Exhibit 10.1

 

EXECUTIVE SEVERANCE AGREEMENT

 

This Executive Severance Agreement (this “Agreement”), made this      day of
              ,         (the “Effective Date”), is by and between Fossil
Partners, L.P., a Texas limited partnership (the “Company”), and          , a
resident of         (“Executive”) (the signatories to this Agreement will be
referred to jointly as the “Parties”).

 

WHEREAS, the Company desires that Executive receive certain severance benefits
in connection with certain terminations of service in exchange for entering into
this Agreement; and

 

[WHEREAS, the Company and Executive have previously entered into that certain
Executive Retirement Agreement, dated as of                 , 20   (the
“Retirement Agreement”); and]

 

[WHEREAS, the Company and Executive desire to terminate the Retirement Agreement
and for this Agreement to supersede the Retirement Agreement in all respects;
and]

 

WHEREAS, both the Company and Executive have read and understood the terms and
provisions set forth in this Agreement, and have been afforded a reasonable
opportunity to review this Agreement with their respective advisors.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
in this Agreement, and for good and valuable consideration, the receipt of which
is hereby acknowledged, Executive and the Company agree as follows:

 

1.                                      DEFINITIONS.

 

a.                                      “Affiliate” shall have the meaning set
forth in Rule 12b-2 promulgated under the Exchange Act.

 

b.                                      “Base Salary” means Executive’s then
current annual base salary in effect.

 

c.                                       “Beneficial Owner” shall have the
meaning set forth in Rule 13d-3 under the Exchange Act.

 

d.                                      “Cause” shall mean Executive’s
Termination of Service by the Company upon the occurrence of any of the
following events, as determined by the Company, in its sole discretion: (i) an
act or acts of theft, embezzlement, fraud, or dishonesty by Executive,
regardless of whether it relates to the Company or its Affiliates; (ii) a
willful or material misrepresentation by Executive that relates to the Company
or its Affiliates or has an impact on the Company or its Affiliates; (iii) any
gross or willful misconduct by Executive with regard to the Company or its
Affiliates; (iv) any violation by Executive of any fiduciary duties owed by
Executive to the Company or its Affiliates; (v) Executive’s conviction of, or
pleading nolo contendere or guilty to, a felony (other than a traffic
infraction) or misdemeanor; (vi) a material violation of the Company’s written
policies,

 

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standards or guidelines, which Executive failed to cure within thirty (30) days
after receiving written notice from the Company specifying the alleged
violation; (vii) Executive’s failure or refusal to satisfactorily perform the
duties and responsibilities required to be performed by Executive or necessary
to carry out Executive’s job duties, which Executive failed to cure within
thirty (30) days after receiving written notice from the Company specifying the
alleged willful failure or refusal; (viii) the failure or refusal of Executive
to follow the lawful directives of the Company; (ix) Executive’s illegal use of
drugs, use of alcohol or illegal drugs in the workplace, or Executive is under
the influence of alcohol or illegal drugs in the workplace or Executive
possesses illegal drugs in the workplace  (x) a material breach by Executive of
any agreement to which Executive and the Company are parties that is not cured
by Executive within thirty (30) days after receipt by Executive of a written
notice from the Company specifying the details of such breach; or
(xi) Employee’s unauthorized use or disclosure of any Proprietary Information of
the Company

 

e.                                       “Change in Control” shall mean a
“Change in Control” as defined in the Incentive Plan.

 

f.                                        “Code” means the Internal Revenue Code
of 1986, as amended.

 

g.                                       “Date of Grant” means, with respect to
an equity or equity-based award previously granted to Executive, the applicable
date of grant of such award as set forth in the award agreement for such award.

 

h.                                      “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

i.                                          “Fossil” means Fossil Group, Inc., a
Delaware corporation.

 

j.                                         “Good Reason” means Executive’s
resignation in accordance with the following sentence after the occurrence of
one or more of the following without Executive’s express written consent: (i) a
material diminution by the Company in Executive’s Base Salary; provided,
however, that, a reduction of Base Salary that (combined with all prior
reductions) totals ten percent (10%) or less and also applies to substantially
all other similarly situated employees of the Company will not be grounds for
“Good Reason”; (ii) a material reduction of Executive’s authority, duties, or
responsibilities relative to Executive’s authority, duties, or responsibilities
in effect immediately prior to such reduction, provided, however, that continued
employment following a Change in Control with substantially the same
responsibility with respect to the Company’s business and operations will not
constitute “Good Reason” (for example, “Good Reason” does not exist if Executive
is employed by the Company with substantially the same responsibilities with
respect to the Company’s business that Executive had immediately prior to the
Change in Control regardless of whether Executive’s title is revised to reflect
Executive’s placement within the overall corporate hierarchy or whether
Executive provides services to a subsidiary, affiliate, business unit or
otherwise); (iii) the relocation of Executive’s principal work location(s) to a
facility or a location more than fifty (50) miles from Executive’s prior work
location; or (iv) the

 

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Company’s material breach of its employment agreement with Executive.  In order
for Executive’s resignation to be for Good Reason, Executive must not terminate
employment with the Company without first providing the Company with written
notice of the acts or omissions constituting the grounds for “Good Reason”
within sixty (60) days of Executive’s awareness of the initial existence of the
grounds for “Good Reason” and a cure period of thirty (30) days following the
date of written notice (the “Cure Period”), such grounds must not have been
cured during such time, and Executive must resign within thirty (30) days
following the end of the Cure Period.

 

k.                                      “Incentive Plan” means the Fossil, Inc.
2008 Long-Term Incentive Plan, or any successor plan thereto.

 

l.                                          “Person” shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include (i) Fossil or
any of its subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of Fossil or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities or (iv) a corporation owned, directly or indirectly, by the
stockholders of Fossil in substantially the same proportions as their ownership
of stock of Fossil.

 

m.                                  “Restricted Area” means the geographical
area within which Executive performed services for the Company or its Affiliates
or for which Executive had any responsibility or about which Executive received
Proprietary Information during the term of Executive’s employment with the
Company.

 

n.                                      “Target” means the Company’s or its
Affiliates’ desired performance metric achievement determined for each fiscal
year to calculate Executive pay for benchmarking purposes.  For fiscal 2015, the
Target achievement level was an “exceeds” rating.

 

o.                                      “Target Bonus” means the annual cash
bonus compensation, if any, that may be paid to Executive if Executive and the
Company and its Affiliates achieved the Target level performance goals
established by the Company and its Affiliates for the applicable performance
period under any cash bonus plan.

 

p.                                      “Termination Date” means the effective
date of Executive’s Termination of Service.

 

q.                                      “Termination of Service” means a
“separation from service” within the meaning of Section 409A of the Code and the
final treasury regulations issued thereunder.

 

2.                                      DUTIES.  The Company has agreed to
employ Executive and Executive is currently employed as [job title].  The
specific position and duties assigned to Executive may be changed or modified at
any time by the Company, in its sole discretion. Executive will work diligently
to perform his or her assigned duties in a reasonable, timely, and professional
manner, and will comply with all applicable policies and rules of the Company.

 

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3.                                      AT WILL EMPLOYMENT.  At all times during
his or her employment with the Company, Executive’s employment will be
considered at-will.  Nothing in this Agreement shall be construed as a guarantee
of present or future employment with the Company.

 

4.                                      COMPENSATION.  During the term of this
Agreement, the Company will provide Executive with compensation and benefits,
subject to adjustment at any time at the Company’s discretion. Compensation will
be paid in accordance with the Company’s payroll policies and practices, which
may be adjusted at any time at the Company’s discretion.

 

5.                                      SEVERANCE BENEFITS.

 

a.                                      TERMINATION OF SERVICE WITHOUT CAUSE OR
RESIGNATION FOR GOOD REASON PRIOR TO A CHANGE IN CONTROL.  Subject to the terms
and conditions of Section 5(d) below and provided Executive has not otherwise
forfeited his or her rights under this Agreement, upon Executive’s Termination
of Service by the Company without Cause or Executive’s resignation for Good
Reason prior to a Change in Control, Executive shall become entitled to the
following:

 

(i)                                     payment of an amount equal to eighteen
(18) months of Executive’s Base Salary as of the Termination Date (or if such
termination of employment is a result of Section 1(j)(i), then Executive’s Base
Salary immediately prior to such reduction of Base Salary), less all applicable
withholdings and taxes, payable in thirty-nine (39) equal installments over an
eighteen (18) month period in accordance with the Company’s normal payroll
practices, with the first payment commencing on the first payroll date
coinciding with or immediately following the sixtieth (60th) day following the
Termination Date;

 

(ii)                                  payment of a cash bonus under any cash
bonus plan for which Executive was eligible on the Termination Date as follows:

 

A.                                    a pro-rata bonus amount for the fiscal
year in which the Termination Date occurs based on the actual performance by
Fossil and its Affiliates under the applicable cash bonus plan, payable in a
lump sum to Executive at the ordinary time of payout to other active employees
(generally in March of the following year), less all applicable withholdings and
taxes.  The amount to be paid to Executive hereunder shall be the bonus payment
amount Executive would have received under the cash bonus plan using Executive’s
Target performance review rating (or any subsequent target measurement used
under a cash bonus plan for Executive) had Executive not incurred a Termination
of Service times (1) the number of actual days Executive was employed during the
fiscal year through the Termination Date, divided by (2) three hundred
sixty-five (365); and

 

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B.                                    an amount equal to the full Target Bonus
for which Executive was eligible for during the fiscal year in which the
Termination Date occurs times one point five (1.5), less all applicable
withholdings and taxes, divided and payable in thirty-nine (39) equal
installments over an eighteen (18) month period in accordance with the Company’s
normal payroll practices, with the first payment commencing on the first payroll
date coinciding with or immediately following the sixtieth (60th) day following
the Termination Date.

 

(iii)                               with respect to any outstanding
non-performance based restricted stock unit and stock appreciation right awards
granted pursuant to the Incentive Plan (collectively, “Time-Based Awards”),
unless more favorable vesting is provided under the terms of the applicable
award agreement, the outstanding Time-Based Awards shall continue to vest for an
additional eighteen (18) months, to the same extent such awards would have
otherwise vested had Executive remained employed during such period; plus

 

(iv)                              with respect to any outstanding performance
based restricted stock unit awards granted pursuant to the Incentive Plan (“PSU
Awards”), unless more favorable vesting is provided under the terms of the
applicable award agreement, pro-rata vesting on the date such award would vest
on its terms, in an amount equal to (1) the ratio derived by dividing the sum of
eighteen (18) months plus the number of whole calendar months from the
respective Date of Grant through the Termination Date, by the total number of
months from the Date of Grant through the date such award would vest on its
terms, provided the ratio is no greater than one, multiplied by (2) the number
of performance based restricted stock unit awards that would have vested based
on the actual performance of Fossil and its Affiliates at the end of the
applicable performance period; and

 

(v)                                 notwithstanding anything in an award
agreement to the contrary, all vested stock appreciation rights, whether vested
pursuant to this Section 5(a) or the terms of such award, shall be exercisable
until the earlier of (1) the expiration date of such stock appreciation right
award, and (2) the date that is twenty-four (24) months from the Termination
Date.

 

b.                                      TERMINATION OF SERVICE WITHOUT CAUSE OR
RESIGNATION FOR GOOD REASON IN CONNECTION WITH OR FOLLOWING A CHANGE IN
CONTROL.  Subject to the terms and conditions of Section 5(d) below and provided
Executive has not otherwise forfeited his or her rights under this Agreement,
upon Executive’s Termination of Service by the Company without Cause or
resignation for Good Cause in connection with or within the twenty-four (24)
months following a Change in Control, Executive shall become entitled to the
following:

 

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(i)                                     payment of an amount equal to
twenty-four (24) months of Executive’s Base Salary as of the Termination Date
(or if such termination of employment is a result of Section 1(j)(i), then
Executive’s Base Salary immediately prior to such reduction of Base Salary),
less all applicable withholdings and taxes, payable in fifty-two (52) equal
installments over a twenty-four (24) month period in accordance with the
Company’s normal payroll practices, with the first payment commencing on the
first payroll date coinciding with or immediately following the sixtieth (60th)
day following the Termination Date;

 

(ii)                                  payment of a cash bonus under any cash
bonus plan for which Executive was eligible on the Termination Date as follows:

 

A.                                    an amount equal to the full Target Bonus
Executive would have received under the cash bonus plan had Executive not
incurred a Termination of Service, payable in a lump sum, less all applicable
withholdings and taxes, on the first payroll date coinciding with or immediately
following the sixtieth (60th) day following the Termination Date; and

 

B.                                    an amount equal to the full Target Bonus
for which Executive was eligible for the fiscal year in which the Termination
Date occurs times two (2), less all applicable withholdings and taxes, divided
and payable in fifty-two (52) equal installments over a twenty-four (24) month
period in accordance with the Company’s normal payroll practices, with the first
payment commencing on the first payroll date coinciding with or immediately
following the sixtieth (60th) day following the Termination Date.

 

(iii)                               with respect to any outstanding Time-Based
Awards, full acceleration of vesting of such awards, as of the Termination Date;

 

(iv)                              with respect to any outstanding PSU Awards,
unless more favorable vesting is provided under the terms of the applicable
award agreement, (A) if the Termination of Service occurs within the first half
of the applicable performance period, then full acceleration of vesting at
Target performance, and (B) if the Termination of Service occurs within the
second half of the applicable performance period, then accelerated vesting of
the award, based on actual performance of Fossil and its Affiliates if
measurable, or at Target performance if the performance of Fossil and its
Affiliates is not measurable; and

 

(v)                                 notwithstanding anything in an award
agreement to the contrary, all vested stock appreciation rights, whether vested
pursuant to this Section 5(b) or the terms of such award, shall be exercisable
until the earlier of (1) the expiration date of such stock appreciation right
award, and (2) the date that is twenty-four (24) months from the Termination
Date.

 

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c.                                       HEALTH BENEFITS.  Executive shall
receive information about continuation health care coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) under separate
cover.  Subject to the terms and conditions of Section 5(d) below and provided
Executive has not otherwise forfeited his or her rights under this Agreement,
the Company shall pay Executive on a monthly basis, an amount equal to the
Company paid portion of the health insurance premiums that were paid by the
Company on behalf of Executive immediately prior to the Termination Date, less
all applicable taxes and withholdings required and/or authorized by law (the
“Healthcare Allowance”), to be used by Executive to purchase health coverage
after the Termination Date, such as COBRA coverage or coverage on the Health
Insurance Marketplace (Exchange).  Such Healthcare Allowance will be made
available to Executive for a period of eighteen (18) months from the Termination
of Service or until Executive becomes eligible to participate in another
employer’s health care plan, whichever date is earlier.  The amount of the
Healthcare Allowance will be calculated by the Company’s benefits department. 
However, Executive is not required to use any portion of the Healthcare
Allowance for this purpose or provide evidence of such health coverage.  It is
solely Executive’s responsibility to elect or apply for post-termination health
coverage and to pay the full amount of any required premium or contribution for
such post-termination health coverage.  The Company agrees to pay the Healthcare
Allowance to Executive in accordance with the Company’s normal payroll
practices, with the first payment commencing on the first payroll date
coinciding with or immediately following the sixtieth (60th) day following the
Termination Date; provided, that, the first payment shall include any payment
that would have otherwise been paid during the preceding sixty (60) day period.

 

d.                                      ELIGIBILITY; RELEASE.  The right to the
payments and benefits described in this Section 5 is conditioned upon:
(i) Executive’s continued compliance with any restrictive covenants in any
written agreement between Executive and the Company, including, without
limitation, Sections 6, and 7; and (ii) within fifty (50) days following the
Termination Date, the execution and delivery to the General Counsel of the
Company by Executive of a release prepared by the Company and providing for
Executive’s release of any and all claims against the Company and its Affiliates
(and those acting on behalf of them) that may have arisen on or before the date
of the release, which release shall contain such other reasonable and customary
terms as are specified by and acceptable to the Company (the “Release”). 
Notwithstanding any provisions to the contrary, the payments and benefits
described in this Section 5 shall not be paid unless and until such binding
release is effective.  If such executed release is not delivered within fifty
(50) days of the Termination Date, then all rights to the payments and benefits
described in this Section 5 shall be forfeited.

 

6.                                      NON-DISCLOSURE AND CONFIDENTIALITY.

 

a.                                      Executive acknowledges that, by the
nature of his or her duties and in order for Executive to perform his or her
duties, the Company and its Affiliates shall disclose to Executive, and
Executive shall have otherwise prohibited access to, trade secrets and
confidential, proprietary, and highly sensitive information of and/or relating

 

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to the Company and its Affiliates, which is a competitive asset of the Company
and its Affiliates and which Executive did not have prior knowledge of,
including, without limitation, information pertaining to: (i) the identities of
existing and prospective customers or clients, including names, addresses,
contact persons, and pricing information; (ii) current, pending, and prospective
contracts and business relationships; (iii) business information pertaining to
existing and prospective customers or clients, including customer or client
preferences and non-public personal information; (iv) product and systems
specifications, concepts for new or improved products, and other product or
systems data; (v) the identities of and special skills possessed by the Company,
its Affiliates and/or the Company’s or its Affiliates’ executives; (vi) customer
or client lists and profiles developed and/or purchased by the Company or its
Affiliates; (vii) training programs developed by the Company or its Affiliates;
(viii) pricing studies, information, and analyses; (ix) current and prospective
products, product designs, inventions, services, and or systems; (x) financial
models, business projections and market studies; (xi) the Company’s and its
Affiliates’ financial results and business conditions, including, without
limitation, marketing and business plans and strategies; (xii) special
processes, procedures, and services of the Company and its Affiliates;
(xiii) computer programs, technology, and software developed by the Company, its
Affiliates and/or their consultants; (xiv) any and all information regarding the
salary, pay scale, capabilities, experiences and desires of the Company’s and
its Affiliates’ employees and independent contractors; (xv) vendor or supplier
lists, profiles, preferences and non-public personal information; and (xvi) and
other business information disclosed to Executive by the Company or its
Affiliates, either directly or indirectly, in writing, orally, or by drawings or
observation.  The confidential, proprietary, and highly sensitive information
described in this Section 6(a) is hereinafter referred to as “Proprietary
Information.”

 

b.                                      Executive acknowledges and agrees that
Proprietary Information is proprietary to and a trade secret of the Company and
its Affiliates and, as such, is a special and unique asset of the Company and
its Affiliates.  Executive recognizes and agrees that the unauthorized
disclosure and/or use of Proprietary Information will place the Company and its
Affiliates at a competitive disadvantage and cause irreparable harm and loss to
the Company and its Affiliates.  Executive understands and acknowledges that
each and every component of the Proprietary Information (i) has been developed
by the Company and its Affiliates at significant effort and expense and is
sufficiently secret to derive economic value from not being generally known to
other parties, and (ii) constitutes a protectable business interest of the
Company and its Affiliates.  Executive agrees to preserve and protect the
confidentiality of all Proprietary Information.  Consequently, during
Executive’s employment with the Company and after Executive’s Termination of
Service for any reason, Executive agrees not to: (A) use, directly or
indirectly, at any time, any Proprietary Information for his or her own benefit
or for the benefit of another; or (B) disclose, directly or indirectly, any
Proprietary Information to any person  or entity, except as permitted in the
proper performance of the duties assigned to Executive in this Agreement or as
otherwise permitted by law.  Executive acknowledges and agrees that the Company
and its Affiliates own the Proprietary Information.  Executive agrees not to
dispute, contest, or deny any such ownership rights

 

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either during or after the Executive’s employment with the Company.  Executive
further acknowledges and agrees not to make copies of any Proprietary
Information, except in the performance of the duties assigned to him or her in
this Agreement.

 

c.                                       Executive’s obligations under this
section shall survive Executive’s employment with the Company.  Executive’s
obligations under this section are in addition to, and not in limitation or
preemption of, all other obligations of confidentiality which he or she may have
to the Company or its Affiliates under general legal or equitable principles or
under other policies of the Company or its Affiliates.

 

7.                                      NON-COMPETITION AND NON-SOLICITATION.

 

a.                                      Executive acknowledges that the Company
and its Affiliates have, over a period of time, developed, and will continue,
over a period of time, to develop, significant relationships and goodwill
between themselves and their current and prospective clients, customers,
vendors, and suppliers by providing superior products and services to their
current and prospective clients, customers, vendors, and suppliers. Executive
further acknowledges that these relationships and goodwill are a valuable asset
belonging solely to the Company and its Affiliates.  The Company and its
Affiliates promise to share their business relationships and goodwill with
Executive.

 

b.                                      Executive agrees that, as part of his or
her employment with the Company, he or she will become familiar the Proprietary
Information of the Company and its Affiliates, including, without limitation,
information regarding the salary, pay scale, capabilities, experiences and
desires of the Company’s and its Affiliates’ employees and independent
contractors.  Executive agrees to maintain the confidentiality of such
information.

 

c.                                       Executive acknowledges that, in
exchange for the execution of the non-competition and non-solicitation
restrictions set forth below in this section, he or she has received
substantial, valuable consideration, including the consideration set forth in
Sections 4, 5 and 6 above.  Executive acknowledges and agrees that this
consideration constitutes fair and adequate consideration for the execution of
the non-competition and non-solicitation restrictions set forth in this section.

 

d.                                      In consideration for (i) the Company’s
promise to provide Proprietary Information to Executive, (ii) the substantial
economic investment made by the Company and its Affiliates in the Proprietary
Information and goodwill of the Company and its Affiliates, and/or the business
opportunities disclosed or entrusted to Executive, (iii) access to the Company’s
and its Affiliates’ customers, clients, vendors and suppliers, and (iv) the
Company’s employment of Executive pursuant to this Agreement and the
compensation and other benefits provided by the Company to Executive, to protect
the Proprietary Information and business goodwill of the Company and its
Affiliates, Executive agrees to the following restrictive covenants.  Executive
agrees that while he or she is employed by the Company and for a period of
eighteen (18) months following Executive’s Termination of Service, he or she
shall not, without the Company’s prior

 

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written consent, directly or indirectly, alone or for his or her own account, or
as a principal, owner, partner, member, manager, executive, advisor, agent,
trustee, officer, director, employee, shareholder, or consultant of any
corporation, trust, partnership, joint venture or other business organization or
entity, or in any other manner or capacity whatsoever:

 

(i)                                     be employed by, work for, perform
consulting services for, have business dealings with, control, manage, have an
ownership interest in, establish, take steps to establish, engage in or
otherwise become involved with, directly or indirectly, any business, operation,
corporation, partnership, association, agency, or other person or entity that is
in the business of producing, marketing, servicing, and/or retailing, directly
or at wholesale, watches, leather goods or connected devices (works with an
app), in the Restricted Area; or

 

(ii)                                  call upon, solicit, divert, interfere
with, induce, or attempt to call upon, solicit, divert, interfere with, or
induce any of the Company’s or its Affiliates’ clients or customers with whom
the Company or its Affiliates did business or were in the process of conducting
business during the previous twenty-four (24) months of Executive’s employment
with the Company, and who or which: (A) Executive contacted, called on, serviced
or did business with during Executive’s employment with the Company;
(B) Executive learned of as a result of Executive’s employment with the Company;
or (C) about whom Executive received Proprietary information.  This restriction
applies only to business which is in the scope of services or products provided
by the Company or its Affiliates;

 

(iii)                               cause, induce, solicit or attempt to cause,
induce or solicit clients, manufacturers, suppliers, or others doing business
with the Company or its Affiliates to terminate, reduce, or alter such business
with the Company or its Affiliates; or

 

(iv)                              recruit, hire, or attempt to recruit or hire,
directly, indirectly or by assisting others, any other employees or independent
contractors of the Company or its Affiliates, nor shall he or she contact or
communicate with any other employees or independent contractors of the Company
or its Affiliates for the purpose of inducing other employees or independent
contractors to terminate their employment or association with the Company or its
Affiliates.  For purposes of this covenant, “other employees or independent
contractors” shall refer to permanent employees, temporary employees, or
independent contractors who were employed by, doing business with, or associated
with the Company or its Affiliates within six (6) months of the time of the
attempted recruiting or hiring.  Executive’s obligations under this section
shall survive Executive’s employment with the Company.

 

e.                                       Executive understands that the
non-competition and non-solicitation restrictions shall apply whether he or she
acts as an individual or for his or her own account, or as a principal, partner,
owner, member, manager, executive, officer, director,

 

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employee, advisor, agent, trustee, shareholder, salesman, distributor,
consultant, representative or in any other capacity whatsoever, of any person,
firm, corporation or other entity.

 

f.                                        Executive agrees that the
non-competition and non-solicitation restrictions set forth above are ancillary
to an otherwise enforceable agreement and supported by independent valuable
consideration.  Executive further agrees that the limitations as to time,
geographical area, and scope of activity to be restrained by this section are
reasonable and acceptable to him or her, and do not impose any greater restraint
than is reasonably necessary to protect the goodwill and other business
interests of the Company and Affiliates.  Executive agrees that if, at some
later date, a court of competent jurisdiction determines that the
non-competition and/or non-solicitation restrictions set forth in this section
are unreasonable or unenforceable as written, this section may be reformed by
the court and enforced to the maximum extent permitted by law.

 

g.                                       If Executive is found to have violated
any of the provisions of this section, Executive agrees that the restrictive
period of each covenant so violated shall be extended by a period of time equal
to the period of such violation by him or her.  It is the intent of this section
that the running of the restrictive period of any covenant shall be tolled
during any period of violation of such covenant so that the Company may obtain
the full and reasonable protection for which it contracted and so that Executive
may not profit by his or her breach.

 

h.                                      Executive understands that his or her
obligations under this section shall survive his or her employment with the
Company and shall not be assignable by him or her.

 

8.                                      REMEDIES FOR BREACH OF SECTIONS 6 and
7.  In the event that Executive violates any of the provisions set forth in
Sections 6 or 7 of this Agreement, he or she acknowledges that the Company will
suffer immediate and irreparable harm which cannot be accurately calculated in
monetary damages and/or for which money damages would not be a sufficient remedy
to the Company .  Consequently, Executive acknowledges and agrees that the
Company shall be entitled to a temporary restraining order and injunctive
relief, to prevent such a violation or threatened violation, and to recover from
Executive the Company’s attorneys’ fees, costs and expenses related to any
violation or threatened violation of this Agreement and enforcement of this
Agreement.  Executive further acknowledges and agrees that this injunctive
relief shall be in addition to any other legal or equitable relief to which the
Company would be entitled.  The existence of any claim or cause of action by
Executive against the Company or its Affiliates, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of Sections 6 or 7 of this Agreement or preclude injunctive relief. 
Executive also acknowledges that violations of the provisions set forth in
Sections 6 or 7 will result in the immediate cessation of the payments and
benefits described in Section 5 above.

 

9.                                      CLAWBACK.  Executive acknowledges,
understands and agrees, with respect to any compensation paid to Executive
pursuant to this Agreement or otherwise, that such compensation shall be subject
to recovery by the Company, and Executive shall be required to

 

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repay such compensation, if either in the year such compensation is paid, or
within the three (3) year period thereafter: (i) Fossil (or any successor
thereto) is required to prepare an accounting restatement due to material
noncompliance of the Company or an Affiliate with any financial reporting
requirement under applicable securities laws and Executive is or was during such
three (3) year period, either a named executive officer of Fossil or an employee
of the Company who is responsible for preparation of the Company’s financial
statements; or (ii) the Company or Fossil is required by applicable law to
require repayment by Executive of such compensation.  The parties agree that the
repayment obligations set forth in the foregoing sentence shall only apply to
the extent repayment is required by applicable law.

 

10.                               SEVERABILITY.  The Parties acknowledge that
each covenant and/or provision of this Agreement shall be enforceable
independently of every other covenant and/or provision. Furthermore, Executive
and the Company acknowledge that, in the event any covenant and/or provision of
this Agreement is determined to be unenforceable for any reason, the remaining
covenants and/or provisions will remain effective, binding and enforceable.

 

11.                               COMPLETE AGREEMENT; MODIFICATION.  The Parties
acknowledge and agree that this Agreement constitutes the complete and entire
agreement between the Parties with respect to the subject matter hereof, and
fully supersedes any and all prior negotiations, discussions, agreements,
understanding or representations pertaining to or concerning the subject matter
of this Agreement.  The Parties further acknowledge and agree that each executed
this Agreement based upon the express terms and provisions set forth herein;
that, in entering into this Agreement, Executive is not relying on, has not
relied on, and specifically disclaims any reliance upon any representations,
promises, statements, communications, or inducements, oral or written, by the
Company or its agents, which are not set forth in this Agreement; that no
previous agreements or statements, either oral or written, shall have any effect
on the terms or provisions of this Agreement; and that all previous agreements,
either oral or written, [including, without limitation, the Retirement
Agreement,] are expressly superseded and revoked by this Agreement; except that
Executive agrees that he or she continues to be bound by and will comply with
all non-disclosure, non-competition, and non-solicitation agreements previously
made by Executive.  The provisions hereof may not be altered, amended, modified,
waived, or discharged in any way whatsoever, except by written agreement
executed by Executive and an authorized representative of the Company. 
Executive represents that Executive relied solely and only on Executive’s own
judgment in making the decision to enter into this Agreement.

 

12.                               GOVERNING LAW AND VENUE.  The validity of this
Agreement and any of its terms or provisions, as well as the rights and duties
of the parties hereunder, shall be governed by, construed under, and in
accordance with the laws of the State of Texas. With respect to any disputes,
claims and causes of action between the Parties hereto, the Company and
Executive agree that the state and federal courts situated in Dallas County,
Texas, shall have personal jurisdiction over the Company and Executive to hear
all disputes arising under this Agreement. This Agreement is to be at least
partially performed in Dallas County, Texas, and, as such, the Company and
Executive agree that venue shall be proper with the state or federal courts in
Dallas County, Texas, to hear such disputes.

 

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13.                               VOLUNTARY AGREEMENT.  The Parties acknowledge
that each has carefully read this Agreement, that each has had an opportunity to
consult with his or her or its attorney concerning the meaning, import and legal
significance of this Agreement, that each understands its terms, that all
understandings and agreements between Executive and the Company relating to the
subjects covered in this Agreement are contained in it, and that each has
entered into the Agreement voluntarily and not in reliance on any promises or
representations by the other Party, other than those contained in this
Agreement.

 

14.                               CODE SECTION 280G.

 

a.                                      Code Section 280G Treatment.  In the
event it is determined that any payment, distribution, or benefit of any type by
the Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with a Change in Control (the “Change in Control
Payments”), constitute “parachute payments” within the meaning of Code
Section 280G(b)(2), the Company will provide Executive with a computation of
(i) the maximum amount of the Change in Control Payments that could be made,
without the imposition of the excise tax imposed by Code Section 4999 (said
maximum amount being referred to as the “Capped Amount”); (ii) the value of the
Change in Control Payments that could be made pursuant to the terms of this
Agreement (all said payments, distributions and benefits being referred to as
the “Uncapped Amount”); (iii) the dollar amount of the excise tax (if any)
including any interest or penalties with respect to such excise tax which
Executive would become obligated to pay pursuant to Code Section 4999 as a
result of receipt of the Uncapped Payments (the “Excise Tax Amount”); and
(iv) the net value of the Uncapped Amount after reduction by the Excise Tax
Amount and the estimated income taxes payable by Executive on the difference
between the Uncapped Amount and the Capped Amount, assuming that Executive is
paying the highest marginal tax rate for state, local and federal income taxes
(the “Net Uncapped Amount”).  If the Capped Amount is greater than the Net
Uncapped Amount, Executive shall be entitled to receive or commence to receive
payments equal to the Capped Amount; or if the Net Uncapped Amount is greater
than the Capped Amount, Executive shall be entitled to receive or commence to
receive payments equal to the Uncapped Amount.  If Executive receives the
Uncapped Amount, then Executive shall be solely responsible for the payment of
all income and excise taxes due from Executive and attributable to such Uncapped
Amount, including, without limitation, the excise tax including any interest or
penalties with respect to such excise tax which Executive may become obligated
to pay pursuant to Code Section 4999, with no right of additional payment from
the Company as reimbursement for any taxes, interest or penalties.

 

b.                                      Determination By Accountant.  All
determinations required to be made under this Section 14 shall be made in
writing by the independent accounting firm agreed to by the Company and
Executive on the date of the Change in Control (the “Accounting Firm”), whose
determination shall be conclusive and binding upon Executive and the Company for
all purposes.  For purposes of making the calculations required by Section 15,
the Accounting Firm may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations

 

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concerning the application of Code Sections 280G and 4999.  The Company and
Executive shall furnish to the Accounting Firm such information and documents as
it reasonably may request in order to make determinations under this
Section 14.  If the Accounting Firm determines that no Excise Tax Amount is
payable by Executive, it shall furnish Executive with an opinion that he has
substantial authority not to report any Code Section 4999 excise tax on his
federal income tax return. The Company shall bear all costs the Accounting Firm
may reasonably incur in connection with any calculations contemplated by this
Section 14.

 

15.                               CODE SECTION 409A.  It is intended that this
Agreement be exempt from the provisions of Code Section 409A, or, to the extent
it is found to be subject to Code Section 409A, compliant with Code
Section 409A.  This Agreement shall be administered and interpreted in a manner
consistent with this intent, and any provision that would cause this Agreement
to fail to be exempt from or compliant with Code Section 409A shall have no
force or effect.  Notwithstanding the foregoing, nothing contained herein shall
be construed as a representation or guarantee by the Company of the tax
treatment of the payments and benefits described herein.  Executive acknowledges
and agrees that the Company has advised him or her to consult with his or her
own tax advisor regarding the tax consequences of this Agreement, including,
without limitation, any possible tax consequences under Code Section 409A.

 

* * * * * * * * *

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth below, to be effective as of the date first above written.

 

COMPANY:

 

 

 

 

 

Fossil Partners, L.P.

 

 

By: Fossil Group, Inc., general partner

 

 

 

 

 

 

 

 

By:

 

 

Date:

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

 

 

 

Date:

 

 

Signature Page to Executive Severance Agreement

 

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