Document:

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.exhibit10-2.htm

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SIXTH AMENDED AND RESTATED
REVOLVING LINE OF CREDIT NOTE

      

      

      
        	
                November
      18, 2009

              	
                Dallas,
      Texas

              	 	$	200,000,000.00	 

      

      

      

      

      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 TWO
HUNDRED MILLION AND NO/100
DOLLARS ($200,000,000.00), or such lesser amount as has been loaned or
advanced by Payee to Maker hereunder or under the Loan Agreement, 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 Sixth Amended and Restated 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 and capitalized terms used herein but not
defined herein shall have the meanings therefor specified in the Loan
Agreement:

       

      “Business Day” shall
mean:

       

      (a) for all
purposes (other than as covered by clause (b) 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; and

       

      (b) 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 (a) 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 (a) 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 (b) 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 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 (a) 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 (b) 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 (a) in the case of any WFB Base Rate Balance, the last
day of each December, March, June and September prior to November 17, 2010 (the
maturity date of this Note) and the maturity date of this Note, and (b) in the
case of any LIBOR Balance, the last day of the corresponding LIBOR Interest
Period with respect to such LIBOR Balance and November 17, 2010 (the maturity
date 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 (a) the LIBOR Rate with respect to such LIBOR Interest Period,
divided by (b) 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: (a) 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 (b) 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 shall elect in
accordance with the provisions hereof; provided, that: (i) 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 (ii) 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 (iii) below and (i) above, end
on the last Business Day of a calendar month; and (iii) any LIBOR Interest
Period which would otherwise end after November 17, 2010 shall end on November
17, 2010.

       

      “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 $100,000,000.00; provided, however, that, with
the prior written consent of Payee (which consent may or may not be granted in
Payee's sole and absolute discretion), the Total Commitment may be increased to
an amount not to exceed $200,000,000.00 as provided in the Loan
Agreement.  As of November 18, 2009, the Total Commitment is
$100,000,000.00.

       

      “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 (a) the aggregate
principal amount of such advance and (b) 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 on 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 (but not the
obligation) to permit or effectuate advances under this Note as a part of its
cash management services provided to Maker and 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 November 17, 2010.

       

      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 (a) the higher of either (i) the WFB Base Rate in effect from day
to day, plus
one and one-half of one percent (1.50%) or (ii) three percent (3.0%), or (b) 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 (A) the LIBOR Base Rate for the LIBOR Interest Period in effect with respect
to such LIBOR Balance plus three-quarters
of one percent (0.75%), or (B) 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 (including clause (c)
below), 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 (a)
except in the case of any advance under this Note made by Payee to repay any
negative cash balance of Maker relating to cash management services provided by
Payee, in the case of selection of the WFB Base Rate, such advance shall not be
less than $100,000 (or, if greater than $100,000, in integral multiples of
$100,000 in excess thereof), (b) 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 $250,000 (or, if greater than $250,000, in integral multiples of $100,000
in excess thereof), and (c) notwithstanding anything to the contrary
contained herein, Maker shall not have the option to designate portions of the
unpaid principal balance hereof to bear interest at a rate based upon the WFB
Base Rate unless circumstances are such that designating such principal balance
to bear interest at a rate based upon the LIBOR Base Rate is not feasible or
practical for any of the reasons specified in paragraph 8(a), 8(b) or 8(c) hereof; 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.  Subject to the foregoing, the option (or obligation, as
applicable, if so required by clause (c) of this paragraph 7 above) 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 LIBOR
Base Rate, with a LIBOR Interest Period which is the same as the then relevant
LIBOR Interest Period, to be applicable to such LIBOR Balance or, if but only if
Maker is then permitted to select a rate based upon the WFB Base Rate in
accordance with clause
(c) of this paragraph 7 above, to
have selected a rate based upon the WFB Base Rate to be applicable to such LIBOR
Balance, and, in each case, such LIBOR Balance shall thereafter continue to be a
LIBOR Balance or shall thereafter be a WFB Base Rate Balance (as applicable)
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 (or obligation, as applicable, if so required by clause (c) of this
paragraph 7
above), 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,
after the date hereof, 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, after
the date hereof, 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 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, after
the date hereof, 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 in reasonable detail 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 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:   Julia
Harman, Vice President

      Fax:  (214)
953-3982

      

      Maker:                    Fossil
Partners, L.P.

      2323 North Central
Expressway

      Richardson,
Texas  75082

      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 nonpayment, 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 and during the continuance
of any Event of Default, 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 contract for, charge, 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 contract for, charge,
receive or collect 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
contracts for, charges, 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, and (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 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 paragraph 19
hereof.

       

      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.

       

      20. Amendment and
Restatement.  This Note increases, amends, modifies and
restates, but does not extinguish the indebtedness evidenced by, that certain
(a) Fifth Amended and Restated Revolving Line of Credit Note dated November 19,
2008, in the stated principal amount of $140,000,000, executed by Maker and
payable to the order of Payee, (b) Fourth Amended and Restated Revolving Line of
Credit Note dated September 19, 2008, in the stated principal amount of
$100,000,000, executed by Maker and payable to the order of Payee,
(c) Third Amended and Restated Revolving Line of Credit Note dated
September 20, 2007, in the stated principal amount of $100,000,000, executed by
Maker and payable to the order of Payee, (d) Second Amended and Restated
Revolving Line of Credit Note dated September 21, 2006, in the stated principal
amount of $100,000,000, executed by Maker and payable to the order of Payee,
(e)  Amended and Restated Revolving Line of Credit Note dated September 22,
2005, in the stated principal amount of $100,000,000, executed by Maker and
payable to the order of Payee, and (f) Revolving Line of Credit Note dated
September 23, 2004, in the stated principal amount of $50,000,000, executed by
Maker and payable to the order of Payee.

       

      [THE
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      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.

      Title:           General
Partner

      

      

      By:           /s/ Mike L.
Kovar                                                      

      Name:           Mike
L. Kovar

      Title:           Executive
Vice President, Chief

      Financial Officer and
Treasurer

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