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EIGHTH AMENDMENT TO LOAN AGREEMENT
 
THIS EIGHTH AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is made and entered
into and effective as of November 18, 2009 (the “Amendment Closing Date”), by
and among WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association
(the “Bank”), FOSSIL PARTNERS, L.P. (the “Borrower”), FOSSIL, INC. (the
“Company”), FOSSIL INTERMEDIATE, INC. (“Fossil Intermediate”), FOSSIL TRUST
(“Fossil Trust”), FOSSIL STORES I, INC. (“Fossil I”), ARROW MERCHANDISING, INC.
(“Arrow Merchandising”), FOSSIL HOLDINGS, LLC (“Fossil Holdings”) and FOSSIL
INTERNATIONAL HOLDINGS, INC. (“Fossil International”) (the Company, Fossil
Intermediate, Fossil Trust, Fossil I, Arrow Merchandising, Fossil Holdings and
Fossil International are sometimes referred to herein individually as a
“Guarantor” and collectively as the “Guarantors”).
 
RECITALS
 
WHEREAS, the Bank, the Borrower and certain of the Guarantors are parties to
that certain Loan Agreement dated as of September 23, 2004 (as amended, modified
or supplemented from time to time, the “Agreement”); and
 
WHEREAS, the Bank, the Borrower and the Guarantors desire to amend the Agreement
and the other Loan Documents as herein set forth to, among other things, (a)
allow for a possible increase of the Total Commitment from $100,000,000 to up to
$200,000,000 upon the request of the Borrower and the consent of the Bank (which
consent may or may not be granted in the Bank's sole and absolute discretion)
and (b) extend the maturity date of the loans under the Line of Credit and the
Revolving Note (which evidences such loans) to November 17, 2010.
 
NOW, THEREFORE, in consideration of the premises herein contained and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
 
ARTICLE I.
 
Definitions
 
Section 1.01. Capitalized terms used in this Amendment are defined in the
Agreement, as amended hereby, unless otherwise stated.
 
ARTICLE II.
 
Amendments
 
Section 2.01. Amendment to Section 1.  Effective as of the Amendment Closing
Date, Section 1 of the Agreement is hereby amended and restated to read in its
entirety as follows:
 
“1.           The Line of Credit.  Subject to and upon the terms, conditions,
covenants and agreements contained herein (including the proviso below) and in
the Revolving Note (as hereinafter defined), the Bank agrees to loan to the
Borrower, at any time and from time to time prior to November 17, 2010 (the
maturity of the Revolving Note), such amounts as the Borrower may request up to
but not exceeding at any time the aggregate principal amount of $100,000,000 (as
such amount may be increased from time to time pursuant to the proviso below,
the “Total Commitment”); within such limits and during such period, the Borrower
may borrow, repay and re-borrow hereunder (the “Line of Credit”); provided,
however, that, from time to time upon the written request of the Borrower to the
Bank and upon the written consent of the Bank to such request (which consent may
or may not be granted by the Bank in its sole and absolute discretion), the
Total Commitment may be increased to an amount not to exceed $200,000,000;
provided, further, however, that, in connection with any written request of the
Borrower to the Bank to increase the Total Commitment in accordance with the
immediately preceding proviso, the Bank's requested consent thereto shall be
deemed to have been automatically denied unless the Bank shall have delivered to
the Borrower a written consent to such increase within fifteen (15) Business
Days after such written request is delivered to the Bank.  All loans under the
Line of Credit shall be evidenced by a Revolving Line of Credit Note (as
amended, modified or supplemented, increased, renewed, extended or replaced from
time to time, the “Revolving Note”) in form and substance satisfactory to the
Bank, executed by the Borrower and payable to the order of the Bank, and bearing
interest upon the terms provided therein (but in no event to exceed the maximum
non-usurious interest rate permitted by law).  The principal of, and interest
on, the Revolving Note shall be due and payable as provided in the Revolving
Note.  Notation by the Bank on its records shall constitute prima facie evidence
of the amount and date of any payment or borrowing thereunder.

(a) Renewals and Extensions.  All renewals, extensions, modifications and
rearrangements of the Revolving Note, if any, shall be deemed to be made
pursuant to this Agreement, and, accordingly, shall be subject to the terms and
provisions hereof, and the Borrower and the Guarantors shall be deemed to have
ratified, as of such renewal, extension, modification or rearrangement date, all
of the representations, covenants and agreements herein set forth.
 
(b) Letters of Credit.  Advances under the Line of Credit may be utilized by the
Borrower to fund drawings under any Documentary or Stand-by Letters of Credit
(as hereinafter defined) that are issued by the Bank for the account of the
Borrower.  In the event the Borrower fails to reimburse the Bank for any such
drawings, the Bank may, in its own discretion, advance funds under the Line of
Credit to fund such drawings and all such advances shall be added to the
principal amount of the Revolving Note.”
 
(c) Unused Fee.  The Borrower shall pay to the Bank a fee equal to (i) the
Unused Fee Percentage (as such term is hereinafter defined) per annum multiplied
by (ii) the amount by which the Total Commitment exceeds the average daily
balance of the sum of the outstanding principal amount of loans under the Line
of Credit plus the aggregate undrawn amount of Documentary and Standby Letters
of Credit during the applicable period (which amount is hereinafter called the
"Unused Total Commitment").  Such fee shall be payable in arrears, on the last
day of each December, March, June and September and on the maturity of the
Revolving Note, based upon such average daily balance of the Unused Total
Commitment during the period then ended on such payment date.  For avoidance of
doubt, such fee shall commence to accrue on November 18, 2009.  The term "Unused
Fee Percentage" shall mean the percentage specified in the following table,
based upon the Unused Total Commitment.
 
Unused Total
Commitment
Unused Fee
Percentage
 
Equal to or greater than 90% of Total Commitment
0.20%
Less than 90% and equal to or greater than 70% of Total Commitment
0.10%
Less than 70% of Total Commitment
0.00%

Section 2.02. Amendment to Section 16.  Effective as of the Amendment Closing
Date, the address of the Bank contained in Section 16 of the Agreement is hereby
amended to read as follows:
 
Wells Fargo Bank, National Association
1445 Ross Avenue, 3rd Floor
MAC T5303-031
Dallas, Texas  75202
Attention:  Julia Harman, Vice President
Fax:  (214) 953-3982

ARTICLE III.
 
Conditions Precedent
 
Section 3.01. Conditions to Effectiveness.  The effectiveness of this Amendment
is subject to the satisfaction of the following conditions precedent, unless
specifically waived in writing by the Bank:
 
(a) The Bank shall have received (i) this Amendment, duly executed by the
Borrower and each Guarantor, and (ii) an amended and restated Revolving Note in
form and substance satisfactory to the Bank which, among other things, extends
the maturity date of the Revolving Note to November 17, 2010, duly executed by
the Borrower;
 
(b) The Bank shall  have received (i) certified copies of any amendments or
modifications to the organizational documents of the Borrower, each Guarantor
and each Significant Foreign Subsidiary that have been entered into between
November 19, 2008 and the Amendment Closing Date, (ii) certificates dated as of
a recent date issued by the applicable governmental authorities which evidence
the existence and good standing of the Borrower and each Guarantor, and
(iii) certified copies of resolutions of the board of directors or other
applicable governing body of the Borrower and each Guarantor which authorize the
execution and delivery of this Amendment and the other Loan Documents executed
in connection herewith, in each case in form and substance satisfactory to the
Bank;
 
(c) [intentionally omitted];
 
(d) There shall have been no material adverse change in the business or
financial condition of the Borrower, the Company and the Guarantors, taken as a
whole;
 
(e) There shall be no material adverse litigation, either pending or threatened,
against the Borrower or any Guarantor that could reasonably be expected to have
a material adverse effect on the business or financial condition of the
Borrower, the Company and the Guarantors, taken as a whole;
 
(f) The representations and warranties contained herein and in the Agreement and
the other Loan Documents, as each is amended hereby, shall be true and correct
in all material respects as of the date hereof, as if made on the date hereof,
except to the extent such representations were made as of a specific date;
 
(g) No default or Event of Default under the Agreement, as amended hereby, shall
have occurred and be continuing, unless such default or Event of Default has
been specifically waived in writing by the Bank; and
 
(h) All requisite corporate, partnership or trust proceedings, as appropriate,
shall have been taken the Borrower and each Guarantor to authorize the
execution, delivery and performance of this Amendment, and such proceedings and
other legal matters incident thereto shall be satisfactory to the Bank and its
legal counsel.
 
ARTICLE IV.
 
Ratifications, Representations and Warranties, Covenants
 
Section 4.01. General Ratifications.  The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and the other Loan Documents, and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the
Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect.  The parties hereto agree that the Agreement
and the other Loan Documents, as amended hereby, shall continue to be legal,
valid, binding and enforceable in accordance with their respective terms.
 
Section 4.02. Ratification of Guaranties.  Each of the Guarantors hereby
acknowledges and consents to all of the terms and conditions of this Amendment
and hereby ratifies and confirms the Guaranty Agreement to which it is a party
to or for the benefit of the Bank and all of its obligations thereunder.  Each
of the Guarantors hereby represents and acknowledges that it has not revoked,
terminated, limited or otherwise modified its obligations under the Guaranty
Agreement executed by it in any way and that it has no claims, counterclaims,
offsets, credits or defenses to the Guaranty Agreement executed by it or to the
other Loan Documents to which it is a party or the performance of its
obligations thereunder, all of which obligations are legal, valid and binding in
accordance with their terms.  Furthermore, each Guarantor agrees that nothing
contained in this Amendment shall adversely affect any right or remedy of the
Bank under the Guaranty Agreement to which such Guarantor is a party.  Each
Guarantor hereby agrees that, with respect to the Guaranty Agreement to which it
is a party, all references in such Guaranty Agreement to the “Guaranteed
Obligations” shall include, without limitation, the obligations of the Borrower
to the Bank under the Agreement, as amended hereby, and all indebtedness
evidenced by the Revolving Note dated as of November 18, 2009, in the maximum
original principal amount of $200,000,000 made by the Borrower payable to the
order of the  Bank.  Finally, each of the Guarantors hereby represents and
acknowledges that the execution and delivery of this Amendment, the Revolving
Note and the other Loan Documents executed in connection herewith shall in no
way change or modify its obligations as a guarantor, debtor, pledgor, assignor,
obligor and/or grantor under its respective Guaranty Agreement (except as
specifically provided in this Section 4.02) and shall not constitute a waiver by
the Bank of any of the Bank’s rights or remedies against such Guarantor.
 
Section 4.03. Ratification of Security Interests.  The Company hereby agrees
that the Stock Pledge Agreement is hereby expressly amended such that the
definition of “Secured Obligations” contained therein includes, without
limitation, all indebtedness and other obligations of the Borrower now or
hereafter existing hereunder the Agreement, as amended hereby, and all
indebtedness evidenced by the Revolving Note dated as of November 18, 2009, in
the maximum original principal amount of $200,000,000 made by the Borrower
payable to the order of the Bank.  Furthermore, the Company hereby ratifies and
reaffirms its grant of a security interest in all “Collateral”, as such term is
defined in the Stock Pledge Agreement, as security for the payment and
performance of all “Secured Obligations”, as such term is defined in the Stock
Pledge Agreement, and all other obligations under the Stock Pledge Agreement, as
the same is amended hereby, and represents and acknowledges that the Stock
Pledge Agreement is not subject to any claims, counterclaims, defenses or
offsets and that all of its obligations thereunder are legal, valid and binding
in accordance with their terms.  Finally, the Company hereby represents and
acknowledges that the execution and delivery of this Amendment, the Revolving
Note and the other Loan Documents executed in connection herewith shall in no
way change or modify its obligations as a debtor, pledgor, assignor, obligor
and/or grantor under the Stock Pledge Agreement (except as specifically provided
in this Section 4.03) and shall not constitute a waiver by the Bank of any of
the Bank’s rights or remedies against the Company.
 
Section 4.04. Representations and Warranties, etc.  The Borrower and each of the
Guarantors hereby jointly and severally represent and warrant to the Bank that
(a) the execution, delivery and performance of this Amendment and any and all
other Loan Documents executed and/or delivered in connection herewith have been
duly authorized by all requisite corporate, partnership or trust proceedings, as
appropriate, and will not contravene, or constitute a default under, any
provision of applicable law or regulation or of the Agreement of Limited
Partnership, Articles of Incorporation, By-Laws, Trust Agreement or other
organizational document, as applicable, of the Borrower or any Guarantor, or of
any mortgage, indenture, material contract, material agreement or other material
instrument, or any judgment, order or decree, binding upon the Borrower or any
Guarantor; (b) the officer(s) or other representatives, as applicable, of the
Borrower and each Guarantor executing and delivering this Amendment and any and
all other Loan Documents executed and/or delivered in connection herewith are
duly elected and are authorized, by resolution of the board of directors, board
of managers or trustees (or other applicable governing body) of the Borrower and
each such Guarantor, to execute on behalf of each such entity this Amendment and
any and all other Loan Documents executed and/or delivered in connection
herewith; (c) the representations and warranties contained in the Agreement and
the other Loan Documents, as amended hereby, are true and correct in all
material respects on and as of the date hereof and on and as of the date of
execution hereof as though made on and as of each such date, except to the
extent such representations were made as of a specific date; (d) no default or
Event of Default under the Agreement, as amended hereby, or any other Loan
Document has occurred and is continuing, unless such default or Event of Default
has been specifically waived in writing by the Bank; and (e) the Borrower and
the Guarantors are in full compliance with all covenants and agreements
contained in the Agreement and the other Loan Documents, as amended hereby.
 
Section 4.05. Subsidiaries, etc.  The Borrower and each of the Guarantors hereby
jointly and severally represent and warrant to the Bank that (a) attached hereto
as Eighth Amendment Schedule 1 is a list of all majority-owned subsidiaries of
the Company or the Borrower as of the Amendment Closing Date, (b) attached
hereto as Eighth Amendment Schedule 2 is a list of all Significant Domestic
Subsidiaries as of the Amendment Closing Date and after giving effect to this
Amendment, (c) attached hereto as Eighth Amendment Schedule 3 is a list of all
Significant Foreign Subsidiaries as of the Amendment Closing Date and after
giving effect to this Amendment, and (d) each of the Borrower and the Guarantors
is in compliance with the requirements of Section 12(m) of the Agreement as of
the Amendment Closing Date and after giving effect to this Amendment.
 
ARTICLE V.
 
Miscellaneous Provisions
 
Section 5.01. Survival of Representations and Warranties.  All representations
and warranties made in the Agreement or any other Loan Documents, including,
without limitation, any document furnished in connection with this Amendment,
shall survive the execution and delivery of this Amendment and the other Loan
Documents to be executed in connection herewith, and no investigation by the
Bank or any closing shall affect the representations and warranties or the right
of the Bank to rely upon them.
 
Section 5.02. Reference to Agreement.  Each of the Agreement and the other Loan
Documents, and any and all other agreements, documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof or thereof or
pursuant to the terms of the Agreement, as amended hereby, are hereby amended so
that any reference in the Agreement and such other Loan Documents to the
Agreement shall mean a reference to the Agreement as amended hereby.
 
Section 5.03. Expenses of the Bank.  As provided in the Agreement, the Borrower
agrees to pay on demand all reasonable costs and expenses incurred by the Bank
in connection with the preparation, negotiation and execution of this Amendment
and the other Loan Documents executed pursuant hereto and any and all
amendments, modifications and supplements hereto or thereto, including, without
limitation, the costs and fees of the Bank’s legal counsel and all costs and
expenses incurred by the Bank in connection with the enforcement or preservation
of any rights or remedies under the Agreement or any other Loan Document, in
each case as amended hereby, including, without, limitation, the costs and fees
of the Bank’s legal counsel.
 
Section 5.04. Severability.  Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
 
Section 5.05. Successors and Assigns.  This Amendment is binding upon and shall
inure to the benefit of the Borrower, the Guarantors and the Bank and their
respective successors and assigns; provided, however, that neither the Borrower
nor any Guarantor may assign any of its obligations hereunder or under any Loan
Document without the prior written consent of the Bank.
 
Section 5.06. Counterparts.  This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.  A facsimile signature or a signature transmitted electronically
shall be effective as an original signature.
 
Section 5.07. Effect of Waiver.  No consent or waiver, express or implied, by
the Bank to or for any breach of or deviation from any covenant, condition or
duty by the Borrower or any Guarantor shall be deemed a consent to or waiver of
any other breach of the same or any other covenant, condition or duty.
 
Section 5.08. Headings.  The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
 
Section 5.09. Applicable Law.  THIS AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED
PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN, AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS.
 
Section 5.10. Final Agreement.  THE AGREEMENT AND THE OTHER LOAN DOCUMENTS, EACH
AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT
TO THE SUBJECT MATTER HEREOF AND THEREOF ON THE DATE THIS AMENDMENT IS EXECUTED.
THE AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE
PARTIES. NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY
PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED
BY THE BORROWER, THE GUARANTORS AND THE BANK.
 
Section 5.11. Agreement for Binding Arbitration.  The parties agree to be bound
by the terms and provisions of the Bank’s current Arbitration Program, a true
and correct copy of which is attached hereto as Exhibit A and incorporated
herein by reference and is acknowledged as received by the parties pursuant to
which any and all disputes shall be resolved by mandatory binding arbitration
upon the request of any party.
 
[Remainder of page intentionally left blank.]

 
 

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IN WITNESS WHEREOF, this Amendment has been executed and is effective as of the
date first above-written.
 
“BANK”
 
WELLS FARGO BANK,
NATIONAL ASSOCIATION

By:           /s/ Julia
Harman                                                                
Name:           Julia Harman
Title:           Vice President

“BORROWER”

FOSSIL PARTNERS, L.P.

By:           Fossil, Inc.
Title:           General Partner

By:           /s/ Mike L.
Kovar                                                      
Name:           Mike L. Kovar
Title:           Executive Vice President, Chief
Financial Officer and Treasurer

“GUARANTORS”

FOSSIL, INC.

By:           /s/ Mike L.
Kovar                                                                
Name:           Mike L. Kovar
Title:           Executive Vice President, Chief
Financial Officer and Treasurer

FOSSIL INTERMEDIATE, INC.

By:           /s/ Mike L.
Kovar                                                                
Name:           Mike L. Kovar
Title:           Treasurer

 
 

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FOSSIL TRUST

By:           /s/ Mike L.
Kovar                                                                
Name:           Mike L. Kovar
Title:           Treasurer

FOSSIL STORES I, INC.

By:           /s/ Mike L.
Kovar                                                                
Name:           Mike L. Kovar
Title:           Treasurer

ARROW MERCHANDISING, INC.

By:           /s/ Mike L.
Kovar                                                                
Name:           Mike L. Kovar
Title:           Treasurer

FOSSIL HOLDINGS, LLC

By:           /s/ Mike L.
Kovar                                                                
Name:           Mike L. Kovar
Title:           Manager

FOSSIL INTERNATIONAL HOLDINGS, INC.

By:           /s/ Mike W.
Barnes                                                                
Name:           Michael W. Barnes
Title:           President

 
 

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EIGHTH AMENDMENT SCHEDULE 1

ALL SUBSIDIARIES

Fossil Intermediate, Inc.
Fossil Stores I, Inc.
Arrow Merchandising, Inc.
Fossil Holdings, LLC
Fossil Trust
Fossil International Holdings, Inc.
Fossil Europe B.V.
Fossil Holdings (Gibraltar) Ltd.
Swiss Technology Holding GmbH
Fossil Austria GmbH
Fossil Japan, K.K.
Fossil (Gibraltar) Ltd.
Fossil Canada, Inc.
Fossil Mexico, S.A. de C. V.
Servicios Fossil Mexico, S.A. de C.V.
Fossil (East) Limited
Fossil Holding LLC Luxembourg, SCS
Fossil Luxembourg, Sarl
Pulse Time Center Company, Ltd.
Fossil (Asia) Ltd
Fossil Singapore Ptd Ltd.
FDT, Ltd.
Fossil (Australia) Pty Ltd.
Fossil (New Zealand) Ltd.
Fossil Time Malaysia Sdn. Bhd.
Fossil Industries Ltd.
Fossil Trading (Shanghai) Company Ltd.
Fossil (Asia) Holding Ltd.
Fossil Europe GmbH
Fossil Italia, S.r.l.
Gum, S.A.
Fossil, S.L.
Fossil U.K. Holdings Ltd.
FESCO, GmbH
Fossil Swiss No Time GmbH
Fossil Swiss X Time GmbH
In Time - Portugal
Fossil U.K. Ltd.
Fossil Stores U.K. Ltd.
Montres Antima SA
Fossil Group Europe, GmbH
Fossil France SA
Logisav SARL
Trotime Espana SL
Fossil Retail Stores (Australia) Pty. Ltd
Fossil Management Services Pty. Ltd.
Fossil Scandinavia AB
Fossil Norway AS
Fossil Denmark AS
Fossil Stores France SAS
Fossil Stores S.r.l.
Fossil (Korea) Ltd.
Fossil (Macau) Limited
Fossil India Private Ltd.
Fossil Stores Spain, S.L.
Fossil Stores Belgium BVBA
Fossil Belgium BVBA
Fossil Stores Sweden AB
Fossil Stores Denmark A/S
MW (Asia), Ltd.
Trylink International, Ltd.
Fossil Newtime Ltd.
Fossil Asia Pacific, Ltd.

 
 

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EIGHTH AMENDMENT SCHEDULE 2

SIGNIFICANT DOMESTIC SUBSIDIARIES

Fossil Intermediate, Inc.
Fossil Trust
Fossil Stores I, Inc.

 
 

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EIGHTH AMENDMENT SCHEDULE 3

SIGNIFICANT FOREIGN SUBSIDIARIES

Fossil Europe B.V.
Fossil Holdings (Gibraltar) Ltd.
Swiss Technology Holding GmbH

 
 

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EXHIBIT A

ARBITRATION PROGRAM

 
 

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ARBITRATION

(a)             Arbitration.  The parties hereto agree, upon demand by any
party, to submit to binding arbitration all claims, disputes and controversies
between or among them (and their respective employees, officers, directors,
attorneys, and other agents), whether in tort, contract or otherwise in any way
arising out of or relating to (i) any credit subject hereto, or any of the Loan
Documents, and their negotiation, execution, collateralization, administration,
repayment, modification, extension, substitution, formation, inducement,
enforcement, default or termination; or (ii) requests for additional credit.

(b)             Governing Rules.  Any arbitration proceeding will (i) proceed in
a location in Texas selected by the American Arbitration Association (“AAA”);
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein, as applicable, as the
“Rules”).  If there is any inconsistency between the terms hereof and the Rules,
the terms and procedures set forth herein shall control.  Any party who fails or
refuses to submit to arbitration following a demand by any other party shall
bear all costs and expenses incurred by such other party in compelling
arbitration of any dispute.  Nothing contained herein shall be deemed to be a
waiver by any party that is a bank of the protections afforded to it under 12
U.S.C. §91 or any similar applicable state law.

(c)             No Waiver of Provisional Remedies, Self-Help and
Foreclosure.  The arbitration requirement does not limit the right of any party
to (i) foreclose against real or personal property collateral; (ii) exercise
self-help remedies relating to collateral or proceeds of collateral such as
setoff or repossession; or (iii) obtain provisional or ancillary remedies such
as replevin, injunctive relief, attachment or the appointment of a receiver,
before during or after the pendency of any arbitration proceeding.  This
exclusion does not constitute a waiver of the right or obligation of any party
to submit any dispute to arbitration or reference hereunder, including those
arising from the exercise of the actions detailed in sections (i), (ii) and
(iii) of this paragraph.
 

(d)             Arbitrator Qualifications and Powers.  Any arbitration
proceeding in which the amount in controversy is $5,000,000.00 or less will be
decided by a single arbitrator selected according to the Rules, and who shall
not render an award of greater than $5,000,000.00.  Any dispute in which the
amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of
a panel of three arbitrators; provided however, that all three arbitrators must
actively participate in all hearings and deliberations.  The arbitrator will be
a neutral attorney licensed in the State of Texas with a minimum of ten years
experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated.  The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim.  In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication.  The arbitrator shall resolve all
disputes in accordance with the substantive law of Texas and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award.  The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Texas Rules of Civil Procedure or other applicable
law.  Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction.  The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

(e)             Discovery.  In any arbitration proceeding, discovery will be
permitted in accordance with the Rules.  All discovery shall be expressly
limited to matters directly relevant to the dispute being arbitrated and must be
completed no later than 20 days before the hearing date.  Any requests for an
extension of the discovery periods, or any discovery disputes, will be subject
to final determination by the arbitrator upon a showing that the request for
discovery is essential for the party's presentation and that no alternative
means for obtaining information is available.

(f)             Class Proceedings and Consolidations.  No party hereto shall be
entitled to join or consolidate disputes by or against others in any
arbitration, except parties who have executed any Loan Document, or to include
in any arbitration any dispute as a representative or member of a class, or to
act in any arbitration in the interest of the general public or in a private
attorney general capacity.

(g)             Payment Of Arbitration Costs And Fees.  The arbitrator shall
award all costs and expenses of the arbitration proceeding.

(h)             Miscellaneous.  To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA.  No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation.  If more than one agreement for arbitration by or between the
parties potentially applies to a dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the dispute
shall control.  This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.

 
 

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