EXHIBIT 10.1

 

FIRST AMENDED AND RESTATED

FOSSIL, INC. AND AFFILIATES
DEFERRED COMPENSATION PLAN

DECEMBER 7, 2005

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

SECTION I.

 

DEFINITIONS

1

1.1.

 

Addendum

1

1.2.

 

Account

1

1.3.

 

Applicable Interest Rate

1

1.4.

 

Beneficiary

1

1.5.

 

Benefit

1

1.6.

 

Board

1

1.7.

 

Business Day

1

1.8.

 

Change of Control

1

1.9.

 

Code

2

1.10.

 

Committee

2

1.11.

 

Company

2

1.12.

 

Contributions

2

1.13.

 

Deferred Payments

3

1.14.

 

Deferred Payment Date

3

1.15.

 

Designated Affiliate

3

1.16.

 

Earnings

3

1.17.

 

Effective Date

3

1.18.

 

Election Form

3

1.19.

 

Eligible Employee

3

1.20.

 

Employee

3

1.21.

 

Employer

3

1.22.

 

Employer Account

3

1.23.

 

Employer Contribution

3

1.24.

 

Entry Date

4

1.25.

 

ERISA

4

1.26.

 

Final Deferral Filing Date

4

1.27.

 

Grandfathered Benefit

4

1.28.

 

Installment Payment

4

1.29.

 

Investment Date

4

1.30.

 

Lump Sum

4

1.31.

 

Measurement Preference

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.

 

Salary

4

1.38.

 

Salary Deferral Account

5

1.39.

 

Salary Deferral Contributions

5

1.40.

 

Separates or Separation

5

1.41.

 

Specific Employee

5

1.42.

 

Third-Party Record-keeper

5

1.43.

 

Trust

5

1.44.

 

Valuation Date

5

1.45.

 

Vest, Vesting or Vested

5

 

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Page

 

 

 

 

SECTION II.

 

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

6

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 III.

 

PARTICIPATION

7

SECTION IV.

 

CONTRIBUTIONS

7

4.1.

 

Election Dates

7

4.2.

 

Salary Deferral Contributions

7

4.3.

 

Crediting of Salary Deferral Contributions

7

4.4.

 

Employer Contributions

8

4.5.

 

Disposition of Contributions

8

SECTION V.

 

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

8

SECTION VI.

 

VESTING

9

6.1.

 

Salary Deferral Account

9

6.2.

 

Employer Account

9

SECTION VII.

 

DISTRIBUTION OF BENEFIT

9

7.1.

 

Form and Timing of Distribution

9

7.2.

 

Special Rules for Specific Employees

9

7.3.

 

Election of Deferred Payments

9

7.4.

 

Installment Payments

10

7.5.

 

Change in Control

10

7.6.

 

Hardship Distribution

10

7.7.

 

Grandfathered Benefits

10

7.8.

 

Source of Distribution

11

SECTION VIII.

 

DESIGNATION OF BENEFICIARIES

11

8.1.

 

Designation by Participant

11

8.2.

 

Lack of Designation

11

SECTION IX.

 

AMENDMENT AND TERMINATION

11

SECTION X.

 

CLAIMS PROVISIONS

12

10.1.

 

Presentation of Claim

12

10.2.

 

Notification of Decision

12

10.3.

 

Review of a Denied Claim

13

10.4.

 

Decision on Review

13

10.5.

 

Legal Action

14

SECTION XI.

 

GENERAL PROVISIONS

14

11.1.

 

No Assignment

14

 

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Page

 

 

 

 

11.2.

 

Incapacity

14

11.3.

 

Claims Procedure

14

11.4.

 

Final Resolution of Disputes Relating to Plan

14

11.5.

 

Information Required

14

11.6.

 

Communications by, and Information from, Participant

15

11.7.

 

No Rights Implied

15

11.8.

 

Communications by Committee or Employer

15

11.9.

 

Interpretations and Adjustments

15

11.10.

 

No Liability for Good Faith Determinations

15

11.11.

 

No Employment Rights

15

11.12.

 

Withholding of Taxes

16

11.13.

 

Waivers

16

11.14.

 

Records

16

11.15.

 

Securities Laws

16

11.16.

 

Severability

16

11.17.

 

Captions and Gender

16

11.18.

 

Choice of Law

16

11.19.

 

Effective Date and Termination Date

16

 

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FIRST AMENDED AND RESTATED

FOSSIL, INC. AND AFFILIATES

DEFERRED COMPENSATION PLAN

 

Effective January 1, 2005, Fossil, Inc. hereby amends and restates the
Fossil, Inc. and Affiliates Deferred Compensation Plan (“Predecessor Plan”) and
establishes this, the First Amended and Restated Fossil, Inc. and Affiliates
Deferred Compensation Plan to allow for a select group of highly compensated
employees to defer a portion of their compensation and possibly receive deferred
employer contributions.  For purposes of the Code, the Company intends this Plan
to be an unfunded, unsecured promise to pay on the part of each Employer.  For
purposes of ERISA, the Company intends 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 I.

 

DEFINITIONS

 

1.1.          Addendum.  Addendum 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 4.4.

 

1.2.          Account.  Account shall mean, collectively, the Salary Deferral
Account, and the Employer Account, maintained for each Participant.

 

1.3.          Applicable Interest Rate.  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.

 

1.4.          Beneficiary.  Beneficiary shall mean the person or persons, entity
or entities designated by the Participant and in accordance with the
requirements set forth in Section VIII as the beneficiary of the Participant’s
Benefit.

 

1.5.          Benefit.  Benefit shall mean the Vested amount credited to the
Participant’s Account at the time of reference.

 

1.6.          Board.  Board shall mean the Board of Directors of the Company.

 

1.7.          Business Day.  Business Day shall mean, with respect to each
Measurement Preference, a day on which the exchange on which it is traded is
operating.

 

1.8.          Change of Control.  Change of Control shall mean the first to
occur of the following:

 

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(a)                                   A change in ownership of the Company.  A
change in ownership of the Corporation occurs on the date that any person, or
more than one person acting as a group, 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

 

(b)                                  A change in the effective control of the
Company.  A change in the effective control of the Company occurs 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 Company possessing thirty-five percent (35%)or more of the total voting
power of the stock of the Company; or

 

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

 

(c)                                   A change in the ownership of a substantial
portion of the Company’s assets.  A change in the ownership of a substantial
portion of the Company’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, assets from the Company 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 Company immediately prior to such acquisition
or acquisitions. For this purpose, gross fair market value means the value of
the assets of the Company, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such assets.

 

1.9.                              Code.  Code shall mean the Internal Revenue
Code of 1986, as amended.

 

1.10.                        Committee.  Committee shall mean those persons
designated to administer the Plan pursuant to Section II.

 

1.11.                        Company.  Company shall mean Fossil, Inc., a
Delaware corporation, and its successors and assigns.

 

1.12.                        Contributions.  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.

 

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1.13.        Deferred Payments.  Deferred Payments shall mean the payment of a
Participant’s Benefits as described in Section 4.2.

 

1.14.        Deferred Payment Date.  Deferred Payment Date shall mean the date
as of which a Participant’s Deferred Payments are made or commenced.

 

1.15.        Designated Affiliate.  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.

 

1.16.        Earnings.  Earnings shall mean the notated credits or debits 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.

 

1.17.        Effective Date.  Effective Date shall mean December 30, 1998.  The
Effective Date of the First Amended and Restated Plan shall be January 1, 2005.

 

1.18.        Election Form.  Election Form shall mean an election in such form
as specified by the Committee by 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.

 

1.19.        Eligible Employee.  Eligible Employee shall mean an Employee of an
Employer who is: (i) a member of a select group of management or a highly
compensated Employee and after December 31, 2004, is at the level of vice
president or above, and (ii) designated by the Committee as eligible to
participate in the Plan.

 

1.20.        Employee.  Employee shall mean any person on the U.S. payroll of
the Employer.

 

1.21.        Employer.  Employer shall mean, collectively, the Company and each
Designated Affiliate.

 

1.22.        Employer Account.  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.

 

1.23.        Employer Contribution.  Employer Contribution shall mean the
amount, if any, credited under the Plan by an Employer to an Eligible
Participant, and evidenced by an Addendum.

 

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1.24.        Entry Date.  Entry Date shall mean January 1st for each Plan Year;
except that, it shall mean July 1 for any Employee who first became an Eligible
Employee since the preceding January 1.

 

1.25.        ERISA.  ERISA shall mean the Employee Retirement Income Security
Act of 1974, as amended.

 

1.26.        Final Deferral Filing Date.  Final Deferral Filing Date shall mean
the date on which a Participant’s Deferred Payment is scheduled to begin.

 

1.27.        Grandfathered Benefit.  Grandfathered Benefit shall mean the
Benefit earned and Vested and credited to the Account of any Participant as of
December 31, 2004.

 

1.28.        Installment Payment.  Installment Payment shall mean each of a
series of annual distributions, in cash, of the Participant’s Account balance.

 

1.29.        Investment Date.  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.  Lump Sum shall mean a single distribution, in cash, of a
Participant’s Benefit.

 

1.31.        Measurement Preference.  Measurement Preference shall mean the
preference described in subsection 5.3.

 

1.32.        Participant.  Participant shall mean an Eligible Employee who
participates in the Plan pursuant to Section 3.

 

1.33.        Plan.  Plan shall mean the First Amended and Restated Fossil, Inc.
and Affiliates Deferred Compensation Plan, as set forth in this document and
subsequent amendments.

 

1.34.        Plan Year.  Plan Year shall mean calendar year.

 

1.35.        Quarter.  Quarter shall mean calendar quarter.

 

1.36.        Rules of General Application.  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
consistent manner to similarly situated Participants.

 

1.37.        Salary.  Salary shall mean Participant’s base salary determined as
of December 31 preceding the effective date of the election to defer Salary. 
Salary shall include 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.

 

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1.38.        Salary Deferral Account.  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.

 

1.39.        Salary Deferral Contributions.  Salary Deferral Contributions shall
mean the amounts described in Subsection 4.2.

 

1.40.        Separates or Separation.  Separates or Separation or any
conjugation of the term “Separate” shall mean a Participant’s termination of
employment with an Employer.

 

1.41.        Specific Employee.  Specific Employee is a “key employee” as
defined in Code section 416(i) without regard to paragraph (5) of such section.

 

1.42.        Third-Party Record-keeper.  Third-Party Record keeper shall mean
the person or entity selected by the Committee to maintain the records necessary
to the administration of the Plan.

 

1.43.        Trust.  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.

 

1.44.        Valuation Date.  Valuation Date shall mean the last Business Day of
each Quarter.

 

1.45.        Vest, Vesting or Vested.  Vest, Vesting or Vested, shall mean the
portion of a Participant’s Employer Account which is nonforfeitable at the time
of reference.

 

SECTION II.

 

ADMINISTRATION

 

2.1.          Appointment of Committee.  The Board shall appoint the Committee
comprised of one or more persons who may or may not be Employees.  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.

 

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

 

5

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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 such member’s own rights or benefits under this Plan.  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 only with regard to such specific 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.

 

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SECTION III.

 

PARTICIPATION

 

An Eligible Employee 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 Employee for one Plan Year does
not entitle such Employee to continued status as an Eligible Employee for
subsequent Plan Years.  A determination as to whether an Employee shall be an
Eligible Employee for any Plan Year shall be made by the Committee in advance of
making an Employer Contribution on behalf of such Eligible Employee.  Following
removal of the status of Eligible Employee for any Participant, such Participant
shall not be able to elect Salary Deferral Contributions on any Entry Date on
which he is not an Eligible Employee.

 

SECTION IV.

 

CONTRIBUTIONS

 

4.1.          Election Dates.  Election Forms setting forth the amount of the
Salary Deferral for the subsequent Plan Year, in the case of a Participant whose
Entry Date is January 1, shall be delivered in proper form no later than the
December 31, preceding such Entry Date.  The Election Form for Participants who
first become eligible during a taxable year and whose Entry Date is July 1, must
submit their Election Form no later than the June 30 prior to such Entry Date.

 

4.2.          Salary Deferral Contributions.  An Employee who is an Eligible
Employee 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 January 1st) and not more than fifty percent (50%) of his
Salary 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.  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 Employee has never timely filed an Election
Form deferring a portion of his Salary, then such Eligible Employee shall not
have any portion of his Salary deferred.  Notwithstanding any provision hereof
to the contrary, the amount of a Participant’s Salary Deferral Contributions
will be deducted 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.

 

4.3.          Crediting of Salary Deferral Contributions.  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 soon as
administratively practicable after the payroll period from which such salary was
deferred.

 

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4.4.          Employer Contributions.  At any time on or after the Effective
Date, in addition to the amount described in Section 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 the Addendum; provided that one hundred
percent (100%) of such amounts contributed for a Participant, and related
Earnings, shall be forfeited on such Participant’s Separation from service for
reasons other than a Change of Control unless otherwise expressly provided in an
Addendum expressly relating to such Employer Contribution.

 

4.5.          Disposition of Contributions.  At the discretion of the Plan
Administrator, Contributions may be delivered to the Trust or the funds may be
retained by the Employer.

 

SECTION V.

 

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.  Grandfathered Benefits shall
be accounted for separately within the Participant’s Account.

 

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 five percent (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.

 

5.4.          Statements.  In accordance with Rules of General Application, but
not less frequently than one statement for each Plan Year, each Participant
shall have a statement made available 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 since
the previous statement, (iii) the Earnings credited or debited to his Account
since the previous statement, (iv) any debited charges to, or distributions
from, his Account since the previous statement, and (v) any other information or
disclosures determined appropriate by the Committee.

 

8

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SECTION VI.

 

VESTING

 

6.1.          Salary Deferral Account.  Participant shall always be one hundred
percent (100%) Vested in the amounts credited to his Salary Deferral Account.

 

6.2.          Employer Account.  A 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 first
occurrence of a Change of Control Separation for reason of death, disability, or
normal retirement at or after attaining age sixty-five (65).

 

SECTION VII.

 

DISTRIBUTION OF BENEFIT

 

7.1.          Form and Timing of Distribution.  Unless the Participant is
entitled to a Deferred Payment or is a Specific Employee, upon a Participant’s
Separation he shall receive a Lump Sum distribution within 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.          Special Rules for Specific Employees.  Notwithstanding anything to
the contrary, distributions of Grandfathered Benefits to Specific Employees
shall be made in the form and timing set forth in section 7.1 above. 
Distributions of all benefits that are not Grandfathered Benefits to Specific
Employees for any reason other than death shall not be paid earlier than six
(6) months after the Specific Employee ceases to be an Employee.

 

7.3.          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 fifty-five (55) and
completed at least five (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 fifty-five (55) and prior to the later of age sixty-five
(65) or his Separation, and may be paid either in a Lump Sum or in five, ten, or
fifteen Installment Payments, as the Participant shall select on the Election
Form in effect on his Final Deferral Filing Date, and only the initial Election
Form filed on or twelve (12) months before such Final Deferral Filing Date shall
be effective.  Any election which delays the distribution beyond the
distribution date initially elected or changes the initial form of distribution
or elected by the Participant shall not be effective unless it takes effect not
less than the later of (i) twelve months prior to the commencement of payment
upon Separation by reason of death, disability, or (ii) five years prior to the
commencement of payment upon Separation for any other reason.  Installment
Payments shall be paid at such time, during the first thirty (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,

 

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and shall resume (iii) during the first thirty (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.

 

7.4.          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.

 

7.5.          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 fourteen (14) days prior to
the date of Change in Control, for a period of fourteen (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.

 

7.6.          Hardship Distribution.  Upon the Committee’s determination
(following petition by the Participant) that the Participant has suffered an
“unforeseeable emergency”, 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.  An “unforeseeable emergency” means a severe financial hardship to the
Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent of the Participant as defined in Code
section 152(a), 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, 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.

 

7.7.          Grandfathered Benefits.  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

 

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the forfeiture), or a portion of his Grandfathered Benefit.  If a Participant
elects to receive such a distribution, he shall permanently and irrevocably
forfeit from his Grandfathered Benefit an amount equal to twenty 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.  Upon separation of service for
any reason, Grandfathered Benefits shall be distributable in accordance with the
provisions of the Predecessor Plan.

 

7.8.          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 VIII.

 

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 IX.

 

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 one hundred percent (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

 

11

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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 ninety
days prior to the taxable year for which the amendment is effective.  Each
affected Participant shall be entitled to elect an immediate distribution of all
Benefits then credited to such Participant’s Account, except that Grandfathered
Benefits may be excluded by the Participant from such distribution election. 
Pertaining to the amendments made effective January 1, 2005, at any time during
the 2005 Plan Year, each Participant shall be entitled to elect to terminate or
cancel any deferral election by timely notifying the Committee in accordance
with the Rules of General Application.

 

SECTION X.

 

CLAIMS PROVISIONS

 

10.1.                        Presentation of Claim.  Any Participant or
Beneficiary of a deceased Participant (such Participant or Beneficiary being
referred to below as a “Claimant”) may deliver to the Committee a written claim
for a determination with respect to the amounts distributable to such Claimant
from the Plan.  If such a claim relates to the contents of a notice received by
the Claimant, the claim must be made within 60 days after such notice was
received by the Claimant.  All other claims must be made within 180 days of the
date on which the event that caused the claim to arise occurred.  The claim must
state with particularity the determination desired by the Claimant.

 

10.2.                        Notification of Decision.  The Committee shall
consider a Claimant’s claim within a reasonable time, but no later than 90 days
after receiving the claim.  If the Committee determines that special
circumstances require an extension of time for processing the claim, written
notice of the extension shall be furnished to the Claimant prior to the
termination of the initial 90 day period.  In no event shall such extension
exceed a period of 90 days from the end of the initial period.  The extension
notice shall indicate the special circumstances requiring an extension of time
and the date by which the Committee expects to render the benefit
determination.  The Committee shall notify the Claimant in writing:

 

(A)                                  THAT THE CLAIMANT’S REQUESTED DETERMINATION
HAS BEEN MADE, AND THAT THE CLAIM HAS BEEN ALLOWED IN FULL; OR

 

(B)                                 THAT THE COMMITTEE HAS REACHED A CONCLUSION
CONTRARY, IN WHOLE OR IN PART, TO THE CLAIMANT’S REQUESTED DETERMINATION, AND
SUCH NOTICE MUST SET FORTH IN A MANNER CALCULATED TO BE UNDERSTOOD BY THE
CLAIMANT:

 

(I)            THE SPECIFIC REASON(S) FOR THE DENIAL OF THE CLAIM, OR ANY PART
OF IT;

 

(II)           SPECIFIC REFERENCE(S) TO PERTINENT PROVISIONS OF THE PLAN UPON
WHICH SUCH DENIAL WAS BASED;

 

12

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(III)          A DESCRIPTION OF ANY ADDITIONAL MATERIAL OR INFORMATION NECESSARY
FOR THE CLAIMANT TO PERFECT THE CLAIM, AND AN EXPLANATION OF WHY SUCH MATERIAL
OR INFORMATION IS NECESSARY;

 

(IV)          AN EXPLANATION OF THE CLAIM REVIEW PROCEDURE SET FORTH IN
SECTION 10.3 BELOW; AND

 

(V)           A STATEMENT OF THE CLAIMANT’S RIGHT TO BRING A CIVIL ACTION UNDER
SECTION 502(A) OF ERISA FOLLOWING AN ADVERSE BENEFIT DETERMINATION ON REVIEW.

 

10.3.                        Review of a Denied Claim.  On or before 60 days
after receiving a notice from the Committee that a claim has been denied, in
whole or in part, a Claimant (or the Claimant’s duly authorized representative)
may file with the Committee a written request for a review of the denial of the
claim.  The Claimant (or the Claimant’s duly authorized representative) may:

 

(a)                                   upon request and free of charge, have
reasonable access to, and copies of, all documents, records and other
information relevant to the claim for benefits;

 

(b)                                  submit written comments or other documents;
and

 

(C)                                  REQUEST A HEARING, WHICH THE COMMITTEE, IN
ITS SOLE DISCRETION, MAY GRANT.

 

10.4.                        Decision on Review.  The Committee shall render its
decision on review promptly, and no later than 60 days after the Committee
receives the Claimant’s written request for a review of the denial of the
claim.  If the Committee determines that special circumstances require an
extension of time for processing the claim, written notice of the extension
shall be furnished to the Claimant prior to the termination of the initial 60
day period.  In no event shall such extension exceed a period of 60 days from
the end of the initial period.  The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Committee
expects to render the benefit determination.  In rendering its decision, the
Committee shall take into account all comments, documents, records and other
information submitted by the Claimant relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit
determination.  In the case of a claim for Disability benefits, the review on
appeal must be made by a different decision-maker from the Committee and the
decision-maker cannot give procedural deference to the original decision.  The
decision must be written in a manner calculated to be understood by the
Claimant, and it must contain:

 

(a)            specific reasons for the decision;

 

(b)           specific reference(s) to the pertinent Plan provisions upon which
the decision was based;

 

(c)            a statement that the Claimant is entitled to receive, upon
request and free of charge, reasonable access to and copies of, all documents,
records and other information relevant (as defined in applicable ERISA
regulations) to the Claimant’s claim for benefits; and

 

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(D)           A STATEMENT OF THE CLAIMANT’S RIGHT TO BRING A CIVIL ACTION UNDER
SECTION 502(A) OF ERISA.

 

10.5.                        Legal Action.  A Claimant’s compliance with the
foregoing provisions of this Article 10 is a mandatory prerequisite to a
Claimant’s right to commence any legal action with respect to any claim for
benefits under the Plan.

 

SECTION XI.

 

GENERAL PROVISIONS

 

11.1.        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 8 with respect to designations
of Beneficiaries.

 

11.2.        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 and the Committee as to the amount paid.

 

11.3.        Claims Procedure.  If a claim is denied in whole or in part, the
Committee shall comply with the claims procedures outlined in the summary plan
description.  A request for review and appeal of a denied claim may be made by a
claimant by following the claims procedures outlined in the summary plan
description.

 

11.4.        Final Resolution of Disputes Relating to Plan.  If, after the
exhaustion of the claims procedure set forth in Article 10 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”) may 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 may 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.  The costs and
expenses of mediation will be paid by the Company.  If the Interested Parties
agree to mediation and are unable to resolve their dispute by mediation, then
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 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.  If the Interested Parties seek
resolution through mediation and arbitration then they will waive their right to
institute litigation in a court of law to resolve a dispute concerning the
construction or enforcement of this Plan.

 

11.5.        Information Required.  Each Participant shall file with the
Committee such pertinent information concerning the Participant and any
Beneficiary as the Committee may

 

14

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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.

 

11.6.        Communications by, and Information from, Participant.  All
elections, selections, designations, requests, notices, instructions and other
Participant communications to the Committee, Third-Party Record keeper, Company,
or Employer required or permitted under the Plan shall be in such form as is
prescribed in the Rules of General Application.  If the Committee notifies the
Participant or Beneficiary at his last known electronic address or mailing
address that he is entitled to a distribution, and the Participant or
Beneficiary fails to claim his benefits under the Plan 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.

 

11.7.        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.

 

11.8.        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 sent either (a) electronically or (b) via first-class mail, postage
prepaid, and addressed to such person at his address last appearing on the
Plan’s records.

 

11.9.        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.

 

11.10.      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.

 

11.11.      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

 

15

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Employer or as affecting the right of an Employer to dismiss any Employee at any
time, with or without cause.

 

11.12.      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.

 

11.13.      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.

 

11.14.      Records.  Records of the Company, and of the Committee, as to any
matters relating to this Plan will be conclusive on all persons.

 

11.15.      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.

 

11.16.      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.

 

11.17.      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.

 

11.18.      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.

 

11.19.      Effective Date and Termination Date.  This amendment and restatement
is effective January 1, 2005, 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 IX.

 

16

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IN WITNESS WHEREOF, the Company has executed this First Amended and Restated
Plan on this the 7th day of December, 2005.

 

 

FOSSIL, INC.

 

 

 

 

 

By:

/s/ Randy S. Kercho

 

 

 

 

Its:

Executive Vice President

 

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