Unassociated Document


    
      

    

    
      Exhibit
        10.38

       

    

    STOCK
      OPTION AWARD AGREEMENT

    Standard
      Terms And Conditions

    


    


    Fossil,
      Inc., a Delaware corporation
      (the “Company”) has adopted the 2004 Long-Term Incentive Plan of Fossil, Inc.
      (the “Long-Term Incentive Plan”) effective as of the Effective Date (as defined
      in the Long-Term Incentive Plan) with the objective of retaining key executives
      and other selected employees and of rewarding them for making major
      contributions to the success of the Company and its Subsidiaries (as defined
      in
      the Long-Term Incentive Plan).

    


    The
      Long-Term Incentive Plan provides
      that an employee of the Company or its Subsidiaries (the “Optionee”) may be
      granted an Award (as defined in the Long-Term Incentive Plan), which may consist
      of right to purchase a specified number of shares of common stock, par value
      $.01 per share (“Common Stock”), of the Company at a specified price, including
      rights in the form of nonqualified stock options.

    


    In
      consideration of the premises, the
      terms and conditions set forth herein, the terms of the Stock Option Award
      Letter Agreement (the “Award Letter”) between the Company and
      Optionee,  the mutual benefits to be gained by the performance thereof
      and other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged, the parties hereto agree as follows:

    


    1.   
      Grant of
      Award; Nonqualified Stock Options.  Subject to the terms and
      conditions set forth herein, the Company hereby grants to the Optionee an Award
      consisting of options (the “Options”) to purchase an aggregate of up to but not
      exceeding  the number of shares of Common Stock (the “Option Shares”)
      from the Company and at a price per share as set forth in the Award Letter
      (which is equal to or greater than the fair market value of the Common Stock
      on
      the date of grant of the Options), such number of shares and such price per
      share being subject to adjustment from time to time as provided in Paragraph
      14
      of the Long-Term Incentive Plan.  The Options are intended to
      be  comply with the requirements of Section 409A of the Internal
      Revenue Code of 1986, as amended (the “Code”) and the regulations and other
      guidance issued thereunder, so that the Options shall be exempt from such
      requirements and this Agreement shall be interpreted to give effect to such
      intention; provided, however, that nothing contained herein shall be construed
      as a representation, guarantee or other undertaking on the part of the Company
      that the Options are or will be found to be exempt from and not subject to
      the
      requirements of Section 409A or any other regulations or guidance issued
      thereunder.  The Options shall not be treated as “incentive stock
      options” under Section 422 of the Code.

    


    The
      grant of this Award to the Optionee
      shall not confer any right to such Optionee (or any other Optionee) to be
      granted any Option or Award in the future under the Long-Term Incentive Plan,
      even if options have been granted in the past.

    


    2.   
      Option Period
      and Vesting.  The Options granted pursuant to this agreement (the
“Agreement”) may be exercised by the Optionee at any time during the ten-year
      period beginning on the Grant Date specified in the Award Letter (“Option
      Period”), subject to the limitation that such Options shall vest and become
      exercisable in accordance with the Vesting Schedule set forth in the Award
      Letter (it being understood that the right to purchase the Option Shares shall
      be cumulative, so that the Optionee may purchase on or after any anniversary
      and
      during the remainder of the Option Period that number of Option Shares which
      the
      Optionee was entitled to purchase but did not purchase during any preceding
      period or periods).

    


    Notwithstanding
      the Vesting Schedule set forth in the Award Letter: (i) the Committee may in
      its
      discretion at any time accelerate the vesting of the Options; and (ii) all
      of
      the Options granted hereunder shall vest upon a Change in Control of the
      Company.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    3.    Method
      of Exercise.  The Options granted pursuant to this Agreement may
      be exercised by the Optionee by giving written notice of exercise to the
      Secretary of the Company, which notice shall (i) state the number of Option
      Shares with respect to which such Options are being exercised and (ii) be
      accompanied by a check, cash or money order payable to the Company in the full
      amount of the exercise price for such Options or, at the option of the Company,
      by means of a cashless exercise procedure through the use of a brokerage
      arrangement approved by the Company (or any combination of cash, check, money
      order or cashless exercise procedure).  Any shares of Common Stock
      delivered in satisfaction of all or a portion of the exercise price shall be
      appropriately endorsed for transfer to the Company or shall be accompanied
      by
      appropriate stock powers duly executed for transfer to the
      Company.  As promptly as practicable following the receipt of such
      written notification and payment, the Company shall deliver to the Optionee
      a
      certificate or certificates for the number of Option Shares with respect to
      which the Options have been exercised.

    


    4.    Termination
      in
      Event of Nonemployment. In the event that the Optionee ceases to be
      employed by the Company or any of its Subsidiaries during the Option Period
      for
      any reason other than death, the Options granted pursuant to this Agreement
      shall terminate, except to the extent that they are exercisable on the date
      the
      Optionee ceases to be so employed.  To the extent that such Options
      are exercisable on the date that the Optionee ceases to be employed by the
      Company or any of its Subsidiaries for any reason other than death, such Options
      may be exercised by the Optionee during the three-month period beginning on
      such
      date but shall terminate and be of no further force or effect at the end of
      such
      period.

    


    5.   
      Acceleration
      in Event of Death.  In the event that the Optionee ceases to be
      employed by the Company or any of its Subsidiaries during the Option Period
      by
      reason of death at a time when the Options granted pursuant hereto are still
      in
      force and unexpired, such unmatured Options shall be
      accelerated.  Such acceleration shall be effective as of the date of
      death of the Optionee, and each Option so accelerated may be exercised by the
      person or persons to whom the Optionee’s rights shall pass pursuant to Paragraph
      13 of the Long-Term Incentive Plan during the 12-month period beginning on
      such
      date but shall terminate at the end of such period.

    


    6.    Assignability.  The
      Options granted pursuant hereto shall not be assignable or transferable by
      the
      Optionee other than by will or the laws of descent and distribution or pursuant
      to a qualified domestic relations order as defined by Code or Title I of the
      Employee Retirement Income Security Act of 1974, as amended.  Any
      attempt to do so contrary to the provisions hereof shall be null and
      void.   No
      assignment of the Options herein granted shall be effective to bind the Company
      unless the Company shall have been furnished with written notice thereof and
      a
      copy of such documents and evidence as the Company may deem necessary to
      establish the validity of the assignment and the acceptance by the assignee
      or
      assignees of the terms and conditions hereof.

    


    7.   
      No Stockholder
      Rights.  The Optionee shall have no rights as a stockholder of
      the Company with respect to the Option Shares unless and until certificates
      evidencing such Option Shares shall have been issued by the Company to the
      Optionee.  Until such time, the Optionee shall not be entitled to
      dividends or distributions in respect of any Option Shares or to vote such
      shares on any matter submitted to the stockholders of the Company.  In
      addition, except as to adjustments that may from time to time be made by the
      Committee in accordance with the Long-Term Incentive Plan (and Paragraph 14
      below), no adjustment shall be made or required to be made in respect of
      dividends (ordinary or extraordinary, whether in cash, securities or any other
      property) or distributions paid or made by the Company or any other rights
      granted in respect of any Option Shares for which the record date for such
      payment, distribution or grant is prior to the date upon which certificates
      evidencing such Option Shares shall have been issued by the
      Company.

    


    8.    Administration.  The
      Committee shall have the power to interpret the Long-Term Incentive Plan, the
      Notice of Grant and this Award, and to adopt such rules for the administration,
      interpretation, and application of the Long-Term Incentive Plan as are
      consistent therewith and to interpret or revoke any such rules.  All
      actions taken and all interpretations and determinations made by the Committee
      shall be final and binding upon the Optionee, the Company, and all other
      interested persons.  No member of the Committee shall be personally
      liable for any action, determination, or interpretation made in good faith
      with
      respect to the Long-Term Incentive Plan or this Award.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    9.  
      Tax Withholding.  The Company may make such provision as it
      may deem appropriate for the withholding of any taxes that it determines is
      required in connection with the Options granted pursuant to this
      Agreement.  However, the Optionee may pay all or any portion of the
      taxes required to be withheld by the Company or paid by the Optionee in
      connection with the exercise of all or any portion of such Options by electing
      to have the Company withhold a portion of the Option Shares or by delivering
      shares of Common Stock theretofore owned by the Optionee having a Fair Market
      Value on the date of exercise, as determined in accordance with Paragraphs
      2 and
      9 of the Long-Term Incentive Plan, equal to the amount required to be withheld
      or paid.  The Optionee must make the foregoing election on or before
      the date upon which the amount of the taxes to be withheld is determined. If
      the
      Optionee is subject to the short-swing profits recapture provisions of Section
      16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
      any such election shall be subject to such additional restrictions as may be
      imposed by the Committee to ensure that the satisfaction of withholding
      requirements by the withholding of a portion of the Option Shares or by delivery
      of shares of Common Stock theretofore owned by the Optionee shall be exempt
      from
      the short-swing profits recapture provisions of Section 16(b) of the Exchange
      Act.

    


    10.  
Restrictions
      and
      Related Representations. Upon the acquisition of any Option Shares pursuant
      to the exercise of the Options granted pursuant hereto, the Optionee may be
      required to enter into such written representations, warranties and agreements
      as the Company may reasonably request in order to comply with applicable
      securities laws, the Long-Term Incentive Plan or with this
      Agreement.  In addition, the certificate or certificates representing
      any Option Shares purchased upon the exercise of the Options will be stamped
      or
      otherwise imprinted with a legend in such form as the Company may require with
      respect to any applicable restrictions on sale or transfer, and the stock
      transfer records of the Company will reflect stop-transfer instructions, as
      appropriate, with respect to such shares.

    


    11.   Notices
      and
      Electronic Delivery.  Unless otherwise provided herein, any
      notice or other communication hereunder shall be in writing and shall be given
      by registered or certified mail unless the Company, in its sole discretion,
      decides to deliver any documents relating to the Option or future options that
      may be granted under the Long-Term Incentive Plan by electronic means to request
      Optionee’s consent to participate in the Long-Term Incentive Plan by electronic
      means.  Optionee hereby consents to receive such documents by
      electronic delivery and, if requested, to agree to participate in the Long-Term
      Incentive Plan through an on-line or electronic system established and
      maintained by the Company or another third party designated by the
      Company.  All notices of the exercise by the Optionee of the Options
      granted pursuant hereto shall be directed to Fossil, Inc., Attention: Secretary,
      at the Company’s then current address unless the Company, in writing or
      electronically, directs Optionee otherwise.  Any notice given by the
      Company to the Optionee directed to him at his address on file with the Company,
      and shall be effective to bind any other person who shall acquire rights
      hereunder.  The Company shall be under no obligation whatsoever to
      advise or notify the Optionee of the existence, maturity or termination of
      any
      rights hereunder and the Optionee shall be deemed to have familiarized himself
      with all matters contained herein and in the Long-Term Incentive Plan which
      may
      affect any of the Optionee’s rights or privileges hereunder.

    


    12.   Scope
      of
      Certain Terms.  Whenever the term “Optionee” is used herein under
      circumstances applicable to any other person or persons to whom this award
      may
      be assigned in accordance with the provisions of Paragraph 6 of this Agreement,
      the term “Optionee” shall be deemed to include such person or
      persons.  The term “Long-Term Incentive Plan” as used herein shall be
      deemed to include the 2004 Long-Term Incentive Plan of Fossil, Inc. and any
      subsequent amendments thereto, together with any administrative interpretations
      which have been adopted thereunder by the Committee pursuant to Paragraph 5
      of
      such plan.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    13.  General
      Restrictions.  This Award is subject to the requirement that, if
      at any time the Committee shall determine that (a) the listing, registration
      or
      qualification of the shares of Common Stock subject or related thereto upon
      any
      securities exchange or under any state or federal law; (b) the consent or
      approval of any government regulatory body; or (c) an agreement by the recipient
      of an Award with respect to the disposition of shares of Common Stock, is
      necessary or desirable (in connection with any requirement or interpretation
      of
      any federal or state securities law, rule or regulation) as a condition of,
      or
      in connection with, the granting of such Award or the issuance, purchase or
      delivery of shares of Common Stock thereunder, such Award may not be consummated
      in whole or in part unless such listing, registration, qualification, consent,
      approval or agreement shall have been effected or obtained free of any
      conditions not acceptable to the Committee.

    


    14.  
Adjustments
      for
      Changes in Capitalization.  In the event of any stock dividends,
      stock splits, recapitalizations, combinations, exchanges of shares, mergers,
      consolidations, liquidations, split-ups, split-offs, spin-offs or other similar
      changes in capitalization, or any distributions to stockholders, including
      a
      rights offering, other than regular cash dividends, changes in the outstanding
      stock of the Company by reason of any increase or decrease in the number of
      issued shares of Common Stock resulting from a split-up or consolidation of
      shares or any similar capital adjustment or the payment of any stock dividend,
      any share repurchase at a price in excess of the market price of the Common
      Stock at the time such repurchase is announced or other increase or decrease
      in
      the number of such shares, the Committee shall make appropriate adjustment
      in
      the number and kind of shares authorized by the Long-Term Incentive Plan, in
      the
      number, price or kind of shares covered by the Awards and in any outstanding
      Awards under the Long-Term Incentive Plan.  In the event of any
      adjustment in the number of shares covered by any Award, any fractional shares
      resulting from such adjustment shall be disregarded and each such Award shall
      cover only the number of full shares resulting from such
      adjustment.

    


    15.  Precondition
      of
      Legality.  Notwithstanding anything to the contrary contained
      herein, the Optionee agrees that he will not exercise the Options granted
      pursuant hereto, and that the Company will not be obligated to issue any Option
      Shares pursuant to this Agreement, if the exercise of the Options or the
      issuance of such shares would constitute a violation by the Optionee or by
      the
      Company of any provision of any law or regulation of any governmental authority
      or any national securities exchange or transaction quotation
      system.

    


    16.   Governing
      Law.  The Option grant and the provisions of this Agreement are
      governed by, and subject to, the laws of the State of Delaware, as provided
      in
      the Long-Term Incentive Plan.

    


    17.  
      No Right of
      Employment. Neither the granting of this Option, the exercise of any part
      hereof, nor any provision of the Long-Term Incentive Plan or this Award shall
      constitute or be evidence of any understanding, express or implied, on the
      part
      of the Company or any Subsidiary to employ the Participant for any specified
      period.

    


    18.  Amendment.  This
      Award may be amended only by a writing executed by the Company and the
      Participant which specifically states that it is amending this
      Award.  Notwithstanding the foregoing, this Award may be amended
      solely by the Committee by a writing which specifically states that it is
      amending this Award, so long as a copy of such amendment is delivered to the
      Participant, and provided that no such amendment adversely affecting the rights
      of the Participant hereunder may be made without the Participant’s written
      consent.  Without limiting the foregoing, the Committee reserves the
      right to change, by written notice to the Participant, the provisions of the
      Option or this Award in any way it may deem necessary or advisable to carry
      out
      the purpose of the grant as a result of any change in applicable laws or
      regulations or any future law, regulation, ruling, or judicial decision,
      provided that any such change shall be applicable only to Option which are
      then
      subject to restrictions as provided herein.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    19.  Incorporation
      of the Long-Term Incentive Plan. This Agreement is subject to the Long-Term
      Incentive Plan, a copy of which has been furnished to the Optionee and for
      which
      the Optionee acknowledges receipt.  The terms and provisions of the
      Long-Term Incentive Plan are incorporated by reference herein. In the event
      of a
      conflict between any term or provision contained here in and a term or provision
      of the Long-Term Incentive Plan, the applicable terms and provisions of the
      Long-Term Incentive Plan shall govern and prevail.

    


    20.   Severability.  If
      one or more of the provisions of this Award shall be held invalid, illegal
      or
      unenforceable in any respect, the validity, legality and enforceability of
      the
      remaining provisions shall not in any way be affected or impaired thereby and
      the invalid, illegal or unenforceable provisions shall be deemed null and void;
      however, to the extent permissible by law, any provisions which could be deemed
      null and void shall first be construed, interpreted or revised retroactively
      to
      permit this Award to be construed so as to first the intent of this Award and
      the Long-Term Incentive Plan.

    


    21.   Construction.  The
      Option is being granted pursuant to Section 7 of the Long-Term Incentive Plan
      and are subject to the terms of the Long-Term Incentive Plan.  A copy
      of the Long-Term Incentive Plan has been given to the Optionee, and additional
      copies of the Long-Term Incentive Plan are available upon request during normal
      business hours at the principal executive offices of the Company.  To
      the extent that any provision of this Award violates or is inconsistent with
      an
      express provision of the Long-Term Incentive Plan, the Long-Term Incentive
      Plan
      provision shall govern and any inconsistent provision in this Award shall be
      of
      no force or effect.

     

     

    -5-