EXHIBIT 10.54
FORM OF DEFERRED COMPENSATION AGREEMENT
This Deferred Compensation Agreement ("Agreement") is made between ___________
"Employee") and Farah U.S.A., Inc. ("Employer") on the following terms and
conditions:
1. Beginning January 1, 1996 and continuing through December 31, 1996,
Employee and Employer agree that Employee's monthly salary shall be reduced 5%
(must be 5% or more) each month during the aforementioned period ("Deferred
Income") and the monthly payments of Employee's salary shall be recalculated
accordingly.
2. The following accrual, crediting and vesting rules shall apply with
respect to this Agreement.
a. Employer shall accrue on December 31, 1996 an amount equal to the
Employee's total Deferred Income during 1996 and shall credit that sum to a
separate memorandum account on its books ("______________ 1996 Deferral Account"
or "Deferral Account").
b. In addition, on December 31, 1996 Employer shall accrue and credit the
following to the Employee's Deferral Account: (i) an amount in lieu of interest
equal to the sum of eleven (11) amounts, each such amount calculated as of the
last day of each month during 1996 other than January 31 by multiplying the
Farah U.S.A., Inc. weighted average monthly interest rate on short-term
borrowing during Farah U.S.A., Inc.'s most recently completed fiscal year (i.e.,
the fiscal year ended October 31, 1996) by the Employee's Deferred Income as of
the last day of the preceding month pursuant to this Agreement (with the
Employee's Deferred Income pursuant to this Agreement with respect to each month
deemed accrued as of the last day of such month) and (ii) five percent (5%) of
the Employee's total salary during the time period described in paragraph 1
above ("Matching Amount"). No amount in lieu of interest shall be accrued or
credited to the Deferral Account for 1996 on the amounts described in (ii)
above.
c. After December 31, 1996, until payment of the Employee's vested Deferral
Account balance as provided in paragraph 3 hereof, the Deferral Account shall be
credited on December 31 of each year with an amount in lieu of interest
calculated by multiplying the Employee's total Deferred Account balance as of
that December 31 (including his Deferral Income, Matching Amount and previously
credited sums in lieu of interest) times the Farah U.S.A., Inc. weighted average
annual interest rate on short-term borrowing during Farah U.S.A., Inc.'s most
recently completed fiscal year. In the event of a partial calendar year time
period, the amount in lieu of interest for post-1996 calendar years shall be
calculated as previously described and prorated for the appropriate time period
using the Farah U.S.A., Inc. weighted average annual interest rate on short-term
borrowing during Farah U.S.A. Inc.'s prior fiscal year, even if the partial
calendar year time period ends on or after the last day of Farah U.S.A., Inc.'s
current fiscal year.
d. Notwithstanding the foregoing to the contrary, if Employee terminates
his employment with Farah Incorporated and all of its wholly owned subsidiaries
incorporated in the United States ("Farah Entities" or, individually, a "Farah
Entity") during calendar year 1996, the following rules shall apply with respect
to the matching amount that Employee shall (or shall not) be entitled to with
respect to calendar year 1996:
i) If Employee's termination of employment was voluntary and for a reason
other than retirement on or after age 60 or involuntary and for cause, Employee
shall not be entitled to nor credited with any matching amount with respect to
calendar year 1996; and
ii) If Employee's termination of employment was voluntary and because of
retirement on or after age 60 or involuntary and not for cause (including, but
not limited to, termination of employment due to death or permanent and total
disability), Employee shall be entitled to a prorated matching amount with
respect to the calendar year in which his termination of employment occurs equal
to five (5%) of Employee's total salary during the portion of calendar year 1996
with respect to which he has deferred compensation pursuant to Farah
Incorporated 1993 Unfunded Deferred Compensation Plan ("Plan").
iii) The Stock Option and Compensation Committee of the Board of Directors
of Farah Incorporated (or its authorized representative) shall determine, in its
sole discretion, whether the Employee is entitled to a matching amount pursuant
to the foregoing paragraphs of this Agreement and the Plan (including, but not
limited to, determining whether Employee's termination of employment was
voluntary or involuntary or for cause or not for cause).
e. If Employee terminates his employment with all Farah Entities, Employee
shall receive amounts in lieu of interest in the manner described in the
preceding paragraphs until payment of Employee's entire vested Deferred Account
balance is made. However, notwithstanding the foregoing to the contrary, with
respect to the calendar year in which the last payment is made to Employee
pursuant to paragraph 3 (or the only payment, if a lump sum payment is to be
made) of this Agreement, no amounts in lieu of interest shall be accrued or paid
later than the date of such last payment and the rules for the determination of
amounts in lieu of interest for partial calendar year time periods shall be
utilized to determine the amount in lieu of interest which shall be included
with the last payment made to Employee with respect to the Agreement.
3. The total deferred compensation due to Employee, consisting of the total
amounts credited to and vested in the Deferral Account, shall be paid to the
Employee in the form of a lump sum on January 10, 1997. Should Employee die
before receiving all amounts payable to him pursuant to this Agreement, and at
such time is an employee of Farah Entity, the remaining amounts shall be paid in
a lump sum (or in a lump sum to each beneficiary if there is more than one
beneficiary, the sum of which shall not exceed the remaining amounts payable to
Employee) 30 days after Employee's death to his beneficiary(ies) under
Employee's primary life insurance plan (per total death benefit payable due to
Employee's death) maintained by a Farah Entity with respect to which a Farah
Entity defrays or has defrayed Employee's cost of coverage. If Employee is not
employed by a Farah Entity at the time of death, all unpaid amounts in the
Deferral Account shall be paid in a lump sum 30 days after Employee's death to
the estate of the Employee.
4. It is specifically agreed that the amounts credited to Employee in the
Deferral Account shall not be held by a Farah Entity in a trust, escrow or
similar arrangement or other fiduciary capacity. The Deferral Account shall not
be subject in any manner to attachment or other legal process for debts of
Employee or his successors or legal representatives for any reason; and neither
Employee, nor any legal representative or successor shall have any right against
a Farah Entity with respect to any portion of the Deferral Account, except as a
general unsecured creditor of a Farah Entity. Neither Employee, his successors
or legal representatives shall have any right to assign, transfer, pledge,
hypothecate, anticipate or otherwise alienate any payment of deferred
compensation to become due in the future to such person, and any attempt to do
so shall be void and will not be recognized by a Farah Entity.
5. Employee acknowledges that he has received a copy of the Plan and that
he understands the terms and conditions of the Plan.
6. Employee agrees that by executing this Agreement he and his
beneficiary(ies) and their successors or legal representatives and any other
person claiming any amount pursuant to this Agreement are bound by all of the
terms of the Plan, pursuant to which this Agreement is executed.
7. Employee agrees that his election to defer compensation pursuant to this
Agreement is irrevocable and no sale, transfer, alienation, assignment, pledge,
encumbrance, garnishment, collateralization, anticipation or attachment of any
benefits under the Plan shall be valid or recognized.
Executed this 21ST day of December, 1995.
EMPLOYER
By____________________________________________
EMPLOYEE
By____________________________________________
ANNEX TO EXHIBIT 10.54
Below is a list of variables to the Deferred Compensation Agreements chosen by
the officers required to file with this Form 10-K.
Name Period of Deferral % Deferred Payment Date
Xxxxxxx X. Xxxxxxxx January 1, 1996 to 5% January 10, 1997
December 31, 1996
Xxxxxx X. Xxxxxxx January 1, 1996 to 5% January 10, 1997
December 31, 1996
Xxxxxxx X. Xxxxxxxx January 1, 1996 to 7% January 10, 1997
December 31, 1996
Xxxxx X. Xxxxx January 1, 1996 to 5% January 10, 1997
December 31, 1996
