DEFERRAL AGREEMENT
Deferral Agreement (this "Deferral Agreement") made as of the
1st day of May, 1997 by and between Concord Camera Corp., a New Jersey
corporation (the "Employer"), and Xxx X. Xxxxxxx (the "Executive").
The Executive is presently Chairman and Chief Executive
Officer of the Employer. The Executive and the Employer desire to make
provisions to permit the Executive to defer the payment of certain compensation
in connection with that employment on the terms hereinafter provided.
In consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto hereby agree as follows:
Article I. Deferred Compensation
1. The Employer agrees to defer the payment of certain
compensation earned by the Executive during each calendar year, and such
deferred compensation shall be paid to the Executive as hereinafter provided.
The amount of compensation to be deferred in respect of any year shall be that
portion or all of the Executive's annual salary and/or cash bonus earned for
such year as the Executive elects to defer by written notice given to the
Employer at least 15 days prior to the first day of such year; provided,
however, that in the case of a cash bonus to be paid in a year following the
year to which such cash bonus relates, such election may be made prior to the
last day of the year to which
such cash bonus relates; provided, further, that in the case of compensation to
be paid in 1997 after the execution of this Deferral Agreement, such election
may be made within 30 days of the execution of this Deferral Agreement.
2. The Employer shall establish and credit to a special
account on its books (hereinafter referred to as an "Account") the amount of
deferred compensation specified in paragraph 1 of this Article I. The Employer
shall keep separate Accounts for deferred compensation in respect of particular
years to the extent necessary to account for differing elections and
designations hereunder regarding investments, benefit distributions and
beneficiaries for such years. If a portion or all of the Executive's annual
salary for a year is deferred under paragraph 1, one-twelfth (or in the case of
1997, a fraction, the denominator of which is 1 and the numerator of which is
the number of full month remaining in 1997 at the time of the election) of such
deferred amount shall be credited to the appropriate Account on the last day of
each month during such year (or such period). If a portion or all of the
Executive's bonus for a year is deferred under paragraph 1, such deferred amount
shall be credited to the appropriate Account on the last day of the month in
which the Executive would have received the bonus in cash had he not elected the
deferral under paragraph 1.
3. The balance in each Account shall be deemed for purposes of
this Deferral Agreement to be invested and reinvested in such securities,
investments, instruments and insurance
2
policies as the Executive, in his sole discretion, shall direct from time to
time, by one day advance written notice given to the Employer or its designee.
With the consent of the Employer, the Executive may, by giving written notice to
the Employer or its designee, authorize an investment manager to make the
directions specified in the preceding sentence. Any investment direction or
change of investment direction shall be deemed made on the first business day
after the day of the Employer's or its designee's, as the case maybe, receipt of
the Executive's or the investment manager's, as the case may be, written notice
of investment direction. Any such investment direction shall remain in effect
until affirmatively changed by a subsequent investment direction given in the
same manner, provided that the proceeds of any investment which matures shall be
deemed to be reinvested in such money market account as the Employer may
determine and thereafter until a new investment direction is made with respect
to such proceeds. Notwithstanding the foregoing, no such deemed investment
shall, in the Employer's reasonable judgment, impose upon the Employer
administrative burdens or financial costs which are inappropriate in view of all
of the circumstances. If no applicable investment direction is given on or
before the date on which an amount is credited to an Account, such amount shall
be initially invested in such money market account as the Employer may
reasonably determine. The Employer, in its discretion and on such terms as it
decides, may waive, or reduce the period of, any notice required under this
paragraph.
3
4. Title to and beneficial ownership of any direct or indirect
investment the Employer may make in connection with the Plan or Agreement
(including the transfer of funds to a selected investment manager for
discretionary investment and reinvestment in such investments by such investment
manager or the transfer of funds to a so-called rabbi trust), shall at all times
remain with the Employer, and the Executive and his designated beneficiary or
beneficiaries shall not have any property interest whatsoever in such
investments.
5. At the end of every month, each Account shall be increased
or decreased by (a) in the case of each investment actually made directly or
indirectly by the Employer with respect to such Account, the net amount of all
income, gain or loss earned or sustained, whether realized or unrealized, with
respect to such investment, and (b) in the case of each deemed investment with
respect to such Account, the net amount of all income, gain or loss which would
have been earned or sustained, whether realized or unrealized, had the balance
in the Account in fact been invested and reinvested in such investment. Each
Account shall also be charged with all payments or other distributions with
respect to such Account and with all fees and expenses (including brokerage
fees) with respect to such Account, in the case of investments actually made, at
the rates actually paid and, in the case of investments deemed to have been
made, at the rates which would have been paid had the investments actually been
made.
4
Article II. Benefit Distributions
1. The balance in each Account shall be paid to the Executive
in one of the two following methods at the election of the Executive: (a) a
lump-sum payment to be paid at such time as is designated by the Executive or
(b) annual installment payments over such period of years as may be designated
by the Executive. The Executive's election and designation referred to in the
previous sentence with respect to an Account shall be made by a written notice
to the Employer at the time of his deferral election for the year or years to
which the Account relates. The Executive may make different elections and
designations with respect to the deferred compensation of each year, with any
such different elections and designations accounted for through the creation of
separate Accounts as contemplated by paragraph 2 of Article I. In the event that
the Executive fails to make an election pursuant to this paragraph 1 with
respect to an Account, the balance in such Account shall be paid in ten annual
installments commencing on the first day of the month following the termination
of the Executive's employment with the Employer.
2. All payments to be made pursuant to paragraph 1 of this
Article II with respect to each Account shall be made in cash, and in
furtherance thereof, all investments actually made with respect to such Account
shall be sold by the Employer at such time or times as the Employer may
determine to effect such payment; provided, that (a) in the case of an
installment payment, unless the Executive provides the Employer with written
5
notice to the contrary at least five days prior to the date any such payment is
due, the Employer may select the investments to be sold or deemed sold to
provide the cash necessary for such payment, and (b) to the extent investments
have actually been made by the Employer with respect to such Account, the
Executive may elect, subject to the Employer's approval, to receive payment in
kind in lieu of cash by providing written notice of such election to the
Employer at least five days prior to the date of such payment.
3. For purposes of determining the amount of a payment
referred to in paragraph 1 of this Article II with respect to an Account, (a)
the balance in such Account shall be adjusted by the Employer in the manner
provided in paragraph 5 of Article I not more than five trading days preceding
such payment, (b) the amount of such payment shall be reduced by the amount of
any expenses actually incurred or deemed to have been incurred in connection
with the sale or deemed sale of investments required to make such payment
("selling expenses"), and (c) if the installment method is elected with respect
to any year, the amount of each installment shall be equal to the balance in the
appropriate Account as of the date of payment (as adjusted pursuant to clause
(a) of this sentence), divided by the number of annual installments remaining,
including the installment then being paid, and then reduced by the amount of any
applicable selling expenses.
6
4. Except as provided in this paragraph 4, the Executive shall
have no right to modify in any way his election and designation made pursuant to
paragraph 1 of this Article II with respect to an Account or, in the event of
his failure to make such an election or designation, the default provisions of
paragraph 1. Provided that a modification election is made at least 12 months
prior to the commencement of the benefit distributions with respect to an
Account, the Executive, may:
(a) delay the date on which a lump-sum payment from such
Account shall be made;
(b) change the form of benefit payment from such Account
from a lump-sum payment to annual installment payments
over such period of years as designated by the
Executive;
(c) change the form of benefit payment from such Account
from annual installments to a lump-sum payment which
shall be paid at the time designated by the Executive
but no sooner than the day on which the installment
payments were to commence;
(d) delay the commencement of annual installment payments
from such Account; or
(e) increase the period of years during which annual
installments shall be made out of such Account.
7
5. Notwithstanding anything in this Deferral Agreement to the
contrary, in the event of the termination of the Executive's employment with the
Employer for any reason prior to the Executive's attainment of age 65, the
balance in each Account shall be paid to the Executive in one lump-sum payment
within 30 days of such termination.
6. Employer is authorized to withhold from any payments
hereunder such amounts for income tax, social security, unemployment
compensation and other taxes as shall be necessary or appropriate to comply with
applicable laws and regulations.
Article III. Hardship
The Employer may, in its sole discretion, distribute all or a
portion of the balances in the Accounts to the Executive upon a demonstration by
the Executive of an immediate and heavy financial need. The amount of any
distribution made pursuant to this Article III shall be limited to the amount
necessary to satisfy such financial need.
Article IV. Death
In the event of the Executive's death prior to the payment of
all of the balances in the Accounts, unless the Executive otherwise elects with
the consent of the Employer, the Employer shall pay all remaining balances in
the Accounts at such time, not later than 60 days following the Executive's
death, in one lump-sum to such beneficiary or beneficiaries designated by the
Executive in a writing filed by the Executive with the Employer, or in the
absence of such a beneficiary designation, to the Executive's estate.
8
Article V. Claims Procedures
1. At any time the Employer makes a determination adverse to
the Executive or his beneficiary with respect to a claim for payment, the
Employer shall notify the claimant in writing of such determination, setting
forth:
(a) the specific reason for such determination;
(b) a reference to the specific provision or provisions of
this Plan on which such determination is based;
(c) a description of any additional material or information
necessary to perfect the claim, and an explanation of
the reason that such material is required; and
(d) an explanation of the rights and procedures set forth
in this Article V.
2. A person who receives notice of an adverse determination by
the Employer with respect to a claim may request, within 60 days of receipt of
such notice, that the Employer review its determination. This request may be
made on behalf of a claimant by a duly authorized representative. The claimant
or representative may review pertinent documents and submit issues and comments
with respect to the controversy to the Employer. The Employer shall render a
decision within 60 days of
9
a request for review (or within 120 days under special circumstances), which
decision shall be in writing and shall set forth the specific reasons for the
decision reached and the specific provisions of this Plan on which the decision
is based. A copy of the ruling shall be forwarded to the claimant.
Article VI. Miscellaneous
1. Benefits provided in this Deferral Agreement will not be
subject to garnishment, attachment, or assignment, or any other legal process by
creditors of the Executive or any person or persons designated as beneficiaries
of this Deferral Agreement or any other payee of the benefits provided herein,
except as specifically provided herein.
2. The Executive and his beneficiaries shall have the status
of unsecured creditors of the Employer and this Deferral Agreement constitutes a
mere promise by the Employer to make benefit payments as required by Article II,
III and IV.
3. This Deferral Agreement creates no rights in the Executive
to continue in the employment of the Employer for any length of time, nor does
it create any rights in the Executive or his beneficiaries nor any obligations
on the part of the Employer, other than those specifically provided herein.
4. This Deferral Agreement shall be binding upon and inure to
the benefit of the Employer, its successors and assigns, and the Executive, his
heirs, executors, administrators and legal representatives.
10
5. The waiver by any party of any term of this Deferral
Agreement on any occasion shall not be deemed to be a further or continuing
waiver of any such term.
6. Written notices which the Executive must provide to the
Employer under this Deferral Agreement (including, but not limited to, deferral
elections, investment directions, benefit distribution elections and beneficiary
designations) shall be addressed to the Employer at: 00 Xxxxxx Xxx, Xxxxxx, Xxx
Xxxxxx 00000.
7. This Deferral Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New Jersey without giving
effect to principles governing choice of law.
8. This Deferral Agreement may be terminated or amended only
by a writing signed by both of the parties hereto.
IN WITNESS WHEREOF, this Deferral Agreement has been duly
executed by the Employer and by the Executive as of the day and year first above
written.
Witness: CONCORD CAMERA CORP.
/s/ Xxxxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Press
------------------------- ------------------------
Xxxxxx X. Press
Witness:
/s/ XXXXXXXXXXXXXXX /s/ Xxx X. Xxxxxxx
------------------------- ------------------------
Xxx X. Xxxxxxx
11
