AMENDED AND RESTATED DEFERRED COMPENSATION PLAN

 

 

FGX INTERNATIONAL INC.

 

AMENDED AND RESTATED

DEFERRED COMPENSATION PLAN

 

THIS AMENDED AND RESTATED PLAN is adopted and enacted as of the first day of January, 2008, by FGX International Inc., a corporation organized and existing under the laws of the State of Delaware, hereinafter referred to as the “Plan Sponsor”.

 

WHEREAS , the Plan Sponsor adopted this Plan effective as of January 1, 2007; and

 

WHEREAS , the Plan sponsor wishes to amend and restate the Plan to comply with the requirements of Section 409A of the Code, as added by The American Jobs Creation Act of 2004, and any Treasury Regulations and other applicable guidance thereunder issued by the Treasury Department or the Internal Revenue Service; and

 

WHEREAS , the Plan Sponsor intends that the Plan shall at all times be administered and interpreted in such a manner as to constitute a “Top-Hat” unfunded nonqualified deferred compensation plan for tax purposes and for purposes of Title I of ERISA.  This Plan is not intended to qualify for favorable tax treatment pursuant to Section 401(a) of the Code or any successor section or statute;

 

NOW, THEREFORE , the Plan Sponsor hereby amends and restates the Plan, as set forth below.

 

ARTICLE 1

 

Definitions

 

For the purpose of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

 

1.1                                “ Account ” or “ Accounts ” shall mean a book account reflecting amounts credited to a Participant’s Separation Account and/or vested Plan Sponsor Contribution Account, as adjusted for deemed investment performance and all distributions or withdrawals made by the Participant or his or her Beneficiary.  To the extent that it is considered necessary or appropriate, the Plan Administrator shall maintain separate subaccounts for each source of contribution under this Plan or shall otherwise provide a means for determining that portion of an Account attributable to each contribution source.

 

1.2                                “ Annual Bonus ” shall mean any compensation, in addition to Base Salary and Performance-Based Compensation relating to services performed during any Plan Year, whether or not paid in such Plan Year or included on the Federal Income Tax Form W-2 for such Plan Year, payable to a Participant as an employee under any of the Plan Sponsor’s annual bonus or cash incentive plans, excluding stock options.  Annual Bonus shall consist of any amount or portion of any amount that will be paid either regardless of performance or based on a level of performance that is substantially certain to be met.

 

 

1.3                                “ Annual Deferral Amount ” shall mean that portion of a Participant’s Base Salary and Annual Bonus and/or Performance-Based Compensation that a Participant elects to defer for any one Plan Year.

 

1.4                                “ Affiliate ” shall mean any business entity other than the Plan Sponsor that is a member of a controlled group of corporations, within the meaning of Section 414(b) of the Code, of which the Plan Sponsor is a member; all other trade or business (whether or not incorporated) under common control, within the meaning of Section 414(c) of the Code, with the Plan Sponsor; any service organization other than the Plan Sponsor that is a member of an Affiliated service group, within the meaning of Section 414(m) of the Code, of which the Plan Sponsor is a member; and any other organization that is required to be aggregated with the Plan Sponsor under Section 414(o) of the Code and whose Eligible Employees are authorized to participate in this Plan by the Plan Administrator.

 

1.5                                “ Applicable Guidance ” shall mean Section 409A of the Code and any Treasury Regulations and other applicable guidance thereunder issued by the Treasury Department or the Internal Revenue Service.

 

1.6                                “ Base Salary ” shall mean the annual cash compensation relating to services performed during any Plan Year, (excluding bonuses, commissions, overtime, fringe benefits, incentive payments, non-monetary awards, relocation expenses, retainers, directors fees and other fees, severance allowances, pay in lieu of vacations, insurance premiums paid by the Plan Sponsor, insurance benefits paid to the Participant or his or her Beneficiary, stock options and grants, and car allowances) paid to a Participant for services rendered to the Plan Sponsor or an Affiliate.  Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or non-qualified plans of the Plan Sponsor or an Affiliate and shall be calculated to include amounts not otherwise included in the Participant’s gross income under Sections 125, 402(e)(3), 402(h), or 403(b) of the Code pursuant to plans established by the Plan Sponsor; provided, however, that all such amounts will be included in Compensation only to the extent that, had there been no such Plan, the amounts would have been payable in cash to the Participant.

 

1.7                                “ Beneficiary ” shall mean one or more persons, trusts, estates or other entities that are entitled to receive benefits under this Plan upon the death of the Participant.

 

1.8                                “ Cause ” shall mean any of the following acts or circumstances:

 

(a)                                   willful destruction by the Participant of property of the Plan Sponsor or an Affiliate having a material value to the Plan Sponsor or such Affiliate;

 

(b)                                  fraud, embezzlement, theft, or comparable dishonest activity committed by the Participant (excluding acts involving a de minimis dollar value and not related to the Plan Sponsor or an Affiliate);

 

(c)                                   the Participant’s conviction of or entering a plea of guilty or nolo contendere to any crime constituting a felony or any misdemeanor involving fraud,

 

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dishonesty or moral turpitude (excluding acts involving a de minimis dollar value and not related to the Plan Sponsor or an Affiliate);

 

(d)                                  the Participant’s breach, neglect, refusal, or failure to materially discharge the Participant’s duties (other than due to physical or mental illness) commensurate with the Participant’s title and function or the Participant’s failure to comply with the lawful directions of the Board of Directors or a senior managing officer of the Plan Sponsor, or of the Board of Directors or a senior managing officer of an Affiliate that employs the Participant, in any such case that is not cured within fifteen (15) days after the Participant has received written notice thereof from such Board of Directors or senior managing officer;

 

(e)                                   any willful misconduct by the Participant which may cause substantial economic or reputation injury to the Plan Sponsor, including, but not limited to, sexual harassment, or;

 

(f)                                     a willful and knowing material misrepresentation to the Board or a senior managing officer of the Plan Sponsor or to the Board of Directors or a senior managing officer of an Affiliate that employs the Participant.

 

1.9                                “ Change of Control ” shall mean the occurrence of the events described in any of subparagraph (a), (b), or (c), below, or any combination of said event(s) as described within the meaning of Treasury Regulations 1.409A-3(g)(5):

 

(a)                                   Change of Ownership of the Plan Sponsor .   A change of ownership occurs on the date that any one person, or more than one person acting as a group, acquires ownership of the stock of the Plan Sponsor that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Plan Sponsor or of any corporation that owns at least fifty percent (50%) of the total fair market value and total voting power of the Plan Sponsor.  However, if any person, or more than one person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Plan Sponsor, the acquisition of additional stock by the same person or group of persons is not considered to cause a Change of Control.  For this purpose, an increase in the percentage of stock owned by any one person or group, as a result of a transaction in which the Plan Sponsor acquires its stock in exchange for property will be treated as an acquisition of stock.  The rule set forth in the immediately preceding sentence applies only when there is a transfer of stock of the Plan Sponsor (or issuance of stock of the Plan Sponsor) and the stock of the Plan Sponsor remains outstanding after the transaction.  Persons will not be considered to be acting as a group solely because they purchase or own stock of the Plan Sponsor at the same time or as a result of the same public offering.  However, persons will be considered to be acting as a group if they are shareholders of a corporation that enters into a merger, consolidation, purchase or acquisition of stock or similar business transaction with the Plan Sponsor or its parent.  Persons will also be considered to be acting as a group to the extent set forth in Applicable Guidance.

 

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(b)                                  Effective Change of Control .  Effective Change of Control shall occur on the date that either:

 

(i)                                      Any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Plan Sponsor possessing thirty-five percent (35%) or more of the total voting power of the stock of the Plan Sponsor; or

 

(ii)                                   A majority of the members of the Plan Sponsor’s Board of Directors is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Plan Sponsor’s Board of Directors prior to the date of the appointment or election.

 

(c)                                   Change in Ownership of Plan Sponsor’s Assets .   A change in the ownership of a substantial portion of the Plan Sponsor’s assets occurs on the date that any one person, or more than one person acting as a group, acquires or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons of assets from the Plan Sponsor that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Plan Sponsor immediately prior to such initial acquisition or acquisitions.  For this purpose, gross fair market value means the value of the assets of the Plan Sponsor, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

There will be no Change of Control under this Subparagraph (c) when there is a transfer to an entity that is controlled by the shareholders of the Plan Sponsor immediately after the transfer.  A transfer of assets by the Plan Sponsor is not treated as a change in ownership of such assets if the assets are transferred to:

 

(i)                                      A shareholder of the Plan Sponsor (immediately before the asset transfer) in exchange for or with respect to its stock;

 

(ii)                                   An entity, fifty percent (50%) or more of the total value or voting power of which is owned directly or indirectly by the Plan Sponsor;

 

(iii)                                A person, or more than one person, acting as a Group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Plan Sponsor; or

 

(iv)                               An entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a person described in (iii) above.

 

Notwithstanding the above, the definition of Change of Control shall in any event comply with Section 409A and Applicable Guidance.

 

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1.10                          “ Claimant ” shall mean a person who believes that he or she is being denied a benefit to which he or she is entitled hereunder.

 

1.11                          “ Code ” shall mean the Internal Revenue Code of 1986, as amended.

 

1.12                          “ Compensation ” shall mean the total cash remuneration, including regular Base Salary, Annual Bonus, and/or Performance-Based Compensation paid by the Plan Sponsor to an Eligible Employee with respect to his or her services performed for the Plan Sponsor or an Affiliate.

 

1.13                          “Deemed Investments” shall be defined as provided in Paragraph 4.2 below.

 

1.14                          “ Deemed Investment Options ” shall be defined as provided in Paragraph 4.1 below.

 

1.15                          “ Disability ” shall mean a condition of the Participant whereby he or she either: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Plan Sponsor.  The Plan Administrator will determine whether a Participant has incurred a Disability based on its own good faith determination and may require a Participant to submit to reasonable physical and mental examinations for this purpose.  A Participant will also be deemed to have incurred a Disability if determined to be totally disabled by the Social Security Administration or in accordance with a disability insurance program, provided that the definition of disability applied under such disability insurance program complies with the requirements of Treasury Regulation 1.409A-3(g)(4) and Applicable Guidance.

 

1.16                          “ Effective Date ” shall mean January 1, 2007.

 

1.17                          “ Election Form ” shall mean the form or forms established from time to time by the Plan Administrator on which the Participant makes certain designations as required on that form and under the terms of this Plan.

 

1.18                          “ Eligible Employee ” shall mean for any Plan Year (or applicable portion of a Plan Year), a person who is determined by the Plan Sponsor, or its designee, to be a member of a select group of management or highly compensated employees of the Plan Sponsor, and who is designated by the Plan Sponsor, or its designee, to be an Eligible Employee under the Plan.  If the Plan Sponsor determines that an individual first becomes an Eligible Employee during a Plan Year, the Plan Sponsor shall notify the individual of its determination and of the date during the Plan Year on which the individual shall first become an Eligible Employee.

 

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1.19                          “ Entry Date ” shall mean the first day of the pay period following the date on which an individual first becomes an Eligible Employee.

 

1.20                          “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

 

1.21                          “ Participant ” shall mean any (a) Eligible Employee (i) who is selected to participate in this Plan, (ii) who elects to participate in this Plan by signing a Participation Agreement, (iii) who completes and signs certain Election Form(s) required by the Plan Administrator, and (iv) whose signed Election Form(s) are accepted by the Plan Administrator or (b) former Eligible Employee who continues to be entitled to a benefit under this Plan.  A spouse or former spouse of a Participant shall not be treated as a Participant in this Plan or have an Account balance under this Plan, even if he or she has an interest in the Participant’s benefits under this Plan as a result of applicable law or property settlements resulting from legal separation or marital dissolution or divorce.

 

1.22                          “ Participation Agreement ” shall mean the document executed by the Eligible Employee and Plan Administrator whereby the Eligible Employee agrees to participate in the Plan.

 

1.23                          “ Performance-Based Compensation ” shall mean that portion of a Participant’s Compensation that is contingent on the satisfaction of pre established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months in which the Participant performs services.  Organizational or individual performance criteria are considered pre-established if established in writing by no later than ninety (90) days after the commencement of the period of services to which the criteria relate, provided that the right to receive the contingent portion is substantially uncertain, or the amount of the contingent portion is not readily ascertainable, at the time the criteria is established within the meaning of Treasury Regulation 1.409A-1(e) and Applicable Guidance.

 

1.24                          “ Permissible Payments ” shall mean one or more of the following events upon which payment may be made to a Participant or his Beneficiary under the terms of the Plan: (i) the Participant’s Separation from Service, (ii) the Participant’s death, (iii) the Participant’s Disability, or (iv) a Change in Control of the Plan Sponsor.

 

1.25                          “ Plan ” shall mean the FGX International Inc. Deferred Compensation Plan which shall be evidenced by this instrument, as amended from time to time.

 

1.26                          “ Plan Administrator ” shall be the Board of Directors of the Plan Sponsor or its designee.  A Participant in the Plan should not serve as a singular Plan Administrator.  If a Participant is part of a group of persons designated as a committee or Plan Administrator, then the Participant may not participate in any activity or decision relating solely to his or her individual benefits under this Plan.  Matters solely affecting the applicable Participant will be resolved by the remaining Plan Administrator members.

 

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1.27                          “ Plan Sponsor Contribution Account ” shall be defined as provided in Paragraph 3.4 below.

 

1.28                          “ Plan Year ” shall mean, for the first plan year, the period beginning on the Effective Date of the Plan and ending December 31 of such calendar year, and thereafter, a twelve (12) month period beginning January 1 of each calendar year and continuing through December 31 of such calendar year.

 

1.29                          “ Separation Account ” shall mean: (i) the sum of the Participant’s Annual Deferral Amount that may be allocated in whole or in part by a Participant pursuant to his or her deferral election to the Separation Account for each Plan Year, plus (ii) amounts credited (net of amounts debited, which may result in an aggregate negative number) from Deemed Investment Options, less (iii) all distributions made to, or withdrawals by, the Participant and his or her Beneficiary, and tax withholding amounts which may have been deducted from the Participant’s Separation Account.  At the time of the Participant’s deferral election for each Plan Year, the Participant may specify the form in which payment shall be made to the Participant or his or her Beneficiary from this Account.  The Participant may be permitted to change the form of payment subject to Paragraph 6.7 (Subsequent Changes in the Time or Form of Payment) below.

 

1.30                          “ Section 409A ” shall mean Section 409A of the Code and the Treasury Regulations or other authoritative guidance issued under that Section.

 

1.31                          “ Separation From Service ” shall mean a Participant’s termination of active employment, whether voluntary or involuntary, other than by death, Disability, or leave of absence with the Plan Sponsor and Affiliate, within the meaning of Section 409A(a)(2)(A)(i) of the Code, and Applicable Guidance.

 

1.32                          “ Treasury Regulations ” shall mean regulations promulgated by the Internal Revenue Service for the U.S. Department of the Treasury, either proposed, temporary or final as they may be amended from time to time.

 

1.33                          “ Trust ” shall mean a trust that may be established in accordance with the terms of Article 12 of this Plan.

 

1.34                          “ Unforeseeable Emergency ” shall mean a severe financial hardship of the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent(s) (as defined in Section 152(a) of the Code) or loss of the Participant’s property due to casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, within the meaning of Section 409A and Treasury Regulation 1.409A-3(g)(3).

 

1.35                          “ Valuation Date ” shall mean each day at the close of business (currently 4:00 p.m. Eastern Time) of the New York Stock Exchange (“NYSE”), on days that the (NYSE) is open for trading or any other day on which there is sufficient trading in securities of the applicable fund to materially affect the unit value of the fund and the corresponding unit value of the Participant’s Deemed Investment Options.  If the NYSE extends its closing beyond 4:00 p.m.

 

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Eastern Time, and continues to value after the time of closing, the Plan Administrator reserves the right to treat communications received after 4:00 p.m. Eastern Time as being received as of the beginning of the next day.

 

1.36                          “ Year of Plan Participation ” shall mean each twelve (12) month period during which the Participant is employed on a full-time basis by the Plan Sponsor, (determined without regard to whether deferrals have been made by a Participant for any Plan Year), inclusive of any approved leaves of absence, beginning on the Participant’s date of entry into this Plan.

 

1.37                          “ Year of Service ” shall mean each twelve (12) month period during which the Participant is employed on a full-time basis by the Plan Sponsor, with a minimum of 1,000 hours of service, inclusive of any approved leaves of absence, beginning on the Participant’s date of hire.

 

ARTICLE 2

 

Selection, Enrollment, Eligibility

 

2.1                                Selection by Plan Sponsor .  Participation in this Plan shall be limited to a select group of management or highly compensated employees of the Plan Sponsor, as determined by the Plan Sponsor in its sole and absolute discretion.  The initial group of Eligible Employees shall become Participants on the Effective Date of this Plan.  Any individual selected as an Eligible Employee after the Effective Date, shall become a Participant on the first Entry Date occurring on or after the date on which he or she becomes an Eligible Employee.

 

2.2                                Re-Employment.   If a Participant who incurs a Separation from Service is subsequently re-employed by the Plan Sponsor, he or she may at the sole and absolute discretion of the Plan Administrator, become a Participant in accordance with the provisions of this Plan.

 

2.3                                Enrollment Requirements.  As a condition to participation in this Plan, each selected Eligible Employee shall complete, execute, and return to the Plan Administrator a Participation Agreement and Election Form within the time specified by the Plan Administrator in accordance with Article 3.  In addition, the Plan Administrator shall establish such other enrollment requirements as it determines necessary or advisable.  All elections to defer Compensation with respect to a Plan Year shall be irrevocable, except as permitted in the event of an Unforeseeable Emergency pursuant to Paragraph 3.2(d) below.

 

2.4                                Plan Aggregation Rules .   This Plan shall constitute an “account balance plan” as defined in Treasury Regulations 31.3121(v)(2)-1(c)(1)(ii)(A).  For purposes of Section 409A, all amounts deferred by or on behalf of a Participant under this Plan shall be aggregated with deferred amounts under other “account balance plans” currently maintained or adopted in the future by the Plan Sponsor, as required by Applicable Guidance and all amounts shall be treated as deferred under the rules governing a single plan.

 

2.5                                Termination of Participation and/or Deferrals.   If the Plan Administrator determines that a Participant who has not experienced a Separation from Service no longer

 

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qualifies as a member of a select group of management or highly compensated employees or that such a Participant’s participation in the Plan could jeopardize the status of this Plan as “unfunded” and “maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees,” the Plan Administrator shall have the right to terminate any deferral election the Participant has made for the remainder of the Plan Year but only to the extent such termination complies with the requirements of Sections 409A, and/or to prevent the Participant from making future deferral elections and receiving Plan Sponsor Contribution Amounts under the Plan.

 

ARTICLE 3

 

Contributions and Credits

 

3.1                                Annual Deferral Amount .

 

(a)                                   Minimum Deferrals .  For each Plan Year, a Participant may elect to defer Compensation in fixed dollar amounts or percentages subject to the minimums (if any) set forth in his or her Election Form.  If the election is made for less than the stated minimum amount, or if no election is made, the amount deferred shall be zero.

 

(b)                                  Maximum Deferrals .  For each Plan Year, a Participant may elect to defer Compensation in fixed dollar amounts or percentages subject to the maximums (if any) set forth in his or her Election Form.  If the election is made for more than the stated maximum amount, then the amount deferred shall default to the maximum amount.

 

3.2                                Election to Defer Compensation .

 

(a)                                   Deferral Election Rules.   A Participant shall make an election to defer Compensation for each Plan Year on the Election Form provided by the Plan Sponsor.  For the election to be effective, the Election Form must be delivered to the Plan Administrator during the Participant’s taxable year before the Plan Year in which the services are performed.  If no Election Form is timely delivered for a Plan Year, the Annual Deferral Amount shall be zero for that Plan Year.  An election to defer Compensation shall include an election as to both the time and form of payment.

 

(b)                                  Short Plan Year.   If an Eligible Employee becomes a Participant after the beginning of a Plan Year, he or she may make an initial deferral election within thirty (30) days after the date he or she first becomes an Eligible Employee with respect to Compensation paid for services to be performed subsequent to the election.  In the event an election of deferral is made with respect to an Annual Bonus in the first year of eligibility but after the beginning of a performance period, the deferral election will apply to the portion of the Annual Bonus paid for services performed subsequent to the election and will be calculated based on the total Annual Bonus for the performance period multiplied by a fraction whose numerator is the number of days remaining in the performance period after the election and whose denominator is the total number of days in the performance period.

 

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Deemed Investment Options.  Any discontinuance, substitution, or addition of a Deemed Investment Option will take effect as soon as administratively practical.

 

4.2                                Allocation of Deemed Earnings or Losses on Accounts .  Subject to Paragraph 4.3 below, each Participant shall have the right to direct the Plan Administrator as to how the Participant’s Annual Deferral Amounts and Plan Sponsor matching and/or discretionary contributions shall be deemed to be invested, (“Deemed Investments”), subject to any operating rules and procedures imposed from time to time by the Plan Administrator.  As of each Valuation Date, the Participant’s Account(s) will be credited or debited to reflect the Participant’s Deemed Investments.

 

4.3                                Deemed Investment Directions of Participants .  A Participant’s Deemed Inve