Exhibit 10.21
ICON HEALTH & FITNESS, INC.
JUNIOR MANAGEMENT DEFERRED BONUS PLAN
(EFFECTIVE SEPTEMBER 27, 1999)
1. PURPOSE AND EFFECTIVE DATE
The purpose of this Plan is to set forth the terms and conditions under
which certain members of management will become entitled to an amount of
deferred bonus (the "Deferred Bonus Amount") in consideration for their past
service to the Company. This Plan is effective September 27, 1999. The Plan is
intended to be "a plan which is unfunded and is maintained by an employer
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees" within the meaning of sections
201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and shall be administered in a
manner consistent with that intent.
2. DEFINITIONS
(a) "Beneficiary" means the person (which may include trusts and is not
limited to one person) designated by the Participant, in such manner as
prescribed by the Plan Administrator, who shall be entitled to receive payment
of the Participant's Deferred Bonus Account in the event of the Participant's
death. If no such designation is made, or if the designated person predeceases
the Participant, payment shall be made to the Participant's estate.
(b) "Code" means the Internal Revenue Code of 1986 as amended from time to
time.
(c) "Committee" means the Compensation Committee of the Board of Directors
of the Company or if no such committee has been designated, the Board.
(d) "Company" means ICON Health & Fitness, Inc.
(e) "Deferred Bonus Account" means the account described in Section 3.
(f) "Effective Date" means September 27, 1999.
(g) "Liquidity Event" has the meaning set forth in the Stockholders
Agreement.
(h) "Participant" means each of the members of management of the Company
listed on the schedules hereto.
(i) "Plan" means the ICON Health & Fitness, Inc. 1999 Junior Management
Deferred Bonus Plan as set forth herein and as from time to time amended.
(j) "Plan Administrator" means the Committee.
(k) "Option Agreements" means the Non-Incentive Option Certificates dated
as of September 27, 1999 between HF Holdings, Inc. and each of the Participants.
(l) "Stockholders Agreement" means the Stockholders Agreement dated as of
September 27, 1999 among the Company, HF Holdings, Inc. and the stockholders of
HF Holdings, Inc.
Other terms are defined as provided throughout this Plan.
3. DEFERRED BONUS ACCOUNT
The Company shall establish on its books a Deferred Bonus Account for each
Participant as of the Effective Date. The amount credited to each such Account
shall be the amount set forth on Schedule A hereto, and shall not be adjusted
for interest or otherwise, except to reflect distributions made to a Participant
or his or her Beneficiary. 25% of the amount credited to such Account shall be
fully vested as of the Effective Date, and 25% of such amount shall become
vested on the each of the first, second and third anniversaries of the Effective
Date, provided the Participant remains employed by HF Holdings, Inc., the
Company or any of their subsidiaries on each such date, and provided further
that upon the termination of the Plan, or the termination of any Participant's
participation pursuant to Section 12, prior to the third anniversary of the
Effective Date, 100% of the amount credited to such Account shall become fully
vested if the Participant is then so employed. The entire amount credited to a
Participant's Deferred Bonus Account shall become vested upon the occurrence of
a Liquidity Event, provided the Participant remains employed by HF Holdings,
Inc., the Company or any of their subsidiaries on such date.
4. DISTRIBUTIONS
The vested amount credited to a Participant's Deferred Bonus Account shall
become payable to the Participant (or the Participant's Beneficiary, in the
event of death) upon the earliest to occur after the date hereof (each, a
"Payment Date") of (i) a Liquidity Event in which the consideration
received by holders of the common stock of HF Holdings, Inc. in respect of each
share of such common stock is greater than the exercise price at that time in
effect under the Option Agreement between HF Holdings, Inc. and such
Participant, provided the Participant is at such time employed by HF Holdings,
Inc., the Company or any of their subsidiaries, (ii) ten years and one hundred
and eighty (180) days after the date hereof, provided the Participant is at such
time employed by HF Holdings, Inc., the Company or any of their subsidiaries, or
(iii) an exercise by the Company of a call option pursuant to Section 3 of the
Joinder and Supplement to Stockholders Agreement among the Company, HF Holdings,
Inc. and such Participant.
5. FORM OF PAYMENT; TIMING
The Company shall pay, or cause one or more of its affiliates to pay, the
amount due to a Participant or Beneficiary hereunder in cash in a single lump
sum payment as soon as administratably practicable following a Payment Date with
respect to the Participant, which in no case shall be more than 30 days
following the Payment Date. The Participant's Deferred Bonus Account will be
reduced by the amount of the payment (including any amount under Section 9
below).
6. ADMINISTRATION OF THE PLAN
This Plan shall be administered by the Committee, which shall have full
discretion to administer and interpret the Plan in accordance with its terms in
all respects.
7. NATURE OF CLAIM FOR PAYMENTS
Except as herein provided, the Company shall not be required to set aside
or segregate any assets of any kind to meet any of its obligations hereunder,
and all obligations of the Company hereunder shall be reflected by book entries
only. The Participant shall have no rights on account of this Plan in or to any
specific assets of the Company. Any rights that the Participant may have on
account of this Plan shall be those of a general, unsecured creditor of the
Company.
8. RIGHTS ARE NON-ASSIGNABLE
Other than by will or the laws of descent and distribution, neither the
Participant nor any Beneficiary nor any other person shall have any right to
assign or otherwise alienate the right to receive payments hereunder, in whole
or in part, which payments are expressly agreed to be non-assignable and
non-transferable, whether voluntarily or involuntarily.
9. TAXES
If the Company is required to withhold taxes from payments under the Plan
pursuant to federal, state or local law, the amounts payable to Participants
shall be reduced by the tax so withheld.
10. TERMINATION; AMENDMENTS
The Plan shall continue in effect until terminated by action of the
Company's Board of Directors. Upon termination of the Plan, no individual not a
Participant as of the date of termination shall become a Participant thereafter.
If, at the time of termination, there is any Participant or Beneficiary of a
Participant who is or will be entitled to a payment hereunder, the Plan
Administrator shall elect either (a) to make payments to such Participants or
beneficiaries in the normal course as if the Plan had continued in effect, or
(b) to pay to such Participants or beneficiaries the balance in the
Participant's Deferred Bonus Account in a single lump-sum payment.
The Committee and Participants entitled to a majority of the aggregate
Deferred Bonus Accounts may at any time and from time to time amend the Plan in
any manner; provided that, subject to Section 12, without the consent of a
Participant, no such action shall materially and adversely affect the rights of
such Participant with respect to any rights to payment of amounts credited to
such Participant's Deferred Account, including by reducing the amounts
previously credited to the Deferred Bonus Account of such Participant or
otherwise.
11. EMPLOYMENT RIGHTS
Nothing in this Plan shall give any Participant any right to be employed or
to continue employment by HF Holdings, Inc., the Company or any of their
subsidiaries.
12. CHANGE IN OR INTERPRETATION OF LAW
In the event of any change in or interpretation of law which, in the
opinion of counsel acceptable to the Plan Administrator, would cause the Plan to
be other than an unfunded plan maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees (such an unfunded plan being hereinafter referred to as an "exempt
plan") and to be subject to the funding requirements of Title I of ERISA, the
Plan Administrator may terminate the participation of such Participants as may
be necessary to preserve or restore the Plan's status as an exempt plan and may
accelerate payment of their Deferred Bonus Accounts or take such other action as
may be necessary to preserve or restore such status, provided that in any such
case the Company shall use its reasonable best efforts to provide any affected
Participant with benefits reasonably equivalent to those to which he or she
would have been entitled pursuant to the Plan.
13. GOVERNING LAW
The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Delaware.
14. SUCCESSORS
This Plan shall inure to the benefit of and be binding upon the Participant
and the Company and their respective personal or legal representatives,
executors, administrators, and successors and assigns, including successors to
all or substantially all of the stock, business and/or assets, of the Company.
15. CONSENT TO JURISDICTION
Each party to this Agreement, by its execution hereof, (x) hereby
irrevocably submits to the non-exclusive jurisdiction of the state courts of the
State of Utah sitting in the County of Salt Lake or the United States District
Court of Utah for the purpose of any action, claim, cause of action or suit (in
contract, tort or otherwise), inquiry, proceeding or investigation arising out
of or based upon this Agreement or relating to the subject matter hereof, (y)
hereby waives to the extent not prohibited by applicable law, and agrees not to
assert, and agrees not to allow any of its subsidiaries to assert, by way of
motion, as a defense or otherwise, in any such action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such
proceeding brought in one of the above-named courts is improper, or that this
Agreement or the subject matter hereof or thereof may not be enforced in or by
such court and (z) hereby agrees not to make any motion or take any other action
seeking or intending to cause the transfer or removal of any such action, claim,
cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or
investigation to any court other than one of the above-named courts whether on
the grounds of inconvenient forum or otherwise. Each party hereto hereby
consents to service of process in any such proceeding in any manner permitted by
Utah law, and agrees that service of process by registered or certified mail,
return receipt requested, at its address specified pursuant to the Stockholders
Agreement is reasonably calculated to give actual notice.
16. WAIVER OF JURY TRIAL
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH
PARTICIPANT HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT,
TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED
UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING. THE COMPANY AND EACH PARTICIPANT
ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT THIS SECTION 16 CONSTITUTES A
MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO
THIS AGREEMENT. THE COMPANY AND EACH PARTICIPANT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 16 WITH ANY COURT AS WRITTEN EVIDENCE OF
CONSENT TO THE WAIVER OF THE RIGHT TO TRIAL BY JURY.
17. ATTORNEYS FEES
In the event of a dispute by the Company, the Participant or others as to
the validity or enforceability of, or liability under, any provision of this
Plan, the Company shall reimburse the Participant for all legal fees and
expenses incurred by him or her in connection with such dispute to the extent
the Participant shall prevail in such dispute.
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[Jr. Management Deferred Bonus Plan]
ICON HEALTH & FITNESS, INC.
By: /s/ S. FRED BECK
-----------------
Name: S. Fred Beck
Title: Treasurer and CFO
Date: September 27, 1999