Document:

EXHIBIT 10.2

 

DIRECTORS’ DEFERRED COMPENSATION PLAN

 

FARMERS
AND MERCHANTS TRUST COMPANY OF CHAMBERSBURG

DIRECTORS’ DEFERRED COMPENSATION PLAN

 

WHEREAS, FARMERS AND
MERCHANTS TRUST COMPANY OF CHAMBERSBURG does intend by the following instrument
to establish a Deferred Compensation Plan for the exclusive benefit of its
Directors; and

 

WHEREAS, the purpose of
the Plan is to provide said individuals with the opportunity to defer the
payment of certain fees due them;

 

NOW, THEREFORE, to carry
the above intentions into effect, Farmers and Merchants Trust Company of
Chambersburg does enter into this Plan this 1st day of July, 1986.

 

This Plan shall be known
as the:

 

FARMERS AND MERCHANTS
TRUST COMPANY OF CHAMBERSBURG DIRECTORS’ DEFERRED COMPENSATION PLAN

 

ARTICLE I

 

PURPOSE

 

The Bank recognizes that
the members of its Board of Directors possess an intimate knowledge of the
Bank, the community, and general business strategies. It further recognizes
that the participation of its Directors is essential to the Bank’s continued
growth and success. Accordingly, in order to retain and attract knowledgeable
Directors, the Bank now adopts a plan allowing its Directors to defer their
Director fees until their severance from the Board, as follows:

 

ARTICLE II

 

2.1  “BANK” means Farmers and Merchants Trust
Company of Chambersburg and any successor thereto.

 

2.2  “BENEFICIARY” means the person or persons
designated by a Participant pursuant to Section 5.4.

 

2.3  “DEFERRAL ELECTION FORM” shall mean a written
agreement between a Participant and the Bank, whereby a Participant agrees to
defer all or a portion of his Director Fees to be earned in the future, and the
Bank agrees to make benefit payments in accordance with the provisions of the
Plan.

 

2.4  “DEFERRED BENEFIT ACCOUNT” means the accounts
maintained on the books of the Bank pursuant to Article IV. A separate Deferred
Benefit Account shall be maintained for each Participant. A Participant’s
Deferred Benefit Account shall be utilized solely as a device for the
measurement and determination of the amounts to be paid to the Participants
pursuant to the Plan and shall be subject to Article VI hereof. A Participant’s
Deferred Benefit Account shall not constitute or be treated as a trust fund of
any kind.

 

2.5  “DETERMINATION DATE”  means December 31 of each Plan Year and, for
each Participant, the date of death or date of Severance as applicable.

 

2.6  “DIRECTOR” means each individual who serves
on the Bank’s Board of Directors and, except for the Chairman of the Board of
the Bank, is not otherwise employed by the Bank.

 

2.7  “DIRECTOR FEES” means the compensation to a
Director, as a Director, including but not limited to meeting or retainer fees.

 

2.8  “EFFECTIVE DATE” means July 1, 1986.

 

2.9  “PARTICIPANT” means each active Director who
has deferred all or a portion of his Director Fees in accordance with Article
III and any former Director who remains entitled to a benefit pursuant to
Article V.

 

 

2.10 “PLAN” means the
Farmers and Merchants Trust Company of Chambersburg Directors’ Deferred
Compensation Plan as described in this instrument, and as amended from time to
time.

 

2.11 “PLAN INTEREST YIELD”
means the average for the Plan Year or part thereof preceding the Determination
Date of the interest rate available on One Year U.S. Treasury Bills.

 

2.12 “PLAN YEAR”
initially means the period beginning on July 1, 1986, and ending December 31,
1986. Thereafter, Plan Year means the 12 consecutive month period beginning on
January 1 and ending on December 31.

 

2.13 “SEVERANCE” means voluntary
or involuntary termination of Board membership for any reasons other then
death, specifically excepting however a Termination for Cause.

 

2.14 “TERMINATION FOR
CAUSE” means termination from the Bank’s Board of Directors as a result of
willful misconduct or gross negligence in the performance by the Director of
his duties as a Director.

 

ARTICLE III

 

3.1  Each Director who elects to defer all or a
specified portion of Directors Fees pursuant to the terms provided herein shall
execute a Deferral Election Form prior to the Plan Year for which the deferral
shall first occur.

 

3.2  Each Director appointed to the Board during
the course of a Plan Year may file a Deferral Election Form with respect to
Director Fees to be earned in the future including those earned through the
balance of such Plan Year.

 

3.3  An election to defer Director Fees pursuant
to the Plan is irrevocable and shall continue until the earlier of a
Participant’s death, Severance or Termination For Cause, Notwithstanding a
Participant may change the deferred portion of his Director Fees or suspend
deferrals effective for any subsequent Plan Year by executing a new Deferral
Election Form prior to the first day of the Plan Year such change is to be
effective.

 

ARTICLE IV

 

4.1  For recordkeeping purposes only, the Bank
shall maintain separate Deferred Benefit Accounts for each Participant. The
existence of these accounts shall not require any segregation of assets.

 

4.2  The amount of Director Fees that a
Participant elects to defer shall be credited to the Participant’s Deferred
Benefit Account throughout each Plan Year at such time as the Participant would
otherwise be entitled to the Director Fees which are the source of the
deferral.

 

4.3  On each Determination Date, the Bank shall
credit each Deferred Benefit Account, an additional amount equal to the Plan
Interest Yield.

 

 

ARTICLE V

 

BENEFITS

 

5.1  Within sixty (60) days of a Participant’s
Termination For Cause, the Bank shall pay to the Participant a lump sum cash
distribution, in lieu of any other benefit provided hereunder, equal to the
Participant’s accumulated deferrals, without interest.

 

5.2  Within sixty (60) days of a Participant’s
Severance or death, the Bank shall pay to the Participant, or in the event of a
Participant’s death to the Participant’s Beneficiary, a deferred benefit. The
amount of the deferred benefit shall be equal to Participant’s Deferred Benefit
Account, determined pursuant to Article IV.

 

5.3  The Participant’s deferred benefit shall be
payable as a lump sum, unless, prior to the calendar year of Severance or
death, the Participant elects to have his deferred benefit payable over an
optional payment period of five years. If the Participant shall elect against a
lump-sum distribution, the Bank shall annuitize his deferred benefit utilizing
the average of the Plan Interest Yield during the three calendar years
immediately preceding the Participant’s Severance or death, and pay such
annuitized benefit to the Participant, or if applicable, his Beneficiary, in
equal annual installments.

 

5.4  The Participant may designate a Beneficiary
by filing a written notice of such designation with the Bank in such form as
the Bank requires and may include contingent beneficiaries. The Participant may
from time to time change the designated Beneficiary or Beneficiaries without
the consent of such Beneficiary by filing a new designation in writing with the
Bank. (If a Participant maintains his primary residence in a state which has
community property laws, the spouse of a married Participant shall join in any
designation of a Beneficiary or Beneficiaries other than the spouse. If no
designation shall be in effect at the time when any benefits payable under this
Plan shall become due, the Beneficiary shall be representatives of the Participant’s
estate.

 

5.5  To the extent required by the law in effect
at the time payments are made, the Bank shall withhold any taxes required by
the federal or any state or local government from payments made hereunder.

 

ARTICLE VI

 

UNFUNDED PLAN

 

6.1  Benefits are payable as they become due
irrespective of any actual investments the Bank may make to meet its
obligations. The Bank is under no obligation to purchase or maintain any asset,
and any reference to investments is solely for the purpose of computing the
value of benefits. Neither this Plan nor any action taken pursuant to the
provisions of the Plan shall create or be considered to create a trust of any
kind, or a fiduciary relationship between the Bank and the Participant, or any
other person. To the extent a Participant or any other person acquires a right
to receive payments from the Bank under this Plan, such right shall be no
greater than the right of any unsecured creditor of Bank.

 

ARTICLE VII

 

ASSIGNMENT

 

7.1  No Participant, Beneficiary or heir shall
have any right to commute, sell, transfer, assign or otherwise convey the right
to receive any payment under the terms of this Plan. Any such attempted
assignment shall be considered null and void.

 

 

ARTICLE VIII

 

AMENDMENT AND TERMINATION

 

8.1  The Plan may be amended in whole or in part
by the Bank at any time. Notice of any such amendment shall be given in writing
to each Participant and each Beneficiary of a deceased Participant.

 

8.2  Subject to Section 8.3, no amendment hereto
shall permit amounts accumulated pursuant to the Plan prior to the amendment to
be paid to be Participant or Beneficiary prior to the time he would otherwise
be entitled hereto.

 

8.3  The Bank reserves the sole right to terminate
the Plan (and/or the Deferral Election Form pertaining to any Participant) at
any time prior to the commencement of payment of benefits, but only in the
event that the Bank, in its sole discretion, shall determine that the economics
of the Plan have been adversely and materially affected by a change in tax
laws, other government action or other event beyond the control of the
Participants and the Bank. In the event of any such termination, each affected
Participant shall be entitled to a deferred benefit equal to the amount of his
Deferred Benefit Account determined under Article IV, using the Deferral
Election Form).

 

ARTICLE IX

 

MISCELLANEOUS

 

9.1  The benefits provided for the Participants
under the Plan are in addition to benefits provided by any other plan or
program of the Bank and, except as otherwise expressly provided for herein, the
benefits of this Plan shall supplement and shall not supersede any plan or
agreement between the Bank and any Participant or any provisions contained
herein.

 

9.2  The Plan shall be governed and construed under
the laws of the Commonwealth of Pennsylvania as in effect at the time of its
adoption.

 

9.3. The courts of the
Commonwealth of Pennsylvania shall have exclusive jurisdiction in any or all
actions arising under this Plan.

 

9.4  The terms of this Plan shall be binding upon
and inure to the benefit of the parties hereto, their respective heirs,
executors, administrators and successors.

 

9.5  The interest of any Participant or any
Beneficiary receiving payments hereunder shall not be subject to anticipation,
nor to voluntary or involuntary alienation until distribution is actually made.

 

9.6  All headings preceding the text of the
several Articles hereof are inserted solely for the reference and shall not
constitute a part of this Plan, nor affect its meaning, construction or effect.

 

9.7  Where the context admits, words in the
masculine gender shall include the feminine and neuter genders.

 

	
  FARMERS AND MERCHANTS
  TRUST COMPANY OF CHAMBERSBURG

  
	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  	
  By:Exhibit 10.71

GUESS?,
INC.

 

WRITTEN
DESCRIPTION OF PERFORMANCE-BASED BONUS CRITERIA FOR

NAMED
EXECUTIVE OFFICERS WITH RESPECT TO THE

FISCAL
YEAR ENDING DECEMBER 31, 2006

 

 

Guess?, Inc. (the “Company”) maintains
an annual executive compensation program, pursuant to which certain employees
of the Company are eligible to receive cash bonuses and equity incentive
awards, including stock options, restricted stock and/or performance shares (“Equity
Incentives”), upon achievement of pre-established performance goals. Any Equity
Incentives awarded under the executive compensation program will be granted
pursuant to the terms of the existing Guess?, Inc. 2004 Equity Incentive
Plan, previously approved by the shareholders of the Company on May 10,
2004 and filed April 14, 2004 as Exhibit A to the Company’s 2004
Definitive Proxy Statement (the “2004 Plan”). Any cash bonuses awarded under
the executive compensation program will be granted pursuant to the terms of the
2004 Plan or the existing Guess?, Inc. Annual Incentive Bonus Plan,
previously approved by the shareholders of the Company on May 10, 2005 and
filed April 15, 2005 as Appendix A to the Company’s 2005 Definitive Proxy
Statement.

 

On February 23, 2006, the Compensation
Committee of the Board of Directors of the Company established performance
goals under the annual executive compensation program for the current fiscal
year ending December 31, 2006 for its executive officers. The performance
goals vary by individual and are based on net earnings of the Company or
particular segments thereof, operating earnings by segment or, in certain
cases, gross margins by segment. The performance goals with respect to the
individuals that are expected to be designated as Named Executive Officers in
the Company’s 2006 Proxy Statement are based on (i) for Maurice Marciano
and Paul Marciano, Co-Chairmen and Co-CEOs, total Company net earnings,
(ii) for Carlos Alberini, President and Chief Operating Officer, and
Michael Relich, Senior Vice President and Chief Information Officer, net
earnings for North American operations (excluding royalties) and (iii) for
Nancy Shachtman, President of Wholesale, net earnings for North American
operations (excluding royalties) and U.S. wholesale gross margin (adjusted for
specified direct expenses). Upon achievement of such pre-established
performance goals, incentive amounts will be payable in pre-established
combinations of cash, stock options and restricted stock or performance shares.

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