Exhibit
10.3


 


AMENDED AND RESTATED STOCK PLEDGE AGREEMENT


 


THIS AMENDED AND RESTATED STOCK
PLEDGE AGREEMENT (this “Agreement”) is entered into as
of November 19, 2008, between FOSSIL,
INC., a Delaware corporation (“Pledgor”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a
national banking association (“Pledgee”).


 


1.                                       In
consideration of any extension of credit heretofore or hereafter made by
Pledgee to Fossil Partners, L.P., a Texas limited partnership (“Borrower”),
and as collateral security for and to secure the prompt payment and performance
in full of all Secured Obligations (hereinafter defined), Pledgor undertakes to
assign and grant to Pledgee, and hereby assigns to Pledgee and grants to
Pledgee, a continuing security interest in sixty-five percent (65%) of all
issued and outstanding shares of capital stock and other equity interests (including,
without limitation, all shares of capital stock or other equity interests represented
by the certificates identified on Schedule I attached hereto) of
each of Fossil Europe B.V., Fossil Holdings (Gibraltar) Ltd. and Swiss
Technology Holding GmbH (each individually, a “Pledged Subsidiary” and
collectively, the “Pledged Subsidiaries”), whether now or hereafter
issued by any Pledged Subsidiary, together with all proceeds, products and
increases thereof and substitutions and replacements therefor (collectively,
the “Collateral”).  As used
herein, the term “Secured Obligations” shall mean and include any and
all indebtedness, obligations and liabilities of every kind and character of
Borrower and/or Pledgor to Pledgee, whether now existing or hereafter arising,
whether due and owing or to become due and owing, howsoever created or arising
or evidenced, whether joint or several, or joint and several, whether absolute
or contingent, and all renewals, extensions and rearrangements of such
indebtedness, obligations or liabilities, including any and all amounts owing
or which may hereafter become owing thereon or in connection therewith,
including, without limitation, any and all amounts of principal, interest,
attorneys’ fees, costs of collection and other amounts owing thereunder.  In addition to and without limiting the
generality of the foregoing, Pledgor and Pledgee hereby expressly acknowledge
and agree that the Secured Obligations shall include, without limitation, (a) all
loans and other indebtedness at any time and from time to time owed or owing by
Borrower to Pledgee under or in connection with (i) that certain Loan
Agreement dated as of September 23, 2004, by and among Borrower, certain
other entities affiliated with Borrower, as guarantors, and Pledgee, as such
Loan Agreement has been amended and may be amended, increased, modified,
supplemented, renewed, extended, restated or replaced from time to time (the “Loan
Agreement”) and any other loan agreement, credit agreement or other credit
facility with Borrower at any time and from time to time, and (ii) that
certain Fifth Amended and Restated Revolving Line of Credit Note dated November 19,
2008, in the maximum original principal amount of $140,000,000 made by Borrower
payable to the order of Pledgee, as such promissory note may be amended,
increased, modified, supplemented, renewed, extended, restated or replaced from
time to time (the “Note”) and any other promissory note executed by
Borrower and payable to Pledgee at any time and from time to time, and (b) all
obligations and other indebtedness at any time and from time to time owed or
owing by Pledgor to Pledgee under or in connection with (i) that certain
Amended and Restated Guaranty Agreement dated November 19, 2008, executed
by Pledgor and certain other guarantors to and in favor of Pledgee, as such
Amended and Restated Guaranty Agreement may be amended, increased, modified, supplemented,
renewed, extended, restated or replaced from time to time (the “Amended and
Restated Guaranty Agreement”) and (ii) this Agreement as it may be
amended, increased, modified, supplemented, renewed, extended, restated or
replaced from time to time.


 


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2.                                       Pledgor
represents and warrants that (a) Pledgor holds absolute ownership of the
Collateral, free and clear of all liens, security interests and encumbrances; (b) there
are no restrictions upon the transfer of any of the Collateral, other than as
may appear and may be referenced on the face of the certificates or other than
arising under applicable state or federal securities laws or laws of the
jurisdiction in which the applicable Pledged Subsidiary is organized; (c) Pledgor
owns directly 100%  of the issued
and outstanding capital stock of each of the Pledged Subsidiaries; (d) there
are no existing obligations to issue capital stock or securities convertible
into capital stock of any Pledged Subsidiary and in no event will Pledgor permit
any such stock or securities to be issued prior to payment in full of the
Secured Obligations; and (e) there are no existing securities or
obligations of any Pledged Subsidiary the amount of which obligation is based,
in whole or in part, on the value of any Pledged Subsidiary’s capital stock or
any increase thereof, nor will Pledgor permit any such securities or
obligations to exist prior to payment in full of the Secured Obligations.


 


3.                                       In
furtherance of Pledgee’s security interest in the Collateral, Pledgor agrees to
deliver to Pledgee, on the date hereof (to the extent not previously delivered
to Pledgee), the stock certificates identified on Schedule I
attached hereto, together with stock powers duly executed in blank by Pledgor.  Pledgee acknowledges that, notwithstanding
Pledgor’s delivery to Pledgee of stock certificates which may represent in
excess of sixty-five percent (65%) of the issued and outstanding shares of
capital stock of any Pledged Subsidiary, Pledgee’s security interest hereunder
shall be limited to sixty-five percent (65%) of the issued and outstanding
shares of capital stock of each Pledged Subsidiary.


 


4.                                       With
respect to the Collateral and all proceeds, products and increases thereof and
substitutions therefor, Pledgor hereby appoints Pledgee, as Pledgor’s attorney-in-fact,
to arrange for the transfer of the Collateral on the books of each Pledged
Subsidiary to the name of Pledgee subsequent to the occurrence and during the
continuance of any Event of Default (as hereinafter defined) hereunder.  However, Pledgee shall be under no obligation
to do so.


 


5.                                       During
the term of this Agreement, provided no Event of Default has occurred and then
exists hereunder, Pledgor shall have the right, where applicable, to vote the
Collateral on all corporate questions, and Pledgee shall, if necessary, execute
due and timely proxies in favor of Pledgor for this purpose; provided, however,
that Pledgor will not be entitled to exercise any such right if the result
thereof could reasonably be expected to materially and adversely affect the
rights inuring to Pledgee hereunder or the rights and remedies of Pledgee under
this Agreement or the ability of Pledgee to exercise the same.


 


6.                                       Upon
the occurrence of any Event of Default and during the continuance thereof,
Pledgee may exercise all of the rights and privileges in connection with the
Collateral (including, without limitation, voting rights) to which a transferee
may be entitled as the record holder thereof, together with the rights and
privileges otherwise granted hereunder. 
Pledgee shall be under no obligation to exercise any of such rights or
privileges.


 


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7.                                       If,
with the consent of Pledgee, Pledgor shall substitute or exchange other
securities in place of those herein mentioned, all of the rights and privileges
of Pledgee and all of the obligations of Pledgor with respect to the securities
originally pledged or held as Collateral hereunder shall be forthwith
applicable to such substituted or exchanged securities.


 


8.                                       Upon
the occurrence of any Event of Default and during the continuance thereof,
Pledgee shall be authorized to collect all dividends, interest payments and
other amounts (including amounts received or receivable upon redemption or repurchase)
that may be, or become, due on any of the Collateral.  If Pledgor receives any such dividends,
payments or amounts after the occurrence and during the continuance of an Event
of Default, it shall immediately endorse and deliver the same to Pledgee in the
form received.  All such amounts which
Pledgee receives and retains in accordance with the terms of this
paragraph 8 shall be applied to reduce the principal amount outstanding on
the Secured Obligations in inverse order of maturity thereof.  Pledgee is, furthermore, authorized to give
receipts in the name of Pledgor for any amounts so received.  Pledgee shall be under no obligation to
collect any such amounts.


 


9.                                       In
the event that, during the term of this Agreement, subscription warrants or any
other rights or options shall be issued in connection with the Collateral, such
warrants, rights or options shall be immediately assigned, if necessary or
requested by Pledgee, by Pledgor to Pledgee. 
If any such warrants, rights or options are exercised by Pledgor, all
new securities so acquired by Pledgor shall be immediately assigned to Pledgee,
shall become part of the Collateral and shall be endorsed to, delivered to and
held by Pledgee under the terms of this Agreement in the same manner as the
securities originally pledged.


 


10.                                 In
the event that, during the term of this Agreement, any share, dividend,
reclassification, readjustment or other change is declared or made in the
capital structure of any Pledged Subsidiary, all new, substituted and
additional shares, or other securities and related stock certificates, issued
by reason of any such change shall become part of the Collateral and shall be
endorsed to, delivered to and held by Pledgee under the terms of this Agreement
in the same manner as the securities originally pledged hereunder (except to
the extent that any such pledge by Pledgor to Pledgee would cause more than
sixty-five percent (65%) of the issued and outstanding shares of capital stock
of any Pledged Subsidiary to become subject to Pledgee’s security interest
hereunder).


 


11.                                 Pledgor
authorizes Pledgee, without notice or demand, and without affecting the
liability of Pledgor hereunder, from time to time to:


 


(a)                                  hold
security in addition to and other than the Collateral for the payment of the
Secured Obligations or any part thereof, and exchange, enforce, waive and
release any Collateral or any part thereof, or any other such security, or part
thereof;


 


(b)                                 release
any of the endorsers or guarantors of the Secured Obligations secured hereunder
or any part thereof, or any other person or entity whomsoever liable for or on
account of such Secured Obligations;


 


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(c)                                  upon
the transfer of all or any part of the Secured Obligations secured hereunder,
Pledgee may assign all or any part of Pledgee’s security interest in the
Collateral and shall be fully discharged thereafter from all liability and responsibility
with respect to the Collateral so transferred, provided that in no event shall
Pledgee be liable for any act or omission or negligent act or negligent
omission with respect to the Collateral, other than acts or omissions
constituting gross negligence, willful misconduct or tortious breach of
contract.  The transferee of the
Collateral shall be vested with the rights, powers and remedies of Pledgee
hereunder, and, with respect to any Collateral not so transferred, Pledgee
shall retain all rights, powers and remedies hereby given; and


 


(d)                                 Pledgor
hereby waives any right to require Pledgee to proceed against Pledgor, Borrower
or any other person or entity whomsoever, to proceed against or exhaust any
collateral or any other security held by Pledgee, or to pursue any other remedy
available to Pledgee.  Pledgor further
waives any defense arising by reason of any liability or other defense of
Pledgor or of any other person or entity. 
Pledgor shall have no right to require Pledgee to marshal collateral.


 


12.                                 It
shall not be necessary for Pledgee to inquire into the powers of Pledgor or the
officers, directors or agents acting or purporting to act on behalf of Pledgor,
and any obligations made or created in reliance on the professed exercise of
such powers shall be secured hereunder.


 


13.                                 To
the extent permitted by applicable law and in the Loan Agreement, Pledgee shall
be under no duty or obligation whatsoever to make or give any presentments,
demands for performance, notices of non-performance, protests, notices of
protest, or notices of dishonor in connection with the Secured Obligations.


 


14.                                 The
occurrence of an event of default under and as defined in the Loan Agreement
shall, at the option of Pledgee, constitute an “Event of Default” under
this Agreement.


 


15.                                 Upon
the occurrence and during the continuance of any Event of Default, the Secured
Obligations shall, at the option of Pledgee, become immediately due and
payable, and Pledgee shall have all rights and remedies as a secured party
under any UCC (as hereinafter defined), and such additional rights and remedies
to which a secured party is entitled under the laws in effect in all relevant
jurisdictions, and, in this connection, subject to applicable regulatory and
legal requirements, Pledgee may sell the Collateral, or any part thereof, at
public or private sale or at any broker’s board or on any securities exchange
or electronic trading facility, for cash, upon credit or for future delivery as
Pledgee shall deem appropriate.  Pledgee
shall be authorized at any such sale (if it deems it advisable to do so) to restrict
the prospective bidders or purchasers to persons or entities who will represent
and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and, upon
consummation of any such sale, Pledgee shall have the right to assign, transfer
and deliver to the purchaser or purchasers thereof the Collateral so sold.  Each such purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
Pledgor, and, to the extent permitted by applicable law, Pledgor hereby waives
all rights of redemption, stay, valuation and appraisal Pledgor now has or may
at any time in the future have under any rule of law or statute now
existing or hereafter enacted.  Pledgee
shall give each person or entity entitled to notice of such sale under Section 9-611(c) of
the UCC ten (10) days prior written notice (which Pledgor agrees is
reasonable notice within the meaning of Section 9-612 of the UCC) of
Pledgee’s intention to make any sale of Collateral.  


 


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Such notice shall conform to the requirements of Section 9-613
of the UCC.  Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as Pledgee may fix and state in the notice of such sale.  At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as Pledgee may (in its sole and absolute discretion) determine.  Pledgee shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given.  Pledgee may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale
may, without further notice, be made at the time and place to which the same
was so adjourned.  In case any sale of
all or any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by Pledgee until the sale price is paid in
full by the purchaser or purchasers thereof, but Pledgee shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. 
At any public (or, to the extent permitted by applicable law, private)
sale made pursuant to this Section, Pledgee may bid for or purchase, free from
any right of redemption, stay or appraisal on the part of Pledgor (all said
rights being also hereby waived and released), the Collateral or any part
thereof offered for sale and may make payment on account thereof by using any
claim then due and payable to it from Pledgor as a credit against the purchase
price, and it may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to Pledgor therefor.  For purposes hereof, (a) a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof, (b) Pledgee shall be free to carry out such sale pursuant
to such agreement, and (c) Pledgor shall not be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact
that, after Pledgee shall have entered into such an agreement, all Events of
Default shall have been remedied and the Secured Obligations paid in full.  As an alternative to exercising the power of
sale herein conferred upon it, Pledgee may proceed by a suit or suits at law or
in equity to foreclose upon the Collateral and to sell the Collateral or any
portion thereof pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.  Any sale pursuant to the provisions of this Section shall
be deemed to be a commercially reasonable disposition as provided in Section 9-610
of the UCC.  Pledgee shall receive the
proceeds of any such sale or sales, and, after deducting therefrom any and all
reasonable costs and expenses incurred in connection with the sale thereof,
apply the net proceeds toward the payment of the Secured Obligations secured
hereunder, including interest, reasonable attorneys’ fees and all other
reasonable costs and expenses incurred by Pledgee hereunder and under any other
agreement between Pledgor and Pledgee. 
If such proceeds be more than sufficient to pay the same, then, in case
of a surplus, such surplus shall be accounted for and paid over to Pledgor,
provided Pledgor be not then indebted to Pledgee otherwise under this
Agreement, any other Loan Document or any other agreement or for any cause
whatsoever.  As used herein, the term “UCC”
shall mean (i) the Uniform Commercial Code as in effect from time to time
in the State of Texas and (ii) in any case where mandatory choice or law rules in
the Texas Uniform Commercial Code require the application of the Uniform
Commercial Code of another jurisdiction, the Uniform Commercial Code of such
other jurisdiction as in effect from time to time.


 


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16.                                 In
view of the position of Pledgor in relation to the Collateral, or because of
other current or future circumstances, a question may arise under the
Securities Act of 1933, as now or hereafter in effect, or any similar statute
in any other jurisdiction or hereafter enacted analogous in purpose or effect
(such Act and any such similar statute as from time to time in effect being
called the “Securities Laws”) with respect to any disposition of the
Collateral permitted hereunder.  Pledgor
understands that compliance with the Securities Laws might very strictly limit
the course of conduct of Pledgee if Pledgee were to attempt to dispose of all
or any part of the Collateral, and might also limit the extent to which or the
manner in which any subsequent transferee of any Collateral could dispose of
the same.  Similarly, there may be other
legal restrictions or limitations affecting Pledgee in any attempt to dispose
of all or part of the Collateral under applicable blue sky or other state
securities laws or similar laws analogous in purpose or effect.  Pledgor recognizes that, in light of such
restrictions and limitations, Pledgee may, with respect to any sale of the
Collateral, limit the purchasers to those who will agree, among other things,
to acquire such Collateral for their own account, for investment and not with a
view to the distribution or resale thereof. 
Pledgor acknowledges and agrees that, in light of such restrictions and
limitations, Pledgee, in its sole and absolute discretion, (a) may proceed
to make such a sale whether or not a registration statement for the purpose of
registering such Collateral or part thereof shall have been filed under the
Securities Laws and (b) may approach and negotiate with a single potential
purchaser or a limited number of potential purchasers to effect such sale.  Pledgor acknowledges and agrees that any such
sale might result in prices and other terms less favorable to the seller than
if such sale were a public sale without such restrictions.  In the event of any such sales, Pledgee shall
incur no responsibility or liability for selling all or any part of the
Collateral at a price that Pledgee, in its sole and absolute discretion, may in
good faith deem reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might have been realized if the
sale were deferred until after registration under the Securities Laws or if
more than a single purchaser or a limited number of purchasers were
approached.  The provisions of this Section will
apply notwithstanding the existence of a public or private market upon which
the quotations or sales prices may exceed substantially the price at which
Pledgee sells.


 


17.                                 Pledgor
agrees to execute and deliver to Pledgee such financing statements,
continuation statements or amendments of financing statements, each in form
reasonably acceptable to Pledgee, as Pledgee may from time to time reasonably
request, or as are necessary or desirable in the opinion of Pledgee to
establish and maintain a valid, enforceable, first priority perfected security
interest in the Collateral as provided herein, and the other rights and
security contemplated hereby, all in accordance with the UCC as enacted in any
and all relevant jurisdictions, or any other relevant law.  Pledgor hereby authorizes Pledgee to file any
such financing statements without the signature of Pledgor where permitted by
law.  Pledgee is hereby authorized to
make filings with such recording offices and such other governmental
authorities as Pledgee may consider necessary or appropriate for the purpose of
perfecting, confirming, continuing, enforcing and/or protecting the security
interests and liens granted to Pledgor by Pledgee.  Pledgor will pay any applicable filing fees,
recordation taxes and related expenses relating to the Collateral.


 


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18.                                 Pledgor
hereby constitutes and appoints Pledgee its true and lawful attorney,
irrevocably, with full power after the occurrence of and during the continuance
of an Event of Default (in the name of Pledgor or otherwise) (a) to act,
require, demand, receive, compound and give acquittance for any and all moneys
and claims for moneys due or to become due to Pledgor under or arising out of
the Collateral, (b) to endorse any checks or other instruments or orders
in connection therewith, (c) to file any claims or take any action or
institute any proceedings which Pledgee may deem to be necessary or advisable to
protect its interests and (d) to execute, deliver, record or file any
other document or instrument and take such other actions as it considers
appropriate in connection with the perfection, protection or enforcement of its
security interest in the Collateral, the possession, maintenance, preparation
for sale, foreclosure, sale, lease, exchange or other disposition or release of
any Collateral or the exercise of any rights or remedies provided in this
Agreement, which appointment as attorney is coupled with an interest.


 


19.                                 Upon
indefeasible repayment in full in cash of the Secured Obligations, Pledgee will
promptly, at Pledgor’s expense, deliver all of the Collateral to Pledgor along
with all instruments of assignment executed in connection therewith, and
execute and deliver to Pledgor such documents as Pledgor shall reasonably
request to evidence Assignor’s release of Pledgee’s security interest
hereunder.


 


20.                                 Choice
of Law.  This Agreement is being
executed and delivered, and is intended to be performed, in the State of
Texas.  Except to the extent that the
laws of the United States may apply to the terms hereof, the substantive laws
of the State of Texas shall govern the validity, construction, enforcement and
interpretation of this Agreement.  In the
event of a dispute involving this Agreement or any other instruments executed
in connection herewith, the undersigned irrevocably agrees that venue for such
dispute shall lie in any court of competent jurisdiction in Dallas County,
Texas to the extent such dispute is not resolved by binding arbitration
pursuant to Pledgee’s current Arbitration Program described in Section 22
below.


 


21.                                 Loan
Agreement.  This Agreement is
executed in connection with the Loan Agreement and Pledgee is entitled to all
the benefits provided therein and in the other agreements, documents,
instruments and certificates entered into in connection with the Loan
Agreement.


 


22.                                 AGREEMENT FOR BINDING ARBITRATION.  The parties agree to be bound by the terms
and provisions of Pledgee’s current Arbitration Program which is incorporated
by reference herein 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.


 


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IN WITNESS WHEREOF, Pledgor and Pledgee have executed
this Agreement as of the date first above written.


 


	
   

  	
  PLEDGOR:

  
	
   

  	
   

  
	
   

  	
  FOSSIL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mike L. Kovar

  
	
   

  	
  Name:

  	
  Mike L. Kovar

  
	
   

  	
  Title:

  	
  Executive Vice President, Chief Financial

  Officer and Treasurer

  
	
   

  	
   

  
	
   

  	
  PLEDGEE:

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marguerite C. Burtzlaff

  
	
   

  	
  Name:

  	
  Marguerite C. Burtzlaff

  
	
   

  	
  Title:

  	
  Vice President

  



 


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SCHEDULE I


 


(to Amended and Restated Stock Pledge
Agreement)


 


	
  Issuer of Pledged Capital Stock

  	
   

  	
  Jurisdiction of Organization of Issuer

  
	
   

  	
   

  	
   

  
	
  Fossil Europe B.V.

  	
   

  	
  Netherlands

  
	
  Fossil Holdings (Gibraltar) Ltd.

  	
   

  	
  Gibraltar

  
	
  Swiss Technology Holding GmbH

  	
   

  	
  Switzerland

  



 


	
  Class or Other Description of

  Pledged Capital Stock

  	
   

  	
  Number of Shares or

  Units of Capital Stock

  Issued and Outstanding

  	
   

  	
  Number of Shares or

  Units of Capital Stock

  Pledged

  	
   

  	
  Stock Certificate No. evidencing

  Capital Stock Pledged

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


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