Document:

Exhibit
10.2

ADOBE SYSTEMS INCORPORATED

EXECUTIVE SEVERANCE PLAN

IN THE EVENT OF A CHANGE OF
CONTROL

Adobe Systems Incorporated, a Delaware corporation
(the “Company”) has adopted this Executive Severance Plan (the “Plan”),
effective as of December 12, 2006,
for the benefit of certain key employees of the Participating Company Group.

The
Company considers it essential to the best interests of its stockholders to
take reasonable steps to retain its key management personnel.  Further, the Board of Directors of the
Company (the “Board”) recognizes that the uncertainty and questions which might
arise among management in the context of a Change of Control of the Company
could result in the departure or distraction of management personnel to the
detriment of the Company and its stockholders.

The
Board has determined, therefore, that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of its members
of management of the Company to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from any possible
Change of Control of the Company.

The
Company hereby adopts this Executive Severance Plan In the Event of a Change of
Control for the benefit of its employees who are eligible as provided in the
Plan.

Section 1.                                            Definitions.

1.1                                 “Accounting
Firm” shall mean KPMG LLP or, if such firm is unable or unwilling to
perform the calculations required under this Plan, such other national
accounting firm as shall be designated by agreement between the Participant to
whom Section 4.1 applies and the Company.

1.2                                 “Base
Salary” means the Participant’s annual base salary as in effect during the
last regularly scheduled payroll period immediately preceding such Participant’s
Date of Termination.  Base Salary does
not include any bonuses, commissions, fringe benefits, overtime, car
allowances, other irregular payments or any other compensation except base
salary.

1.3                                 “Cause”
shall mean (a) with respect to Group I Participants (i) felony conviction; or
(ii) willful disclosure of material trade secrets or other material
confidential information related to the business of a Participating Company; or
(iii) willful and continued failure substantially to perform the same duties as
in effect prior to the Change of Control for the Participating Company (other
than any such failure resulting from physical or mental incapacity or any
actual or anticipated failure resulting from a resignation for Good Reason)
after a written demand for substantial performance is delivered by the Chief
Executive Officer or the President of the Company, which demand identifies the
specific actions which the Chief Executive Officer or the President of the
Company believes constitute willful and continued failure substantially to
perform duties, and which performance is not substantially corrected within ten
(10) days of receipt of such demand.  For
purposes of the previous sentence, no act or failure to act shall be deemed “willful”
unless done, or omitted to be done, with willful malfeasance or gross

 

 

negligence and without
reasonable belief that action or omission was not materially adverse to the
best interest of the Participating Company Group; and (b) with respect to Group
II Participants (i) theft, dishonesty or falsification of any employment or
Participating Company Group records, (ii) improper disclosure of a
Participating Company’s confidential or proprietary information, (iii) any
intentional act by such Participant which has a material detrimental effect on
the Participating Company Group’s reputation or business, (iv) failure to
perform any reasonably assigned duties, which failure is not cured with in
thirty (30) days following written notice of such failure from the
Participating Company, (v) gross misconduct or (vi) felony conviction.

1.4                                 “Change
of Control” shall mean a Change of Control of the Company of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Exchange Act, whether or not the Company
is then subject to such reporting requirement; provided, however, that anything
in this Plan to the contrary notwithstanding, a Change of Control shall be
deemed to have occurred if:

(a)                                  any
individual, partnership, firm, corporation, association, trust, unincorporated
organization or other entity or person, or any syndicate or group deemed to be
a person under Section 14(d)(2) of the Exchange Act, is or becomes the “beneficial
owner” (as defined in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company’s then
outstanding securities entitled to vote in the election of directors of the
Company;

(b)                                 during
any period of two (2) consecutive years (not including any period prior to the
Effective Date), individuals who at the beginning of such period constituted
the Board and any new directors, whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least
three-fourths (3/4ths) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved (the “Incumbent Directors”),
cease for any reason to constitute a majority thereof;

(c)                                  there
occurs a reorganization, merger, consolidation or other corporate transaction
involving the Company (a “Transaction”),
in each case with respect to which the stockholders of the Company immediately
prior to such Transaction do not, immediately after the Transaction, own
securities representing more than 50% of the combined voting power of the
Company, a parent of the Company or other corporation resulting from such
Transaction (counting, for this purpose, only those securities held by the
Company’s stockholders immediately after the Transaction that were received in
exchange for, or represent their continuing ownership of, securities of the
Company held by them immediately prior to the Transaction);

(d)                                 all
or substantially all of the assets of the Company are sold, liquidated or
distributed; or

(e)                                  there
is a “Change of Control” or a “change in the effective control” of the Company
within the meaning of Section 280G of the Code and the Regulations.

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1.5                                 “Change
of Control Date” shall mean the date on which the Change of Control
occurs.  Notwithstanding the first
sentence of this definition, if a Participant’s employment with the
Participating Company Group terminates prior to the Change of Control Date and
it is reasonably demonstrated that such termination (a) was at the request of
the third party who has taken steps reasonably calculated to effect the Change
of Control or (b) otherwise arose in connection with or in anticipation of the Change
of Control, then “Change of Control Date” shall mean the date immediately prior
to the date of such Participant’s termination of employment.

1.6                                 “Code”
shall mean the Internal Revenue Code of 1986, as amended, and any successor
provisions thereto.

1.7                                 “Committee”
means the Executive Severance Plan Administrative Committee responsible for
administering the Plan as provided in Section 5.

1.8                                 “Common
Stock” shall mean the common stock of the Company.

1.9                                 “Company”
means Adobe Systems Incorporated, a Delaware Corporation, and, except in
determining under Section 1.4 hereof whether or not any Change of Control has
occurred, shall include any successor to its business and/or assets.

1.10                           “Date
of Termination” means the date of a Participant’s termination of employment
with the Participating Company Group as determined in accordance with Section
3.6.

1.11                           “Disability”
shall mean a Participant’s (a) incapacity due to physical or mental illness
which causes such Participant’s absence from the full-time performance of his
or her duties with the Participating Company Group for six (6) consecutive
months and (b) such Participant’s failure to return to full-time performance of
his or her duties for the Participating Company Group within thirty (30) days
after written Notice of Termination due to Disability is given to a
Participant.  Any question as to the
existence of Disability upon which a Participant and the Participating Company
Group cannot agree shall be determined by a qualified independent physician
selected by the Participant (or, if such Participant is not able to select a
physician, such selection shall be made by any adult member of the Participant’s
immediate family), and approved by the Participating Company Group.  The determination of such physician made in
writing to the Participating Company Group shall be final and conclusive for
all purposes of this Plan.

1.12                           “Effective
Date” means December 12, 2001.

1.13                           “Equity
Awards” shall mean options, restricted stock, bonus stock or other grants
or awards which consist of, or relate to, equity securities of the Company and
which have been granted to Participant’s under the Equity Plans.  For purposes of this Plan, Equity Awards
shall also include any securities acquired upon the exercise of an option,
warrant or similar right that constitutes an Equity Award.

1.14                           “Equity
Plans” shall mean the Adobe Systems Incorporated 1994 Stock Option Plan,
the Adobe Systems Incorporated 1994 Amended Performance and Restricted Stock
Plan, the Adobe Systems Incorporated 1999 Nonstatutory Stock Option Plan, the
Adobe Systems

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Incorporated 2003 Equity
Incentive Plan, the Adobe Systems Incorporated 2005 Special Purpose Equity
Incentive Plan, and any other equity-based incentive plan or arrangement
adopted or assumed by the Company, and any future equity-based incentive plan
or arrangement adopted or assumed by the Company, but shall not include the
Adobe Systems Incorporated 1997 Employee Stock Purchase Plan or any other plan
intended to be qualified under Section 423 of the Code.

1.15                           “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.

1.16                           “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, and any
successor provisions thereto.

1.17                           “Good
Reason” shall mean a Participant’s resignation of employment during the
Term as a result of any of the following:

(a)                                  A
meaningful and detrimental alteration in such Participant’s position, titles,
or the nature or status of responsibilities (including reporting
responsibilities) from those in effect immediately prior to the Change of
Control Date;

(b)                                 A
reduction by the Participating Company Group in such Participant’s Base Salary
as in effect immediately prior to the Change of Control Date or as the same may
be increased from time to time thereafter; a failure by the Participating
Company Group to increase such Participant’s salary at a rate commensurate with
that of other similarly situated key executives
of the Participating Company Group; or a reduction in the target incentive
opportunity percentage used to determine such Participant’s Target Bonus below
the percentage in effect immediately prior to the Change of Control Date;

(c)                                  The
relocation of the office of the Participating Company where such Participant is
primarily employed immediately prior to the Change of Control Date (the “COC Location”) to a location which
is more than fifty (50) miles away from the COC Location or the Participating
Company’s requiring such Participant to be based more than fifty (50) miles
away from the COC Location (except for required travel on the Participating
Company’s business to an extent substantially consistent with the Participant’s
customary business travel obligations in the ordinary course of business prior
to the Change of Control Date);

(d)                                 The
failure by the Participating Company Group to continue in effect any
compensation plan in which such Participant participated prior to the Change of
Control Date or made available to such Participant after the Change of Control
Date, unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan in connection with
the Change of Control, or the failure by the Participating Company Group to
continue such Participant’s participation therein on at least as favorable a
basis, both in terms of the amount of benefits provided and the level of
participation relative to other participants, as existed on the Change of
Control Date;

(e)                                  The
failure by the Participating Company Group to continue to provide such Participant
with benefits at least as favorable in the aggregate to those enjoyed by such
Participant under the Participating Company Group’s retirement, savings, life
insurance, medical, health and accident, disability, and fringe benefit plans
and programs in which such

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Participant was
participating in immediately prior to the Change of Control Date; or the
failure by the Participating Company Group to provide such Participant with the
number of paid vacation days to which he or she was entitled on the basis of
years of service with the Participating Company Group in accordance with the
Participating Company Group’s normal vacation policy in effect immediately
prior to the Change of Control;

(f)                                    The
failure by the Participating Company Group to pay or provide to such
Participant with any material item of compensation or benefits promptly when
due;

(g)                                 The
failure of the Participating Company Group to obtain an agreement from any
successor to assume and agree to perform the obligations of this Plan, as contemplated
in Section 9.1 hereof or, if the business for which such Participant’s services
are principally performed is sold at any time after a Change of Control, the
failure of the Participating Company Group to obtain such an agreement from the
purchaser of such business;

(h)                                 A
material breach by the Participating Company Group of the provisions of this
Plan;

 provided, however, that an event described above in clause (a), (b),
(d), (e), (f) or (h) shall not constitute Good Reason unless it is communicated
by such Participant to the Company in writing and is not corrected by the
Company in a manner which is reasonably satisfactory to such Participant
(including full retroactive correction with respect to any monetary matter)
within 10 days of the Company’s receipt of such written notice.

1.18                           “Group
I Participant” shall mean each senior management employee of a
Participating Company who (i) is on the U.S. payroll, (ii) is not a party to
any other retention and/or severance agreement with the Participating Company
Group that is not otherwise waived in accordance with Section 3.9, and (iii) on
the Change of Control Date, is classified as a Vice President of a
Participating Company.

1.19                           “Group
II Participant” shall mean each senior management-level employee of a
Participating Company who (i) is on the U.S. payroll, (ii) is not a party to
any other retention and/or severance agreement with the Participating Company
Group that is not otherwise waived in accordance with Section 3.9, and (iii)
who on the Change of Control Date, is classified as a Director, Senior
Director, or such other position, which is determined by the Company prior to
the Change of Control as equivalent thereto.

1.20                           “Involuntary
Termination” shall mean (i) a Participant’s involuntary termination of
employment with the Participating Company Group during the Term other than for
death, Disability or Cause or (ii) a Participant’s resignation of
employment with the Participating Company Group during the Term for Good
Reason.

1.21                           “Notice
of Termination” means the notice specified in Section 3.6.

1.22                           “Participating
Company Group” means the Company and any present or future United States
parent and/or United States direct or indirect subsidiary corporations of the
Company that have been designated by the Board as a “Participating Company” for
purposes of this Plan (all of which along with the Company being individually
referred to as a “Participating

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Company” and collectively
referred to as the “Participating Company Group”).  For purposes of this Plan, a parent or
subsidiary corporation shall be defined in Sections 424(e) and 424(f) of the
Code and shall include entities related to the Company by similar ownership
levels that are not corporations.

1.23                           “Participant”
shall mean each Group I Participant and each Group II Participant.

1.24                           “Plan”
means this Adobe Systems Incorporated Executive Severance Plan In the Event of
a Change of Control.

1.25                           “Plan
Year” means the calendar year and the last day of such year is December 31.

1.26                           “Reference
Bonus” shall mean the greater of (a) the Target Bonus applicable to a
Participant for the year in which such Participant’s Involuntary Termination
occurs or (b) the highest Target Bonus applicable to such Participant in any of
the three years ending prior to the Change of Control Date.

1.27                           “Reference
Salary” shall mean the greater of (a) the annual rate of a Participant’s
Base Salary from the Participating Company Group in effect immediately prior to
the date of such Participant’s Involuntary Termination or (b) the annual rate
of a Participant’s Base Salary from the Participating Company Group in effect
at any point during the three-year period ending on the Change of Control
Date.

1.28                           “Regulations”
shall mean the proposed, temporary and final regulations under Section 280G of
the Code or any successor provision thereto.

1.29                           “Severance
Benefits” means those benefits provided to a Participant under this Plan on
account of a Change of Control, as determined in accordance with Section 3.2,
3.3 and 3.4 after the execution of a release of claims as required by Section
10.

1.30                           “Severance
Multiple” shall mean (a) with respect to Group I Participants, the sum of
(i) two (2) plus (ii) one twelfth (1/12th) for each completed year of service with the
Participating Company Group (not in excess of twelve (12) years), and (b) with
respect to Group II Participants, the sum of (i) one (1) plus (ii) one twelfth
(1/12th) for each
completed year of service with the Participating Company Group (not in excess
of six (6) years).

1.31                           “Target
Bonus” shall mean an amount equal to (i) a Participant’s Base Salary
multiplied by such Participant’s target incentive opportunity percentage under
the Participating Company’s Annual Incentive Plan and Profit Sharing Plan (or
any successor plans then in effect), and (ii) 
target commissions.

1.32                           “Term”
shall mean the period of a Participant’s employment that commences on the
Change of Control Date and shall continue until the second anniversary of the
Change of Control Date.

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Section 2.                                            Employment
During the Term.  During the Term,
the following terms and conditions shall apply to a Participant’s employment
with the Participating Company Group:

2.1                                 Titles;
Reporting and Duties.  A Participant’s
position, title, nature and status of responsibilities and reporting
obligations shall be no less favorable than those that such Participant enjoyed
immediately prior to the Change of Control Date.

2.2                                 Base
Salary and Bonus.  A Participant’s
Base Salary and annual bonus opportunity may not be reduced, and such Participant’s
Base Salary shall be periodically reviewed and increased in the manner
commensurate with increases awarded to other similarly situated employees of
the Participating Company Group.

2.3                                 Incentive
Compensation.  A Participant shall be
eligible to participate in each long-term incentive plan or arrangement
established by the Participating Company Group for its employees at such
Participant’s level of seniority in accordance with the terms and provisions of
such plan or arrangement and at a level consistent with the Participating
Company Group’s practices applicable to each Participant prior to the Change of
Control Date.

2.4                                 Benefits.  A Participant shall be eligible to
participate in all retirement, welfare and fringe benefit plans and
arrangements that the Participating Company Group provides to its employees in
accordance with the terms of such plans and arrangements, which shall be no
less favorable to such Participant, in the aggregate, than the terms and
provisions available to other similarly situated employees of the Participating
Company Group.

2.5                                 Location.  A Participant shall continue to be employed
at a business location in the metropolitan area in which such Participant was
employed prior to the Change of Control Date and the amount of time that such
Participant is required to travel for business purposes will not be increased
in any significant respect from the amount of business travel required of such
Participant prior to the Change of Control Date.

Section 3.                                            Severance
Benefits.  In the event of a
Participant’s Involuntary Termination, the terminated Participant shall be
entitled to the following:

3.1                                 Payment
of Wages and Accrued Vacation.  The
Company shall pay to such terminated Participant within five (5) days of the
date of such Involuntary Termination the full amount of any earned but unpaid
Base Salary through the Date of Termination at the rate in effect at the time
of the Notice of Termination, plus a cash payment (calculated on the basis of
such Participant’s Base Salary) for all unused vacation time which such
Participant may have accrued as of the Date of Termination.

3.2                                 Payment
of Cash Severance.  Subject to
execution of a release of claims as described in Section 10 below, the
terminated Participant will receive the following cash benefits:

(a)                                  The
Company shall pay to such terminated Participant within five (5) days of the
Date of Termination a pro rata portion of the Participant’s Target Bonus for
the year in which such Involuntary Termination occurs, calculated on the assumption
that all performance targets have been or will be achieved.

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(b)                                 In
addition, the Company shall pay to such terminated Participant in a cash lump
sum, within eight (8) days following the date such terminated Participant
executes the release described in Section 10 (or on the Date of Termination, if
later) an amount equal to the product of (a) the sum of such terminated
Participant’s Reference Salary and Reference Bonus, multiplied by (b) such
terminated Participant’s Severance Multiple. 
This severance payment shall be in lieu of any other cash severance
payments which such terminated Participant is entitled to receive under any
other severance pay and/or retention plan or arrangement sponsored by any
Participating Company.

3.3                                 Vesting
and Exercise of Equity Awards. 
Subject to execution of a release of claims as described in Section 10
below, and notwithstanding anything to the contrary contained in an applicable
Equity Award, all Equity Awards granted to a terminated Participant under the
Equity Plans (except performance share unit awards, which shall continue to be
governed by their current terms) shall vest in full and become exercisable,
upon the Participant’s Involuntary Termination during the Term.  Notwithstanding anything in this Plan to the
contrary, in no event shall the vesting and exercisability provisions
applicable to a terminated Participant under the terms of an Equity Award be
less favorable to such Participant than the terms and provisions of such awards
in effect on the Change of Control Date.

3.4                                 Benefits
Continuation.  Subject to execution
of a release of claims as described in Section 10 below, and subject to the
terminated Participant and/or his or her eligible dependents electing continued
medical insurance coverage in accordance with the applicable provisions of
federal law (commonly referred to as “COBRA”),
the Company shall pay the terminated Participant’s COBRA premiums for the
duration of such COBRA coverage, or for the period of years equal to the
Participant’s Severance Multiple, whichever is less.  If the terminated Participant’s medical
coverage immediately prior to the Date of Termination included the terminated
Participant’s dependents, the Company paid COBRA premiums shall include the
premiums necessary for such dependents as have elected COBRA coverage.  Notwithstanding the above, in the event the
terminated Participant becomes covered under another employer’s group health
plan (other than a plan which imposes a preexisting condition exclusion unless
the preexisting condition exclusion does not apply) during the period provided
in this Section 3.4, the Company shall cease payment of the COBRA premiums.

3.5                                 Other
Benefit Plans.  A terminated
Participant’s participation and rights in other benefit plans as may be
provided by the Participating Company Group at the time of his/her Involuntary
Termination shall be governed solely by the terms and conditions of such plans,
if any.

3.6                                 Date
and Notice of Termination.  Any
termination of a Participant’s employment by a Participating Company or by such
Participant during the Term shall be communicated by a notice of termination to
the other party hereto (the “Notice of Termination”).  The Notice of Termination shall indicate the
specific termination provision in this Plan relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Participant’s employment under the provision so
indicated.  The date of a Participant’s
termination of employment with the Participating Company Group shall be
determined as follows:  (i) if employment
is terminated by the Participating Company Group in an Involuntary Termination,
five (5) days after the date the Notice of Termination is provided by

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the Participating Company
Group, (ii) if employment is terminated by the Participating Company Group
for Cause, the later of the date specified in the Notice of Termination or ten
(10) days following the date such notice is received by the Participant, and
(iii) if the basis of a Participant’s Involuntary Termination is such
Participant’s resignation for Good Reason, the Date of Termination shall be ten
(10) days after the date such Participant’s Notice of Termination is received
by the Company.

3.7                                 No
Mitigation or Offset.  A terminated
Participant shall not be required to mitigate the amount of any payment
provided for in this Plan by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for in this Plan be reduced by
any compensation earned by such a terminated Participant as the result of
employment by another employer or by retirement benefits paid by the
Participating Company Group or another employer after the Date of Termination
or otherwise.

3.8                                 Withholding.  Amounts paid to a Participant hereunder shall
be subject to all applicable federal, state and local withholding taxes.

3.9                                 Waiver
of Any Other Participating Company Retention/Severance Agreement.  A terminated Participant may elect, in his or
her sole discretion, to waive each and every prior retention and/or severance
agreement entered into between a Participating Company and such terminated
Participant in order to participate and receive the Severance Benefits provided
under this Plan. Such waiver shall be in writing in such form as may reasonably
be specified by the Committee and shall be filed with the Company in accordance
with such rules and procedures as may be reasonably established by the
Committee

3.10                           Application
of Section 409A.  Notwithstanding any
other provision of this Plan, to the extent the Committee determines in good
faith that (a) one or more of the payments or benefits received or to be
received by a Participant pursuant to the Plan would constitute deferred
compensation subject to the rules of Code Section 409A, and (b) that
the Participant is a “specified employee” under Code Section 409A, then only to
the extent required to avoid the Participant’s incurrence of any additional tax
or interest under Section 409A of the Code, such payment or benefit will be
delayed until the date which is six (6) months after the Participant’s “separation
of service” within the meaning of Code Section 409A.

Section
4.                                            Limitation
on Payment of Benefits.

4.1                                 Parachute
Payments.  In the event that it is
determined by the Accounting Firm that any amount payable to a Participant
under this Plan, alone or when aggregated with any other amount payable or
benefit provided to such Participant pursuant to any other plan or arrangement
of the Participating Company Group, would constitute an “excess parachute
payment” within the meaning of Section 280G of the Code, then notwithstanding
the other provisions of this Plan, the amounts payable will not exceed the
amount which produces the greatest after-tax benefit to the Participant.  For purposes of the foregoing, the greatest
after-tax benefit will be determined within thirty (30) days of the occurrence
of such payment to the Participant, in the Participant’s sole and absolute
discretion.  To aid the Participant in
making the determination called for under this Section 4.1, the Company
shall request a determination in writing by the Accounting Firm.  As soon as practicable thereafter, the
Accounting Firm shall determine and report to the Company and the Participant
the amount of such payments and

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benefits which would
produce the greatest after-tax benefit to the Participant.  For the purposes of such determination, the
Accounting Firm may rely on reasonable, good faith interpretations concerning
the application of Sections 280G and 4999 of the Code.  The Company and the Participant shall furnish
to the Accounting Firm such information and documents as the Accounting Firm
may reasonably request in order to make their required determination.  The Company shall bear all fees and expenses
the Accounting Firm may reasonably charge in connection with its services
contemplated by this Section. 
Notwithstanding the time limit above, Participant shall have no less
than ten (10) days following receipt of the Accounting Firm’s report to make
the determination called for by this Section 4.1.

4.2                                 Non-Duplication
of Benefits.  Notwithstanding any
other provision in the Plan to the contrary, the benefits provided hereunder
shall be in lieu of any other severance plan and/or retention agreement
benefits provided by any Participating Company and the Severance Benefits and
other benefits provided under this Plan shall be reduced by any severance paid
or provided to a Participant by a Participating Company under any other plan or
arrangement.

4.3                                 Indebtedness
of Participant.  If a Participant is
indebted to the Participating Company Group at his or her Date of Termination,
the Company reserves the right to offset any benefits under this Plan by the
amount of such indebtedness.

Section 5.                                            Plan
Administration, Amendment and Termination.

5.1                                 Plan
Administrative Committee.

(a)                                  Administration
by the Committee.  The Plan shall be
administered by the Committee.

(b)                                 Committee
Members.  Except as otherwise
provided in Section 5.1(c) below, the Committee shall be composed of those
individuals at the Company who hold the titles of Vice President and General
Counsel, and Vice President Human Resources, or titles functionally equivalent
thereto, and another employee of the Company as shall be appointed by the
Board.  The designation of an individual
as holding such title or position shall constitute automatic appointment to the
Committee and the resignation or other termination of employment or change to a
different position by a Committee member shall constitute automatic resignation
from the Committee.

(c)                                  Notwithstanding
the foregoing, upon a Change of Control, a majority of the Committee Members
shall be comprised of persons who were members of the Committee prior to the
Change of Control or who are elected to serve as additional Adobe Members as provided
below (the “Adobe Members”).  This shall be accomplished by retaining a
majority of those persons who were Committee Members prior to the Change of
Control, regardless of whether such members’ job titles have changed or they
would otherwise be deemed to have automatically resigned their membership on
the Committee.  In the event that a
majority of the members of the Committee prior to the Change of Control are
unwilling or unable to continue to serve as members of the Committee, the
members of the Committee shall, by majority vote, elect sufficient additional
Adobe Members, so that a majority of the Committee Members are Adobe
Members.  Such additional Adobe Members
shall be persons who were employed by the Company prior to the Change of
Control.

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(d)                                 The
Committee Members shall not receive compensation for their services on the
Committee.  The Participating Company
Group shall indemnify and hold harmless the Committee Members from and against
all liabilities, claims, demands and costs, including reasonable attorneys’
fees and expenses of legal proceedings, incurred by the Committee which arise
as a result of membership on the Committee.

5.2                            Committee
Powers and Responsibilities.  The
Committee shall have all powers necessary to enable it properly to carry out
its duties with respect to the complete control of the administration of the
Plan.  Not in limitation, but in
amplification of the foregoing, the Committee shall have the power and
authority in its discretion to:

(a)                               Construe
the Plan to determine all questions that shall arise as to interpretations of
the Plan’s provisions, including determination of which individuals are
eligible for Severance Benefits, the amount of Severance Benefits to which any
employee may be entitled, the determination of which type of Participant any
individual is (i.e., Group I Participant or Group II Participant) and all other
matters pertaining to the Plan;

(b)                              Adopt
amendments to the Plan document which are deemed necessary or desirable bring
these documents into compliance with all applicable laws and regulations,
including but not limited to Code Section 409A and the guidance thereunder; and

(c)                               Establish
procedures for determining who the Adobe Members of the Committee shall be
after a Change of Control and/or for electing additional Adobe Members of the
Committee pursuant to Section 5.1. 
For purposes of this Section 5.2(c), only those persons who were
members of the Committee prior to the Change of Control shall be authorized to
vote.

5.3                            Decisions
of the Committee.  Decisions of the
Committee made in good faith upon any matter within the scope of its authority
shall be final, conclusive and binding upon all persons, including Participants
and their legal representatives.  Any
discretion granted to the Committee shall be exercised in accordance with such
rules and policies as may be established by the Committee from time to time.

5.4                            Plan
Amendment.  The Plan may be amended
by the Committee as provided by Section 5.2(b) and may also be amended by
resolution of the Board of Directors of the Company (i) for the purposes
specified in Section 5.2(b), (ii) to increase the amount and/or type of
Severance Benefits provided by the Plan, and (iii) to extend the Plan
termination date as provided in Section 5.5. 
Except as otherwise provided in this Section 5.4 the Plan may not be
amended prior to its termination, or, in the event the Plan is extended as
provided in this section 5.4,  the date
on which it would have terminated under Section 5.5 had it not been extended.

5.5                            Plan
Termination.  This Plan shall
terminate automatically five (5) years from the
Effective Date unless extended by the Company or unless a Change of Control
shall have occurred prior thereto, in which case the Plan shall terminate
following the later of the date which is at least twenty-four (24) months after
the occurrence of a Change of Control or the payment of all Severance Benefits
due under the Plan.

Section
6.                                            Claims
for Benefits.  Any person who
believes he or she is entitled to benefits under this Plan may submit a claim
for benefits.  The claim must be in
writing and should state

 11
 

 

the
claimant’s reasons for claiming these benefits. 
The claims should be sent to the Executive Severance Plan Administrative
Committee of Adobe Systems Incorporated. 
If the claim is denied, in whole or in part, written notice of the
denial will be provided within ninety (90) days of initial receipt of the
claim.  Such notice will include an
explanation of the factors on which the denial is based and what, if any,
additional information is needed to support the claim.  Further review of the claim may be obtained
by filing a written request for review. 
An individual whose claim for benefits is denied may file a request for
review with the Committee within sixty (60) days.  After receiving a request for review, the
Committee will render a final decision within sixty (60) days, unless
circumstances require an extension of an additional sixty (60) days for the
review.  In this case, the Committee will
notify the claimant in writing of the need for an extension.  The Committee’s decision will be in writing,
setting forth the specific reasons for the decision, as well as specific
references to the Plan provisions upon which the decision is based.

Section
7.                                            Legal
Fees and Expenses.  The Company shall
pay or reimburse a Group I Participant for all costs and expenses (including,
without limitation, court costs and reasonable legal fees and expenses which
reflect common practice with respect to the matters involved) incurred by such
Group I Participant as a result of any claim, action or proceeding (a) arising
out of such Group I Participant’s termination of employment during the Term,
(b) contesting, disputing or enforcing any right, benefits or obligations under
this Plan or (c) arising out of or challenging the validity, advisability or
enforceability of this Plan or any provision thereof.  The payments or reimbursements provided for
herein shall be paid by the Participating Company Group promptly (but in no
event more than five (5) business days) following receipt of a written request
for payment or reimbursement, as the case may be.

Section
8.                                            Miscellaneous.

8.1                                 No
Contract of Employment.  Nothing in
this Plan shall be construed as giving any Participant any right to be retained
in the employ of the Participating Company Group or shall affect the terms and
conditions of a Participant’s employment with the Participating Company Group
prior to the commencement of the Term.

8.2                                 ERISA
Plan.  This Plan is intended to be
(a) an employee welfare plan as defined in Section 3(1) of ERISA and (b) a “top-hat”
plan maintained for the benefit of a select group of management or highly
compensated employees of the Participating Company Group.

8.3                                 Source
of Payments.  All payments provided
under this Plan, other than payments made pursuant to any other Participating
Company Group employee benefit plan which provides otherwise, shall be paid in
cash from the general funds of the Participating Company Group, and no special
or separate fund shall be established, and no other segregation of assets made,
to assure payment.  To the extent that
any person acquires a right to receive payments from the Participating Company
Group hereunder, such right shall be no greater than the right of an unsecured
creditor of the Participating Company Group.

8.4                                 Notice.  For the purpose of this Plan, notices and all
other communications provided for in this Plan shall be in writing and shall be
deemed to have been duly given when delivered or mailed by overnight courier or
United States registered mail, return receipt requested, postage prepaid,
addressed to the Executive Severance Plan Administrative Committee, Adobe
Systems Incorporated, 345 Park Avenue, San Jose, California 95110-2704,

 12
 

 

with a copy to the
General Counsel of the Company, or to a Participant at the address set forth in
the Participating Company Group’s payroll records or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.

8.5                                 Nonalienation
of Benefits.  No benefit under the
Plan may be assigned, transferred, pledged as security for indebtedness or
otherwise encumbered by any Participant or subject to any legal process for the
payment of any claim against a Participant.

8.6                                 Validity.  The invalidity or unenforceability of any
provision of this Plan shall not affect the validity or enforceability of any
other provision of this Plan, which shall remain in full force and effect.

8.7                                 Headings.  The headings contained in this Plan are
intended solely for convenience of reference and shall not affect the rights of
the parties to this Plan.

8.8                                 Governing
Law.  This Plan shall be governed by
and construed in accordance with the laws of the State of California to the
extent such laws are not preempted by ERISA.

Section 9.                                            Successors;
Binding Agreement.

9.1                                 Assumption
by Successor.  The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company expressly to assume and to agree to perform the
obligations under this Plan in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place; provided, however, that
no such assumption shall relieve the Company of its obligations hereunder.  As used in this Section 9, the “Company”
shall include the Company as defined in Section 1.9 and any successor to its
business and/or assets which assumes and agrees to perform the obligations
arising under this Plan by operation of law or otherwise.

9.2                                 Enforceability;
Beneficiaries.  This Plan shall be
binding upon and inure to the benefit of each Participant (and such Participant’s
personal representatives and heirs) and the Company and any organization which
succeeds to substantially all of the business or assets of the Company, whether
by means of merger, consolidation, acquisition of all or substantially all of
the assets of the Company or otherwise, including, without limitation, as a
result of a Change of Control or by operation of law.  This Plan shall inure to the benefit of and
be enforceable by each Participant’ personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.  If a Participant should die
while any amount would still be payable hereunder if such Participant had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Plan to such Participant’s devisee,
legatee or other designee or, if there is no such designee, to such Participant’s
estate.

Section 10.                                      Release
of Claims.  No Severance Benefits shall be paid to a Participant
under this Plan unless and until the Participant shall, in consideration of the
payment of such Severance Benefits, execute a release of claims in a form
satisfactory to the Committee; provided, however,

 13
 

 

that
such release shall not apply to any right a Participant may have to be indemnified
by the Company.

	
   

  	
   

  	
  Adobe Systems Incorporated

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated: September
  25, 2006

  	
  By:

  	
  /s/ Randy Furr

  	
   

  
	
   

  	
   

  	
  Randy Furr

  
	
   

  	
   

  	
  Executive Vice
  President and

  
	
   

  	
   

  	
  Chief Financial
  Officer

  

 

 14Exhibit 10.1

THIRD AMENDMENT TO LOAN AGREEMENT

THIS THIRD
AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is made and entered into
and effective as of September 21, 2006 (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”) and FOSSIL HOLDINGS, LLC (“Fossil Holdings”) (the Company,
Fossil Intermediate, Fossil Trust, Fossil I, Arrow Merchandising and Fossil
Holdings are sometimes referred to herein individually as a “Guarantor”
and collectively as the “Guarantors”).

RECITALS

WHEREAS, the Bank,
the Borrower and 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.

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

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

ARTICLE II

Amendments

2.01         Amendment to Section 14(a).  Effective as of the Amendment Closing Date, Section
14(a) of the Agreement is hereby deleted in its entirety and replaced with
the following:

“(a)       Quick Ratio.  Maintain, at all times, a ratio of (i) (A)
cash, plus (B) cash equivalents, plus (C) account
receivables, plus (D) marketable securities available for sale, plus
(E) royalty advance prepayments, to (ii) current liabilities net of
any pre-payments related to those current liabilities not included in
subsection (i) above of not less than 0.80 to 1.00.  Cash, cash equivalents, 

 

accounts receivable and current liabilities
are defined according to generally accepted accounting principles, with the
exception that current liabilities will include all indebtedness of the
Borrower under the Revolving Note and all Documentary or Stand-by Letters of
Credit excluding Standby Letters of Credit relating to any indebtedness of
Borrower’s subsidiaries already included subsection (ii) above.”

2.02         Amendment to Section 16.  Effective as of the Amendment Closing Date,
the Borrower’s, and Guarantors’ notice address set forth in Section 16
of the Agreement is hereby deleted in is entirety and replace with the
following:

“if to
the Borrower:                                      Fossil
Partners, L.P.

2323 North Central Expressway

Richardson, Texas  75082

Attention:  Mike L. Kovar

Fax:  (972) 498-9448

if to
Guarantors:                                                      c/o
Fossil, Inc.

2280 N. Greenville Avenue

Richardson, Texas  75082

Attention:  Mike L. Kovar

Fax:  (972) 498-9448”

ARTICLE III

Conditions Precedent

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, (ii) the Second
Amended and Restated Revolving Line of Credit Note, duly executed by the
Borrower, in form and substance satisfactory to the Bank and its counsel and
(iii) the Amended and Restated Stock Pledge Agreement, duly executed by Fossil,
Inc., in form and substance satisfactory to the Bank and its counsel (the “Stock
Pledge Agreement”);

(b)         There shall have been no material
adverse change in the business or financial condition of the Borrower or any
Guarantor;

(c)         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 or such Guarantor;

 2
 

 

(d)         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;

(e)         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;

(f)          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; and

(g)         The Bank shall have received from the
Company or the Borrower, as appropriate, all fees and expenses (if any)
required to be paid to the Bank pursuant to the Agreement, as amended hereby.

ARTICLE IV

No Waiver

4.01         Nothing contained herein shall be
construed as a waiver by the Bank of any covenant or provision of the
Agreement, the other Loan Documents, this Amendment, or of any other contract
or instrument between the Borrower and/or the Guarantors and the Bank, and the
failure of the Bank at any time or times hereafter to require strict
performance by the Borrower and/or any Guarantor of any provision thereof shall
not waive, affect or diminish any right of the Bank to thereafter demand strict
compliance therewith.  The Bank hereby
reserves all rights granted under the Agreement, the other Loan Documents, this
Amendment and any other contract or instrument between the Borrower and/or the
Guarantors and the Bank.

ARTICLE V

Ratifications, Representations and Warranties, Covenants

5.01         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.

5.02         Ratification of Guaranties.  Each of the Guarantors hereby acknowledges
and consents to all of the terms and conditions of this Amendment and the
Revolving Note and hereby ratifies and confirms the Guaranty Agreement to which
it is a party to or for the benefit of the Bank.  Each of the Guarantors hereby represents and
acknowledges that it has no claims, counterclaims, offsets, credits or defenses
to the Loan Documents or the performance of its 

 3
 

 

obligations
thereunder.  Furthermore, each Guarantor
agrees that nothing contained in this Amendment or the Revolving Note 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.  Finally, each of the Guarantors hereby
represents and acknowledges that the execution and delivery of this Amendment
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 5.02) and shall not constitute a
waiver by the Bank of any of the Bank’s rights against such Guarantor.

5.03         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. 
Furthermore, the Company hereby ratifies and reaffirms its 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. 
Finally, the Company hereby represents and acknowledges that the
execution and delivery of this Amendment 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 this Section 5.03) and shall
not constitute a waiver by the Bank of any of the Bank’s rights against the
Company.

5.04         Representations and Warranties.  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 or Trust Agreement, 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) 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
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; (d) no default or Event of Default
under the Agreement, as amended hereby, 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 

 4
 

 

covenants and agreements
contained in the Agreement and the other Loan Documents, as amended hereby.

ARTICLE VI

Miscellaneous Provisions

6.01         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.

6.02         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 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.

6.03         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 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.

6.04         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.

6.05         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.

6.06         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.

6.07         Effect of Waiver.  No consent or waiver, express or implied, by
the Bank to or for any breach of or deviation from any covenant or condition 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.

 5
 

 

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

6.09         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.

6.10         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 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 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.

6.11         AGREEMENT
FOR BINDING ARBITRATION.  The
parties agree to be bound by the terms and provisions of the Bank’s current
Arbitration Program which is 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.]

 6

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

	
   

  	
  “BANK”

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK,

  
	
   

  	
  NATIONAL ASSSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susan K.
  Nugent

  
	
   

  	
   

  	
  Susan K. Nugent,

  
	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  “BORROWER”

  
	
   

  	
   

  
	
   

  	
  FOSSIL PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  Fossil, Inc.,
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Randy S. Kercho

  
	
   

  	
   

  	
  Randy S. Kercho,

  
	
   

  	
   

  	
  Executive Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  “GUARANTORS”

  
	
   

  	
   

  
	
   

  	
  FOSSIL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randy S. Kercho

  
	
   

  	
   

  	
  Randy S. Kercho,

  
	
   

  	
   

  	
  Executive Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FOSSIL
  INTERMEDIATE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mike L.
  Kovar

  
	
   

  	
   

  	
  Mike L. Kovar,
  Treasurer

  

 

 

 

	
  

  	
  FOSSIL TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mike L. Kovar

  
	
   

  	
   

  	
  Mike L. Kovar, Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FOSSIL STORES I,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mike L.
  Kovar

  
	
   

  	
  Mike L. Kovar,
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARROW
  MERCHANDISING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mike L.
  Kovar

  
	
   

  	
  Mike L. Kovar, Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FOSSIL HOLDINGS,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mike L.
  Kovar

  
	
   

  	
  Mike L. Kovar,
  Treasurer

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