EXHIBIT 10.1


 


FIRST
AMENDED AND RESTATED


FOSSIL,
INC. AND AFFILIATES

DEFERRED COMPENSATION PLAN


DECEMBER 7, 2005


 

















 


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

  



 


i

















 


	
   

  	
   

  	
   

  	
  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

  



 


ii

















 


	
   

  	
   

  	
   

  	
  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

  



 


iii

















 


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:


 

















 


(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.


 


2

















 


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.


 


3

















 


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.


 


4

















 


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

















 


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.


 


6

















 


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.


 


7

















 


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

















 


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,


 


9

















 


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


 


10

















 


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

















 


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

















 


(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


 


13

















 


(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

















 


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

















 


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

















 


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

  



 


17