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  Exhibit 10.40    
    

 
    AMENDMENT TO EMPLOYMENT AGREEMENT BETWEEN
  DTS, INC. AND DANIEL E. SLUSSER    
    

        This Amendment (the "Amendment") effective as of February 9, 2010, is made and entered into by and between DTS, Inc. (the
"Company") and Daniel E. Slusser (the "Executive"). 

        Whereas,
DTS and Executive have previously entered into an Employment Agreement effective January 1, 2009 (the "Agreement"); and 

        Whereas,
the parties to the Agreement wish to amend the Agreement; 

        NOW
THEREFORE, in consideration of the respective covenants contained herein, the parties agree as follows: 

        Section 1,
"Term" shall be amended by adding the following: 

        "Notwithstanding
the foregoing, the term shall be extended to expire on December 31, 2010." 

        This
Amendment does not delete, terminate or replace any provision of the Agreement except as specifically provided herein. 

        IN
WITNESS WHEREOF, the parties have executed this Amendment effective as of the day and date first written above. 

 

 

							
	 DANIEL E. SLUSSER	 	 DTS, INC.
	
 By:	
 	
/s/ DANIEL E. SLUSSER

  Daniel E. Slusser	
 	
 By:	
 	
/s/ JON KIRCHNER

  Jon Kirchner
 President & Chief Executive Officer
	

Date: February 9, 2010	
 	
Date: February 9,
2010                                    

 

 

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Exhibit 10.40

AMENDMENT TO EMPLOYMENT AGREEMENT BETWEEN DTS, INC. AND DANIEL E. SLUSSERExhibit 10.13

 

LOAN AGREEMENT

 

This Loan Agreement (the “Agreement”) is
entered into as of September 23, 2004, 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”), INTERMEDIATE LEASING, INC. (“Intermediate Leasing”), ARROW MERCHANDISING, INC. (“Arrow
Merchandising”), FOSSIL HOLDINGS, LLC
(“Fossil Holdings”) and FMW
ACQUISITION, INC. (“FMW”) (the Company, Fossil Intermediate,
Fossil Trust, Fossil I, Intermediate Leasing, Arrow Merchandising, Fossil
Holdings and FMW are sometimes referred to herein individually as a “Guarantor”
and collectively as the “Guarantors”).

 

R E C I T A L S

 

WHEREAS, the Borrower and the Guarantors have
requested that the Bank make available to the Borrower a revolving line of
credit of up to $50,000,000 and the Bank has agreed to do so subject to the
terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing, the
Bank’s making the following described loans, the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
Bank, the Borrower and the Guarantors agree as follows:

 

A G R E E M E N T

 

1.             The Line of Credit.  Subject to,
and upon the terms, conditions, covenants and agreements contained herein and
in the Revolving Note (as hereinafter defined), the Bank agrees to loan the
Borrower, at any time, and from time to time prior to 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 $50,000,000 (the “Total
Commitment”); within such limits and during such period, the Borrower may
borrow, repay, and re-borrow hereunder (the “Line of Credit”).  All loans under the Line of Credit shall be
evidenced by the a Revolving Line of Credit Note (the “Revolving Note”),
substantially 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.

 

2.             Documentary and Stand-by Letters of Credit. 
Subject to the terms and conditions contained herein, the Bank shall (a) from
time to time, at the request of the Borrower, issue documentary or stand-by
letters of credit to Borrower’s or its subsidiaries’ vendors for the acquisition
of inventory for the Borrower or its subsidiaries (the “Inventory
Acquisition Letters of Credit”) and (b) issue a stand-by letter of
credit in an aggregate amount up to ¥400,000,000 in favor of any Japanese
domestic bank for the account of the Borrower (the “JDB Letter of Credit”)
(the Inventory Acquisition Letters of Credit and the JDB Letter of Credit are
hereinafter collectively referred to as the “Documentary or Stand-by Letters
of Credit”).  The fees for issuance
of all Inventory Acquisition Letters of Credit shall be in accordance with the
Bank’s schedule of fees for issuance of letters of credit existing as of the
time of issuance.  No fees shall be
charged directly by the Bank to the Borrower in connection with the issuance of
the JDB Letter of Credit.  Immediately
upon issuance, the undrawn face amount of any such Documentary and Stand-by
Letters of Credit shall be considered in computing the amount of funds
available to the Borrower under the Line of Credit, as provided in Section 5
hereof.  The Bank shall not be obligated
to: (w) issue any Documentary or Stand-by Letter of Credit for the account
of the Borrower or its subsidiaries if the issuance of same would cause the
Outstanding Revolving Credit to exceed the Total Commitment; (x) issue any
Documentary or Stand-by Letter of Credit with an expiration date that is more
than one hundred eighty (180) days after the maturity date of the Revolving
Note; (y) extend the expiration date of any Documentary or Stand-by Letter
of Credit to a date that is more than one hundred eighty (180) days after the
maturity date of the Revolving Note; or (z) issue any Documentary or
Stand-by Letter of Credit if the face amount of such letter of credit, combined
with the aggregate undrawn face amount of all other Documentary and Stand-by
Letters of Credit then outstanding, would exceed $50,000,000.  If any Documentary or Stand-by Letters of
Credit are outstanding on the maturity date of the Revolving Note, the Borrower
shall deposit with the Bank, as cash collateral, an amount equal to the undrawn
face amount of all such Documentary or Stand-by Letters of Credit then
outstanding (such cash collateral to be maintained in a deposit account at the
Bank pursuant to documentation in form and substance mutually acceptable to the
Borrower and the Bank (the “Cash Collateral Account”)).  The Cash Collateral Account shall be in the
name of Borrower, and shall be pledged to, and subject to the control of, the
Bank in a manner satisfactory to the Bank. 
The Borrower hereby pledges and grants to the Bank a security interest
in all such funds held in the Cash Collateral Account from time to time and all
proceeds thereof, as security for the payment of any drawings under any and all
such Documentary or Stand-by Letters of Credit.

 

3.             [Intentionally
Deleted]

 

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4.           Use of Proceeds.  The proceeds
of the Line of Credit shall be used for the Borrower’s working capital needs
and for general corporate purposes.  No
part of the proceeds received hereunder will be used, directly or indirectly,
for the purpose of purchasing or carrying, or the payment in full or in part,
of indebtedness which was incurred for the purposes of purchasing or carrying
margin of stock, as such term is defined in Regulation U of the Board of
Governors of the Federal Reserve System, as now or from time to time
hereinafter in effect.

 

5.           Availability.

 

(a)           Revolving
Note.  The aggregate principal amount
at any time outstanding under the Revolving Note, plus one hundred
percent (100%) of the face amount of the JDB Letter of Credit (calculated by
reference to the amount of United States of America dollars into which the Bank
determines it could, in accordance with its practice from time to time in the
interbank foreign exchange market, convert such amount of Yen at its spot rate
of exchange in effect at approximately 8:00 a.m. (Dallas, Texas time) on
the date of determination), plus one hundred percent (100%) of the face
amount of all outstanding Documentary and Stand-by Letters of Credit (other
than the JDB Letter of Credit) issued for the account of the Borrower, plus
one hundred percent (100%) of the Bank’s participation interest in all letters
of credit issued for the account of the Borrower, the Company or any of their
respective subsidiaries pursuant to that certain Hongkong and Shanghai Banking
Corporation Limited Uncommitted Letter of Credit Facility, as the same may be
amended, modified or extended from time to time (said sum being herein referred
to as the “Outstanding Revolving Credit”), shall not at any time exceed
the Total Commitment.

 

(b)           Total Commitment
Compliance.  In the event the
Outstanding Revolving Credit at any time exceeds the Total Commitment, then,
upon notice from the Bank to the Borrower, the Borrower shall immediately make
such payments to the Bank as are necessary to reduce the Outstanding Revolving
Credit to an amount such that the Outstanding Revolving Credit is less than or
equal to the Total Commitment.

 

6.           Advances.  Advances
under the Line of Credit may be made by written or facsimile request signed by
an authorized officer of the Borrower or by telephone oral request or
electronic request by an authorized officer of the Borrower (unless such
authority for telephone oral request, electronic or facsimile request is
revoked in writing by an authorized officer of the Borrower, and such
revocation is actually received by the Bank (the “Revocation”)),
provided that any such advance shall be deposited in an account of the
Borrower.  In consideration of the Bank’s
permitting the Borrower to make telephone oral requests, electronic and
facsimile requests for advances under the Revolving Note until Revocation, the
Borrower covenants and agrees to assume liability for and to protect, indemnify
and hold harmless the Bank, its predecessors, agents, officers, directors,
employees, successors and assigns (individually and collectively, an “Indemnified
Party”) from any and all liabilities, obligations, damages, penalties,
claims, causes of action, costs, charges and expenses, including attorneys’
fees and expenses of employees, which may be imposed, incurred by or asserted
against any Indemnified Party by reason of any loss, damage or claim howsoever
arising or incurred because of or out of or in 

 

3

 

connection with (i) any action of any Indemnified Party pursuant
to telephone oral requests, electronic requests or facsimile requests for
advances under the Line of Credit, (ii) the breach of any provisions of
this Agreement by the Borrower, (iii) the transfer of funds pursuant to
such telephone oral requests, electronic requests or facsimile requests, or (iv) any
Indemnified Party’s honoring or failing to honor any telephone oral request,
electronic request or facsimile request for any reason.  The Bank is entitled to rely upon and act
upon telephone oral requests, electronic requests and facsimile requests made
or purportedly made by any of the officers or employees specified in the
resolutions delivered to the Bank of even date herewith, as supplemented in
writing from time to time and accepted by the Bank, and the Borrower shall be
unconditionally and absolutely estopped from denying (i) the authenticity
and validity of any such transaction so acted upon by the Bank once the Bank
has advanced funds under the Line of Credit and deposited or transferred such
funds as requested in any such telephone oral request, electronic request or
facsimile request, and (ii) the Borrower’s liability and responsibility
therefore.

 

7.           Payments; Prepayments.  Any payment
or prepayment of the outstanding principal amount of, or accrued interest on,
the Revolving Note shall be paid at the office of the Bank designated in the
Revolving Note (or at such other place or to such account as the Bank may from
time to time designate in writing to the Borrower).  The Borrower shall be entitled to repay
and/or prepay the outstanding principal balance of, and accrued interest on,
the Revolving Note from time to time and at any time, in whole or in part,
without notice or penalty of any kind, except as otherwise set forth in the
Revolving Note.  The Borrower may
re-borrow all or any portion of the principal amount of the Line of Credit so
repaid or prepaid subject to the terms and conditions the Revolving Note and
this Agreement (including, without limitation, Section 5(a) hereof).  All payments and prepayments on the Revolving
Note shall be applied first to accrued interest and then to principal in the
order of maturity.  No prepayment shall
relieve the Borrower of the obligation to pay the principal and interest on the
Revolving Note until such time as all obligations are paid in full.

 

8.           Collateral for the Loans. 
The Line of Credit shall be secured by the collateral described in the
Stock Pledge Agreement (as hereinafter defined) and, if applicable, by the cash
collateral maintained in the Cash Collateral Account.  Except as specifically provided in the
preceding sentence or as contemplated by Section 12(m) hereof,
the Line of Credit shall be unsecured.

 

9.           Conditions Precedent to Initial Loans . 
The Borrower shall execute and deliver, or cause to be executed and
delivered, to the Bank the following described documents:

 

(a)           In connection with
and as a condition precedent to the Bank’s obligation to make initial advances
under the Line of Credit or otherwise extend any credit accommodations
hereunder, the Borrower shall execute and deliver to the Bank, or cause to be
executed and delivered to the Bank, the following documents and instruments,
each of which shall be in form and substance satisfactory to the Bank (and the
Bank shall have no obligation to make initial advances under the Line of Credit
or otherwise extend any credit accommodations hereunder until each of said
documents and instruments are so executed and delivered to the Bank):

 

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(i)            This Agreement;

 

(ii)           The Revolving Note;

 

(iii)          A Guaranty
Agreement, duly executed by each of the Guarantors, pursuant to which the
Guarantors shall guarantee the prompt payment and performance by the Borrower
of its obligations hereunder (collectively, the “Guaranty Agreement”);

 

(iv)          A Stock Pledge
Agreement, duly executed by the Company, pursuant to which the Company shall
pledge to the Bank, as collateral security for the Borrower’s obligations to
the Bank hereunder, a security interest in sixty-five percent (65%) of any and
all issued and outstanding shares of stock of Fossil Europe B.V. and Fossil
(East) Limited, whether now or hereafter issued by such subsidiaries of the
Company (the “Stock Pledge Agreement”); and

 

(v)           Ordinary and
customary certificates and documents satisfactory to the Bank and its counsel.

 

(b)           In
connection with the Bank’s issuance of each Documentary or Stand-by Letter of
Credit, the Borrower shall, in addition to the documents required in Section 9(a) above,
execute and deliver to the Bank a Letter of Credit Application and Agreement
(herein so called), provided the Bank shall have no obligation to issue a
Documentary or Stand-by Letter of Credit for the account of the Borrower until
a Letter of Credit Application and Agreement has been executed by the Borrower
and delivered to the Bank.

 

10.         Conditions Precedent to each Loan and Issuance of each
Documentary or Stand-by Letter of Credit. 
Notwithstanding any other provision of this Agreement or any other Loan
Document to the contrary, it is understood and agreed that the Bank’s
obligation to make any advance or extension of credit hereunder on any date
(including the issuance of any Documentary or Stand-by Letter of Credit) is
subject to the satisfaction of the following conditions precedent:

 

(a)           The Borrower shall
have executed and delivered, or cause to have been executed and delivered, to
the Bank this Agreement and the other loan documentation referred to in Section 9
and, if applicable, Section 12(m) hereof;

 

(b)           There shall have
been no material adverse change in the financial condition of the Borrower,
individually, or the Guarantors, taken as a whole;

 

(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 Borrower, individually, or the Guarantors, taken as a whole;

 

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(d)           The representations
and warranties contained herein and in the other Loan Documents (as hereinafter
defined) shall be true and correct on and as of such date; and

 

(e)           No default or event
of default shall have occurred and be continuing hereunder or under any of the
other Loan Documents.

 

11.         Representations and Warranties. 
The Borrower and each of the Guarantors hereby jointly and severally
represent, warrant and covenant that:

 

(a)           The Borrower and
each of the Guarantors is a limited partnership, corporation, limited liability
company or business trust, as the case may be, duly organized, validly existing
and in good standing under the laws of the state, of its organization and is
duly licensed, qualified to do business and in good standing in each
jurisdiction in which the ownership of its property or the conduct of its
business requires such licensing and qualification and where the failure to be
so licensed or qualified would have a material adverse effect upon (i) its
business, operations, properties, assets or condition (financial or otherwise),
or (ii) its ability to perform, or of the Bank to enforce, its obligations
under the Loan Documents to which it is a party.  Borrower and each of the Guarantors has all
powers and all permits consents and authorizations necessary to own and
operate  properties and to carry on its
business as presently conducted.  The
execution, delivery and performance of this Agreement and the Guaranty
Agreement by the Guarantors and the execution, delivery and performance of this
Agreement by the Borrower, the borrowings hereunder and the execution and
delivery of the Revolving Note, the Letter of Credit Applications, the Guaranty
Agreement, the Stock Pledge Agreement, and the several agreements and
instruments contemplated thereby, (i) have been duly authorized by proper
corporate, partnership or trust proceedings, as appropriate, and (ii) 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, contract, agreement or other
instrument, or any judgment, order or decree, binding upon the Borrower or any
Guarantor.  To the best of Borrower’s and
Guarantors’ knowledge, no consent or authorization of, filing with or other act
by or in respect of, any governmental authority or any other person (other than
the Bank) is required in connection with the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of any of the Loan
Documents, except for such consents, authorizations, filings or acts as have
been obtained, filed or taken by the Borrower and the Guarantors prior to the
date hereof.  This Agreement, the
Revolving Note, the Letter of Credit Applications, the Guaranty Agreement, the
Stock Pledge Agreement, and any other agreements, documents and instruments
contemplated herein and thereby, or in any way related thereto whether executed
simultaneously herewith or hereafter (all of same being hereinafter sometimes
called the “Loan Documents”), when duly executed and delivered in
accordance with this Agreement, will each constitute a legal, valid and binding
obligation of  each of the Borrower and
the Guarantors, if a party thereto, enforceable against each such party in
accordance with its respective terms.

 

6

 

(b)           The audited balance
sheet of the Company at January 3, 2004, the related statement of income
and retained earnings for the period then ended, copies of which have been
delivered to the Bank, accurately represent the financial position of the
Company at January 3, 2004, and the results of its operations for the
periods then ended materially prepared in conformity with generally accepted
accounting principles applied on a basis consistent with the preceding
year.  No material adverse change has
occurred since January 3, 2004 position or in the results of operations of
the Company or in its business.

 

(c)           No approvals or
consents of any governmental department, administrative agency or
instrumentality having jurisdiction over the Borrower or any Guarantor are
necessary to permit the Borrower or any Guarantor to enter into the Loan
Documents to which it is a party, except for such approvals and covenants as
have been obtained.

 

(d)           There is no action,
suit or proceeding pending or, to the knowledge of the Borrower or any
Guarantor, threatened against the Borrower or any Guarantor or the Collateral
(hereinafter defined) before any court, governmental department, administrative
agency or instrumentality which, if such action, suit or proceeding were
adversely determined, would materially affect the financial position or the
results of operations of the Borrower or any Guarantor or its business or the
ability of the Borrower or any Guarantor to perform its obligations under the
Loan Documents.

 

(e)           To the best of the
Company’s management’s knowledge, no default or Event of Default (hereinafter
defined) has occurred and is continuing.

 

(f)            To the best of the
Company’s management’s knowledge, each of the Borrower and the Guarantors has
good and indefeasible title to all of its assets and properties, free and clear
of all security interests, mortgages, liens or encumbrances, except as
otherwise permitted under this Agreement.

 

(g)           Neither the Borrower
nor any Guarantor is an investment company within the meaning of the Investment
Company Act of 1940.

 

(h)           To the best of the
Company’s management’s knowledge, each of the Borrower and the Guarantors has
filed all United States federal returns and all material State and foreign tax
returns required to be filed by it and paid all sums required thereby to the
extent the same have become due and before they may have become delinquent in
accordance with such returns, or is contesting the payment of same diligently
and in good faith before the proper taxing authority.  To the best of the Company’s management’s
knowledge, all other material tax returns required to be filed by the Borrower
and the Guarantors with any taxing jurisdiction have been filed and all tax
liabilities shown thereon to be due have been paid to the extent the same have
become due and before they may have become delinquent in accordance with such
returns, or the payment of such tax liabilities is being contested diligently
and in good faith before the proper taxing authority, and such returns properly
reflect the taxes of the Borrower and the Guarantors, as applicable, for the
periods covered thereby in all material respects.

 

7

 

(i)            Borrower and each
Guarantor (a) is solvent and will continue to be solvent after giving
effect to the transactions contemplated hereunder, and (b) is able to pay
its debts as they mature and has (and has reason to believe it will continue to
have) sufficient capital (and not unreasonably small capital) to carry on its
business and all businesses in which it is about to engage.  The assets and properties of Borrower and
each Guarantor at a fair valuation and at their present fair salable value are,
and will be, greater than the indebtedness of Borrower and each such Guarantor,
respectively (including subordinated and contingent liabilities computed at the
amount which, to the best of the Company’s management’s knowledge, represents
an amount which can reasonably be expected to become an actual or matured
liability).

 

12.         Affirmative Covenants.  The Borrower
and the Company hereby agree that, at all times during the term of this
Agreement and until payment and performance in full of the Revolving Note,
unless the Borrower receives prior written approval of a deviation therefrom
from the Bank, the Borrower and the Company shall, and except in the case of
delivery of financial information, reports and notices, shall cause each of the
Guarantors to:

 

(a)           Annual Financial
Statements.  Furnish the Bank, within
one hundred (100) days after the end of each fiscal year of the Company, (i) a
copy of the Company’s audited consolidated financial statements, consisting of
at least a balance sheet and related statement of income, retained earnings and
changes in financial condition of the Company prepared in conformity with
generally accepted accounting principles, applied on a basis consistent with
that of the preceding year, and certified by an independent certified public
accountant selected by the Company and reasonably satisfactory to the Bank, (ii) a
copy of the consolidating financial statements of the Company prepared by the
Company, and (iii) a copy of the Form 10-K of the Company for such
fiscal year.

 

(b)           Quarterly
Financial Statements.  Furnish the
Bank, upon request, within fifty (50) days after the end of any fiscal quarter
of the Company during the term hereof, (i) a copy of its unaudited
consolidating financial statements for such fiscal quarter, consisting of at
least a balance sheet and related statement of income, materially prepared in
conformity with generally accepted accounting principles and certified by an
authorized officer of the Company, and (ii) a copy of the Form 10-Q
of the Company for such fiscal quarter.

 

(c)           Compliance
Certificate.  Furnish the Bank,
concurrently with the delivery of the financial statements required to be delivered
pursuant to clauses (a) and (b) above, a Compliance Certificate in a
form similar to the Compliance Certificate attached hereto as Exhibit B,
but including all representations and warranties to the satisfaction of the
Bank, signed by an authorized officer of the Borrower and the Company.

 

(d)           Accounts
Receivable Agings, Accounts Payable Agings and Inventory Summaries.  Furnish the Bank, within ten (10) days
of any request by the Bank, accounts receivable agings, accounts payable agings
and/or inventory summaries in form and detail acceptable to the Bank.

 

8

 

(e)           Insurance.  Maintain and keep in full force and effect
insurance of the kinds customarily carried or maintained by persons of
established reputation engaged in similar lines of business to that of the
Borrower and Company, with all such insurance to be carried in amounts and
provided by insurance companies reasonably acceptable to the Bank.  The Borrower and the Company agree to deliver
to the Bank from time to time at the Bank’s request schedules setting forth all
insurance then in effect.

 

(f)            Taxes.  Pay and discharge all material taxes,
assessments and governmental charges or levies imposed on it or on its income
or profits or on any of its property prior to the date on which such taxes,
assessments and governmental charges or levies become due and payable; provided,
however, that neither the Borrower nor any Guarantor shall be required
to pay and discharge or cause to be paid and discharged any such taxes,
assessments and governmental charges or levies if (and for so long as) the
validity or amount thereof are being contested in good faith by appropriate
proceedings diligently pursued and appropriate reserves have been provided
therefor; provided further, however, that the Borrower and each
of the Guarantors shall, in any event, pay and discharge all material taxes,
assessments and governmental charges or levies imposed on it or on its income
or profits or on any of its property prior to the fifteenth (15th) day following the date that any liens securing same
are filed of public record.

 

(g)           Litigation.  Promptly give notice to the Bank of all
litigation and all proceedings before governmental or regulatory agencies
affecting the Borrower or any Guarantor except litigation or proceedings that
could not reasonably be expected to have material adverse effect upon the
financial condition of the Borrower, individually, or the Guarantors, taken as
a whole.

 

(h)           Further
Assurances.  At any time and from
time to time, execute and deliver such further instruments and take such
further action as may reasonably be requested by the Bank, in order to cure any
defects in the execution and delivery of, or to comply with or accomplish the
covenants and agreements contained in the Loan Documents.

 

(i)            Books and
Records.  Make available to the Bank
during normal business hours at the Borrower’s main office its books and
records, including, but not limited to, the subsidiary journals, accounts
receivable files, inventory records, general ledger, and correspondence
files.  The Bank shall have the right to
examine its collateral at any reasonable time without prior notice.

 

(j)            Existence.  Continue to be a limited partnership,
corporation, limited liability company or business trust, as the case may be,
duly organized and existing in good standing under the law of the jurisdiction
under which it is organized and continue to be duly licensed or qualified as a
foreign limited partnership, corporation, limited liability company or business
trust, as the case may be, in all jurisdictions wherein the character of the
property owned or leased by it or the nature of the business transacted by it
makes licensing or qualification necessary by a foreign limited partnership,
corporation, 

 

9

 

limited liability
company or business trust, as the case may be, except where the failure to be
so licensed or qualified would not have a material adverse affect on its
business or operations taken as a whole.

 

(k)           Expenses.  Pay reasonable expenses, including reasonable
legal expenses and attorney’s fees, of the Bank which have been or may be
incurred by the Bank in connection with the preparation of this Agreement and
the lending and incurring of obligations or liabilities hereunder, the
collection of any note authorized hereby, or for the enforcement of the
Borrower’s or any Guarantor’s obligations hereunder and under any document
executed to secure the payment of any note authorized hereunder and for the
recording and filing and recording and refiling of any such document.

 

(l)            Default; Name
Change; Casualty.  Give notice to the
Bank in writing of the occurrence of any default or Event of Default under this
Agreement, any change in name, identity or structure of the Borrower or any
Guarantor, and any uninsured or partially uninsured loss in excess of
$5,000,000 through fire, theft, liability or property damage.

 

(m)          Domestic
Subsidiary Guarantees/Stock Pledges. 
At the discretion of the Company, either (i) cause each
majority-owned subsidiary of the Company or the Borrower which is incorporated
or formed in the United States of America and which owns or holds tangible
assets having an aggregate book value of $50,000,000 or more (each, a “Significant
Domestic Subsidiary”) to execute a Guaranty Agreement in the form of Exhibit A
attached hereto, or (ii) pledge to the Bank, as collateral security for
the Borrower’s obligations to the Bank hereunder, a security interest in one
hundred percent (100%) of the stock of each such Significant Domestic
Subsidiary which is owned by the Borrower or the Company by executing a Stock
Pledge Agreement in the form of Exhibit B attached hereto.

 

13.         Negative Covenants.  The Borrower
and the Guarantors hereby agree that, at all times during the term of this
Agreement and until payment and performance in full of the Revolving Note,
unless the Borrower receives prior written approval of a deviation therefrom
from the Bank, the Borrower and the Guarantors shall not directly or
indirectly:

 

(a)           Debt.  Create, incur, assume or suffer to exist any
debt for borrowed money, whether by way of loan, or the issuance or sale of
bonds, debentures, notes or securities, including deferred debt for the
purchase price of assets, except for (i) the loans described herein, (ii) revolving
credit loans in an aggregate principal amount of up to ¥400,000,000 from any
Japanese domestic bank, provided that the only security for
such revolving credit loans shall be the JDB Letter of Credit, (iii) loans
from one or more Guarantors to the Borrower or another Guarantor, so long as
the indebtedness in respect of such loans is unsecured and fully subordinated
to the indebtedness owing to the Bank pursuant to a written subordination
agreement in form and substance satisfactory to the Bank, (iv) current
accounts payable and other current obligations (other than for borrowed

 

10

 

money) arising out of transactions in the ordinary course of business
and (v) indebtedness or obligations permitted pursuant to Section 13
(b) hereof.

 

(b)         Liabilities.  Assume, guarantee, endorse, suffer to exist
or otherwise become liable upon, or agree to purchase or otherwise furnish
funds for the payment of, the obligations of any person, firm or corporation,
except for

 

(i)            the
obligations hereunder;

 

(ii)           endorsement
of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business;

 

(iii)          obligations
under operating leases;

 

(iv)          obligations
for indebtedness secured by purchase money liens not to exceed $10,000,000 in
the aggregate at any time outstanding;

 

(v)           obligations
under foreign currency exchange contracts, so long as such obligations are
incurred in the ordinary course of its business;

 

(vi)          indebtedness
to shareholders, officers or partners, so long as such indebtedness is
unsecured, fully subordinated to the indebtedness owing to the Bank in form and
substance satisfactory to the Bank, and evidenced by debt instruments
satisfactory in form and substance to the Bank;

 

(vii)         obligations
under guaranties securing indebtedness not to exceed $10,000,000 in the
aggregate at any time outstanding; and

 

(viii)        any
other unsecured indebtedness which is subordinated to the indebtedness owing to
the Bank pursuant to a written subordination agreement in form and substance
satisfactory to the Bank.

 

(c)          Encumbrances.  Create, incur, assume or suffer to exist any
mortgage, deed of trust, pledge, encumbrance, lien or security interest of any
kind, upon any of its property now owned or hereafter acquired, except (i) liens,
mortgages, encumbrances or security interest to secure payment of the
borrowings authorized hereunder; (ii) pledges or deposits to secure
obligations under workmen’s compensation laws or of similar legislation; (iii) deposits
to secure public or statutory obligations; (iv) statutory mechanics’,
carriers’, workmen’s, repairmen’s liens or other like items in the ordinary
course of business in respect to obligations which are not overdue or are being
contested in good faith; (v) existing liens disclosed to the Bank in
writing prior to the date of this Agreement or otherwise consented to in
writing by the Bank; (vi) liens for taxes, assessments or other
governmental charges or levies not yet due or liens which are being contested
in good faith by appropriate proceedings for sums not exceeding $100,000 in the
aggregate; (vii) legal or equitable encumbrances not in excess of
$1,000,000 in the aggregate deemed to exist by reason of the existence of any
litigation or other legal 

 

11

 

proceeding or arising out of a judgment or award with respect to which
an appeal is being prosecuted; and (viii) liens securing purchase money
indebtedness permitted under Section 13(b)(iv) hereof.

 

(d)         Purchase of Assets and Investments;
Consolidations, Mergers and Sales of Assets.  Form any new subsidiary or merge or
invest in or consolidate with any corporation or other entity, or sell, lease,
assign, transfer, or otherwise dispose of (whether in one transaction or as a
series of related transactions) all or substantially all of its assets, whether
now owned or hereafter acquired; or acquire by purchase or otherwise, all or
substantially all of the assets of any corporation or other entity; provided,
however, that (i) the Borrower and the Company may form new
subsidiaries, so long as (A) the Borrower or the Company provides the Bank
with prior written notice of such formation and (B) the Borrower and the
Company comply with their obligations pursuant to Section 12(m) hereof,
and (ii) the Company may merge or consolidate one or more of its
wholly-owned subsidiaries (other than the Borrower) with or into (A) the
Company (provided that the Company shall be the surviving corporation) or (B) any
one or more of its wholly-owned subsidiaries, (iii) the Company may merge
or consolidate one or more of its wholly-owned subsidiaries with or into the
Borrower (provided that the Borrower shall be the surviving corporation), and (iv) the
Company or the Borrower may invest in or acquire by purchase or otherwise, all
or substantially all of the assets of any corporation or other entity, so long as
(A) the consideration utilized by the Company or the Borrower to effect
any such investment or acquisition consists solely of cash and/or capital stock
of the Company or any subsidiary of the Company and (B) no default or
Event of Default then exists or would exist after giving effect to such
investment or acquisition.

 

(e)           Business.  Change the nature of its business or engage
in a kind of business different from that which it presently conducts.

 

(f)            Loans
to Officers.  Make any loans or
advances to its shareholders or officers in excess of $500,000 to any
individual officer or shareholder or $2,000,000 in the aggregate to all
officers and shareholders.

 

14.           Financial Covenants.  The Company
covenants and agrees that, at all times during the term of this Agreement and
until payment and performance in full of the Revolving Note, the Company will,
on a consolidated basis:

 

(a)           Quick
Ratio.  Maintain, at all times, a
ratio of (i) (A) cash, plus (B) cash equivalents, plus
(C) account receivables to (ii) current liabilities of not less than
1.0 to 1.0.  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.

 

(b)           [Intentionally
Deleted]

 

(c)           Fixed
Charge Coverage Ratio.  Maintain a
ratio of Cash Flow to Fixed Charges of not less than 2.0 to 1.0 throughout the
term hereof.  “Cash Flow” is
defined as 

 

12

 

the Company’s net income, plus depreciation and amortization, plus
interest expense, plus rental expense, all on a consolidated basis, and each
determined in accordance with generally accepted accounting principles.  “Fixed Charges” is defined as the
Company’s current portion of long-term debt and capitalized leases, plus
interest expense, plus rental expense, plus dividends, all on a consolidated
basis, and each determined in accordance with generally accepted accounting principles.  Cash Flow and Fixed Charges shall be
determined as of the end of the immediately preceding fiscal quarter for the
twelve-month period ended as of the end of such fiscal quarter for which the
determination is being made (i.e., on a rolling four-quarter basis).

 

(d)           Minimum
Net Income.  Achieve net income of
not less than $5,000,000 for each fiscal quarter of the Company, commencing
with the fiscal quarter ending October 2, 2004 (with net income to be
determined in accordance with generally accepted accounting principles).

 

15.         Default.  The Borrower
shall be in default hereunder if any one of the following events of default (“Events
of Default”) shall occur and be continuing, namely:

 

(a)           The
Borrower, any Guarantor or any other party to the Loan Documents shall fail to
pay, when due, any sums owing to the Bank; or

 

(b)           The
Borrower, any Guarantor or any other party to the Loan Documents shall fail to
pay, when due, any sums owing to others for borrowed money or the deferred
payment of goods or services (excluding trade payables) in excess of $5,000,000
(hereinafter referred to as “Other Indebtedness”) or if the holder of
any such Other Indebtedness declares or may declare such Other Indebtedness due
prior to the stated maturity because of any default thereunder; or

 

(c)           Any
representation, statement, warranty, projection, or certificate made by the
Borrower or any Guarantor in the Loan Documents, or in any agreement, document
or instrument executed pursuant hereto or concurrently herewith, or hereafter
furnished to the Bank in connection with any loan or loans hereunder, shall
prove to have been incorrect in any material respect at the time of making or
issuance thereof; or

 

(d)           The
Borrower or any Guarantor, as applicable, shall fail or neglect to perform,
keep or observe any covenant contained in Section 12(i), 12(j),
12(l),  13 or 14 hereof on the date that the Borrower or
any such Guarantor, as applicable, is required to perform, keep or observe such
covenant; or

 

(e)           The
Company shall fail or neglect to perform, keep or observe any covenant
contained in Section 3 of the Stock Pledge Agreement on the date
that the Company is required to perform, keep or observe such covenant; or

 

(f)            The
Borrower, any Guarantor or any other party to the Loan Documents shall fail or
neglect to perform, keep or observe any covenant or agreements set forth in the
Loan Documents or in any other agreement, document or instrument executed 

 

13

 

pursuant hereto (other than a covenant or agreement the performance of
which is dealt with specifically elsewhere in this Section 15), and
such default is not cured to the Bank’s satisfaction within thirty (30) days of
the occurrence thereof; provided, however, that the provisions of this
Agreement shall control in the event that any of such provisions are in
conflict with the provisions of any other agreement, mortgage, indenture or
instrument executed pursuant hereto and all of such provisions in such other
instruments shall be deemed to be cumulative of the provisions hereof to the
extent such provisions are not inconsistent herewith; or

 

(g)           The
Borrower, any Guarantor or any other party to the Loan Documents shall apply
for or consent to, or acquiesce in the appointment of a receiver, trustee, or
liquidator of itself or himself or of its or his property, or admit in writing
its or his inability to pay its or his debts as they mature, or make a general
assignment for the benefit of creditors or an Order of Relief be entered with
respect to the Borrower, any guarantor or any other party to the Loan Documents
by any court having competent jurisdiction in the premises, or file a voluntary
petition in bankruptcy or a petition or answer seeking reorganization,
composition, readjustment or arrangement, or similar relief with creditors,
under any present or future statute, law or regulation, or otherwise, or take
advantage of any insolvency law or file an answer admitting the material
allegations of a petition filed against it or him in bankruptcy,
reorganization, or insolvency proceedings, or corporate action shall be taken
by it or him for the purpose of effecting any of the foregoing, or it or he
shall have a receiver or trustee or assignee in bankruptcy or insolvency
appointed for it or him, or its or his property, without its or his application
or consent.

 

Upon the occurrence and
during the continuance of any Event of Default (other than an Event of Default
specified in Section 15 (g) above), the obligation of the Bank to
make any advance or extend any credit hereunder (including the issuance of
Documentary or Stand-by Letters of Credit) to or for the account of the
Borrower shall, upon notice by the Bank to the Borrower, immediately terminate
and the Bank shall be entitled to each and every remedy and to take each and
every action permitted by the Loan Documents. 
Upon the occurrence and during the continuance of any Event of Default
specified in Section 15 (g) above, the obligation of the Bank to make
any advance or extend any credit hereunder (including the issuance of
Documentary or Stand-by Letters of Credit) to or for the account of the
Borrower shall automatically terminate, all indebtedness, liabilities and
obligations of the Borrower to the Bank under this Agreement and the other Loan
Documents shall immediately become due and payable (without presentment,
demand, protest or other or other notice of any kind, all of which are waived
by the Borrower and the Guarantors) and the Bank shall be entitled to each and
every remedy and to take each and every action permitted by the Loan Documents.

 

16.          Notice.  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 the parties at their 

 

14

 

respective addresses set
forth below or such other address as any such party may from time to time
designate by written notice to the other:

 

	
  if to the Bank:

  	
  Wells Fargo Bank, National Association

  
	
   

  	
  1445 Ross Avenue, 3rd Floor

  
	
   

  	
  MAC T5303-031

  
	
   

  	
  Dallas, Texas 75202

  
	
   

  	
  Attention: 

  	
  Susan K. Nugent

  
	
   

  	
   

  	
  Assistant Vice President

  
	
   

  	
  Fax: (214) 969-0370

  
	
   

  	
   

  
	
  with a copy to:

  	
  Patton Boggs LLP

  
	
   

  	
  2001 Ross Avenue, Suite 3000

  
	
   

  	
  Dallas, Texas 75201

  
	
   

  	
  Attention: Robert Jeffery Cole, Esq.

  
	
   

  	
  Fax: (214) 758-1550

  
	
   

  	
   

  
	
  if to the Borrower:

  	
  Fossil Partners, L.P.

  
	
   

  	
  2280 N. Greenville Avenue

  
	
   

  	
  Richardson, Texas 75082-4412

  
	
   

  	
  Attention: Mike L. Kovar

  
	
   

  	
  Fax: (972) 498-9448

  
	
   

  	
   

  
	
  if to Guarantors:

  	
  c/o Fossil, Inc.

  
	
   

  	
  2280 N. Greenville Avenue

  
	
   

  	
  Richardson, Texas 75082-4412

  
	
   

  	
  Attention: Mike L. Kovar

  
	
   

  	
  Fax: (972) 498-9448

  

 

17.           Waiver.  No failure to
exercise and no delay in exercising on the part of the Bank of any right, power
or privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder, preclude any
other or further exercise thereof, or the exercise of any other right, power or
privilege.  The rights and remedies
herein provided are  cumulative and not
exclusive of any rights or remedies provided by law or in any other agreement.

 

18.           Survival of Agreements.  All
agreements, representations and warranties herein made shall survive the
execution and delivery of the Revolving Note, and the making and renewal
thereof.

 

19.           Amendment.  This
Agreement may not be amended except in writing signed by the Borrower, the
Guarantors and the Bank.

 

20.           Successors.  This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Guarantors, the Bank and the successors and assigns of each party hereto.

 

15

 

21.           Severability.  In the case
any one or more of the provisions contained in the Loan Documents should be
invalid, illegal, or unenforceable, in any respect, the validity, legality, and
enforceability of the remaining provisions contained therein shall not in any
way be affected thereby.

 

22.           Interest.  It is the
intention of the parties hereto to comply with the laws of the State of Texas
accordingly, it is agreed that notwithstanding any provisions to the contrary
in the Loan Documents, in no event shall said Loan Documents require the
payment or permit the collection of interest, as defined under the laws of the
State of Texas, in excess of the maximum amount permitted by such laws.  If any such excess of interest is contracted
for, charged or received, under the Loan Documents, or in the event the
maturity of the indebtedness evidenced by the Revolving Note or is accelerated
in whole or in part, or in the event that all or part of the principal or
interest of the Revolving Note shall be prepaid, so that under any of such
circumstances the amount of interest contracted for, charged, or received under
the Loan Documents on the amount of principal actually outstanding from time to
time thereunder shall exceed the maximum amount of interest permitted by the
laws of the State of Texas, then in any such event (a) the provisions of
this section shall govern and control, (b) neither the Borrower nor any other
person or entity now or hereafter liable for the payment of the Revolving Note
shall be obligated to pay the amount of such interest to the extent that it is
in excess of the maximum amount of interest permitted to be contracted for by,
charged to or received from the party obligated thereon under the laws of the
State of Texas, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal amount on the
Revolving Note or refunded to the person paying the same, at the holder’s
option, and (d) the effective rate of interest shall be automatically
reduced to the maximum lawful rate of interest permitted to be contracted for
by, charged to or received from the party obligated thereon under the laws of
the State of Texas as now or hereafter construed by the courts having
jurisdiction thereof.  It is further
agreed that without limitation of the foregoing, all calculations of the rate
of interest contracted for, charged or received under the Loan Documents, for
the purpose of determining whether such rate exceeds the maximum lawful rate of
interest, shall be made, to the extent permitted by the laws of the State of
Texas, by amortizing, prorating, allocating and spreading in equal parts during
the period of the full stated terms of the Revolving Note all interest at any
time contracted for, charged or received from the undersigned or otherwise by
the holder or holders thereof in connection with such Revolving Note.  To the extent that Chapter 1D of Article 5069
of the Texas Revised Civil Statutes is relevant to the Bank for the purpose of
determining the maximum rate of interest, the Bank hereby elects to determine
the applicable rate ceiling under such Article by the weekly rate ceiling
from time to time in effect, subject to Bank’s right subsequently to change
such method in accordance with applicable law, as the same may be amended or
modified from time to time.

 

23.           Participations, Etc.  The Borrower
expressly recognizes and agrees that, so long as the total indebtedness of the
Borrower to the Bank is $50,000,000 or less, upon the mutual consent of the
Borrower and the Bank (unless an Event of Default has occurred hereunder in
which case no consent of the Borrower shall be necessary), the Bank may sell to
other lenders participations in the loans incurred by the Borrower pursuant
hereto.  The Borrower expressly
recognizes and agrees that, if the total indebtedness of the Borrower to the
Bank is more than 

 

16

 

$50,000,000, the Bank, without the consent of the
Borrower, may sell to other lenders participations in the loans incurred by the
Borrower pursuant hereto.  Therefore, as
security for the due payment and performance of all indebtedness and other
liabilities and obligations of the Borrower to the Bank under the Loan
Documents and any other obligation of the Borrower to the Bank, whether now
existing or hereafter arising, and to such lenders arising now by reason of
such participations or otherwise, the Borrower hereby grants to the Bank and to
such lenders, a lien on and security interest in any and all deposits or other
sums at  any time credited by or due from
the Bank and such lenders or either or any of them to the Borrower, whether in
regular or special depository accounts or otherwise, and any and all monies,
securities and other property of the Borrower, and the proceeds thereof now or
hereafter held or received by or in transit to the Bank and such lenders or
either or any of them, from or for the Borrower whether for safekeeping,
custody, pledge, transmission, collection or otherwise and any such deposit,
sums, monies securities and other property may at any time after Default be
set-off, appropriated and applied by the Bank and by such lenders, or either or
any of them, against any indebtedness, liabilities or other obligations,
whether now existing or hereafter arising, of the Borrower or any of them,
under this Agreement, the Revolving Note, or otherwise whether or not such
indebtedness, liabilities or other obligation is then due or secured by any
indebtedness, liabilities or other obligation is then due or secured by any
collateral or if it is so secured whether or not such collateral held by the
Bank or such lenders is considered to be adequate.

 

24.           This Agreement is being executed and delivered, and is
intended to be performed in the State of Texas. 
Except to the extent that the laws of the United States may apply to the
terms hereof, the substantive laws of the State of Texas shall govern the
validity, construction, enforcement and interpretation of this Agreement. In
the event of a dispute involving this Guaranty 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 Bank’s current Arbitration Program described in paragraph 28
below.

 

25.          Judgment Currency.

 

(a)           If,
for the purposes of obtaining judgment in any court, it is necessary to convert
a sum due hereunder or under the Revolving Note from a currency (the “Original
Currency”) into
another currency (the “Other Currency”), the parties hereto agree, to
the fullest extent that they may effectively do so, that the rate of exchange
used shall be the rate of exchange prevailing on the business day immediately
preceding the day on which final judgment is given.

 

(b)           The
obligation of the Borrower in respect of any sum due in the Original Currency
from it to Bank hereunder or under the Revolving Note shall, notwithstanding
any judgment in any Other Currency, be discharged only if and to the extent
that on the business day following receipt by Bank of any sum adjudged to be so
due in such Other Currency Bank may in accordance with normal banking
procedures purchase such amount of the Original Currency with such Other
Currency at the rate of exchange prevailing on the business day preceding the
day on which the final judgment referred to 

 

17

 

in Section 25 (a) is given; if the amount of the
Original Currency so purchased is less than the amount of the Original Currency
which the Bank could have purchased at the rate of exchange prevailing on the
business day preceding the day on which such final judgment is given, the
Borrower agrees, as a separate obligation of the Borrower to the Bank and
notwithstanding any such judgment, to indemnify Bank against such difference,
and if the amount of the Original Currency so purchased exceeds the amount of
the Original Currency which the Bank could have purchased at the rate of
exchange prevailing on the business day preceding the day on which such final
judgment is given, Bank agrees to remit to the Borrower such excess.

 

26.           [Intentionally Deleted]

 

27.           NOTICE:  THIS
AGREEMENT AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS CONSTITUTE A
WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND 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 RELATING TO
THE INDEBTEDNESS.

 

28.           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 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.

 

[THE REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK]

 

18

 

EXECUTED as of the day
and year first above written.

 

 

	
   

  	
  BANK:

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Susan K. Nugent

  
	
   

  	
  Title:

  	
  Assistant Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  FOSSIL
  PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Fossil, Inc., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Randy S. Kercho

  
	
   

  	
   

  	
  Executive Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  FOSSIL,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Randy S. Kercho

  
	
   

  	
   

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FOSSIL
  INTERMEDIATE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Mike L. Kovar, Treasurer

  
					

 

 

	
   

  	
  FOSSIL
  TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Mike L. Kovar, Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FOSSIL
  STORES I, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Mike L. Kovar, Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTERMEDIATE
  LEASING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARROW
  MERCHANDISING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FOSSIL
  HOLDINGS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 

	
   

  	
  FMW
  ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

Exhibits:

A—Guaranty Agreement

B—Stock Pledge Agreement

 

 

EXHIBIT A

 

GUARANTY AGREEMENT

 

(See Attached)

 

 

EXHIBIT B

 

STOCK PLEDGE AGREEMENT

 

(See Attached)

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