Exhibit 10.1

 

SEVENTH AMENDMENT TO LOAN AGREEMENT

 

THIS SEVENTH AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is made and entered
into and effective as of November 19, 2008 (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) increase the Total Commitment from $100,000,000 to $140,000,000 and
(b) extend the maturity date of the Revolving Note to November 18, 2009.

 

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 DEFINITION OF
“GUARANTORS”.  THE PARENTHETICAL PHRASE “(THE COMPANY, FOSSIL INTERMEDIATE,
FOSSIL TRUST, FOSSIL I, INTERMEDIATE LEASING, ARROW MERCHANDISING, FOSSIL
HOLDINGS AND FMW ARE SOMETIMES REFERRED TO HEREIN INDIVIDUALLY AS A ‘GUARANTOR’
AND COLLECTIVELY AS ‘GUARANTORS’)” CONTAINED IN THE PREAMBLE TO THE AGREEMENT IS
HEREBY AMENDED AND RESTATED TO READ IN ITS ENTIRETY AS FOLLOWS:

 

“(the Company, Fossil Intermediate, Fossil Trust, Fossil I, Arrow Merchandising,
Fossil Holdings, Fossil International Holdings, Inc. and any other person or
entity which is, at any time, a party to the Guaranty Agreement or any other
agreement which guarantees payment or collection of any loans or other
obligations from time to time outstanding under this Agreement, the Revolving
Note or any other Loan Document are sometimes referred to herein individually as
a ‘Guarantor’ and collectively as the ‘Guarantors’)”.

 

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SECTION 2.02.                             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 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 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 $140,000,000 (the “Total
Commitment”); within such limits and during such period, the Borrower may
borrow, repay and re-borrow hereunder (the “Line of Credit”).  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.”

 

SECTION 2.03.                             AMENDMENT TO SECTION 2.  EFFECTIVE AS
OF THE AMENDMENT CLOSING DATE, THE REFERENCE TO “$100,000,000” CONTAINED IN
SECTION 2 OF THE AGREEMENT IS HEREBY DELETED AND “$140,000,000” IS SUBSTITUTED
IN LIEU THEREOF.

 

SECTION 2.04.                             AMENDMENT TO SECTION 5(A).  EFFECTIVE
AS OF THE AMENDMENT CLOSING DATE, SECTION 5(A) OF THE AGREEMENT IS HEREBY
AMENDED AND RESTATED TO READ IN ITS ENTIRETY AS FOLLOWS:

 

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“5.                                 Availability.

 

(A)                                  REVOLVING NOTE.  THE AGGREGATE PRINCIPAL
AMOUNT AT ANY TIME OUTSTANDING UNDER THE REVOLVING NOTE, PLUS ONE HUNDRED
PERCENT (100%) OF THE FACE AMOUNT OF THE JDB LETTER OF CREDIT (CALCULATED BY
REFERENCE TO THE AMOUNT OF UNITED STATES OF AMERICA DOLLARS INTO WHICH THE BANK
DETERMINES IT COULD, IN ACCORDANCE WITH ITS PRACTICE FROM TIME TO TIME IN THE
INTERBANK FOREIGN EXCHANGE MARKET, CONVERT SUCH AMOUNT OF YEN AT ITS SPOT RATE
OF EXCHANGE IN EFFECT AT APPROXIMATELY 8:00 A.M. (DALLAS, TEXAS TIME) ON THE
DATE OF DETERMINATION), PLUS ONE HUNDRED PERCENT (100%) OF THE FACE AMOUNT OF
ALL OUTSTANDING DOCUMENTARY AND STAND-BY LETTERS OF CREDIT (OTHER THAN THE JDB
LETTER OF CREDIT) ISSUED FOR THE ACCOUNT OF THE BORROWER, PLUS ONE HUNDRED
PERCENT (100%) OF THE BANK’S PARTICIPATION INTEREST IN ALL LETTERS OF CREDIT
ISSUED FOR THE ACCOUNT OF THE BORROWER, THE COMPANY OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES PURSUANT TO THAT CERTAIN THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED UNCOMMITTED LETTER OF CREDIT FACILITY DATED AS OF MARCH 2,
2006 OR ANY SIMILAR LETTER OF CREDIT FACILITY TO WHICH THE BORROWER, THE COMPANY
OR ANY OF THEIR RESPECTIVE SUBSIDIARIES IS A PARTY FROM TIME TO TIME, AS THE
SAME MAY BE AMENDED, MODIFIED, EXTENDED, RENEWED OR REPLACED FROM TIME TO TIME
(SAID SUM BEING HEREIN REFERRED TO AS THE “OUTSTANDING REVOLVING CREDIT”), SHALL
NOT AT ANY TIME EXCEED THE TOTAL COMMITMENT.”

 

SECTION 2.05.                             AMENDMENT TO SECTION 12(M).  EFFECTIVE
AS OF THE AMENDMENT CLOSING DATE, SECTION 12(M) OF THE AGREEMENT IS HEREBY
AMENDED AND RESTATED TO READ IN ITS ENTIRETY THE FOLLOWING:

 

“(m)                         Domestic/Foreign Subsidiary Guarantees/Stock
Pledges.  (i) cause each majority-owned subsidiary of the Company or the
Borrower which is incorporated, organized or formed in the United States of
America and which owns or holds tangible assets having an aggregate book value
of $30,000,000 or more (each, a “Significant Domestic Subsidiary”) to execute a
Guaranty Agreement in the form of Exhibit A attached hereto, and (ii) pledge to
the Bank, as collateral security for the Borrower’s obligations to the Bank
hereunder, a security interest in sixty-five percent (65%) of the stock and
other equity interests of each majority owned subsidiary of the Company which is
incorporated, organized or formed outside of the United States and which owns or
holds tangible assets having an aggregate book value of $30,000,000 or more
(each a “Significant Foreign Subsidiary”)  by executing a Stock Pledge Agreement
in the form of Exhibit B attached hereto.”

 

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:

 

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(A)                                  THE BANK SHALL HAVE RECEIVED (I) THIS
AMENDMENT, DULY EXECUTED BY THE BORROWER AND EACH GUARANTOR, (II) AN AMENDED AND
RESTATED REVOLVING NOTE IN FORM AND SUBSTANCE SATISFACTORY TO THE BANK WHICH
(A) INCREASES THE MAXIMUM PRINCIPAL AMOUNT THEREOF FROM $100,000,000 TO
$140,000,000 AND (B) EXTENDS THE MATURITY DATE OF THE REVOLVING NOTE TO
NOVEMBER 18, 2009, DULY EXECUTED BY THE BORROWER, (III) AN AMENDED AND RESTATED
GUARANTY AGREEMENT, DULY EXECUTED BY EACH GUARANTOR, AND (IV) AN AMENDED AND
RESTATED STOCK PLEDGE AGREEMENT EXECUTED BY THE COMPANY WHICH PLEDGES SIXTY-FIVE
PERCENT (65%) OF THE STOCK AND OTHER EQUITY INTERESTS OF EACH SIGNIFICANT
FOREIGN SUBSIDIARY;

 

(B)                                 THE BANK SHALL HAVE RECEIVED (I) CERTIFIED
COPIES OF THE ORGANIZATIONAL DOCUMENTS OF THE BORROWER, EACH GUARANTOR AND EACH
SIGNIFICANT FOREIGN SUBSIDIARY, (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)                                  THE BANK SHALL HAVE RECEIVED A LEGAL
OPINION FROM COUNSEL TO THE BORROWER AND EACH GUARANTOR RELATING TO THIS
AMENDMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH, IN FORM
AND SUBSTANCE SATISFACTORY TO THE BANK;

 

(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.

 

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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.  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 19, 2008, IN THE MAXIMUM
ORIGINAL PRINCIPAL AMOUNT OF $140,000,000 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 19,
2008, IN THE MAXIMUM ORIGINAL PRINCIPAL AMOUNT OF $140,000,000 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.

 

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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 REPRESENTS AND WARRANTS TO
THE BANK THAT (A) ATTACHED HERETO AS SEVENTH 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 SEVENTH 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 SEVENTH
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.

 

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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.

 

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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.]

 

8

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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/ Marguerite C. Burtzlaff

 

Name:

Marguerite C. Burtzlaff

 

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

 

9

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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/ Michael W. Barnes

 

Name:

Michael W. Barnes

 

Title:

President

 

10

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SEVENTH 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

 

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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.

 

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SEVENTH AMENDMENT SCHEDULE 2

 

SIGNIFICANT DOMESTIC SUBSIDIARIES

 

Fossil Intermediate, Inc.

Fossil Trust

Fossil Stores I, Inc.

 

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SEVENTH 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.

 

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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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