years 2002, 2001 and 2000, respectively. The higher expenses in fiscal year 2002 were mainly attributable to increased advertising expenditures for North America primarily related to TRESemmé, St. Ives Swiss Formula and Pro-Line’s ethnic hair care products.

Interest expense, net of interest income, was $22.6 million, $21.8 million and $19.2 million in fiscal years 2002, 2001 and 2000, respectively. Interest expense was $26.0 million in fiscal year 2002 versus $27.3 million in 2001 and $23.7 million in 2000. The decrease in interest expense in 2002 was primarily attributable to the elimination of borrowings under the company’s Swedish krona revolving credit facility and lower interest resulting from an interest rate swap. Interest income in fiscal year 2002 was $3.4 million compared to $5.5 million in 2001 and $4.5 million in 2000. The decrease in 2002 was principally due to lower interest rates on investments.

The provision for income taxes as a percentage of earnings before income taxes was 35.0% in 2002, 34.0% in 2001 and 33.1% in 2000. The higher tax rate in 2002 compared to the two previous fiscal years was primarily due to the mix of foreign taxable earnings and the favorable settlements of certain tax years in 2001 and 2000. Other factors which influenced the effective tax rates for those years are described in “note 6” to the consolidated financial statements.

Financial Condition

Working capital at September 30, 2002 was $523.8 million, an increase of $37.1 million from the prior year’s working capital of $486.7 million. The resulting current ratio was 2.14 to 1.00 at September 30, 2002 compared to 2.25 to 1.00 last year. The increase in working capital in fiscal year 2002 was primarily due to net working capital generated from the growth of the company, including acquisitions, substantially offset by cash outlays for the purchases of full-service beauty supply distributors, capital expenditures, cash dividends and purchases of treasury stock.

Cash and cash equivalents increased $15.5 million during fiscal year 2002 primarily due to cash flow from operating activities and cash received from the exercise of stock options, partially offset by $110.1 million of cash paid for acquisitions of full-service beauty supply distributors by Sally Beauty Company, $55.5 million of capital expenditures, the repurchase of $40.0 million of accounts receivable previously sold under the company’s conduit facility and $35.7 million of treasury stock purchases, primarily related to shares surrendered by employees in connection with stock option exercises.

Accounts receivable increased 23.2% to $209.0 million from $169.7 million last year. The increase was due to the repurchase of $40.0 million of accounts receivable previously sold under the company’s conduit facility. See “note 3” to the consolidated financial statements.

Inventories were $522.2 million at September 30, 2002, up 9.2% compared to $478.3 million last year. The increase primarily resulted from the acquisitions of full-service beauty supply distributors and the growth of Sally Beauty Company.

Other current assets increased $9.4 million to $35.5 million at September 30, 2002 primarily due to an increase in net deferred tax assets principally resulting from an increase in accrued expenses.

Net property, plant and equipment increased $12.0 million to $247.9 million at September 30, 2002. The increase resulted primarily from expenditures for additional Sally stores, acquisitions, office facilities, machinery and equipment and information systems, partially offset by depreciation during fiscal year 2002.

Net goodwill increased $79.1 million during fiscal year 2002 mainly due to goodwill resulting from acquisitions during the year, partially offset by the effects of foreign exchange rates.

Other assets increased $14.5 million to $74.3 million at September 30, 2002. The increase was primarily due to acquisitions of full-service beauty supply distributors.

Accounts payable of $233.9 million at September 30, 2002 increased $42.5 million compared to 2001 primarily due to increased inventory levels applicable to overall sales growth, including acquisitions, and the timing of vendor payments.

Accrued expenses increased 25.8% to $208.3 million from $165.5 million last year. The increase was primarily attributable to the continued growth of Sally Beauty Company, including acquisitions, and higher accruals for compensation and benefits, insurance, advertising and promotion expenditures.

Income taxes payable and deferred income taxes decreased $16.7 million to $52.8 million at September 30, 2002 mainly due to the timing of tax payments and tax benefits realized from the exercise of employee stock options in fiscal year 2002.

Other liabilities were $48.1 million at September 30, 2002, an increase of $18.1 million compared to last year. The increase was primarily due to higher accruals for insurance, incentive and retirement plans and a deferred gain resulting from the termination of an interest rate swap.

18

Management’s Discussion and Analysis of Results of Operations and Financial Condition (continued)

Alberto-Culver Company and Subsidiaries

Accumulated other comprehensive income – foreign currency translation increased $16.3 million to $77.6 million from $61.3 million last year. The increase was primarily attributable to the effect of the devaluation of the Argentine peso, partially offset by the weakening of the U.S. dollar versus certain foreign currencies, primarily the British pound and Swedish krona.

Total stockholders’ equity increased $126.5 million to $862.5 million as of September 30, 2002. The increase was primarily due to net earnings for the fiscal year and proceeds from the exercise of employee stock options, partially offset by dividend payments.

Liquidity and Capital Resources

The company’s primary sources of cash over the past three years have been from funds provided by operating activities and the issuance of $200 million of 8.25% senior notes in April, 2000. Operating activities provided cash of $231.7 million, $165.2 million and $119.1 million in fiscal years 2002, 2001 and 2000, respectively.

The company has obtained long-term financing as needed to fund acquisitions and other growth opportunities. Funds also may be obtained prior to their actual need in order to take advantage of opportunities in the debt markets. In April, 2000, the company issued $200 million of 8.25% senior notes due November, 2005. In June, 1998, the company issued $120 million of 6.375% debentures due June, 2028. In September, 1997, the company obtained a five-year, $200 million revolving credit facility, which was increased to $250 million in fiscal year 2000 and subsequently replaced with a three-year, $300 million revolving credit facility in fiscal year 2002. The current $300 million facility, which had no borrowings outstanding at September 30, 2002, may be drawn in U.S. dollars or certain foreign currencies. Under debt covenants, the company has the ability to incur up to $969 million of additional borrowings.

The primary uses of cash during the three-year period ended September 30, 2002 were $273.8 million for acquisitions, $209.9 million for repayments of long-term debt, $129.7 million for capital expenditures and $54.7 million for cash dividends.

Compared to 1999, cash dividends per share increased 38.2% over the three-year period ended September 30, 2002. Cash dividends paid on Class A and Class B common stock were $.3525 per share in 2002, $.3225 per share in 2001 and $.29 per share in 2000.

The company anticipates that cash flows from operations and available credit will be sufficient to fund operating requirements in future years. During fiscal year 2003, the company expects that cash will continue to be used for acquisitions, capital expenditures, new product development, market expansion and dividend payments. The company may also purchase shares of its common stock depending on market conditions. During fiscal years 1998 and 1999, the Board of Directors authorized the company to purchase up to 9.0 million shares of its Class A common stock. Prior to the fourth quarter of fiscal year 2002, the company had purchased 7.3 million Class A common shares under this program at a total cost of $162.9 million with the last purchase occurring in October, 1999. In July, 2002, the Board of Directors re-authorized the company to purchase up to 1.7 million shares of Class A common stock remaining under this program. In the fourth quarter of fiscal year 2002, the company purchased 164,200 Class A shares at a total cost of $7.4 million. A total of 1,535,800 Class A shares remain available for purchase under this program as of September 30, 2002. During fiscal year 2002, the company also acquired $28.3 million of Class A and Class B common shares surrendered by employees in connection with the exercises of stock options and the payment of withholding taxes as provided under the terms of certain incentive plans. Shares acquired under these plans are not subject to the company’s stock repurchase program.

19

Management’s Discussion and Analysis of Results of Operations and Financial Condition (continued)

Alberto-Culver Company and Subsidiaries

The following table reflects a summary of contractual cash obligations and commitments outstanding by future payment date as of September 30, 2002:

	Payments Due by Fiscal Year
	2003		2004	2005	2006	2007 and Later	Total
	(In thousands)
Long-term debt, including current maturities (1)	$	1,189	96	63	200,021	120,001	321,370
Operating leases (2)		67,635	56,353	41,750	30,177	50,242	246,157
Other long-term obligations (3)		3,577	3,506	2,489	2,089	6,255	17,916
Total	$	72,401	59,955	44,302	232,287	176,498	585,443

(1) The company’s $120.0 million 6.375% debentures are due in June, 2028, but are subject to repayment, at the option of the holders, in June, 2008.

(2) In accordance with accounting principles generally accepted in the United States of America, these obligations are not reflected in the accompanying consolidated balance sheets.

(3) Other long-term obligations represent commitments under various acquisition-related agreements including non-compete, consulting and severance agreements. These obligations are included in other liabilities in the accompanying consolidated balance sheets.

At September 30, 2002, the company had $15.7 million in outstanding standby letters of credit related to various insurance programs. The company does not have other unconditional purchase obligations or significant other commercial commitments.

The company is in compliance with all covenants and other requirements of its revolving credit agreement and public debt securities. Additionally, the revolving credit agreement and the indenture for the public debt securities do not include rating triggers or subjective clauses that would accelerate maturity dates.

Inflation

The company was not significantly affected by inflation during the past three years. Management continuously attempts to resist cost increases and counteract the effects of inflation through productivity improvements, cost reduction programs and price increases within the constraints of the highly competitive markets in which the company operates.

Market Risk

As a multinational corporation that manufactures and markets products in countries throughout the world, the company is subject to certain market risks including foreign currency fluctuations, interest rates and government actions. The company considers a variety of practices to manage these market risks, including, when deemed appropriate, the occasional use of derivative financial instruments. The company uses derivative financial instruments only for risk management and does not use them for trading or speculative purposes. As of September 30, 2002, the company had no material derivative financial instruments outstanding.

The company is exposed to potential gains or losses from foreign currency fluctuations affecting net investments and earnings denominated in foreign currencies. The company’s primary exposures are to changes in exchange rates for the U.S. dollar versus the Swedish krona, British pound sterling, Canadian dollar, Euro, Australian dollar, Argentine peso and Mexican peso.

The company’s various currency exposures often offset each other, providing a natural hedge against currency risk. Periodically, specific foreign currency transactions (e.g. inventory purchases, intercompany transactions, etc.) are hedged with forward contracts to reduce the foreign currency risk. Gains and losses on these foreign currency hedges are included in the basis of the underlying hedged transactions. As of September 30, 2002, the company had no material outstanding foreign currency contracts.

The company considers combinations of fixed rate and variable rate debt, along with varying maturities, in its management of interest rate risk. At September 30, 2002, the company had no variable rate long-term debt outstanding.

20

Management’s Discussion and Analysis of Results of Operations and Financial Condition (continued)

Alberto-Culver Company and Subsidiaries

The company has periodically used interest rate swaps to manage interest rate risk on debt securities. These instruments allow the company to exchange variable rate debt into fixed rate or fixed rate debt into variable rate. Interest rate differentials paid or received on these arrangements are recognized as adjustments to interest expense over the life of the agreement. At September 30, 2002, the company had no interest rate swaps outstanding.

In May, 2002, the company entered into an interest rate swap agreement with a notional amount of $100 million in order to convert a portion of its fixed rate 8.25% senior notes into a variable rate obligation. In July, 2002, the company terminated the interest rate swap resulting in a gain of $2.8 million, which is being amortized over the remaining term of the 8.25% senior notes as a reduction of interest expense. The unamortized portion of the gain is included in other liabilities and totaled $2.6 million as of September 30, 2002.

The company’s quantitative information on market risk as of September 30, 2002 is as follows (in millions):

	Debt
Expected Maturities	Short-Term Fixed Rate		Long-Term Fixed Rate(1)	Total
2003 (4.3% average rate)	$	3.7	—	3.7
2004 (8.5% average rate)		—	0.1	0.1
2005 (9.2% average rate)		—	0.1	0.1
2006 (8.3% average rate)		—	200.0	200.0
Thereafter (6.4% average rate)		—	120.0	120.0
Total	$	3.7	320.2	323.9
Fair value	$	3.7	336.9	340.6

(1) The company’s $120.0 million 6.375% debentures are due in June, 2028, but are subject to repayment, at the option of the holders, in June, 2008.

The company is exposed to credit risk on certain assets, primarily cash equivalents, short-term investments and accounts receivable. The credit risk associated with cash equivalents and short-term investments is mitigated by the company’s policy of investing in a diversified portfolio of securities with high credit ratings.

The company provides credit to customers in the ordinary course of business and performs ongoing credit evaluations. Concentrations of credit risk with respect to trade receivables are limited due to the number of customers comprising the company’s customer base. Although Wal-Mart is a significant customer of the company’s consumer products segments, sales to Wal-Mart are less than 10% of the company’s consolidated net sales in fiscal year 2002. The company believes its allowance for doubtful accounts is sufficient to cover customer credit risks.

New Accounting Standards

In December, 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, “Revenue Recognition.” SAB No. 101 provides guidance in applying generally accepted accounting principles to revenue recognition. The company implemented SAB No. 101 in the first quarter of fiscal year 2001 and its adoption did not have a material effect on the consolidated financial statements.

In September, 2000, the Financial Accounting Standards Board’s (FASB) Emerging Issues Task Force (EITF) reached a consensus on Issue No. 00-10, “Accounting for Shipping and Handling Fees and Costs.” EITF No. 00-10 addresses the income statement classification of shipping and handling fees and costs. The company implemented EITF No. 00-10 in the first quarter of fiscal year 2001 and its adoption did not have a material effect on the consolidated financial statements.

In September, 2000, the FASB issued Statement of Accounting Standards (SFAS) No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 140 replaces SFAS No. 125 and revises the standards for accounting for securitizations and other transfers of financial assets and collateral. The company implemented SFAS No. 140 in the third quarter of fiscal year 2001 and its adoption did not have a material effect on the consolidated financial statements.

21

Management’s Discussion and Analysis of Results of Operations and Financial Condition (continued)

Alberto-Culver Company and Subsidiaries

In November, 2001, the FASB’s EITF released Issue No. 01-09, “Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor’s Products.” EITF No. 01-09 consolidates EITF No. 00-14, “Accounting for Certain Sales Incentives,” which addresses the recognition, measurement and income statement classification for various types of sales incentives including coupons, rebates and free products, and EITF No. 00-25, “Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor’s Products,” which addresses the income statement classification for various types of consideration paid by a vendor to a retailer. EITF No. 01-09 does not change the accounting treatment set forth by EITF Nos. 00-14 and 00-25. As required, the company adopted the provisions of EITF No. 01-09 in the first quarter of fiscal year 2002. In accordance with EITF No. 01-09, the company reclassified certain amounts for fiscal years 2001 and 2000 to conform to the current year’s presentation resulting in a $115.1 million reduction in net sales, an $11.1 million increase in cost of products sold and a $126.2 million decrease in promotion expense for fiscal year 2001 and a $109.4 million reduction in net sales, a $14.3 million increase in cost of products sold and a $123.7 million decrease in promotion expense for fiscal year 2000. Consolidated net earnings were not affected by these reclassifications.

In June, 2001, the FASB issued SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 addresses financial accounting and reporting for business combinations. SFAS No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets, requires companies to discontinue the amortization of goodwill and certain other intangible assets and requires an impairment test of existing goodwill and certain other intangible assets based on a fair value method. As required, the company adopted SFAS No. 141 in the fourth quarter of fiscal year 2001. The company also adopted SFAS No. 142 as required in the fourth quarter of fiscal year 2001 for new acquisitions and in the first quarter of fiscal year 2002 for previously acquired intangibles. In accordance with SFAS No. 142, the company determined that its trade names have indefinite lives and, therefore, the amortization of trade names was discontinued effective October 1, 2001. Based on the results of the company’s transitional impairment testing, no impairment of indefinite-lived trade names existed at October 1, 2001. In addition, as required by SFAS No. 142, the company ceased the amortization of goodwill effective October 1, 2001. In accordance with the adoption provisions of SFAS No. 142, the company has completed the required transitional goodwill impairment tests and has determined that goodwill was not impaired as of October 1, 2001, the date of adoption. Prospectively, goodwill and trade names will be reviewed for impairment at least annually, with ongoing recoverability monitored based on applicable reporting unit performance and consideration of significant events or changes in the overall business environment.

In accordance with SFAS No. 142, the consolidated statements of earnings for fiscal years 2001 and 2000 have not been restated for the effects of ceasing goodwill and trade name amortization. Had goodwill and trade name amortization been discontinued effective October 1, 1999, net earnings and net earnings per share for the fiscal years ended September 30, 2002, 2001 and 2000 would have been as follows:

	2002		2001	2000*
	(In thousands, except per share data)
Reported net earnings	$	137,665	110,376	103,184
Elimination of goodwill and trade name amortization, net of income taxes		—	8,759	7,832
Pro forma net earnings	$	137,665	119,135	111,016
Reported basic net earnings per share	$	2.40	1.96	1.85
Elimination of goodwill and trade name amortization, net of income taxes		—	.16	.14
Pro forma basic net earnings per share	$	2.40	2.12	1.99
Reported diluted net earnings per share	$	2.32	1.91	1.83
Elimination of goodwill and trade name amortization, net of income taxes		—	.15	.14
Pro forma diluted net earnings per share	$	2.32	2.06	1.97

* Fiscal year 2000 includes a non-recurring gain from the sale of a trademark. The non-recurring gain increased net earnings by $6.0 million and basic and diluted net earnings per share by 11 cents.

The change in the carrying amount of goodwill by operating segment for the fiscal year ended September 30, 2002 is as follows:

	Consumer Products					Specialty Distribution-Sally		Total
	North America			International
	(In thousands)
Balance at September 30, 2001	$	69,379		79,648		115,312		264,339
Additions, net of purchase price adjustments		(214	)	—		92,240		92,026
Foreign currency translation effect		—		(12,906	)	(28	)	(12,934	)
Balance at September 30, 2002	$	69,165		66,742		207,524		343,431

22

Management’s Discussion and Analysis of Results of Operations and Financial Condition (continued)

Alberto-Culver Company and Subsidiaries

Indefinite-lived trade names by operating segment at September 30, 2002 and 2001 are as follows:

	2002		2001
	(In thousands)
Consumer products:
Alberto-Culver North America	$	45,414	45,414
Alberto-Culver International		30,145	33,857
Total consumer products		75,559	79,271
Specialty distribution - Sally		4,122	261
	$	79,681	79,532

In August, 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets, including the presentation of discontinued operations in the statement of earnings. The company is required to adopt the provisions of SFAS No. 144 no later than the first quarter of fiscal year 2003 and does not expect its implementation to have a material effect on the consolidated financial statements.

In January, 2002, the FASB’s EITF released Issue No. 00-23, “Issues Related to the Accounting for Stock Compensation under APB Opinion No. 25, Accounting for Stock Issued to Employees, and FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation.” Issue 41 of EITF No. 00-23 addresses the accounting consequences of converting any class of stock into a surviving class of stock and, in connection therewith, converting outstanding stock options in that class of stock into stock options in the surviving class of stock. Issue 41 of EITF No. 00-23 is effective for any elimination of a class of stock occurring after January 24, 2002. As described in “note 4” to the consolidated financial statements, the company has two classes of common stock, Class A and Class B. All, but not less than all, of the Class A shares may at any time be converted into Class B on a share-for-share basis at the option of the company. From time-to-time, the Board of Directors has considered the question of whether it would be advisable and in the best interests of the company and its shareholders to declassify its classes of common stock and revert to the single class capital structure which existed before 1986. Most recently, in the spring of 2002, the board undertook a serious review of a possible declassification. Although no action or board vote was undertaken in that regard, it was the sense of the board that a declassification would have significant merit, but that it may not have been advisable and in the best interests of the company and its shareholders at that time because of EITF No. 00-23. Under Issue 41 of EITF No. 00-23, a declassification by the company may result in a material non-cash charge in the period of declassification and in each subsequent quarter of the remaining vesting periods of outstanding Class A stock options and restricted stock. The Board of Directors reserves the right to revisit this matter from time-to-time and at any time could conclude that it would be advisable and in the best interests of company and it shareholders to pursue a declassification with or without a resolution of this accounting issue.

In July, 2002, the FASB issued SFAS No 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. The company is required to adopt the provisions of SFAS No. 146 prospectively for exit or disposal activities initiated after December 31, 2002 and does not expect its implementation to have a material effect on the consolidated financial statements.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements. Actual results may differ from these estimates. Management believes these estimates and assumptions are reasonable.

Accounting policies are considered critical when they require management to make assumptions about matters that are highly uncertain at the time the accounting estimate is made and when different estimates that management reasonably could have used have a material impact on the presentation of the company’s financial condition, changes in financial condition or results of operations.

The company’s critical accounting policies relate to the calculation and treatment of sales incentives, allowance for doubtful accounts and the valuation of inventories.

Sales Incentives – Sales incentives primarily include trade promotion activities and consumer coupons. The company records accruals for sales incentives based on estimates of the ultimate cost of each program. The company tracks its commitments for sales incentive programs and, using historical experience, records an accrual at the end of each period for the estimated incurred, but unpaid, costs of these programs. Actual costs differing from estimated costs could significantly affect these estimates and the related accruals.

23

Management’s Discussion and Analysis of Results of Operations and Financial Condition (continued)

Alberto-Culver Company and Subsidiaries

Allowance for Doubtful Accounts – The allowance for doubtful accounts requires management to estimate future amounts of receivables to be collected. Management records allowances for doubtful accounts based on historical collection statistics and current customer credit information. These estimates could be significantly affected as a result of actual collections differing from historical statistics or changes in a customer’s credit status.

Valuation of Inventories – When necessary, the company provides allowances to adjust the carrying value of inventories to the lower of cost or market, including costs to sell or dispose, and for estimated inventory shrinkage. Estimates of the future demand for the company’s products, anticipated product re-launches, changes in formulas and packaging and reductions of stock-keeping units are key factors used by management in assessing the net realizable value of inventories. The company estimates inventory shrinkage based on historical experience. Actual results differing from these estimates could significantly affect the company’s inventories and cost of products sold.

24

Market Price of Common Stock and Cash Dividends Per Share

Alberto-Culver Company and Subsidiaries

The high and low sales prices of both classes of the company’s common stock on the New York Stock Exchange and cash dividends per share in each quarter of fiscal years 2002 and 2001 are as follows:

	Market Price Range					Cash Dividends Per Share
	2002			2001
	High		Low	High	Low	2002		2001
Class A (NYSE Symbol ACVA):
First Quarter	$	39.80	32.26	36.50	24.00	$	.0825	.0750
Second Quarter	$	49.33	37.15	36.00	30.63		.0900	.0825
Third Quarter	$	51.95	44.52	37.40	30.90		.0900	.0825
Fourth Quarter	$	48.05	39.60	39.50	31.70		.0900	.0825
						$	.3525	.3225
Class B (NYSE Symbol ACV):
First Quarter	$	45.90	38.13	43.50	28.44	$	.0825	.0750
Second Quarter	$	55.82	42.80	42.75	36.88		.0900	.0825
Third Quarter	$	57.91	47.70	44.45	37.15		.0900	.0825
Fourth Quarter	$	50.95	41.55	46.26	37.35		.0900	.0825
						$	.3525	.3225

Stockholders of record, which excludes a large number of stockholders with shares held in “street name,” totaled 877 for Class A shares and 865 for Class B shares as of November 15, 2002.

The following trademarks and servicemarks owned by Alberto-Culver Company and its subsidiaries appear in this report: 4+4, Alberto, Alberto European, Alberto VO5, Armstrong-McCall, Beauty Systems Group, BLIW, Botanicals, BSG, Cederroth International, FDS, Grilling Blends, Hydrology, Indola, Just For Me, Molly McButter, Motions, Mrs. Dash, Pro-Line, Sally, Sally Beauty, Sally Beauty Supply, Soft & Beautiful, St. Ives, St. Ives Swiss Formula, Salvekvick, Static Guard, TCB, TRESemmé, TRESpac and VO5.

The following are trademarks and servicemarks of other companies which appear in this report:

Farouk (Farouk Systems, Inc.), Graham Webb (Graham Webb International, Inc.), L’Oreal (L’Oreal S.A.), Matrix (L’Loreal USA Creative, Inc.), Paul Mitchell (John Paul Mitchell Systems), Redken (L’Oreal USA Creative, Inc.), Sebastian (Sebastian International, Inc.), Shiseido (Shiseido Company Limited), TIGI (Toni & Guy (USA) Limited), Wal-Mart (Wal-Mart Stores, Inc.) and WELLA (The Wella Corporation).

25

Selected Financial Data

Alberto-Culver Company and Subsidiaries

As of or for the fiscal year ended September 30,
	2002		2001	2000		1999	1998	1997		1996	1995	1994	1993		1992
(In thousands, except per share data)
Operating Results:
Net sales (1)	$	2,650,976	2,379,117	2,137,737		1,882,719	1,743,955	1,694,728		1,523,939	1,297,589	1,150,514	1,093,330		1,038,096
Cost of products sold  (1)		1,356,530	1,228,509	1,120,079		990,568	916,499	896,152		816,343	689,793	605,900	572,770		541,153
Interest expense		26,013	27,309	23,747		14,849	12,170	11,826		15,905	9,946	8,630	9,661		11,665
Earnings before provision for income taxes (2)		211,792	167,236	154,281	(3)	133,783	132,378	136,121	(4)	100,014	84,242	71,078	65,129		61,356
Provision for income taxes		74,127	56,860	51,097	(3)	47,493	49,311	50,704	(4)	37,270	31,591	27,010	23,857		22,740
Net earnings (2)		137,665	110,376	103,184	(3)	86,290	83,067	85,417	(4)	62,744	52,651	44,068	41,272		38,616
Net earnings per share (2)(5):
Basic		2.40	1.96	1.85	(3)	1.53	1.46	1.53	(4)	1.13	.95	.79	.72		.68
Diluted		2.32	1.91	1.83	(3)	1.51	1.37	1.41	(4)	1.06	.94	.79	.72		.68
Weighted average shares outstanding (5):
Basic		57,380	56,176	55,790		56,378	56,845	55,967		55,571	55,430	56,063	57,361		56,726
Diluted		59,214	57,838	56,410		57,162	62,420	63,377		62,776	57,053	56,083	57,434		56,726
Shares outstanding at year end (5):
Class A		25,847	23,871	22,982		22,768	24,063	22,610		22,097	21,926	21,826	23,126		23,491
Class B		32,332	32,957	32,957		32,957	33,148	33,533		33,533	33,533	33,534	33,604		33,604
Financial Condition:
Current ratio		2.14 to 1	2.25 to 1	2.17 to 1		1.92 to 1	1.89 to 1	1.86 to 1		1.79 to 1	2.28 to 1	1.86 to 1	2.05 to 1		1.88 to 1
Working capital	$	523,770	486,646	399,748		309,153	277,940	269,007		226,123	301,706	185,747	205,050		193,080
Cash, cash equivalents and short-term investments		217,485	202,839	114,951		57,816	73,305	87,600		71,557	146,985	50,362	73,947		80,158
Property, plant and equipment, net		247,850	235,822	240,091		238,753	223,476	190,998		175,920	157,791	132,881	124,449		121,703
Total assets		1,729,491	1,516,501	1,385,598		1,181,494	1,065,343	998,056		908,412	814,757	610,208	593,046		610,400
Long-term debt		320,181	321,183	340,948		225,173	171,760	149,441		161,548	183,094	42,976	80,184		84,549
Stockholders’ equity		862,459	736,009	632,260		565,780	531,150	495,001		424,242	370,574	326,970	298,857		286,222
Cash dividends		20,351	18,215	16,182		14,394	13,220	10,909		9,724	8,590	7,708	7,893	(6)	6,665
Cash dividends per share (5)(6)		.3525	.3225	.290		.255	.230	.195		.175	.155	.1375	.1375	(6)	.1175

(1) As required, the company implemented the Financial Accounting Standards Board’s (FASB) Emerging Issues Task Force (EITF) Issue No. 01-09, “Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor’s Products,” in fiscal year 2002. In accordance with EITF No. 01-09, net sales and cost of products sold for fiscal years 1992 through 2001 have been reclassified to conform to the current year’s presentation. Net earnings was not affected by these reclassifications.

(2) As required, the company implemented the FASB’s Statement of Financial Accounting Standards (SFAS) No. 142 ,“Goodwill and Other Intangible Assets,” in fiscal year 2002 and, accordingly, discontinued the amortization of goodwill and trade names. In accordance with SFAS No. 142, earnings before provision for income taxes, net earnings and net earnings per share for fiscal years 1992 through 2001 have not been restated and, therefore, include amortization of goodwill and trade names.

(3) Fiscal year 2000 includes a non-recurring gain from the sale of a trademark (note 9). The non-recurring gain increased earnings before provision for income taxes by $9.3 million, net earnings by $6.0 million and basic and diluted net earnings per share by 11 cents.

(4) Fiscal year 1997 includes a non-recurring gain from an insurance settlement for the loss of the company’s corporate airplane. The non-recurring gain increased earnings before provision for income taxes by $15.6 million, net earnings by $9.8 million and basic and diluted net earnings per share by 18 cents and 16 cents, respectively.

(5) Net earnings per share, shares outstanding and cash dividends per share have been restated to reflect the 100% stock dividend on the company’s Class A and Class B outstanding shares in February, 1997.

(6) Cash dividends per share on Class A common stock and Class B common stock have been equal since the Class A shares were issued in April, 1986. Cash dividends paid in fiscal 1993 included a one-time extraordinary dividend of one cent per share in recognition of the company surpassing one billion dollars in net sales for the fiscal year ended September 30, 1992.

26

EX-21

                                                                     Exhibit 21

                    ALBERTO-CULVER COMPANY AND SUBSIDIARIES

                        Subsidiaries of the Registrant



                                                                    State or
                                                                     Other
                                                                  Jurisdiction
        Subsidiary                                              of Incorporation
        ----------                                              ----------------
                                                             
        Alberto-Culver (Australia) Pty. Ltd....................       Australia
        Alberto-Culver Canada, Inc.............................          Canada
        Alberto-Culver Company (U.K.), Limited.................  United Kingdom
        Alberto-Culver International, Inc......................        Delaware
        Alberto-Culver de Mexico, S.A. de C.V..................          Mexico
        Alberto-Culver (P.R.), Inc.............................        Delaware
        Alberto-Culver USA, Inc................................        Delaware
        Beauty Systems Group, Inc..............................        Delaware
        Beauty Systems Group (Canada), Inc.....................          Canada
        BDM Grange, Ltd........................................     New Zealand
        Cederroth International AB.............................          Sweden
        CIFCO, Inc.............................................        Delaware
        Indola Cosmetics, B.V.................................. The Netherlands
        IHB SpA................................................           Italy
        La Farmaco Argentina I. y C.S.A........................       Argentina
        Pro-Line International, Inc............................        Delaware
        Sally Beauty Company, Inc..............................        Delaware
        Soraya, S.A. 3/4.......................................          Poland
        St. Ives Laboratories, Inc.............................        Delaware


Subsidiaries of the company omitted from the above table, considered in the
aggregate, would not be considered significant.

EX-23

                                                                     Exhibit 23

                              Consent of KPMG LLP
                              -------------------

The Board of Directors and Stockholders
Alberto-Culver Company:

We consent to incorporation by reference in the Registration Statements on Form
S-8 (Numbers 33-36051, 33-47748, 33-62693, 33-62699, 33-62701, 333-35795,
333-51527, 333-51529, 333-70067, 333-72388, 333-72262, 333-101573 and
333-101620) and Form S-3 (Numbers 333-49649, 333-44390, 333-54302 and
333-89382) of Alberto-Culver Company of our reports dated October 22, 2002,
relating to the consolidated balance sheets of Alberto-Culver Company and
subsidiaries as of September 30, 2002 and 2001 and the related consolidated
statements of earnings, cash flows, and stockholders' equity and related
schedule for each of the years in the three-year period ended September 30,
2002, which reports appear or are incorporated by reference in the September
30, 2002 annual report on Form 10-K of Alberto-Culver Company.

Our reports refer to a change in accounting for goodwill and trade names in the
year ended September 30, 2002.

                                          /s/ KPMG LLP
                                          -------------
                                          KPMG LLP

Chicago, Illinois
December 11, 2002

EX-99.(A)

                                                                  Exhibit 99(a)

                           CERTIFICATION PURSUANT TO
                            18 U.S.C. SECTION 1350,
                            AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
                 ---------------------------------------------

In connection with the Annual Report of Alberto-Culver Company (the "Company")
on Form 10-K for the period ending September 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Howard
B. Bernick, President and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

      (1) The Report fully complies with the requirements of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

      (2) The information contained in the Report fairly presents, in all
          material respects, the financial condition and result of operations
          of the Company.


/s/ Howard B. Bernick
- -------------------------
President and Chief
Executive Officer
December 12, 2002

EX-99.(B)

                                                                  Exhibit 99(b)

                           CERTIFICATION PURSUANT TO
                            18 U.S.C. SECTION 1350,
                            AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
                 ---------------------------------------------

In connection with the Annual Report of Alberto-Culver Company (the "Company")
on Form 10-K for the period ending September 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
William J. Cernugel, Senior Vice President and Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

      (1) The Report fully complies with the requirements of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

      (2) The information contained in the Report fairly presents, in all
          material respects, the financial condition and result of operations
          of the Company.


/s/ William J. Cernugel
- -------------------------
Senior Vice President and
Chief Financial Officer
December 12, 2002