Exhibit 10.2


 


REVOLVING LINE OF CREDIT NOTE


 


	
  September 23, 2004

  	
   

  	
  Dallas, Texas

  	
   

  	
  $50,000,000.00

  



 


FOR VALUE
RECEIVED, the undersigned (hereinafter called “Maker”) does hereby
unconditionally promise to pay to the order of Wells Fargo Bank, National Association, a national banking
association (“Payee”), at its office at 1445 Ross Avenue, 3rd Floor, MAC
T5303-031, Dallas, Texas 75202, the principal sum of FIFTY MILLION AND NO/100
DOLLARS
($50,000.000.00), or such lesser amount as has been loaned or advanced by Payee
to Maker hereunder, in lawful money of the United States of America, together
with interest from the date hereof until maturity at the rates per annum
provided below.


 


1.             Definitions. 
For purposes of this Revolving Line of Credit Note (this “Note”),
unless the context otherwise requires, the following terms shall have the
definitions assigned to such terms as follows:


 


“Business Day”
shall mean:


 


(i)            for all purposes (other than as covered
by clause (ii) below) any day except Saturday, Sunday or a day which in the
United States is a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close;


 


(ii)           with respect to all notices and
determinations in connection with, and payments of principal and interest on, a
LIBOR Balance, any day which is a Business Day described in clause (i) above
and which is also a day for trading by and between banks in the interbank
eurodollar market.


 


“Consequential
Loss” shall mean, with respect to Maker’s payment, or conversion to a
different Interest Option, of all or any portion of the then-outstanding
principal amount of any LIBOR Balance on a day other than the last day of the
LIBOR Interest Period related thereto, any loss, cost or expense incurred by
Payee in redepositing such principal amount, including the sum of (i) the
interest which, but for such payment, Payee would have earned in respect of
such principal amount so paid for the remainder of LIBOR Interest Period
applicable to such principal amount, reduced, if Payee is able to redeposit
such principal amount so paid for the balance of such LIBOR Interest Period, by
the interest earned by Payee as a result of so redepositing such principal
amount, plus (ii) any expense or penalty incurred by Payee on redepositing
such principal amount.


 


“Contract Rate”
shall mean a rate of interest based upon the LIBOR Base Rate or WFB Base Rate
in effect at any time pursuant to an Interest Notice.


 


“Dollars”
and the sign “$” shall mean lawful currency of the United States of
America.


 


“Eurocurrency
Reserve Percentage” shall mean, with respect to each LIBOR Interest Period
the maximum reserve percentage (expressed as a decimal) in effect on the first
day of any


 


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LIBOR Interest Period, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor), for determining reserve requirements
applicable to “eurocurrency liabilities” pursuant to Regulation D or any other
then applicable regulation of the Board of Governors (or any successor) which
prescribes reserve requirements applicable to “eurocurrency liabilities,” as
presently defined in Regulation D, or any eurocurrency funding.


 


“Event of
Default” shall mean an Event of Default as such term is defined in the Loan
Agreement.


 


“Excess
Interest Amount” shall mean, on any date, the amount by which (i) the
amount of all interest which would have accrued prior to such date on the
principal of this Note (had the applicable Contract Rate at all times been in
effect without limitation by the Maximum Rate) exceeds (ii) the
aggregate amount of interest actually received by Payee on this Note on or
prior to such date.


 


“Federal Funds
Effective Rate” means, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the immediately following
Business Day by the Federal Reserve Bank of New York or, if such rate is not
published for any Business Day, the average of the quotations for the day of
the requested advance received by Payee from three Federal funds brokers of
recognized standing selected by Payee.


 


“Interest
Notice” shall mean the written notice given by Maker to Payee of the
Interest Options selected hereunder. 
Each Interest Notice shall specify the Interest Option selected, the
amount of the unpaid principal balance of this Note to bear interest at the
rate selected and, if the LIBOR Base Rate is specified, the length of the
applicable LIBOR Interest Period.


 


“Interest
Option” shall have the meaning assigned to such term in paragraph 7
hereof.


 


“Interest
Payment Date” shall mean (i) in the case of any WFB Base Rate Balance, the
fifteenth (15th) day of the last month of each calendar quarter during the term
hereof, commencing December 15, 2004, and at the maturity of this Note,
and (ii) in the case of any LIBOR Balance, the last day of the corresponding
LIBOR Interest Period with respect to such LIBOR Balance and at the maturity of
this Note.


 


“LIBOR Balance”
shall mean any principal balance of this Note which, pursuant to an Interest
Notice, bears interest at a rate based upon the LIBOR Base Rate for the LIBOR
Interest Period specified in such Interest Notice.


 


“LIBOR Base
Rate” shall mean, with respect to each LIBOR Interest Period, on any day
thereof the quotient of (i) the LIBOR Rate with respect to such LIBOR Interest
Period, divided by (ii) the remainder of 1.0 minus the
Eurocurrency Reserve Percentage in effect on such day.


 


“LIBOR Interest
Period” shall mean, with respect to any LIBOR Balance, a period commencing:
(i) on any date upon which, pursuant to an Interest Notice, the principal
amount of such LIBOR Balance begins to accrue interest at the LIBOR Base Rate,
or (ii) on the last day of the immediately preceding LIBOR Interest Period in
the case of a rollover to a successive LIBOR Interest Period, and ending one
month, two months or three months thereafter as Maker


 


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shall elect in accordance with the provisions hereof; provided, that:
(A) any LIBOR Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such LIBOR Interest
Period shall end on the next preceding Business Day; and (B) any LIBOR Interest
Period which begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at
the end of such LIBOR Interest Period) shall, subject to clauses (C) below and
(A) above, end on the last Business Day of a calendar month; and (C) any LIBOR
Interest Period which would otherwise end after September 22, 2005 shall
end on September 22, 2005.


 


“LIBOR Rate”
shall mean, with respect to each LIBOR Interest Period, the rate of interest
determined by Payee to be the arithmetic average (rounded upward, if necessary
to the nearest 1/16th of 1%) of the per annum rates of interest at which Dollar
deposits with a maturity equal to the proposed LIBOR Interest Period (and in an
amount approximating the LIBOR Balance) would be offered to Payee by major
banks in the interbank eurodollar market at approximately 8:00 a.m. (Dallas,
Texas time) on the Business Day immediately preceding the first day of such
LIBOR Interest Period.


 


“Loan Agreement”
shall mean that certain Loan Agreement, dated as of September 23, 2004, by
and among Maker, Payee and the subsidiaries and/or affiliates of Maker from
time to time a party thereto, as guarantors, as amended, restated, supplemented
and/or modified from time to time.


 


“Maximum Rate,”
as used herein, shall mean, with respect to the holder hereof, the maximum
non-usurious interest rate, if any, that at any time, or from time to time, may
be contracted for, taken, reserved, charged, or received on the indebtedness
evidenced by this Note under the laws which are presently in effect of the
United States and the State of Texas applicable to such holder and such
indebtedness or, to the extent permitted by law, under such applicable laws of
the United States and the State of Texas which may hereafter be in effect and
which allow a higher maximum non-usurious interest rate than applicable laws
now allow.  To the extent that any of
the optional interest rate ceilings provided in Chapter 303 of the Texas
Finance Code, as amended from time to time (as amended, the “Texas Finance
Code”), may be available for application to any loan(s) or extension(s) of
credit under this Note for the purpose of determining the Maximum Rate
hereunder pursuant to the Texas Finance Code, the applicable “monthly ceiling”
(as such term is defined in Chapter 303 of the Texas Finance Code) from
time to time in effect shall be used to the extent that it is so available, and
if such “monthly ceiling” at any time is not so available then the applicable
“weekly ceiling” (as such term is defined in Chapter 303 of the Texas Finance
Code) from time to time in effect shall be used to the extent that it is so
available.


 


“Regulation D”
shall mean Regulation D of the Board of Governors of the Federal Reserve System
from time to time in effect and shall include any successor or other regulation
relating to reserve requirements applicable to member banks of the Federal
Reserve System.


 


“Total
Commitment” shall mean $50,000,000.00.


 


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“WFB” shall
mean Wells Fargo Bank, National Association, a national banking association,
and its successors and assigns.


 


“WFB Base Rate”
shall mean, on any date of determination, a variable rate of interest per annum
equal to the higher of either (a) the WFB Prime Rate, or (b) the Federal Funds
Effective Rate plus one-half of one
percent (0.50%).


 


“WFB Base Rate
Balance” shall mean that portion of the principal balance of this Note
bearing interest at a rate based upon the WFB Base Rate.


 


“WFB Prime Rate”
shall mean the rate of interest most recently announced within Payee at its
principal office in San Francisco as its prime rate and is a base rate for
calculating interest on certain loans. 
The rate announced by Payee as its prime rate may or may not be the most
favorable rate charged by Payee to its customers.  Each change in the WFB Prime Rate shall become effective without
prior notice to Maker automatically as of the opening of business on the date
such change is announced within Payee.


 


2.             Manner of Borrowing; Advance Requests. 
A request for an advance under this Note shall be made, or shall be
deemed to be made, if Maker gives Payee notice of its intention to borrow, in
which notice Maker shall specify (i) the aggregate principal amount of such
advance and (ii) the requested date of such advance, which shall be a Business
Day.  Any such request for an advance
shall be accompanied by an Interest Notice and shall be made (i) no later than
11:00 a.m. Dallas, Texas time at least three (3) Business Days prior to the
requested advance date if the principal balance of such advance, pursuant to
such Interest Notice, is to bear interest at a rate based upon the LIBOR Base
Rate and (ii) no later than 11:00 a.m. Dallas, Texas time or the requested
advance date if the principal balance of such advance, pursuant to such
Interest Notice, is to bear interest at a rate based upon the WFB Base
Rate.  Notwithstanding anything herein
to the contrary, Payee shall have the right to refuse to accept a request for
an advance under this Note if at the date any such request is made or any such
advance is to be made there exists a default or an Event of Default under this
Note or the Loan Agreement.  As an
accommodation to Maker, Payee may permit telephonic requests for loans and
electronic transmittal of instructions, authorizations, agreements or reports
to Payee by Maker.  Unless Maker
specifically directs Payee in writing not to accept or act upon telephonic or
electronic communications from Maker, Payee shall have no liability to Maker
for any loss or damage suffered by Maker as a result of Payee’s honoring of any
requests, execution of any instructions, authorizations or agreements or
reliance on any reports communicated to Payee telephonically or electronically
and purporting to have been sent to Payee by any individual from time to time
designated by Maker as an authorized officer and Payee shall have no duty to
verify the origin or authenticity of any such communication.


 


3.             Payments of Interest and Principal. 
Interest on the unpaid principal balance of this Note shall be due and
payable on each Interest Payment Date as it accrues.  The unpaid principal balance of this Note shall be due and
payable in full on September 22, 2005.


 


4.             Rates of Interest. 
The unpaid principal of the WFB Base Rate Balance shall bear interest at
a rate per annum which shall from day to day be equal to the lesser of (i) the
higher of either (a) the WFB Base Rate in effect from day to day, minus  one percent (1.00%) or (b) three


 


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percent (3.0%), or (ii) the Maximum Rate. The unpaid
principal of each LIBOR Balance shall bear interest at a rate per annum which
shall from day to day be equal to the lesser of (i) the LIBOR Base Rate for the
LIBOR Interest Period in effect with respect to such LIBOR Balance plus  one-half of
one percent (0.50%), or (ii) the Maximum Rate.  Each determination by Payee of the LIBOR
Base Rate shall, in the absence of manifest error, be conclusive and
binding.  Interest on this Note with
respect to each WFB Base Rate Balance and each LIBOR Balance shall be calculated
on the basis of the actual days elapsed in a year consisting of 360 days.


 


5.             Interest Recapture. 
If on each Interest Payment Date or any other date on which interest
payments are required hereunder, Payee does not receive interest on this Note
computed at the Contract Rate because such Contract Rate exceeds or has
exceeded the Maximum Rate, then Maker shall, upon the written demand of Payee,
pay to Payee in addition to the interest otherwise required to be paid
hereunder, on each Interest Payment Date thereafter, the Excess Interest Amount
(calculated as of such later Interest Payment Date); provided that in no event
shall Maker be required to pay interest at a rate exceeding the Maximum Rate
effective during such period.


 


6.             Default Rate of Interest. 
From and after the occurrence and during the continuance of an Event of
Default, this Note shall bear interest at any rate equal to or less than the
Maximum Rate, as chosen by Payee, at its discretion.  All past due principal and, to the extent permitted by applicable
law, interest upon this Note shall bear interest at any rate equal to or less
than the Maximum Rate, as chosen by Payee, at its discretion.


 


7.             Interest Option. 
Subject to the provisions hereof, Maker shall have the option (an “Interest
Option”) to designate portions of the unpaid principal balance hereof to
bear interest at a rate based upon the LIBOR Base Rate or WFB Base Rate as
provided in paragraph 4 hereof; provided, however, that in
the case of the selection of the LIBOR Base Rate, the LIBOR Balance for a
particular LIBOR Interest Period shall not be less than $500,000 (or, if greater than
$500,000,
in integral multiples of $100,000); provided  further,  however,
that no more than five (5) LIBOR Balances shall be outstanding at any one time
under this Note; provided  further, however, that the sum
of the aggregate amount of all LIBOR Balances and WFB Base Rate Balances
outstanding under this Note shall at no time exceed the Total Commitment.  The option of Maker to designate portions of
the principal of this Note to bear interest at a rate based upon the LIBOR Base
Rate or WFB Base Rate shall be exercised in the manner provided below:


 


(i)            At Time of Borrowing. 
Maker shall request advances under this Note in accordance with, and in
the manner prescribed by, paragraph 2 hereof.  In connection with any such advance request,
Maker shall give Payee an Interest Notice indicating the Interest Option
selected with respect to the principal amount of the proposed borrowing.


 


(ii)           At Expiration of LIBOR Interest. 
At least three (3) Business Days prior to the termination of any LIBOR
Interest Period, Maker shall give Payee an Interest Notice indicating the
Interest Option to be applicable to the corresponding LIBOR Balance, as
appropriate, upon the expiration of such LIBOR Interest Period.  If the required Interest Notice shall not
have been timely received by Payee prior to the expiration of the then relevant
LIBOR Interest Period, Maker shall be deemed (a) to have selected a rate based
upon the WFB Base Rate to be applicable to such LIBOR Balance, and such LIBOR


 


5

















 


Balance shall thereafter be a WFB Base Rate Balance
upon the expiration of such LIBOR Interest Period and (b) to have given Payee
notice of such selections.


 


(iii)          Conversion From WFB Base Rate. 
During any period in which any portion of the principal hereof bears
interest at a rate based upon the WFB Base Rate, Maker shall have the right, on
any Business Day (the “Conversion Date”), to convert all or a portion of
such principal amount from the WFB Base Rate Balance to a LIBOR Balance by
giving Payee an Interest Notice of such selection at least three (3) Business
Days prior to such Conversion Date for any LIBOR Balance.


 


8.             Special Provisions For LIBOR Pricing


 


(a)           Inadequacy of LIBOR Pricing. 
If Payee reasonably determines that, by reason of circumstances
affecting the interbank market generally, deposits in Dollars (in the
applicable amounts) are not being offered to Payee in the interbank market for
any LIBOR Interest Period, or that the rate at which such Dollar deposits are
being offered will not adequately and fairly reflect the cost to Payee of
making or maintaining a LIBOR Balance for such LIBOR Interest Period, Payee
shall forthwith give notice thereof to Maker, whereupon until Payee notifies
Maker that the circumstances giving rise to such suspension no longer exist,
(i) the right of Maker to select an Interest Option based upon the LIBOR Base
Rate shall be suspended, and (ii) Maker shall convert each LIBOR Balance into the
WFB Base Rate Balance in accordance with the provisions hereof on the last day
of the then-current LIBOR Interest Period applicable to such LIBOR Balance.


 


(b)           Illegality.  If the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Payee with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for Payee to make or
maintain a LIBOR Balance, Payee shall so notify Maker.  Upon receipt of such notice, Maker shall
convert such LIBOR Balance into the WFB Base Rate Balance, on either (i) the
last day of the then-current LIBOR Interest Period applicable to such LIBOR
Balance if Payee may lawfully continue to maintain and fund such LIBOR Balance
to such day, or (ii) immediately, if Payee may not lawfully continue to
maintain such LIBOR Balance to such day.


 


(c)           Increased Costs for LIBOR Balances.


 


(i)            If the adoption of any applicable law,
rule or regulation, or any change therein, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by Payee with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency shall
subject Payee to any tax (including without limitation any United States
interest equalization or similar tax, however named), duty or other charge with
respect to the LIBOR Balances, this Note or Payee’s obligation to compute interest
on the principal balance of this Note at a rate based upon the LIBOR Base Rate,
or shall change the basis


 


6

















 


of taxation of payments to Payee of the principal of
or interest on the LIBOR Balances or any other amounts due under this Note in
respect of the LIBOR Balances or Payee’s obligation to compute the interest on
the balance of this Note at a rate based upon the LIBOR Base Rate (except for
changes in the rate on the tax on the overall net income of Payee imposed by
the jurisdiction in which Payee’s principal executive office is located); or


 


(ii)           if any governmental authority, central
bank or other comparable authority shall at any time impose, modify or deem
applicable any reserve (including, without limitation, any imposed by the Board
of Governors of the Federal Reserve System but excluding any reserve
requirement included in the Eurocurrency Reserve Percentage of Payee), special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, Payee, or shall impose on Payee (or its
eurocurrency lending office) or the interbank market any other condition
affecting a LIBOR Balance, this Note or Payee’s obligation to compute the
interest on the balance of this Note at a rate based upon the LIBOR Base Rate;
and the result of any of the foregoing is to increase the cost to Payee of
maintaining a LIBOR Balance, or to reduce the amount of any sum received or
receivable by Payee under this Note by an amount deemed by Payee to be
material, then upon demand by Payee, Maker shall pay to Payee such additional
amount or amounts as will compensate Payee for such increased cost or
reduction, the amount of which, when aggregated with interest to be paid under
the LIBOR Balance, does not exceed the interest which would have been payable
had the balance been calculated using the WFB Base Rate.  Payee will promptly notify Maker of any
event of which it has knowledge, occurring after the date hereof, which will
entitle Payee to compensation pursuant to this paragraph.  A certificate of Payee claiming compensation
under this paragraph and setting forth the additional amount or amounts to be
paid to Payee hereunder shall be conclusive in the absence of manifest error.


 


(d)           Effect on Balances. 
If notice has been given requiring a LIBOR Balance to be repaid or
converted to the WFB Base Rate Balance, then unless and until Payee notifies
Maker that the circumstances giving rise to such repayment no longer apply, the
Interest Option shall be a rate based upon the WFB Base Rate.  If Payee notifies Maker that the
circumstances giving rise to such repayment or conversion no longer apply,
Maker may thereafter select a rate based upon the LIBOR Base Rate in accordance
with the terms of this Note.


 


9.             Extension, Place and Application of
Payments.  Subject to the terms of the definitions of
LIBOR Interest Period, should the principal of, or any interest on, this Note
become due and payable on any day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day, and interest shall be
payable with respect to such extension. 
All payments of principal of, and interest on, this Note shall be made
by Maker to Payee at Payee’s principal banking office in Dallas, Texas in
federal or other immediately available funds. 
Payments made to Payee by Maker hereunder shall be applied first to
accrued interest and then to principal.


 


10.           Repayments of WFB Base Rate Balances;
Prepayments of LIBOR Balances; Consequential Loss. 
Maker may repay any WFB Base Rate Balance at any time without premium or
penalty and without prior notice.  Maker
may prepay any LIBOR Balance prior to


 


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the expiration of the applicable LIBOR Interest Period
upon three (3) Business Days prior written notice subject to Maker’s payment of
the Consequential Loss incurred by Payee as a result of the timing of such
prepayment; provided, however, that Maker shall not have the
option to designate any portion of the unpaid principal balance hereof to bear
interest at a rate based upon the LIBOR Base Rate for a period of ninety (90)
days following any such prepayment of any LIBOR Balance.  Any repayment or permitted prepayment of
principal made hereunder shall not be less than $100,000 (or, if greater than
$100,000, in integral multiples of $100,000, or such lesser amount as is then
outstanding under this Note).  Any
repayment or permitted prepayment of principal made hereunder shall be made
together with interest accrued through the date of such repayment or
prepayment, as applicable.


 


11.           Advance Notice. 
Payee will use its best efforts to supply the Maker advance notice of
the interest and/or principal amounts that the Payee has calculated are due at
the scheduled payment dates at least one day in advance, assuming the unpaid
principal balance and interest rate remain the same until such scheduled
payment date.  Notwithstanding the
foregoing, no failure by the Payee to give such notice will reduce the obligation
of the Maker to pay such amounts on the date they become due.


 


12.           Notices.  All notices
required or permitted hereunder shall be in writing and shall be deemed to have
been given or made as follows: 
(a) if sent by hand delivery, upon delivery; (b) if sent by
registered or certified mail, return receipt requested, upon receipt (as
indicated on the return receipt); and (c) if sent by facsimile, upon
receipt (which shall be confirmed by a confirmation report from the sender’s
facsimile machine), addressed to Maker or Payee at the following respective
addresses or such other address as such party may from time to time designate
by written notice to the other:


 


	
  Payee:

  	
  Wells Fargo Bank, National Association

  
	
   

  	
  1445 Ross Avenue, 3rd Floor

  
	
   

  	
  MAC T5303-031

  
	
   

  	
  Dallas, Texas 75202

  
	
   

  	
  Attention:  Susan K. Nugent,
  Assistant Vice President

  
	
   

  	
  Fax:  (214) 969-0370

  
	
   

  	
   

  
	
  Maker:

  	
  Fossil Partners, L.P.

  
	
   

  	
  2280 N. Greenville Avenue

  
	
   

  	
  Richardson, Texas 75082-4412

  
	
   

  	
  Attention:  Mike L. Kovar

  
	
   

  	
  Fax:  (972) 498-9448

  



 


13.           Legal Fees.  If this Note
is placed in the hands of any attorney for collection, or if it is collected
through any legal proceeding at law or in equity or in bankruptcy, receivership
or other court proceedings, Maker agrees to pay all costs of collection
including, but not limited to, court costs and reasonable attorneys’ fees.


 


14.           Waivers.  Maker and
each surety, endorser, guarantor and other party ever liable for payment of any
sums of money payable on this Note, jointly and severally waive presentment and
demand for payment, protest, notice of protest, intention to accelerate,
acceleration and non-


 


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payment, or other notice of default, and agree that
their liability under this Note shall not be affected by any renewal or
extension in the time of payment hereof, or in any indulgences, or by any
release or change in any security for the payment of this Note, and hereby
consent to any and all renewals, extensions, indulgences, releases or changes,
regardless of the number of such renewals, extensions, indulgences, releases or
changes.


 


No waiver by Payee
of any of its rights or remedies hereunder or under any other document
evidencing or securing this Note or otherwise shall be considered a waiver of
any other subsequent right or remedy of Payee; no delay or omission in the
exercise or enforcement by Payee of any rights or remedies shall ever be
construed as a waiver of any right or remedy of Payee; and no exercise or
enforcement of any such rights or remedies shall ever be held to exhaust any
right or remedy of Payee.


 


15.           Acceleration. 
If Maker fails or refuses to pay any part of the principal of or
interest upon this Note as the same become due, or upon the occurrence of any
Event of Default or other default hereunder or under any other agreement or
instrument securing or assuring the payment of this Note or executed in
connection herewith, then in any such event the holder hereof may, at its
option, declare the entire unpaid balance of principal and accrued interest on
this Note to be immediately due and payable, and foreclose all liens and
security interests securing payment hereof or any part hereof.


 


16.           Interest Laws; Spreading. 
Any provision herein, or in any document securing this Note, or any
other document executed or delivered in connection herewith, or in any other
agreement or commitment, whether written or oral, expressed or implied, to the
contrary notwithstanding, neither Payee nor any holder hereof shall in any
event be entitled to receive or collect, nor shall or may amounts received
hereunder be credited, so that Payee or any holder hereof shall be paid, as
interest, a sum greater than the maximum amount permitted by applicable law to
be charged to the person, partnership, firm or corporation primarily obligated
to pay this Note at the time in question. 
If any construction of this Note or any document securing this Note, or
any and all other papers, agreements or commitments, indicate a different right
given to Payee or any holder hereof to ask for, demand or receive any larger
sum as interest, such is a mistake in calculation or wording which this clause
shall override and control, it being the intention of the parties that this
Note, and all other instruments securing the payment of this Note or executed
or delivered in connection herewith shall in all things comply with applicable
law and proper adjustments shall automatically be made accordingly.  In the event that Payee or any holder hereof
ever receives, collects or applies as interest, any sum in excess of the
Maximum Rate, if any, such excess amount shall be applied to the reduction of
the unpaid principal balance of this Note, and if this Note is paid in full,
any remaining excess shall be paid to Maker. 
In determining whether or not the interest paid or payable, under any
specific contingency, exceeds the Maximum Rate, if any, Maker and Payee or any
holder hereof shall, to the maximum extent permitted under applicable law: (a)
characterize any non-principal payment as an expense or fee rather than as
interest, (b) exclude voluntary prepayments and the effects thereof, (c)
“spread” the total amount of interest throughout the entire term of this Note;
provided that if this Note is paid and performed in full prior to the end of
the full contemplated term hereof, and if the interest received for the actual
period of existence thereof exceeds the Maximum Rate, if any, Payee or any
holder hereof shall refund to Maker the amount of such excess, or credit the
amount


 


9

















 


of such excess against the aggregate unpaid principal
balance of all advances made by the Payee or any holder hereof under this Note
at the time in question.


 


17.           Choice of Law. 
This Note 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 Note. In the event of a
dispute involving this Note 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 the
Payee’s current Arbitration Program described in Section 19 below.


 


18.           Loan Agreement. 
This Note is executed in connection with the Loan Agreement and the
holder hereof 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.


 


19.           AGREEMENT FOR BINDING ARBITRATION.  The parties agree to be bound by the terms
and provisions of the Payee’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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10

















 


IN WITNESS
WHEREOF, Maker has caused this Note to be duly executed and delivered in
Dallas, Texas, as of the date first above written.


 


	
   

  	
  FOSSIL PARTNERS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   Fossil, Inc., its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   Randy S. Kercho,

  
	
   

  	
   

  	
   Executive Vice President