FOSSIL, INC. AND AFFILIATES
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
SECTION ONE DEFINITIONS 1
1.1 "ADDENDUM(s)" 1
1.2 "ACCOUNT(s)" 1
1.3 "INSTALLMENT PAYMENT" 1
1.4 "APPLICABLE INTEREST RATE" 1
1.5 "BENEFICIARY" 1
1.6 "BENEFIT" 1
1.7 "BOARD" 1
1.8 "BONUS" 1
1.9 "BUSINESS DAY" 2
1.10 "CHANGE OF CONTROL" 2
1.11 "CODE" 2
1.12 "COMMITTEE" 2
1.13 "COMPANY" 2
1.14 "CONTRIBUTIONS" 3
1.15 "DEFERRED PAYMENTS" 3
1.16 "DEFERRED PAYMENT DATE" 3
1.17 "DESIGNATED AFFILIATE" 3
1.18 "EARNINGS" 3
1.19 "EFFECTIVE DATE" 3
1.20 "ELECTION FORM" 3
1.21 "ELIGIBLE INDIVIDUAL" 3
1.22 "EMPLOYEE" 3
1.23 "EMPLOYER" 3
1.24 "EMPLOYER CONTRIBUTION" 3
1.25 "EMPLOYER ACCOUNT" 3
1.26 "ENTRY DATE" 4
1.27 "ERISA" 4
1.28 "FINAL DEFERRAL FILING DATE" 4
1.29 "INVESTMENT DATE" 4
1.30 "LUMP SUM" 4
1.31 "MEASUREMENT PREFERENCES" 4
1.32 "PARTICIPANT" 4
1.33 "PLAN" 4
1.34 "PLAN YEAR" 4
1.35 "QUARTER" 4
1.36 "RULES OF GENERAL APPLICATION" 4
1.37 "THIRD-PARTY RECORDKEEPER" 4
1.38 "SALARY" 4
1.39 "SALARY DEFERRAL CONTRIBUTIONS" 4
1.40 "SALARY DEFERRAL ACCOUNT" 5
1.41 "SEPARATES" OR "SEPARATION" 5
1.42 "TRUST" 5
1.43 "VALUATION DATE" 5
1.44 "VEST" OR "VESTING" 5
SECTION TWO ADMINISTRATION 5
2.1 APPOINTMENT OF COMMITTEE. 5
2.2 EMPLOYER DUTIES 5
2.3 AUTHORITY OF COMMITTEE. 5
2.4 ACTION BY COMMITTEE. 5
2.5 MEETINGS OF COMMITTEE. 5
2.6 POWERS OF COMMITTEE AND COMPANY. 6
2.7 INDEMNIFICATION. 6
2.8 BOND AND EXPENSES. 6
2.9 RELIANCE ON TABLES 6
SECTION THREE PARTICIPATION 6
SECTION FOUR CONTRIBUTIONS 7
4.1 SALARY DEFERRAL CONTRIBUTIONS. 7
4.2 CREDITING OF SALARY DEFERRAL CONTRIBUTIONS. 7
4.3 EMPLOYER CONTRIBUTIONS. 8
4.4 DISPOSITION OF CONTRIBUTIONS. 8
SECTION FIVE PARTICIPANT'S ACCOUNTS AND INVESTMENTS 8
5.1 ESTABLISHMENT OF ACCOUNT. 8
5.2 EARNINGS CREDITED TO ACCOUNTS. 8
5.3 INVESTMENT DIRECTION. 8
5.4 STATEMENTS. 9
SECTION SIX VESTING 9
6.1 SALARY DEFERRAL ACCOUNT. 9
6.2 EMPLOYER ACCOUNT. 9
SECTION SEVEN DISTRIBUTION OF BENEFIT 9
7.1 FORM AND TIMING OF DISTRIBUTION. 9
7.2 ELECTION OF DEFERRED PAYMENTS. 10
7.3 INSTALLMENT PAYMENTS. 10
7.4 CHANGE IN CONTROL. 10
7.5 HARDSHIP DISTRIBUTION. 10
7.6 IN-SERVICE WITHDRAWAL. 11
7.7 SOURCE OF DISTRIBUTION. 11
SECTION EIGHT DESIGNATION OF BENEFICIARIES 11
8.1 DESIGNATION BY PARTICIPANT 11
8.2 LACK OF DESIGNATION. 11
SECTION NINE AMENDMENT AND TERMINATION 12
SECTION TEN GENERAL PROVISIONS 12
10.1 NO ASSIGNMENT. 12
10.2 INCAPACITY. 12
10.3 CLAIMS PROCEDURE. 12
10.4 FINAL RESOLUTION OF DISPUTES RELATING TO PLAN 13
10.5 INFORMATION REQUIRED. 13
10.6 COMMUNICATIONS BY, AND INFORMATION FROM, PARTICIPANT. 13
10.7 NO RIGHTS IMPLIED. 14
10.8 COMMUNICATIONS BY COMMITTEE OR EMPLOYER. 14
10.9 INTERPRETATIONS AND ADJUSTMENTS. 14
10.10 NO LIABILITY FOR GOOD FAITH DETERMINATIONS. 14
10.11 NO EMPLOYMENT RIGHTS. 14
10.12 WITHHOLDING OF TAXES. 14
10.13 WAIVERS. 15
10.14 RECORDS. 15
10.15 SECURITIES LAWS. 15
10.16 SEVERABILITY. 15
10.17 CAPTIONS AND GENDER. 15
10.18 CHOICE OF LAW. 15
10.19 EFFECTIVE DATE AND TERMINATION DATE. 15
FOSSIL, INC. AND AFFILIATES
DEFERRED COMPENSATION PLAN
Fossil, Inc. hereby establishes the Fossil, Inc. And Affiliates Deferred
Compensation Plan to give a select group of highly compensated employees the
opportunity to defer a portion of their compensation and possibly receive
deferred employer contributions. For purposes of the Code, the Employers
intend this Plan to be an unfunded, unsecured promise to pay on the part of
each Employer. For purposes of ERISA, the Employers intend this Plan to be
an unfunded plan solely for the benefit of a select group of management or
highly compensated employees of the Employers for the purpose of qualifying
the Plan for the "top hat" plan exception under sections 201(2), 301(a)(3)
and 401(a)(1) of ERISA.
SECTION ONE DEFINITIONS
1.1 "ADDENDUM(s)" shall mean, collectively, the pages which are
attached to this Plan document, and incorporated by reference, on which shall
be reflected the information described in SECTION 4.3.
1.2 "ACCOUNT(s)" shall mean, collectively, the Salary Deferral Account,
and the Employer Account, maintained for each Participant, except that when
it shall be appropriate to refer to a particular Account, reference shall be
to that Account.
1.3 "INSTALLMENT PAYMENT" shall mean an annual distribution, in cash,
of the Participant's Account balance over a period of years as provided for
in SUBSECTIONS 7.2 AND 7.3.
1.4 "APPLICABLE INTEREST RATE" shall mean, for each day during a period
of reference (but computed without compounding), a percentage equal to the
product of (i), (ii) and (iii), where (i) is the sum of the one (1) year
London Interbank Offered Rate ("LIBOR") as reported in the Wall Street
Journal as of (x) the first Business Day, plus (y) the last Business Day,
occurring during such period of reference, (ii) is fifty percent (50%), and
(iii) is a quotient of 1 divided by 360.
1.5 "BENEFICIARY" shall mean the person(s), entity or entities
designated by the Participant as the beneficiary of balance of his Benefit.
1.6 "BENEFIT" shall mean the Vested amount credited to the
Participant's Account at the time of reference.
1.7 "BOARD" shall mean the Board of Directors of the Company.
1.8 "BONUS" shall mean amounts of compensation paid by an Employer
which is not regular salary, wages or commissions, and which is determined to
be a Bonus by the Committee.
1.9 "BUSINESS DAY" shall mean, with respect to each Measurement
Preference, a day on which the exchange on which it is traded is operating.
1.10 "CHANGE OF CONTROL" shall mean the first to occur of the following:
(a) a dissolution or liquidation of the Company; or
(b) a merger or consolidation (other than a merger effecting a
re-incorporation of the Company in another state or any other merger or a
consolidation in which the shareholders of the surviving corporation and
their proportionate interests therein immediately after the merger or
consolidation are substantially identical to the shareholders of the
Company and their proportionate interests therein immediately prior to the
merger or consolidation) in which the Company is not the surviving
corporation (or survives only as a subsidiary of another corporation as a
result of a transaction in which the shareholders of the parent of the
Company and their proportionate interests therein immediately after the
transaction are not substantially identical to the shareholders of the
Company and their proportionate interests therein immediately prior to the
transaction; provided, however, that the Board may at any time prior to
such a merger or consolidation provide by resolution that there has been no
Change in Control and that the foregoing provisions of this parenthetical
shall not apply if a majority of the Board of Directors of such parent
immediately after the transaction consists of individuals who constituted a
majority of the Board immediately prior to the transaction);
(c) a transaction in which any person becomes the owner of fifty
percent (50%) or more of the total combined voting power of all classes of
stock of the Company (provided, however, that the Board may at any time
prior to such transaction provide by resolution that there has been no
Change in Control and that this subparagraph (c) shall not apply if such
acquiring person is a corporation and a majority of the Board of Directors
of the acquiring corporation immediately after the transaction consists of
individuals who constituted a majority of the Board immediately prior to
the acquisition of such fifty percent (50%) or more total combined voting
power); or
(d) any other transaction or series of transactions which the Board
determines has the effect of a Change in Control.
1.11 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
1.12 "COMMITTEE" shall mean those persons designated to administer the
Plan pursuant to SECTION TWO.
1.13 "COMPANY" shall mean Fossil, Inc., a Delaware corporation, and its
successors and assigns.
1.14 "CONTRIBUTIONS" shall mean, collectively, the Salary Deferral
Contributions, and the Employer Contributions, with respect to each
Participant, except that when it shall be appropriate to refer to a
particular Contribution, reference shall be to that Contribution.
1.15 "DEFERRED PAYMENTS" shall mean the payment of a Participant's
Benefits as described in SECTION 7.2.
1.16 "DEFERRED PAYMENT DATE" shall mean the date as of which a
Participant's Deferred Payments are made or commenced.
1.17 "DESIGNATED AFFILIATE" shall mean Fossil Partners, L.P., and each
other entity of which fifty percent (50%) or more of its value or, in the
case of a corporation, of the total combined voting power of all classes of
stock, are held by the Company or another subsidiary, whether or not such
entity now exists or is hereafter organized or acquired by the Company or
another subsidiary, and which has been designated for participation herein by
the Committee.
1.18 "EARNINGS" shall mean the amounts notationally credited or debited
to a Participant's Account based on changes in the value (including, without
limitation, unrealized appreciation or depreciation) of the Participant's
Measurement Preferences, plus the amount, if any, attributable to the
crediting of the Applicable Interest Rate, all determined in accordance with
Rules of General Application.
1.19 "EFFECTIVE DATE" shall mean December 30, 1998.
1.20 "ELECTION FORM" shall mean a written form on which the Participant
may specify his (i) Salary Deferral Contribution for the Plan Year, (ii)
Measurement Preferences, (iii) form and timing of distribution of his
Benefit, and (iv) such other matters as shall be determined by the Committee
at the time of reference.
1.21 "ELIGIBLE INDIVIDUAL" shall mean an employee of an Employer who is
(i) a member of a select group of management or highly compensated employees,
and (ii) designated by the Committee as eligible to participate in the Plan.
1.22 "EMPLOYEE" shall mean a common law employee of the Employer.
1.23 "EMPLOYER" shall mean, collectively, the Company and each of its
Designated Affiliates.
1.24 "EMPLOYER CONTRIBUTION" shall mean the amount, if any, credited
under the Plan by an Employer to an Eligible Participant, and evidenced by an
Addendum.
1.25 "EMPLOYER ACCOUNT" shall mean the account maintained for each
Participant who has received an Employer Contribution, and which will reflect
the amount of such Employer Contribution and appropriate adjustments as
provided herein.
1.26 "ENTRY DATE" shall mean February 1, 1999 for the 1999 Plan Year,
and January 1st for each subsequent Plan Year; except that, where the
Employee is not an Eligible Individual on such February 1, 1999 or a later
January 1st, it also shall mean July 1st; provided, without limitation, that
each Eligible Individual shall have a single Entry Date with respect to each
Plan Year.
1.27 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.28 "FINAL DEFERRAL FILING DATE" shall mean the date that precedes the
date on which a Participant's Deferred Payment is scheduled to begin by 24
months.
1.29 "INVESTMENT DATE" shall mean the first Business Day in each
Quarter, except that it also shall mean an Entry Date (except that if the
Entry Date is not a Business Day, then the first Business Day following an
Entry Date) with respect to each Eligible Employee who first becomes a
Participant on such Entry Date.
1.30 "LUMP SUM" shall mean a single distribution, in cash, of a
Participant's Benefit.
1.31 "MEASUREMENT PREFERENCES" shall mean the preferences described in
SUBSECTION 5.3.
1.32 "PARTICIPANT" shall mean an Eligible Individual who participates in
the Plan pursuant to SECTION THREE.
1.33 "PLAN" shall mean the Fossil, Inc. and Affiliates Deferred
Compensation Plan, as set forth in this document and subsequent amendments.
1.34 "PLAN YEAR" shall mean calendar year.
1.35 "QUARTER" shall mean calendar quarter.
1.36 "RULES OF GENERAL APPLICATION" shall mean those rules promulgated
by the Committee, in its sole discretion, from time to time with respect to
the matter of reference, but which will be applied in a similar manner to
Participants similarly situated.
1.37 "THIRD-PARTY RECORDKEEPER" shall mean the person or entity selected
by the Committee to maintain the records necessary to the administration of
the Plan.
1.38 "SALARY" shall mean Participant's regular salary, wages, and
commissions paid by an Employer, plus any amounts deferred under sections 125
or 401(k) of the Code, plus any amounts under this Plan, but excludes
Bonuses, expense reimbursements and fringe benefits.
1.39 "SALARY DEFERRAL CONTRIBUTIONS" shall mean the amounts described in
SUBSECTION 4.1.
1.40 "SALARY DEFERRAL ACCOUNT" shall mean the amount credited under the
Plan as a result of the Participant's Salary Deferral Contributions, and
appropriate adjustments as provided herein.
1.41 "SEPARATES" OR "SEPARATION" or similar shall mean a Participant's
termination of employment with an Employer for any reason (including death or
disability).
1.42 "TRUST" shall mean a trust which substantially conforms to the
model rabbi trust provided in section 5 of the Internal Revenue Service's
Revenue Procedure 92-64, 1992-2 C.B. 422, that may be established between the
Company and the trustee(s) named in the Trust.
1.43 "VALUATION DATE" shall mean the last Business Day of each Quarter.
1.44 "VEST" OR "VESTING" or similar, shall mean the portion of a
Participant's Employer Account which is nonforfeitable at the time of
reference.
SECTION TWO ADMINISTRATION
2.1 APPOINTMENT OF COMMITTEE. The Board shall appoint the Committee.
The Board may change Committee membership at any time without cause, and a
member may resign by providing written notice to the Company. Any vacancy in
the membership of the Committee may be filled by the Board.
2.2 EMPLOYER DUTIES. An Employer shall, upon request or as may be
specifically required under the Plan, furnish or cause to be furnished all of
the information or documentation in its possession or control that is
necessary or required by the Committee to perform its duties and functions
under the Plan.
2.3 AUTHORITY OF COMMITTEE. The Committee shall have the exclusive
authority and responsibility for administering the Plan in accordance with
its terms. All exercises of authority by the Committee under this Plan shall
be final, conclusive and binding, unless found by a court of competent
jurisdiction to be arbitrary and capricious.
2.4 ACTION BY COMMITTEE. The Committee may elect a chairman who shall
be a member of the Committee and a secretary who may, but need not, be a
member of the Committee. Any and all acts and decisions of the Committee
shall be by at least a majority of the then members, but the Committee may
delegate to any one or more of its members the authority to sign notices or
other documents on its behalf or to perform ministerial acts for it, in which
event any person may accept such notice, document or act without questioning
its having been authorized by the Committee.
2.5 MEETINGS OF COMMITTEE. The Committee shall hold meetings upon such
notice, at such place or places, and at such time or times as it may from
time to time determine; provided, however, any decisions made or action taken
pursuant to written approval of a majority
of the then members shall be sufficient; and provided, further, and without
limitation, that the Committee may take actions which have retroactive effect.
2.6 POWERS OF COMMITTEE AND COMPANY. The Committee shall have all
powers and discretion as may be necessary to discharge its duties and
responsibilities under this Plan, including, without limitation, the power,
exercisable in its sole discretion, (i) to interpret or construe the Plan,
(ii) to make rules and regulations for the administration of the Plan, (iii)
to determine all questions of eligibility, status and other rights of
Participants, beneficiaries and other persons, (iv) to confirm or reject each
Participants selection of Measurement Preferences, and (v) to resolve any
dispute which may arise under this Plan involving Participants or
beneficiaries. The Committee may engage agents to assist it and may engage
legal counsel, who may be counsel for the Company.
No member of the Committee shall vote or act upon any matter which
relates exclusively to his own rights or benefits under this Plan, and if
all members of the Committee shall be disqualified, with regard to one or
more matters, the President of the Company shall appoint one or more
qualifying persons to be the Committee with regard to such matters.
2.7 INDEMNIFICATION. Without limitation, including SECTION 10.10, the
members of the Committee shall be indemnified by the Company against any and
all liabilities arising by reason of any act, or failure to act, pursuant to
the provisions of the Plan, including expenses reasonably incurred in the
defense of any claim relating to the Plan, even if the same is judicially
determined to be due to such member's negligence, but not when the same is
judicially determined to be due to the gross negligence or willful misconduct
of such member.
2.8 BOND AND EXPENSES. The Committee shall serve without bond unless
state or federal statutes require otherwise, in which event the Company shall
pay the premium. The expenses of the Committee shall be paid by the Company.
Such expenses shall include all expenses incident to the functioning of the
Committee, including, without limitation, litigation costs, fees of
accountants, counsel and other specialists and other costs of administering
the Plan.
2.9 RELIANCE ON TABLES. In administering the Plan, the Committee shall
be entitled to the extent permitted by law to rely conclusively on all
tables, valuations, certificates, opinions and reports which are furnished by
accountants, legal counsel or other experts employed or engaged by the
Committee.
SECTION THREE PARTICIPATION
An Eligible Individual will become a Participant either by filing an
Election Form prior to his Entry Date, or by being credited with an Employer
Contribution, and will remain a Participant until he receives the payment of
his entire Benefit. Being designated as an Eligible Individual for one Plan
Year does not entitle such Employee to continued status as an Eligible
Individual for subsequent Plan Years, but such person will remain an Eligible
Individual until notified in writing by the Committee of his removal from
that status and, following such
removal, such Employee shall not be able to elect Salary Deferral
Contributions on any Entry Date on which he is not an Eligible Individual.
SECTION FOUR CONTRIBUTIONS
4.1 SALARY DEFERRAL CONTRIBUTIONS. An Employee who is an Eligible
Individual on his Entry Date with respect to a Plan Year may elect to defer
from Salary any amount which is not less than Five Thousand Dollars ($5,000)
(prorated based on the remaining portion of the Plan Year if the
Participant's Entry Date is not February 1, 1999 or a subsequent January 1st)
and not more than fifty percent (50%) of his Salary; and may elect to defer
from his Bonus up to one hundred percent (100%) of his Bonus, in each case
payable during the portion of the Plan Year following such Entry Date, by
filing an Election Form with the Committee prior to such Entry Date. Unless
otherwise determined by the Committee, the election to defer Salary must be
designated as a fixed dollar amount, and the election to defer with respect
to the Bonus may be designated in either a fixed dollar, or a percentage,
amount. Each Election Form shall continue to apply to each later Entry Date
until a new Election Form is filed; provided, further, that only the last
Election Form filed prior to an Entry Date shall be effective. If an
Eligible Individual has not filed an Election Form deferring a portion of his
Salary and/or Bonus on or before the Entry Date of reference, such Eligible
Individual shall be deemed to have elected not to defer any portion of his
Salary and/or Bonus with respect to the Plan Year in which such Entry Date
occurs. Notwithstanding any provision hereof to the contrary, the Committee
may designate a special Entry Date with respect to one or more Participants
solely for purposes of permitting each such Participant to elect to defer an
additional amount from each such Participant's Bonus; provided, further, that
such special Entry Date shall have no other effect hereunder.
4.2 CREDITING OF SALARY DEFERRAL CONTRIBUTIONS. The amount of a
Participant's Salary Deferral Contributions will be deducted (i) from a
Participant's Salary on each payroll date during the Plan Year of reference
in an amount equal to the total Salary Deferral Contribution divided by the
number of payroll dates during the Plan Year of reference following the Entry
Date of reference, and (ii) from a Bonus on the date of its payment in the
full amount of Salary Deferral Contribution elected to be deducted from such
Bonus payments. The portion of the Salary Deferral Contribution amount which
will be deducted from Salary shall be credited to the Participant's Salary
Deferral Account as of the first Business Day following the Entry Date or, if
communicated to the Participant in writing on or before such Entry Date, as
of the payroll date on which deducted; and the full amount of the Salary
Deferral Contribution to be deducted from the Bonus shall be credited to the
Participant's Salary Deferral Account on the date the Bonus is (or would have
been) paid. In the event a Participant's Salary Deferral Account is credited
with a Salary Deferral Contribution before such amount is actually deducted
from the Participant's Salary, and the Participant terminates employment
during the Plan Year of reference, such Participant shall forfeit an amount
from his Salary Deferral Account equal to the excess of (iii) the amount of
Salary Deferral Contribution credited to his Account with respect to such
Plan Year, over (iv) the aggregate amount of Salary Deferral Contribution
actually deducted from his Salary during such Plan Year, and such forfeited
amount shall inure to the benefit of the Employer in the manner determined by
the Committee.
4.3 EMPLOYER CONTRIBUTIONS. At any time on or after the Effective
Date, in addition to the amount described in SECTIONS 4.1 and 4.2, an
Employer may credit a Participant's Employer Account with such amount as it
shall determine in its sole discretion. The name of the Participant, the
amount to be credited, the date as of which it is to be credited, the rate of
Vesting, and such other matters as are required to be set forth (as
determined by the Employer in its sole discretion), shall be set forth on an
Addendum; provided that 100% of such amounts contributed for a Participant,
and related Earnings, shall be forfeited on such Participant's Separation
unless otherwise expressly provided in an Addendum expressly relating to such
Employer Contribution.
4.4 DISPOSITION OF CONTRIBUTIONS. All Contributions shall be delivered
to the Trust; provided, however, that such delivery may cease, and the funds
retained by the Employer, effective with respect to Contributions made with
respect to a Plan Year beginning after delivery of written notice of such
change to each Participant.
SECTION FIVE PARTICIPANT'S ACCOUNTS AND INVESTMENTS
5.1 ESTABLISHMENT OF ACCOUNT. The Committee shall establish separate
Accounts for each Participant, to which shall be credited or debited the
Participant's share of Contributions and Earnings, and to which shall be
debited the Account's share of expenses and distributions.
5.2 EARNINGS CREDITED TO ACCOUNTS. Earnings on amounts credited to an
Account shall be credited or debited to such Account on each Business Day
based on the value of the Account's Measurement Preferences on such Business
Day, all in the manner determined by the Committee in accordance with Rules
of General Application.
5.3 INVESTMENT DIRECTION. Effective as of each Investment Date, in
accordance with Rules of General Application, each Participant may select
investments ("Measurement Preferences") from among the different investment
alternatives which are made available by the Committee, for existing balances
in his Account and for future Contributions, such selection of Measurement
Preferences to be made in increments of 5%, and such percentages to apply
equally to the amount credited to the Participant's Account on the
immediately preceding Valuation Date, and to Contributions credited to such
Account subsequent to such Valuation Date. No actual investments shall be
made by Participants. The Measurement Preferences, and the Applicable
Interest Rate, are only for the purpose of determining the Employer's payment
obligation under the Plan and such Measurement Preferences do not control any
actual investments made by the Employer or the Trustee.
A participant may change Measurement Preferences on the next Investment
Date by contacting the Third-Party Recordkeeper, either through filing a
written Election Form or, if available under the Rules of General
Application, through the Third-Party Recordkeeper's voice response system not
later than the 15th day of the month preceding the month in which such
Investment Date occurs. Regardless of the method used to change the
Measurement Preferences, the Third-Party Recordkeeper shall send a
confirmation to the Committee verifying the new
Measurement Preferences. The final Election Form (or its equivalent) timely
filed by the Participant prior to the Investment Date of reference shall be
controlling with respect to such Investment Date. If a Participant has not
timely filed an Election Form with respect to some or all of the funds in his
Account with respect to an Investment Date, he will be credited with interest
at the Applicable Interest Rate on such amount until the first Investment
Date with respect to which he has filed a timely Election Form with respect
to such amount.
Notwithstanding the forgoing, the Committee shall have the power to
reject some or all of the selections of Measurement Preferences by any one or
more Participants by advising the affected Participant(s) and the Third-Party
Recordkeeper in writing of such rejection within 3 days of being receiving
the notice described in the preceding paragraph. If the Committee rejects a
selection, notwithstanding any provision hereof to the contrary, the portion
of such Account(s) subject to such rejection shall earn interest at the
Applicable Interest Rate from the date specified in such written rejection
until the date as of which an approved investment in a Measurement Preference
is made.
5.4 STATEMENTS. As soon as administratively practicable following the
close of each Quarter, the Committee shall furnish each Participant with a
statement setting forth (i) the amount in his Account, (ii) the amount of
Contributions, separately showing the Salary Deferral Contributions and
Employer Contributions, credited to his Account during such Quarter, (iii)
the Earnings credited or debited to his Account for such Quarter, and (iv)
any debited charges to, or distributions from, his Account during such
Quarter.
SECTION SIX VESTING
6.1 SALARY DEFERRAL ACCOUNT. Participant shall always be 100% Vested
in the amounts credited to his Salary Deferral Account.
6.2 EMPLOYER ACCOUNT. Participant shall Vest in the amount credited to
his Employer Account in accordance with the Vesting Schedule set forth on the
Addendum which evidences such Employer Contribution, and otherwise shall be
zero (0) Vested. Notwithstanding any other provision in this Plan, a
Participant's Employer Account will become one hundred percent (100%) Vested
upon the date of a Change of Control.
SECTION SEVEN DISTRIBUTION OF BENEFIT
7.1 FORM AND TIMING OF DISTRIBUTION. Unless a Participant is entitled
to a Deferred Payment, upon a Participant's Separation he shall receive a
Lump Sum distribution within a reasonable period of time, not to exceed sixty
(60) days, after the Valuation Date next following his Separation. The
amount of such Lump Sum distribution shall be equal to his Benefit determined
as of the Valuation Date preceding the date of distribution.
7.2 ELECTION OF DEFERRED PAYMENTS. A Participant shall be entitled to
a Deferred Payment if his Separation is not by reason of his death, and if on
his date of Separation (i) he has attained the age of 55 and completed at
least 5 Years of Service, and (ii) has filed an Election Form on which he has
(x) selected a Deferred Payment Date, and (y) selected a form of payment. A
Participant's Deferred Payments may be made or commenced at any time, after
age 55 and prior to the later of age 65 or his Separation, and may be paid
either in a Lump Sum or in 5, 10, or 15 Installment Payments, as the
Participant shall select on the Election Form in effect on his Final Deferral
Filing Date, and only the last Election Form filed on or before such Final
Deferral Filing Date shall be effective. Installment Payments shall be paid
at such time, during the first 30 days of each Plan Year, as shall be
determined by the Committee. If a Participant receiving an Installment
Payment shall be reemployed, all such Installment Payments shall cease during
the period of his reemployment, and shall resume (iii) during the first 30
days of the Plan Year following his Separation, and (iv) shall be paid out in
the same number of installments as were remaining to be paid on the date of
his reemployment.
7.3 INSTALLMENT PAYMENTS. If Participant elects a Deferred Payment in
the form of Installment Payments, each installment shall be equal to the
product of (i) his Benefit on the Valuation Date next preceding the date of
payment, multiplied by (ii) a fraction, the numerator of which is one (1),
and the denominator of which is the total number of installments originally
elected less the number of installments previously paid.
7.4 CHANGE IN CONTROL. Notwithstanding any other provision to the
contrary, upon a Change of Control, all Benefits hereunder (including,
without limitation, Benefits subject to Deferred Payment elections or which
are being paid in Installment Payments), shall be distributed to Participants
in a Lump Sum as soon as reasonably possible, but not more than 30 days,
after such Change of Control. Notwithstanding the foregoing, at any time
prior to the date of a Change of Control, or with respect to each Participant
who is not notified in writing of an impending Change of Control at least 14
days prior to the date of Change in Control, for a period of 14 days after
the date of notice of such Change of Control, a Participant may elect to
waive the provisions of this SECTION 7.4 with respect to such Change of
Control and his Benefits will continue to be deferred under the Plan as if
such Change of Control had not occurred.
7.5 HARDSHIP DISTRIBUTION. Upon the Committee's determination
(following petition by the Participant) that the Participant has suffered a
"severe financial hardship", the Committee shall distribute to Participant
that portion of such Participant's Benefit as requested by the Participant
and approved by the Committee, but in no event shall the Committee approve a
distribution which is greater than is necessary to relieve the financial
hardship. A "severe financial hardship" means an unforeseeable event
resulting from a sudden and unexplained illness or accident experienced by
either the Participant or his dependents, the loss of property due to
casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the Participant's control, which the
Participant is unable to satisfy through available or attainable assets.
Without limitation, the definition of severe financial hardship does not
include the need to send a child to college or the desire to purchase a home.
The Committee shall evaluate the facts and circumstances of each
hardship request and may rely on the written representations of the
Participant unless it has reason to know such representations are false. The
Participant shall receive a Lump Sum cash payment of the amount approved by
the Committee as soon as possible following the next succeeding Valuation
Date (or, upon the Participant's request, on such earlier date and under such
rules as shall be determined by the Committee), and such amount shall be
deducted from his Measurement Preferences in accordance with Rules of General
Application. If a Participant receives a hardship distribution he shall be
ineligible to elect Salary Deferral Contributions for the following Plan Year.
7.6 IN-SERVICE WITHDRAWAL. Prior to a Participant's Separation, in
accordance with Rules of General Application, a Participant may elect to
receive a distribution of all (subject to the forfeiture), or a portion of
his Benefit. If a Participant elects to receive such a distribution, he shall
permanently and irrevocably forfeit from his Benefit an amount equal to 20
percent (20%) of the amount so distributed and such Participant shall be
ineligible to elect Salary Deferral Contributions for the following Plan
Year. The amount forfeited shall inure to the benefit of the Employer in the
manner determined by the Committee, and such amount shall be deducted from
his Measurement Preferences in accordance with Rules of General Application.
7.7 SOURCE OF DISTRIBUTION. All payments of Benefits shall be in cash
from the funds in the Trust or, in the discretion or the Employer, from the
Employer's funds held outside of the Trust. Nothing contained in the Plan,
nor any action taken pursuant to the provisions of the Plan, shall create or
be construed to create a fiduciary relationship between the Company, an
Employer, Participant, Beneficiary, or Employee or other person. To the
extent that any person acquires a right to be paid Benefits, such right shall
be no greater than the right of an unsecured general creditor of his Employer.
SECTION EIGHT DESIGNATION OF BENEFICIARIES
8.1 DESIGNATION BY PARTICIPANT. Participant's written designation of
one or more persons or entities as his Beneficiary shall operate to designate
the Participant's Beneficiary under this Plan. The Participant shall file
with the Committee a copy of his Beneficiary designation under the Plan. The
last such designation received by the Committee shall be controlling, and no
designation, or change or revocation of a designation shall be effective
unless received by the Committee prior to the Participant's death, and in no
event shall it be effective as of a date prior to such receipt.
8.2 LACK OF DESIGNATION. If no Beneficiary designation is in effect at
the time of Participant's death, if no designated Beneficiary survives the
Participant or if the otherwise applicable Beneficiary designation conflicts
with applicable law, the Participant's estate shall be the Beneficiary. The
Committee may direct the Employer or Trustee to retain any unpaid Benefits,
without crediting for either Measurement Preferences or Applicable Interest
Rate, until all rights to the unpaid Benefits are determined. Alternatively,
the Committee may direct the Employer or Trustee to pay the Benefits into
any court of appropriate jurisdiction. Any such
payment shall completely discharge each Employer, the Trustee, and the
Committee from any liability under the Plan.
SECTION NINE AMENDMENT AND TERMINATION
The Plan, without cause and without prior notice, may be terminated, in
whole or in part, by the Board, in which case the Employer Account of any
affected Participant shall become 100% Vested on such date of termination
and, notwithstanding any provisions of the Plan to the contrary, the Benefits
of such affected Participant will be distributed in a Lump Sum as soon as
reasonably possible following such termination. The Plan may be amended at
any time by the Board or the Committee and, without limiting the generality
of any other provision hereof, if the Committee determines that an amendment
to the Plan would result in a substantial prospective reduction in either the
rights or benefits of one or more Participants with respect to their Benefit
determined as of the effective date of such amendment, the Committee must
give each affected Participant notice of the amendment not less than 5 days
prior to the earlier of its adoption or its effective date, and allow each
such Participant to waive the right to elect an immediate distribution and,
in the absence of such timely waiver, each such Participant shall have the
right, for a period of 90 days commencing on the earlier of the adoption, or
the effective date, of such amendment, to elect, in a writing filed with the
Committee, to have all (but not less than all) of his Benefit distributed to
him as soon as reasonably possible.
SECTION TEN GENERAL PROVISIONS
10.1 NO ASSIGNMENT. The right of any Participant to Benefits shall not
be assigned, transferred, pledged or encumbered, either voluntarily or by
operation of law, except as provided in SECTION EIGHT with respect to
designations of Beneficiaries.
10.2 INCAPACITY. If the Committee shall find that any person to whom
any Benefit is payable under the Plan is unable to care for his affairs
because of illness or accident or is a minor, any payment due shall be paid
to the duly appointed guardian, committee or other legal representative for
such person. Any such payment shall be a complete discharge of the
liabilities of each Employer, the Trustee and the Committee as to the amount
paid.
10.3 CLAIMS PROCEDURE. The Committee will make all determinations as to
the rights of any Employee, Participant, Beneficiary or other person under
the terms of this Plan. Any Employee, Participant, Beneficiary, or person
claiming under them, may make a claim for benefits under this Plan by filing
written notice with the Committee setting forth the substance of the claim.
If a claim is wholly or partially denied, the claimant will have the
opportunity to appeal the denial upon filing with the Committee a written
request for review within 60 days after receipt of notice of denial. In
making an appeal the claimant may examine pertinent Plan documents and may
submit issues and comments in writing. Denial of a claim or a decision on
review will be made in writing by the Committee delivered to the claimant
within 60 days after receipt of the claim or request for review, unless
special circumstances require an extension of
time for processing the claim or review, in which event the Committee's
decision must be made as soon as possible thereafter but not beyond an
additional 60 days. If no action on an initial claim is taken within 120
days, the claims will be deemed denied for purposes of permitting the
claimant to proceed to the review stage. The denial of a claim or the
decision on review will specify the reasons for the denial or decision and
will make reference to the pertinent Plan provisions upon which the denial or
decision is based. The denial of a claim will also include a description of
any additional material or information necessary for the claimant to perfect
the claim and an explanation of the claim review procedure herein described.
The Committee will serve as an agent for service of legal process with
respect to the Plan unless the Employer, through written resolution, appoints
another agent.
10.4 FINAL RESOLUTION OF DISPUTES RELATING TO PLAN. If, after the
exhaustion of the claims procedure set forth in SECTION 10.3, one or more
disputes remain with regard to the rights under the Plan of any Employee,
Participant, Beneficiary or person claiming under them, such person(s) and
the Committee (collectively, "Interested Parties") agree to attempt to
resolve same by telephone conference with an agreed mediator. If the
Interested Parties cannot resolve their differences by such telephone
conference, then the Interested Parties agree to schedule a one day mediation
with a mediator who is mutually agreeable to the Interested Parties, within
thirty (30) days to resolve the disputes and to share equally the costs of
such mediation. If one of the Interested Parties refuses to mediate, then
such Interested Party thereby waives any recovery for attorneys' fees or
costs incurred in any arbitration brought to construe or enforce the
provisions of this Plan. If the Interested Parties are unable to resolve
their dispute by mediation, the Interested Parties may institute an
arbitration proceeding under the auspices of the American Arbitration
Association to construe or enforce the provisions of the Plan. THE
INTERESTED PARTIES HEREBY WAIVE THEIR RIGHT TO INSTITUTE LITIGATION IN A
COURT OF LAW TO RESOLVE A DISPUTE CONCERNING THE CONSTRUCTION OR ENFORCEMENT
OF THIS PLAN. The Interested Party prevailing in any such arbitration shall
recover from the adverse party its actual damages and reasonable costs and
expenses, including, without limitation, reasonable attorneys' fees incurred
in connection with such dispute and arbitration.
10.5 INFORMATION REQUIRED. Each Participant shall file with the
Committee such pertinent information concerning himself and his Beneficiary
as the Committee may specify, and no Participant or Beneficiary or other
person shall have any rights or be entitled to any benefits under the Plan,
unless such information is properly filed.
10.6 COMMUNICATIONS BY, AND INFORMATION FROM, PARTICIPANT. All
elections, selections, designations, requests, notices, instructions and
other communications to the Committee, Third-Party Recordkeeper, Company, or
Employer required or permitted under the Plan shall be (i) in such form as is
prescribed from time to time by the Committee, (ii) shall be (x) mailed by
first-class mail, or (y) delivered, to such location as shall be specified by
the Committee and shall be deemed to have been given and delivered only on
actual receipt by the person to be charged at such location. If the
Committee notifies the Participant or Beneficiary by registered mail (return
receipt requested) at his last known address that he is entitled to a
distribution and also notifies him of the provisions of this paragraph, and
the Participant or Beneficiary fails to claim his benefits under the Plan or
provide his current address to the
Committee within one year after such notification, his Benefit will be
forfeited and inure to the benefit of the Employer in the manner determined
by the Committee. If the Participant or Beneficiary is subsequently located,
such Benefit will be restored, but without Earnings being credited subsequent
to the date of the forfeiture.
10.7 NO RIGHTS IMPLIED. Without limitation, nothing contained in this
Plan, nor any modification or amendment to the Plan, nor the creation of any
Account on the books of the Company, shall give any Employee or Participant
any legal or equitable right against the Company or any officer, director, or
Employee of the Company, except as expressly provided by the Plan.
10.8 COMMUNICATIONS BY COMMITTEE OR EMPLOYER. All notices, statements,
reports and other communications from the Committee or any Employer to any
person required or permitted under the Plan shall be deemed to have been duly
given when delivered to, or when mailed first-class mail, postage prepaid and
addressed to, such person at his address last appearing on the records of the
most recent Employer.
10.9 INTERPRETATIONS AND ADJUSTMENTS. To the extent permitted by law,
each interpretation of the Plan and each decision on any matter relating to
the Plan made by the Board, the Company, or the Committee, within their scope
of their authority hereunder, shall be made in their sole discretion and
shall be binding on all persons. A misstatement or other mistake of fact
shall be corrected when it becomes known and the person responsible shall
make such adjustment on account thereof as he considers equitable and
practicable.
10.10 NO LIABILITY FOR GOOD FAITH DETERMINATIONS. Neither the Company,
the Board, nor the Committee shall be liable for any act, omission, or
determination taken or made with respect to the Plan which is not judicially
determined to be due to willful misconduct, and members of the Board, and the
Committee, shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage, or expense (including
attorneys' fees, the costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the Company, and amounts
paid in satisfaction of a judgment, except a judgment based on a finding of
willful misconduct) arising therefrom to the full extent permitted by law and
under any directors' and officers' liability or similar insurance coverage
that may from time to time be in effect.
10.11 NO EMPLOYMENT RIGHTS. Neither the Plan nor any action taken under
the Plan shall be construed as giving to any Employee the right to be
retained in the employ of an Employer or as affecting the right of an
Employer to dismiss any Employee at any time, with or without cause.
10.12 WITHHOLDING OF TAXES. An Employer shall deduct from Participant's
Salary or the amount of any payment made pursuant to this Plan any amounts
required to be paid or withheld by the federal government or any state or
local government. By his participation in the Plan, the Participant agrees
to all such deductions.
10.13 WAIVERS. Any waiver of any right granted pursuant to this Plan
shall not be valid unless the same is in writing and signed by the party
waiving such right. Any such waiver shall not be deemed to be a waiver of
any other rights.
10.14 RECORDS. Records of the Company, and of the Committee, as to any
matters relating to this Plan will be conclusive on all persons.
10.15 SECURITIES LAWS. The Plan intends to comply with and be exempt
under The Securities Act of 1933, as amended. The Participants under the
Plan are final purchasers and not underwriters or conduits to other
beneficial owners or subsequent purchasers.
10.16 SEVERABILITY. In case any one or more of the provisions contained
in this Plan shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions in this
Plan shall not in any way be affected or impaired.
10.17 CAPTIONS AND GENDER. The captions preceding the Sections and
Subsections of this Plan have been inserted solely as a matter of convenience
and in no way define or limit the scope or intent of any provisions of this
Plan. Where the context admits or requires, words used in the masculine
gender shall be construed to include the feminine and the neuter also, the
plural shall include the singular, and the singular shall include the plural.
10.18 CHOICE OF LAW. THE PLAN AND ALL RIGHTS UNDER THIS PLAN SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
EXCEPT TO THE EXTENT PREEMPTED BY ERISA.
10.19 EFFECTIVE DATE AND TERMINATION DATE. The Plan is effective on the
Effective Date and shall terminate on the date no further Benefits are
credited hereunder, or on such earlier date as the Plan is terminated
pursuant to SECTION NINE.
IN WITNESS WHEREOF, the Company has executed this Plan on this the 22nd day
of December, 1998.
FOSSIL, INC.
By: /s/ Randy Kercho
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Its: CFO
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