FIFTH AMENDMENT TO SECOND
AMENDED AND RESTATED LOAN AGREEMENT
THIS FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT (this
"Amendment") is made and entered into this __ day of June, 1997, by and among
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, a national banking association
formerly known as First Interstate Bank of Texas, N.A. (the "Bank"), Fossil
Partners, L.P. (the "Borrower"), Fossil, Inc. (the "Company"), Fossil
Intermediate, Inc. ("Fossil Intermediate"), Fossil Trust ("Fossil Trust"),
Fossil New York, Inc. ("Fossil New York"), Fossil Stores I, Inc. ("Fossil I")
and Fossil Stores II, Inc. ("Fossil II").
RECITALS
A. The Bank, the Borrower, the Company, Fossil Intermediate, Fossil Trust,
Fossil New York and Fossil I are parties to that certain Second Amended and
Restated Loan Agreement, dated effective April 30, 1995, as amended by (i) that
certain First Amendment to Second Amended and Restated Loan Agreement, dated
effective March 27, 1996, by and among the Bank, the Borrower, the Company,
Fossil Intermediate, Fossil Trust, Fossil New York and Fossil I, (ii) that
certain Second Amendment to Second Amended and Restated Loan Agreement, dated
effective May 3, 1996, by and among the Bank, the Borrower, the Company, Fossil
Intermediate, Fossil Trust, Fossil New York, Fossil I and Fossil II, (iii) that
certain Third Amendment to Second Amended and Restated Loan Agreement, dated
effective September 11, 1996, by and among the Bank, the Borrower, the Company,
Fossil Intermediate, Fossil Trust, Fossil New York, Fossil I and Fossil II and
(iv) that certain Fourth Amendment to Second Amended and Restated Loan
Agreement, dated effective April 2, 1997, by and among the Bank, the Borrower,
the Company, Fossil Intermediate, Fossil Trust, Fossil New York, Fossil I and
Fossil II (as amended, the "Loan Agreement");
B. The Bank, the Borrower, the Company, Fossil Intermediate, Fossil Trust,
Fossil New York, Fossil I and Fossil II desire to amend the Loan Agreement as
hereinafter 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 Loan
Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
Amendment
2.01 Amendment to Section 1. Effective as of the date hereof, Section 1
of the Loan Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:
"1. The Line of Credit. Subject to, and upon the terms,
conditions, covenants and agreements contained herein, the Bank agrees
to loan the Borrower, at any time, and from time to time prior to the
maturity of the Borrower's promissory note executed in conjunction with
this Agreement such amounts as the Borrower may request up to, but not
exceeding, an aggregate principal sum at any time outstanding equal to
$40,000,000.00 (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 Borrower's Eighth Amended and Restated Master
Revolving Credit Note (the 'Revolving Note'), substantially in form and
substance satisfactory to the Bank, 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 set forth on the face of 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 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 also be made to fund Documentary or Stand-by
Letters of Credit (as hereinafter defined) that are issued
under the Revolving Note and are drawn upon, provided, the
Bank may, in its own discretion, advance funds under the Line
of Credit to fund such Documentary or Stand-by Letters of
Credit (as hereinafter defined) when the Borrower does not
reimburse the Bank for such funding. All such advances shall
be added to the principal amount of the Revolving Note."
2.02 Amendment to Section 2. Effective as of the date hereof, Section 2
of the Loan Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:
"2. Documentary and Stand-by Letters of Credit. Subject to the
conditions 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 vendors for the acquisition of inventory for the Borrower
(the 'Inventory Acquisition Letters of Credit') and (b) issue a
stand-by letter of credit in an aggregate amount up to
(Y)540,000,000.00 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 Bank to Borrower in
connection with the issuance of the JDB Letter of Credit. Immediately
upon issuance, such Documentary and Stand-by Letters of Credit shall be
considered in computing the amount of funds available to the Borrower,
as provided in Section 6 herein. The Bank shall not be obligated: (x)
to issue Documentary or Stand-by Letters of Credit if the issuance of
same would cause the Outstanding Revolving Credit to exceed the Total
Commitment; (y) to issue such Letters of Credit with an expiration date
more than one hundred eighty (180) days after the maturity date of the
Revolving Note; and (z) to extend the expiration date of such Letters
of Credit to a date more than one hundred eighty (180) days after the
maturity date of the Revolving Note."
2.03 Amendment to Section 3. Effective as of the date hereof, Section 3
of the Loan Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:
"3. Foreign Currency Exchange Contracts. Subject to the
conditions contained herein, the Bank may, in its discretion, from time
to time at the request of the Borrower, issue foreign currency exchange
contracts to Borrower for use by Borrower in the ordinary course of its
business. Immediately upon issuance, such foreign currency exchange
contracts shall be considered in computing the amount of funds
available to the Borrower, as provided in Section 6 hereof. The Bank
shall not be obligated: (a) to issue any such foreign currency exchange
contract if the issuance of the same would cause the Outstanding
Revolving Credit to exceed the Total Commitment, (b) to issue any
foreign currency exchange contract with a settlement date after the
maturity date of the Revolving Note, or (c) to issue any such foreign
currency exchange contract if (i) the Bank's futures contract risk
under such contract and all other contracts then outstanding would
exceed $15,000,000.00 or (ii) the Bank's delivery risk under such
contract and all other contracts then outstanding would exceed
$3,000,000.00."
2.04 Amendment to Section 6(a). Effective as of the date hereof,
Section 6(a) of the Loan Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:
"(a) Revolving Note. The aggregate principal amount at any
time outstanding under the Revolving Note, plus, one hundred twenty
percent (120%) of the face amount of the JDB Letter of Credit
(calculated by reference to the amount of United States of America
dollars into which 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 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 twenty percent
(20%) of the aggregate amount of all foreign currency exchange
contracts issued by the Bank for the account of the Borrower (said sum
being herein referred to as the 'Outstanding Revolving Credit') shall
not at any time exceed the Total Commitment."
2.05 Amendment to Section 6(c). Effective as of the date hereof,
Section 6(c) of the Loan Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:
"(c) Total Commitment Compliance. In the event the Outstanding
Revolving Credit at any time exceeds the Total Commitment then, upon
notice from the Bank, the Borrower shall immediately make such payments
to the Bank 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."
2.06 Amendment to Section 7. Effective as of the date hereof, Section 7
of the Loan Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:
"7. [INTENTIONALLY DELETED]"
2.07 Amendment to Section 15(d). Effective as of the date hereof,
Section 15(d) of the Loan Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:
"(d) INTENTIONALLY DELETED."
2.08 Amendment to Section 16(a). Effective as of the date hereof,
Section 16(a) of the Loan Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:
"(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 (i) the loans described herein, (ii)
revolving credit loans in an aggregate principal amount of up to
(Y)540,000,000.00 from any Japanese domestic bank; provided, that the
only security for such revolving credit loans shall be the JDB Letter
of Credit, (iii) an additional term loan from the Bank to Borrower in
an aggregate principal amount of up to $4,500,000.00 (if and when such
term loan is approved by the Bank); provided, that (A) such term loan
is made on terms and conditions satisfactory to the Bank in its sole
discretion, and (B) Borrower executes such loan documents as the Bank
deems necessary in connection with such term loan, including, without
limitation, a Commercial/Real Estate Note and Deed of Trust
substantially in the form of Exhibit D and Exhibit E, respectfully,
attached hereto, (iv) 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, and (v) current accounts payable
and other current obligations (other than for borrowed money) arising
out of transactions in the ordinary course of business."
2.09 Amendment to Section 17(b). Effective as of the date hereof,
Section 17(b) of the Loan Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:
"(b) Net Worth. Maintain minimum net worth of not less than
(1) $72,000,000 during the period beginning the date
hereof and ending December 31, 1997; and
(2) beginning January 1, 1998, and during each
subsequent fiscal year of the Company, the amount of the
minimum net worth required under this Agreement during the
immediately preceding fiscal year of the Company plus seventy
percent (70%) of the Company's net income after taxes, on a
consolidated basis, during such preceding fiscal year (with
net income after taxes being determined in accordance with
generally accepted accounting principles and no reductions
being made to the minimum net worth for any fiscal year during
which the Company's net income after taxes, on a consolidated
basis, is a negative number)."
2.10 Addition of New Section 17(d). Effective as of the date hereof,
the Loan Agreement is hereby amended by adding a new Section 17(d) thereto,
which shall read in its entirety as follows:
"(d) Minimum Net Income. Achieve net income of not less than
$1,000,000.00 for each fiscal quarter of the Company, commencing with
the fiscal quarter ending September 30, 1997 (with net income to be
determined in accordance with generally accepted accounting
principles)."
2.11 Amendment to Section 26. Effective as of the date hereof, Section
26 of the Loan Agreement is hereby amended by deleting therefrom the reference
to the dollar amount "$30,000,000" and substituting therefor the dollar amount
"50,000,000".
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 the following documents, each
in form and substance satisfactory to the Bank and its counsel:
(i) This Amendment, duly executed by
the Borrower, the Company, Fossil Intermediate, Fossil Trust,
Fossil New York, Fossil I and Fossil II;
(ii) A Revolving Note in the form of
Exhibit A to this Amendment, duly executed by Borrower;
(iii) The Letter Agreement (herein so
called) in the form of Exhibit B to this Amendment, duly
executed by The Hongkong and Shanghai Banking Corporation
Limited ("HSBC Japan"); and
(iv) A company general certificate
(hereinafter referred to as the "Company General Certificate")
for the Company, certified by its Secretary or Assistant
Secretary, acknowledging (A) that its Board of Directors has
met and has adopted, approved, consented to and ratified
resolutions which authorize the execution, delivery and
performance of this Amendment, the Revolving Note and all
other Loan Documents to which it is or is to be a party, and
(B) the names of the officers authorized to sign this
Amendment, the Revolving Note and each of the other Loan
Documents to which it is or is to be a party (including the
certificates contemplated herein) together with specimen
signatures of such officers. The Company General Certificate
shall conform to the Company General Certificate which is
attached hereto as Exhibit C and incorporated herein for all
purposes;
(b) There shall have been no material adverse change in
the 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
Borrower or such Guarantor;
(d) The representations and warranties contained herein and in
the Loan Agreement and the other Loan Documents, as each is amended
hereby, shall be true and correct as of the date hereof, as if made on
the date hereof;
(e) No default or Event of Default shall have occurred and be
continuing, unless such default or Event of Default has been
specifically waived in writing by the Bank;
(f) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents,
instruments and other legal matters incident thereto shall be
satisfactory to the Bank and its legal counsel; and
(g) The Bank shall have received from HSBC Japan all fees and
other amounts required to be paid by HSBC Japan to Bank pursuant to the
terms of the Letter Agreement; and
(h) The Bank shall have received from the Company or the
Borrower, as appropriate, all other fees and expenses required to paid
pursuant to the Loan Agreement.
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 Loan Agreement, the other Loan
Documents, this Amendment, or of any other contract or instrument between the
Borrower 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 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 Loan Agreement, the other Loan Documents,
this Amendment and any other contract or instrument between the Borrower, the
Guarantors and the Bank.
ARTICLE V
Ratifications, Representations and Warranties
5.01 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Loan Agreement and the other Loan Documents, and, except as
expressly modified and superseded by this Amendment, the terms and provisions of
the Loan Agreement and the other Loan Documents are ratified and confirmed and
shall continue in full force and effect. The parties hereto agree that the Loan
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 Representations and Warranties. The Borrower, the Company, Fossil
Intermediate, Fossil Trust, Fossil New York, Fossil I and Fossil II hereby
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, contract, agreement or other
instrument, or any judgment, order or decree, binding upon the Borrower or any
Guarantor; (b) the representations and warranties contained in the Loan
Agreement, as amended hereby, and the other Loan Documents 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; (c) no default or Event of Default under the Loan 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 (d) the Borrower and
the Guarantors are in full compliance with all covenants and agreements
contained in the Loan 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 Loan 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, 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 Loan Agreement. Each of the Loan 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 Loan Agreement, as amended hereby, are hereby amended so
that any reference in the Loan Agreement and such other Loan Documents to the
Loan Agreement shall mean a reference to the Loan Agreement, as amended hereby.
6.03 Expenses of the Bank. As provided in the Loan 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 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 Loan Agreement, as amended hereby, or any other Loan
Documents, 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.
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 AGREEMENT
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 LOAN 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
LOAN 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 Release. THE BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE "INDEBTEDNESS" OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES
OF ANY KIND OR NATURE FROM THE BANK. THE BORROWER AND THE GUARANTORS HEREBY
VOLUNTARILY AND KNOWINGLY RELEASE AND FOREVER DISCHARGE THE BANK, ITS
PREDECESSORS, OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS,
FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS
AMENDMENT IS EXECUTED, WHICH THE BORROWER OR THE GUARANTORS MAY NOW OR HEREAFTER
HAVE AGAINST THE BANK, ITS PREDECESSORS, OFFICERS, DIRECTORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
ARISING
FROM ANY LOANS OR EXTENSIONS OF CREDIT FROM THE BANK TO THE BORROWER UNDER THE
LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR
AND EXECUTION OF THIS AMENDMENT.
6.12 Agreement for Binding Arbitration. Each party to this Amendment
hereby acknowledges that it has agreed 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]
IN WITNESS WHEREOF, this Amendment has been executed and is effective
as of the date first above-written.
"BANK"
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION,
By:_____________________________________________
Jeffrey S.A. Cook, Vice President
"BORROWER"
FOSSIL PARTNERS, L.P.
By: Fossil, Inc., its general partner
By:_____________________________________________
Randy S. Kercho, Executive Vice President and
Chief Financial Officer
"GUARANTORS"
FOSSIL, INC.
By:_____________________________________________
Randy S. Kercho, Executive Vice President and
Chief Financial Officer
FOSSIL INTERMEDIATE, INC.
By:_____________________________________________
Kosta N. Kartsotis, President
FOSSIL TRUST
By:_____________________________________________
Randy S. Kercho, Trustee
FOSSIL NEW YORK, INC.
By:_____________________________________________
Kosta N. Kartsotis, Chief Executive Officer
FOSSIL STORES I, INC.
By:_____________________________________________
Randy S. Kercho, Treasurer
FOSSIL STORES II, INC.
By:_____________________________________________
Randy S. Kercho, Treasurer
Exhibits:
A - Form of Revolving Note
B - Form of Letter Agreement
C - Form of Company General Certificate
D - Form of Commercial/Real Estate Note
E - Form of Deed of Trust