Exhibit 10.7


 


STOCK
APPRECIATION RIGHTS AWARD

under the Fossil, Inc. 2008 Long-Term Incentive Plan


 


This STOCK
APPRECIATION RIGHTS AWARD (the “Award”), is entered into effect as of the date
of the grant (the “Effective Date”).


 


W I T N E S S E T H:


 


WHEREAS, Fossil, Inc.,
a Delaware corporation (the “Company”) has adopted the Fossil, Inc. 2008
Long-Term Incentive Plan (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; and


 


WHEREAS, the
Long-Term Incentive Plan provides that an employee of the Company or its
Subsidiaries may be granted a Stock Appreciation Right Award, which may consist
of the right to receive a payment, in cash or shares of common stock, par value
$.01 per share (“Common Stock”), of the Company, equal to the excess of the
Fair Market Value of a specified number of shares of Common Stock on the date
the Stock Appreciation Right (“SAR”) is exercised over a specified strike price
as set forth in the Award;


 


NOW, THEREFORE, the
Participant identified in the Notice of Grant is hereby awarded Stock
Appreciation Rights in accordance with the following terms:


 


1.             Grant of Award; Stock Appreciation Rights.  Subject to the terms and conditions set forth
in the Long-Term Incentive Plan, this Award and in the Notice of Grant, the
Company hereby grants to the Participant that number of SARs set forth in the
Notice of Grant, consisting of the right to receive, upon exercise of each SAR,
shares of Common Stock with a Fair Market Value equal to the excess of the Fair
Market Value of each share of Common Stock on the date of exercise minus the
Fair Market Value of each share of Common Stock on the date of this Award,
subject to any adjustments that may be made pursuant to the terms of the
Long-Term Incentive Plan (the “SAR Payment Value”).


 


2.             SAR Exercise Period and Vesting.  The SARs granted pursuant to this Award may
be exercised by the Participant at any time prior to the Expiration Date set
forth in the Notice of Grant (the “Exercise Period”), subject to the limitation
that such SARs shall vest and become exercisable only if the Participant
remains continuously employed by the Company or its Subsidiaries through each
Vesting Date set forth in the Notice of Grant (it being understood that the
right to exercise the SARs shall be cumulative, so that the Participant may exercise
on or after any Vesting Date and during the remainder of the Exercise Period
that number of SARs which the Participant was entitled to exercise but did not
exercise during any preceding period or periods).  Notwithstanding the vesting conditions set forth
herein, (i) the Committee may in its discretion at any time accelerate the
vesting of SARs; and (ii) all of the SARs shall vest upon a Change in
Control of the Company or upon the death of the Participant.


 


3.             Method of Exercise. 
The Participant (or his representative, guardian, devisee or heir, as
applicable) may exercise any portion of this SAR that has become exercisable in
accordance with the terms hereof as to all or any of the SARs by giving written notice of exercise to the
Company, in form satisfactory to the Board, specifying the number of SARs to be
exercised.  The SAR Payment Value shall
be paid to the Participant in shares of Common Stock This SAR may not be exercised for less than one (1) SAR
or the number of whole SARs remaining under this Award, whichever is smaller.
As promptly as practicable following the receipt of such written notification,
the Company shall electronically register the number of shares of Common Stock
having a Fair Market Value (as of the effective date of the 


 

















 


Participant’s notice of
exercise) equal to the SAR Payment Value with respect to those SARs which have
been exercised.  No stock certificate or
certificates shall be issued with respect to such shares of Common Stock,
unless, the Participant requests delivery of the certificate or certificates by
submitting a written request to the General Counsel requesting deliver of the
certificates.  The Company shall deliver
the certificates requested by the Participant to the Participant as soon as
administratively practicable following the Company’s receipt of such request.
Upon registration (or issuance) of any shares hereunder,  the Participant 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 Notice of Grant.


 


4.             Termination in Event of Nonemployment.   In
the event that the Participant ceases to be employed by the Company or any of
its Subsidiaries during the Exercise Period for any reason other than death, at
a time which the SARs granted pursuant hereto are still in force and unexpired,
the SARs granted pursuant to this Award shall terminate, except to the extent
that they are vested on the date of termination of employment, and exercised on
or prior to the date that is three (3) months following termination of
employment (or, if earlier, on the expiration date of the SARs).


 


5.             Death.  In the event that the Participant ceases
to be employed by the Company or any of its Subsidiaries during the Exercise
Period by reason of death at a time when the SARs granted pursuant hereto are
still in force and unexpired, any unvested SARs shall be accelerated and 100%
vested.  Such acceleration shall be
effective as of the date of death of the Participant.  The Participant’s representatives, devises or
heirs, as applicable, shall have a period of one (1) year following the
date of death in which to exercise the SARs (or, if earlier, on the expiration
date of the SARs).


 


6.             Assignability.  The
SARs granted pursuant hereto shall not be assignable or transferable by the
Participant 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 SARs 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 Participant shall have no rights as a stockholder of the Company
with respect to the SARs unless and until certificates evidencing shares of
Common Stock shall have been electronically registered in the Participant’s
name, or if applicable, issued by the Company to the Participant.  Until such time, the Participant shall not be
entitled to dividends or distributions in respect of any 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, 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 shares for which the record date for such
payment, distribution or grant is prior to the date upon which certificates
evidencing such shares shall have been electronically registered by the Company
in the Participant’s name, or, if applicable, 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 


 


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the Committee shall be final
and binding upon the Participant, 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.


 


9.             Tax Withholding Obligations.  The Participant shall be required to deposit
with the Company an amount of cash equal to the amount determined by the Company
to be required with respect to any withholding taxes, FICA contributions, or
the like under any federal, state, or local statute, ordinance, rule, or
regulation in connection with the issuance of shares of Common Stock for the
SAR Payment Value.  Alternatively, the
Company may, at its sole election, (i) withhold the required amounts from
the Participant’s pay during the pay periods next following the date on which
any such applicable tax liability otherwise arises, or (ii) withhold a
number of shares of Common Stock otherwise deliverable having a Fair Market
Value sufficient to satisfy the statutory minimum of all or part of the
Participant’s estimated total federal, state, and local tax obligations
associated with payment of the SAR Payment Value.  The Company shall not deliver any of the
shares of Company Stock until and unless the Participant has made the deposit
required herein or proper provision for required withholding has been made.


 


10.           Restrictions
and Related Representations. Upon the acquisition of any shares
of Common Stock pursuant to the exercise of the SARs granted pursuant hereto,
the Participant 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 Award.  In addition, to the extent a
certificate or certificates are issued representing any shares, the certificate
or certificates 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 Award or future awards that may be granted under the
Long-Term Incentive Plan by electronic means or to request the Participant’s
consent to participate in the Long-Term Incentive Plan by electronic
means.  The Participant 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 Participant of the SARs 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 the
Participant otherwise.  Any notice given
by the Company to the Participant 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 Participant of the
existence, maturity or termination of any rights hereunder and the Participant
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 Participant’s
rights or privileges hereunder.


 


12.           Scope
of Certain Terms.  Whenever the term “Participant” 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
(Assignability) of this Agreement, it shall be deemed to include such person or
persons.  The term “Long-Term Incentive
Plan” as used herein shall be deemed to include the Long-Term Incentive Plan
and any subsequent amendments thereto, together with any administrative
interpretations which have been adopted thereunder by the Committee pursuant to
Section 3.3 


 


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of the Long-Term Incentive
Plan. Unless otherwise indicated, defined terms herein shall have the meaning
ascribed to them in the Long-Term Incentive Plan.


 


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. 
The number of SARs covered by this Award shall be subject to adjustment
in accordance with Articles 12-14 of the Long-Term Incentive Plan.


 


15.           No
Right of Employment. Neither the granting of this SAR, 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.


 


16.           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 SARs 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 SARs which have not
been exercised as provided herein.


 


17.           Precondition
of Legality. 
Notwithstanding anything to the contrary contained herein, the
Participant agrees that he will not exercise the SARs granted pursuant hereto,
and that the Company will not be obligated to issue any shares pursuant to this
Award, if the exercise of the SARs or the issuance of such shares would
constitute a violation by the Participant 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.


 


18.           Governing Law.  This Award 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.


 


19.           Incorporation
of the Long-Term Incentive Plan. This Award is subject to the Long-Term
Incentive Plan, a copy of which has been furnished to the Participant and for
which the Participant 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.


 


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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 SAR is being issued pursuant to Section 6.5
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 Participant, 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.


 


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