exhibit10-1.htm


    

      
        
           


        

        
           


          
            

          

        

        
           


        

      


      EIGHTH AMENDMENT TO LOAN
AGREEMENT

       

      THIS
EIGHTH AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is made
and entered into and effective as of November 18, 2009 (the “Amendment Closing
Date”), by and among WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association (the “Bank”), FOSSIL PARTNERS, L.P. (the
“Borrower”),
FOSSIL, INC. (the “Company”), FOSSIL INTERMEDIATE, INC.
(“Fossil
Intermediate”), FOSSIL
TRUST (“Fossil
Trust”), FOSSIL STORES
I, INC. (“Fossil I”), ARROW MERCHANDISING, INC.
(“Arrow
Merchandising”), FOSSIL
HOLDINGS, LLC (“Fossil Holdings”) and
FOSSIL INTERNATIONAL HOLDINGS,
INC. (“Fossil
International”) (the Company, Fossil Intermediate, Fossil Trust, Fossil
I, Arrow Merchandising, Fossil Holdings and Fossil International are sometimes
referred to herein individually as a “Guarantor” and
collectively as the “Guarantors”).

       

      RECITALS

       

      WHEREAS,
the Bank, the Borrower and certain of the Guarantors are parties to that certain
Loan Agreement dated as of September 23, 2004 (as amended, modified or
supplemented from time to time, the “Agreement”);
and

       

      WHEREAS,
the Bank, the Borrower and the Guarantors desire to amend the Agreement and the
other Loan Documents as herein set forth to, among other things, (a) allow for a
possible increase of the Total Commitment from $100,000,000 to up to
$200,000,000 upon the request of the Borrower and the consent of the Bank (which
consent may or may not be granted in the Bank's sole and absolute discretion)
and (b) extend the maturity date of the loans under the Line of Credit and the
Revolving Note (which evidences such loans) to November 17, 2010.

       

      NOW,
THEREFORE, in consideration of the premises herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as
follows:

       

      ARTICLE
I.

       

      Definitions

       

      Section
1.01. Capitalized
terms used in this Amendment are defined in the Agreement, as amended hereby,
unless otherwise stated.

       

      ARTICLE
II.

       

      Amendments

       

      Section
2.01. Amendment to Section
1.  Effective as of the Amendment Closing Date, Section 1 of the
Agreement is hereby amended and restated to read in its entirety as
follows:

       

      “1.           The Line of
Credit.  Subject to and upon the terms, conditions, covenants
and agreements contained herein (including the proviso below) and in the
Revolving Note (as hereinafter defined), the Bank agrees to loan to the
Borrower, at any time and from time to time prior to November 17, 2010 (the
maturity of the Revolving Note), such amounts as the Borrower may request up to
but not exceeding at any time the aggregate principal amount of $100,000,000 (as
such amount may be increased from time to time pursuant to the proviso below,
the “Total
Commitment”); within such limits and during such period, the Borrower may
borrow, repay and re-borrow hereunder (the “Line of Credit”);
provided, however, that, from
time to time upon the written request of the Borrower to the Bank and upon the
written consent of the Bank to such request (which consent may or may not be
granted by the Bank in its sole and absolute discretion), the Total Commitment
may be increased to an amount not to exceed $200,000,000; provided, further, however, that, in
connection with any written request of the Borrower to the Bank to increase the
Total Commitment in accordance with the immediately preceding proviso, the
Bank's requested consent thereto shall be deemed to have been automatically
denied unless the Bank shall have delivered to the Borrower a written consent to
such increase within fifteen (15) Business Days after such written request is
delivered to the Bank.  All loans under the Line of Credit shall be
evidenced by a Revolving Line of Credit Note (as amended, modified or
supplemented, increased, renewed, extended or replaced from time to time, the
“Revolving
Note”) in form and substance satisfactory to the Bank, executed by the
Borrower and payable to the order of the Bank, and bearing interest upon the
terms provided therein (but in no event to exceed the maximum non-usurious
interest rate permitted by law).  The principal of, and interest on,
the Revolving Note shall be due and payable as provided in the Revolving
Note.  Notation by the Bank on its records shall constitute prima
facie evidence of the amount and date of any payment or borrowing
thereunder.

      


      (a) Renewals and
Extensions.  All renewals, extensions, modifications and
rearrangements of the Revolving Note, if any, shall be deemed to be made
pursuant to this Agreement, and, accordingly, shall be subject to the terms and
provisions hereof, and the Borrower and the Guarantors shall be deemed to have
ratified, as of such renewal, extension, modification or rearrangement date, all
of the representations, covenants and agreements herein set forth.

       

      (b) Letters of
Credit.  Advances under the Line of Credit may be utilized by
the Borrower to fund drawings under any Documentary or Stand-by Letters of
Credit (as hereinafter defined) that are issued by the Bank for the account of
the Borrower.  In the event the Borrower fails to reimburse the Bank
for any such drawings, the Bank may, in its own discretion, advance funds under
the Line of Credit to fund such drawings and all such advances shall be added to
the principal amount of the Revolving Note.”

       

      (c) Unused
Fee.  The Borrower shall pay to the Bank a fee equal to
(i) the Unused Fee Percentage (as such term is hereinafter defined) per
annum multiplied by (ii) the amount by which the Total Commitment exceeds
the average daily balance of the sum of the outstanding principal amount of
loans under the Line of Credit plus the aggregate undrawn amount of Documentary
and Standby Letters of Credit during the applicable period (which amount is
hereinafter called the "Unused Total
Commitment").  Such fee shall be payable in arrears, on the
last day of each December, March, June and September and on the maturity of the
Revolving Note, based upon such average daily balance of the Unused Total
Commitment during the period then ended on such payment date.  For
avoidance of doubt, such fee shall commence to accrue on November 18,
2009.  The term "Unused Fee Percentage" shall mean the percentage
specified in the following table, based upon the Unused Total
Commitment.

       

      
        	
                Unused
      Total

                Commitment

              	
                Unused
      Fee

                Percentage

                 

              
	
                Equal
      to or greater than 90% of Total Commitment

              	
                0.20%

              
	
                Less
      than 90% and equal to or greater than 70% of Total
    Commitment

              	
                0.10%

              
	
                Less
      than 70% of Total Commitment

              	
                0.00%

              


      

      


      Section
2.02. Amendment to Section
16.  Effective as of the Amendment Closing Date, the address of
the Bank contained in Section 16 of the
Agreement is hereby amended to read as follows:

       

      Wells Fargo Bank, National
Association

      1445 Ross Avenue, 3rd
Floor

      MAC T5303-031

      Dallas,
Texas  75202

      Attention:  Julia Harman,
Vice President

      Fax:  (214)
953-3982

      


      ARTICLE
III.

       

      Conditions
Precedent

       

      Section
3.01. Conditions to
Effectiveness.  The effectiveness of this Amendment is subject
to the satisfaction of the following conditions precedent, unless specifically
waived in writing by the Bank:

       

      (a) The Bank
shall have received (i) this Amendment, duly executed by the Borrower and
each Guarantor, and (ii) an amended and restated Revolving Note in form and
substance satisfactory to the Bank which, among other things, extends the
maturity date of the Revolving Note to November 17, 2010, duly executed by the
Borrower;

       

      (b) The Bank
shall  have received (i) certified copies of any amendments or
modifications to the organizational documents of the Borrower, each Guarantor
and each Significant Foreign Subsidiary that have been entered into between
November 19, 2008 and the Amendment Closing Date, (ii) certificates dated
as of a recent date issued by the applicable governmental authorities which
evidence the existence and good standing of the Borrower and each Guarantor, and
(iii) certified copies of resolutions of the board of directors or other
applicable governing body of the Borrower and each Guarantor which authorize the
execution and delivery of this Amendment and the other Loan Documents executed
in connection herewith, in each case in form and substance satisfactory to the
Bank;

       

      (c) [intentionally
omitted];

       

      (d) There
shall have been no material adverse change in the business or financial
condition of the Borrower, the Company and the Guarantors, taken as a
whole;

       

      (e) There
shall be no material adverse litigation, either pending or threatened, against
the Borrower or any Guarantor that could reasonably be expected to have a
material adverse effect on the business or financial condition of the Borrower,
the Company and the Guarantors, taken as a whole;

       

      (f) The
representations and warranties contained herein and in the Agreement and the
other Loan Documents, as each is amended hereby, shall be true and correct in
all material respects as of the date hereof, as if made on the date hereof,
except to the extent such representations were made as of a specific
date;

       

      (g) No
default or Event of Default under the Agreement, as amended hereby, shall have
occurred and be continuing, unless such default or Event of Default has been
specifically waived in writing by the Bank; and

       

      (h) All
requisite corporate, partnership or trust proceedings, as appropriate, shall
have been taken the Borrower and each Guarantor to authorize the execution,
delivery and performance of this Amendment, and such proceedings and other legal
matters incident thereto shall be satisfactory to the Bank and its legal
counsel.

       

      ARTICLE
IV.

       

      Ratifications,
Representations and Warranties, Covenants

       

      Section
4.01. General
Ratifications.  The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and the other Loan Documents, and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the
Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect.  The parties hereto agree that the
Agreement and the other Loan Documents, as amended hereby, shall continue to be
legal, valid, binding and enforceable in accordance with their respective
terms.

       

      Section
4.02. Ratification of
Guaranties.  Each of the Guarantors hereby acknowledges and
consents to all of the terms and conditions of this Amendment and hereby
ratifies and confirms the Guaranty Agreement to which it is a party to or for
the benefit of the Bank and all of its obligations thereunder.  Each
of the Guarantors hereby represents and acknowledges that it has not revoked,
terminated, limited or otherwise modified its obligations under the Guaranty
Agreement executed by it in any way and that it has no claims, counterclaims,
offsets, credits or defenses to the Guaranty Agreement executed by it or to the
other Loan Documents to which it is a party or the performance of its
obligations thereunder, all of which obligations are legal, valid and binding in
accordance with their terms.  Furthermore, each Guarantor agrees that
nothing contained in this Amendment shall adversely affect any right or remedy
of the Bank under the Guaranty Agreement to which such Guarantor is a
party.  Each Guarantor hereby agrees that, with respect to the
Guaranty Agreement to which it is a party, all references in such Guaranty
Agreement to the “Guaranteed Obligations” shall include, without limitation, the
obligations of the Borrower to the Bank under the Agreement, as amended hereby,
and all indebtedness evidenced by the Revolving Note dated as of November 18,
2009, in the maximum original principal amount of $200,000,000 made by the
Borrower payable to the order of the  Bank.  Finally, each
of the Guarantors hereby represents and acknowledges that the execution and
delivery of this Amendment, the Revolving Note and the other Loan Documents
executed in connection herewith shall in no way change or modify its obligations
as a guarantor, debtor, pledgor, assignor, obligor and/or grantor under its
respective Guaranty Agreement (except as specifically provided in this Section 4.02) and
shall not constitute a waiver by the Bank of any of the Bank’s rights or
remedies against such Guarantor.

       

      Section
4.03. Ratification of Security
Interests.  The Company hereby agrees that the Stock Pledge
Agreement is hereby expressly amended such that the definition of “Secured
Obligations” contained therein includes, without limitation, all indebtedness
and other obligations of the Borrower now or hereafter existing hereunder the
Agreement, as amended hereby, and all indebtedness evidenced by the Revolving
Note dated as of November 18, 2009, in the maximum original principal amount of
$200,000,000 made by the Borrower payable to the order of the
Bank.  Furthermore, the Company hereby ratifies and reaffirms its
grant of a security interest in all “Collateral”, as such term is defined in the
Stock Pledge Agreement, as security for the payment and performance of all
“Secured Obligations”, as such term is defined in the Stock Pledge Agreement,
and all other obligations under the Stock Pledge Agreement, as the same is
amended hereby, and represents and acknowledges that the Stock Pledge Agreement
is not subject to any claims, counterclaims, defenses or offsets and that all of
its obligations thereunder are legal, valid and binding in accordance with their
terms.  Finally, the Company hereby represents and acknowledges that
the execution and delivery of this Amendment, the Revolving Note and the other
Loan Documents executed in connection herewith shall in no way change or modify
its obligations as a debtor, pledgor, assignor, obligor and/or grantor under the
Stock Pledge Agreement (except as specifically provided in this Section 4.03) and
shall not constitute a waiver by the Bank of any of the Bank’s rights or
remedies against the Company.

       

      Section
4.04. Representations and
Warranties, etc.  The Borrower and each of the Guarantors
hereby jointly and severally represent and warrant to the Bank that (a) the
execution, delivery and performance of this Amendment and any and all other Loan
Documents executed and/or delivered in connection herewith have been duly
authorized by all requisite corporate, partnership or trust proceedings, as
appropriate, and will not contravene, or constitute a default under, any
provision of applicable law or regulation or of the Agreement of Limited
Partnership, Articles of Incorporation, By-Laws, Trust Agreement or other
organizational document, as applicable, of the Borrower or any Guarantor, or of
any mortgage, indenture, material contract, material agreement or other material
instrument, or any judgment, order or decree, binding upon the Borrower or any
Guarantor; (b) the officer(s) or other representatives, as applicable, of the
Borrower and each Guarantor executing and delivering this Amendment and any and
all other Loan Documents executed and/or delivered in connection herewith are
duly elected and are authorized, by resolution of the board of directors, board
of managers or trustees (or other applicable governing body) of the Borrower and
each such Guarantor, to execute on behalf of each such entity this Amendment and
any and all other Loan Documents executed and/or delivered in connection
herewith; (c) the representations and warranties contained in the Agreement and
the other Loan Documents, as amended hereby, are true and correct in all
material respects on and as of the date hereof and on and as of the date of
execution hereof as though made on and as of each such date, except to the
extent such representations were made as of a specific date; (d) no default or
Event of Default under the Agreement, as amended hereby, or any other Loan
Document has occurred and is continuing, unless such default or Event of Default
has been specifically waived in writing by the Bank; and (e) the Borrower and
the Guarantors are in full compliance with all covenants and agreements
contained in the Agreement and the other Loan Documents, as amended
hereby.

       

      Section
4.05. Subsidiaries,
etc.  The Borrower and each of the Guarantors hereby jointly
and severally represent and warrant to the Bank that (a) attached hereto as
Eighth Amendment
Schedule 1 is a list of all majority-owned subsidiaries of the Company or
the Borrower as of the Amendment Closing Date, (b) attached hereto as Eighth Amendment Schedule
2 is a list of all Significant Domestic Subsidiaries as of the Amendment
Closing Date and after giving effect to this Amendment, (c) attached hereto
as Eighth Amendment
Schedule 3 is a list of all Significant Foreign Subsidiaries as of the
Amendment Closing Date and after giving effect to this Amendment, and
(d) each of the Borrower and the Guarantors is in compliance with the
requirements of Section 12(m) of the
Agreement as of the Amendment Closing Date and after giving effect to this
Amendment.

       

      ARTICLE
V.

       

      Miscellaneous
Provisions

       

      Section
5.01. Survival of Representations
and Warranties.  All representations and warranties made in the
Agreement or any other Loan Documents, including, without limitation, any
document furnished in connection with this Amendment, shall survive the
execution and delivery of this Amendment and the other Loan Documents to be
executed in connection herewith, and no investigation by the Bank or any closing
shall affect the representations and warranties or the right of the Bank to rely
upon them.

       

      Section
5.02. Reference to
Agreement.  Each of the Agreement and the other Loan Documents,
and any and all other agreements, documents or instruments now or hereafter
executed and delivered pursuant to the terms hereof or thereof or pursuant to
the terms of the Agreement, as amended hereby, are hereby amended so that any
reference in the Agreement and such other Loan Documents to the Agreement shall
mean a reference to the Agreement as amended hereby.

       

      Section
5.03. Expenses of the
Bank.  As provided in the Agreement, the Borrower agrees to pay
on demand all reasonable costs and expenses incurred by the Bank in connection
with the preparation, negotiation and execution of this Amendment and the other
Loan Documents executed pursuant hereto and any and all amendments,
modifications and supplements hereto or thereto, including, without limitation,
the costs and fees of the Bank’s legal counsel and all costs and expenses
incurred by the Bank in connection with the enforcement or preservation of any
rights or remedies under the Agreement or any other Loan Document, in each case
as amended hereby, including, without, limitation, the costs and fees of the
Bank’s legal counsel.

       

      Section
5.04. Severability.  Any
provision of this Amendment held by a court of competent jurisdiction to be
invalid or unenforceable shall not impair or invalidate the remainder of this
Amendment and the effect thereof shall be confined to the provision so held to
be invalid or unenforceable.

       

      Section
5.05. Successors and
Assigns.  This Amendment is binding upon and shall inure to the
benefit of the Borrower, the Guarantors and the Bank and their respective
successors and assigns; provided, however, that neither
the Borrower nor any Guarantor may assign any of its obligations hereunder or
under any Loan Document without the prior written consent of the
Bank.

       

      Section
5.06. Counterparts.  This
Amendment may be executed in one or more counterparts, each of which when so
executed shall be deemed to be an original, but all of which when taken together
shall constitute one and the same instrument.  A facsimile signature
or a signature transmitted electronically shall be effective as an original
signature.

       

      Section
5.07. Effect of
Waiver.  No consent or waiver, express or implied, by the Bank
to or for any breach of or deviation from any covenant, condition or duty by the
Borrower or any Guarantor shall be deemed a consent to or waiver of any other
breach of the same or any other covenant, condition or duty.

       

      Section
5.08. Headings.  The
headings, captions and arrangements used in this Amendment are for convenience
only and shall not affect the interpretation of this Amendment.

       

      Section
5.09. Applicable
Law.  THIS AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED PURSUANT
HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN, AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS.

       

      Section
5.10. Final
Agreement.  THE AGREEMENT AND THE OTHER LOAN DOCUMENTS, EACH AS
AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND THEREOF ON THE DATE THIS AMENDMENT IS EXECUTED.
THE AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE
PARTIES. NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY
PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED
BY THE BORROWER, THE GUARANTORS AND THE BANK.

       

      Section
5.11. Agreement for Binding
Arbitration.  The parties agree to be bound by the terms and
provisions of the Bank’s current Arbitration Program, a true and correct copy of
which is attached hereto as Exhibit A and
incorporated herein by reference and is acknowledged as received by the parties
pursuant to which any and all disputes shall be resolved by mandatory binding
arbitration upon the request of any party.

       

      [Remainder
of page intentionally left blank.]


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      IN
WITNESS WHEREOF, this Amendment has been executed and is effective as of the
date first above-written.

       

      “BANK”

       

      WELLS
FARGO BANK,

      NATIONAL
ASSOCIATION

      


      


      By:           /s/ Julia
Harman                                                                

      Name:           Julia
Harman

      Title:           Vice
President

      


      


      “BORROWER”

      


      FOSSIL
PARTNERS, L.P.

      


      By:           Fossil,
Inc.

      Title:           General
Partner

      


      


      By:           /s/ Mike L.
Kovar                                                      

      Name:           Mike
L. Kovar

      Title:           Executive
Vice President, Chief

      Financial Officer and
Treasurer

      


      


      “GUARANTORS”

      


      FOSSIL,
INC.

      


      


      By:           /s/ Mike L.
Kovar                                                                

      Name:           Mike
L. Kovar

      Title:           Executive
Vice President, Chief

      Financial Officer and
Treasurer

      


      


      FOSSIL
INTERMEDIATE, INC.

      


      


      By:           /s/ Mike L.
Kovar                                                                

      Name:           Mike
L. Kovar

      Title:           Treasurer

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


      FOSSIL
TRUST

      


      


      By:           /s/ Mike L.
Kovar                                                                

      Name:           Mike
L. Kovar

      Title:           Treasurer

      


      


      FOSSIL
STORES I, INC.

      


      


      By:           /s/ Mike L.
Kovar                                                                

      Name:           Mike
L. Kovar

      Title:           Treasurer

      


      


      ARROW
MERCHANDISING, INC.

      


      


      By:           /s/ Mike L.
Kovar                                                                

      Name:           Mike
L. Kovar

      Title:           Treasurer

      


      


      FOSSIL
HOLDINGS, LLC

      


      


      By:           /s/ Mike L.
Kovar                                                                

      Name:           Mike
L. Kovar

      Title:           Manager

      


      


      FOSSIL
INTERNATIONAL HOLDINGS, INC.

      


      


      By:           /s/ Mike W.
Barnes                                                                

      Name:           Michael
W. Barnes

      Title:           President

      


      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


      EIGHTH AMENDMENT SCHEDULE
1

      


      ALL
SUBSIDIARIES

      


      Fossil
Intermediate, Inc.

      Fossil
Stores I, Inc.

      Arrow
Merchandising, Inc.

      Fossil
Holdings, LLC

      Fossil
Trust

      Fossil
International Holdings, Inc.

      Fossil
Europe B.V.

      Fossil
Holdings (Gibraltar) Ltd.

      Swiss
Technology Holding GmbH

      Fossil
Austria GmbH

      Fossil
Japan, K.K.

      Fossil
(Gibraltar) Ltd.

      Fossil
Canada, Inc.

      Fossil
Mexico, S.A. de C. V.

      Servicios
Fossil Mexico, S.A. de C.V.

      Fossil
(East) Limited

      Fossil
Holding LLC Luxembourg, SCS

      Fossil
Luxembourg, Sarl

      Pulse
Time Center Company, Ltd.

      Fossil
(Asia) Ltd

      Fossil
Singapore Ptd Ltd.

      FDT,
Ltd.

      Fossil
(Australia) Pty Ltd.

      Fossil
(New Zealand) Ltd.

      Fossil
Time Malaysia Sdn. Bhd.

      Fossil
Industries Ltd.

      Fossil
Trading (Shanghai) Company Ltd.

      Fossil
(Asia) Holding Ltd.

      Fossil
Europe GmbH

      Fossil
Italia, S.r.l.

      Gum,
S.A.

      Fossil,
S.L.

      Fossil
U.K. Holdings Ltd.

      FESCO,
GmbH

      Fossil
Swiss No Time GmbH

      Fossil
Swiss X Time GmbH

      In Time -
Portugal

      Fossil
U.K. Ltd.

      Fossil
Stores U.K. Ltd.

      Montres
Antima SA

      Fossil
Group Europe, GmbH

      Fossil
France SA

      Logisav
SARL

      Trotime
Espana SL

      Fossil
Retail Stores (Australia) Pty. Ltd

      Fossil
Management Services Pty. Ltd.

      Fossil
Scandinavia AB

      Fossil
Norway AS

      Fossil
Denmark AS

      Fossil
Stores France SAS

      Fossil
Stores S.r.l.

      Fossil
(Korea) Ltd.

      Fossil
(Macau) Limited

      Fossil
India Private Ltd.

      Fossil
Stores Spain, S.L.

      Fossil
Stores Belgium BVBA

      Fossil
Belgium BVBA

      Fossil
Stores Sweden AB

      Fossil
Stores Denmark A/S

      MW
(Asia), Ltd.

      Trylink
International, Ltd.

      Fossil
Newtime Ltd.

      Fossil
Asia Pacific, Ltd.

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


      EIGHTH AMENDMENT SCHEDULE
2

      


      SIGNIFICANT
DOMESTIC SUBSIDIARIES

      


      Fossil
Intermediate, Inc.

      Fossil
Trust

      Fossil
Stores I, Inc.

      


      


      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


      EIGHTH AMENDMENT SCHEDULE
3

      


      SIGNIFICANT
FOREIGN SUBSIDIARIES

      


      Fossil
Europe B.V.

      Fossil
Holdings (Gibraltar) Ltd.

      Swiss
Technology Holding GmbH

      


      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


      EXHIBIT
A

      


      ARBITRATION
PROGRAM

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


      ARBITRATION

      


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

      


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

      


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

       

      


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

      


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

      


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

      


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

      


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