Exhibit 10.3

 

 

 

 

 

 

 

Share Purchase Agreement

(Hereinafter referred to as the “Agreement”)

 

 

by and between

 

 

 

 

FOSSIL EUROPE B.V.

 

 

 

 

 

and

 

 

 

 

 

BANQUE DEGROOF LUXEMBOURG SA,

MR. ERIC GALLOU, MR. CHRISTIAN MATT,

ACTIV’INVEST SA

 

 

 

 

 

This Agreement is entered into as of August 3, 2001 by and among :

 

FOSSIL EUROPE B. V.

A company incorporated under the laws of the Netherlands, with its registered
office at
De Boelelaan 7, Officiia I, 1083 HJ AMSTERDAM, The NETHERLANDS
Represented by Mr. T.R. TUNNELL, Executive Vice President and Chief Legal
Officer,
Fossil Inc;

 

(Hereinafter referred to as "FOSSIL")

 

And

 

1.        Banque DEGROOF Luxembourg SA ("Banque DEGROOF")

A bank incorporated under the laws of Luxembourg

With its head office at Luxembourg, 7 Boulevard Joseph II

Registered under the number B 23 459

in the Register of Trade and Companies of Luxembourg

Represented by Mr. Jean-Louis WAUCQUEZ, Fondé de Pouvoir

and by Mr. Benoît DUVIEUSART, Secrétaire Général

Owning 1.800 Shares of GUM

 

2.     Mr. Eric GALLOU

A French citizen

Born in Strasbourg (France) on 01.13.1967

Living in Bouxwiller (France) 5 rue des Seigneurs

Owning 1000 Shares of GUM

 

3.     Mr. Christian MATT

A French citizen

Born in Strasbourg (France) on 04.29.1964

Living in Saverne (France) 23 rue du Serpent

Owning 1000 Shares of GUM

 

4.        ACTIV' INVEST SA ("ACTIV’INVEST")

A company incorporated under the laws of Luxembourg

With its head office at Luxembourg, 23 avenue Monterey

Registered under the number B 66 828

in the Register of Trade and Companies of Luxembourg

Represented by Mr.François Michel UHL,  Administrateur Délégué

Owning 200 Shares of GUM

 

(Hereinafter collectively referred as the "SELLER" or as the “Stockholders of
the Company”)

 

FOSSIL and the SELLER are hereinafter individually / collectively referred to as
the “Party” / the “Parties”.

 

WITNESSETH

 

Whereas FOSSIL wishes to acquire indirectly through GUM SA not less than 99,6 %
of the outstanding share capital of VEDETTE INDUSTRIES SA (hereinafter referred
to as "VEDETTE"), a company incorporated under the laws of France, with its head
office at Saverne, 31 rue de la Vedette, and registered under the number B 675
680 516 in the Register of Trade and Companies of Saverne;

 

Whereas the SELLER owns all of the issued and outstanding shares of GUM (the
"Company"), a company incorporated under the laws of France, having a capital of
EUR 40,000, whose head office is located at Saverne, 31 rue de la Vedette,
registered under the number B 425 122 884 in the Register of Trade and Companies
of Saverne, which as of the date hereof consists of 4,000 (four thousand)
shares, par value EUR 10 (ten Euro) ("the Company Shares");

 

Whereas the Company owns 124,534 shares of VEDETTE, which represents 99,6 % of
the outstanding shares of VEDETTE;

 

Whereas each of Mrs. V. GALLOU, Mrs. S. KIEFFER, Mrs. S. MATT and Mr. Fr. UHL
own 5 shares of VEDETTE, then a total of 20 shares that shall be transferred to
the Company before the Closing Date.

 

Whereas the remaining 446 shares of VEDETTE are split up among 21 other
shareholders as described in Schedule 1;

 

Whereas VEDETTE INDUSTRIES SA  is a leading French wholesaler for clocks and
watches, controlling 3 subsidiaries :

 

-

 

LOGISAV, a logistic and after sales company,
A company incorporated under the laws of France
With its head office at Saverne, 31 rue de la Vedette
Registered under the number B 392 217 980
in the Register of Trade and Companies of Saverne
(100% of its shares are owned by VEDETTE)

 

 

 

-

 

SEM, an after sales company,
A company incorporated under the laws of France
With its head office at Reims, 8 rue Daniel Berger
Registered under the number B 378 298 830
in the Register of Trade and Companies of Reims
(100 % of its shares are owned by LOGISAV)

 

 

 

-

 

TROTIME ESPANA, a clock and watch wholesaler
A company incorporated under the laws of Spain
With its head office at Coslada (Madrid), c/Alcaria 7, 1-10
Registered under the number B 816 35 922
in the Register of Trade and Companies of Madrid
(51 % of its shares are owned by VEDETTE)

 

Whereas the Company, VEDETTE and each of the three subsidiaries may be hereafter
referred to as the "Group Companies".

 

Whereas SELLER desires to sell all of the Company Shares to FOSSIL, and FOSSIL
desires to acquire all of the Company Shares;

 

NOW, THEREFORE, in order to consummate said purchase and sale in consideration
of the mutual agreements set forth herein, the parties hereto agree as follows:

 

 

Section 1                Sale of Shares and Purchase Price

 

1.1.         Sale and Transfer of Company Shares

 

In consideration of and in reliance upon the representations, warranties and
covenants contained herein and subject to the terms and conditions of this
Agreement, the SELLER agrees to sell with full title guarantee, and FOSSIL
agrees to purchase, at the Closing Date (as defined in Section 3), all of the
4,000 Company Shares.

 

At the Closing, the SELLER shall deliver an order of movement transferring all
the Company Shares to FOSSIL. The transfer of shares shall be mentioned on the
same date in the share transfer ledger ("Registre de mouvements des titres") of
the Company. All the shares shall be transferred at the Closing free and clear
of any and all liens, encumbrances, charges or claims.

 

The Stockholders of the Company each waive all rights of preemption and other
restrictions on transfer over the Company Shares conferred on them pursuant to
the articles of association of the Company or applicable law or statute.

 

 

1.2.                Purchase Price

 

 

(a)           Amount of the Purchase Price

 

Assuming the Group Companies consolidated Stockholders’ Equity amounts to FRF
29,100,000,- as of June 30, 2001 and subject to the adjustments referenced
below, the total purchase price (the "Purchase Price") to be paid by FOSSIL to
the SELLER for the Company Shares shall be:

 

(i) subject to adjustments pursuant to Section 1.2(b), USD 5,300,000 (FIVE
MILLION THREE HUNDRED THOUSAND USD) payable upon the Closing of the acquisition
(the "Closing Payment ") split between the Stockholders of the Company as
follows :

 

-

 

Banque DEGROOF

 

USD

 

3,000,000

 

-

 

Eric GALLOU

 

USD

 

1,000,000

 

-

 

Christian MATT

 

USD

 

1,000,000

 

-

 

ACTIV' INVEST

 

USD

 

300,000

 

 

and (ii) subject to the provisions of paragraph 1.2(c) hereof, up to USD 1.5
million in future earn-out payments (the "Earnout Payment ") payable to Eric
GALLOU and Christian MATT on April 30, 2004.

 

The  Purchase Price shall then not exceed USD 6.8 million.

 

 

(b)           Price Adjustment in reliance upon the Group Companies consolidated
Stockholder's Equity

 

On basis of the balance sheets as of June 30, 2001, already reviewed by the
statutory auditor (VEDETTE, LOGISAV), or closed by the respective external
accountants (SEM, TROTIME), SELLER shall prepare the consolidated balance sheets
and statements of stockholders equity on the Group Companies (the “Certified
Statement”) in order to determine the amount of the Group Companies consolidated
Stockholder's Equityas of June 30, 2001, and cause the statutory auditor of the
Company to certify them on or before September 30, 2001. For purposes of this
section, the “Group Companies consolidated Stockholder’s Equity” is defined as
being theamount shown on consolidated statement as of June 30,2001 (see Schedule
2).

 

The Certified Statement will be prepared consistent with generally accepted
accounting principles in the Republic of France (French GAAP) and on the same
basis and using the same accounting methods and policies as the Group Companies
balance sheets as of December 31, 2000.

 

If the amount of the Group Companies consolidatedStockholder's Equity as of June
30, 2001 as reflected on the Certified Statement is less than TWENTY SEVEN
MILLION SIX HUNDRED FORTY FIVE THOUSAND French Francs (FRF 27,645,000), then the
Purchase Price will be decreased by an amount equal to the difference between
the amount of the Group Companies consolidated Stockholder's Equity as of June
30, 2001 and FRF 29,100,000.

 

In the event such an adjustment  is made, each stockholder of the Company shall
support the corresponding decrease of Purchase Price and shall consequently
reimburse FOSSIL within 10 days as follows:

 

-

 

Banque DEGROOF

 

45% of the total decrease of Purchase Price

 

-

 

Eric GALLOU

 

25% of the total decrease of Purchase Price

 

-

 

Christian MATT

 

25% of the total decrease of Purchase Price

 

-

 

ACTIV' INVEST

 

5% of the total decrease of Purchase Price

 

 

If any of the Stockholders of the Company fails to pay any amount due to FOSSIL
as a consequence of such adjustment when due, an interest rate equal to the
interest rate on standing facilities practiced by ECB increased of 4 points
shall be applied to the amount due.

 

 

(c)           Price Adjustment in reliance upon Earnout Payment

 

In the event that the Group Companies achieves the consolidated net sales and
consolidated operating earnings targets (the “Earnout Targets“) as set forth on
Exhibit “A” hereto, then, subject to the provisions of section 6, Mr. Eric
GALLOU and Mr. Christian MATT shall each be entitled to receive fifty percent
(50%) of the Earnout Payment on April 30, 2004.

 

For purposes of calculating the Earnout Payment, the Earnout Targets shall be
based on consolidated net sales and consolidated operating income as determined
in accordance with French GAAP.

 

The Earnout Targets shall be (i) prepared in accordance with French GAAP,
consistently applied, on the same basis and using the same accounting methods
and policies as the VEDETTE balance sheet as of December 31, 2000, and (ii)
calculated on a consolidated basis (100%) for the Group companies and any other
company that may integrate this group as a subsidiary before December 31, 2003.

 

Should any material change in the business operations of the Group companies be
decided by FOSSIL against the opinion of Mr. Eric GALLOU and Mr. Christian MATT,
the negative impact on the consolidated net sales and consolidated operating
income of such decision shall be taken into account when checking achievement of
Earnout Targets.

 

The maximum Earnout Payment shall be USD 1,500,000 (ONE MILLION FIVE HUNDRED
THOUSAND United States Dollars).

 

(d)           Payment of the Purchase Price

 

(i)            The Closing Payment shall be payable at the Closing by wire
transfer in United States dollars to the bank account as specified by each
Stockholder of the Company within five (5) business days prior to Closing. At
the Closing Date the banks of each SELLER shall confirm to each SELLER that the
amount specified in section 1.2(a), has been transferred by swift wire transfer
to the accounts of each respective SELLER, and that the money is available free
of any and all transfer or other tax or fee.

 

(ii)           Pursuant to Section 1.2.(c), the Earnout Payment shall be payable
by wire transfer in United States dollars on April 30, 2004, to the bank account
as specified by Mr. GALLOU and Mr. MATT within five (5) business days prior to
such date, and the banks of Mr. GALLOU and Mr. MATT shall confirm to each of
them that the funds are available free of any and all transfer or other tax or
fee.

 

If FOSSIL fails to pay any such amount due to Mr. GALLOU and Mr. MATT on a such
date, an interest rate equal to the interest rate on standing facilities
practiced by ECB increased of 4 points shall be applied to the amount due.

 

 

Section 2                Pre-closing Covenants

 

Before the signature of this Agreement, FOSSIL has been allowed to carry out the
due diligence review (the “Due Diligence”) it considers appropriate on the Group
Companies.

 

This Due Diligence has been based on the documents and information as required
by FOSSIL in Schedule 3.

 

Section 3                Closing

 

3.1          Closing Date

 

The transaction stipulated in Section 1.1 is subject to the fulfillment, prior
to or at the Closing, of each of the following conditions unless otherwise
waived in writing by the Party for whose benefit the conditions exist.

 

(a)           The representations and warranties made by the Parties in this
Agreement or any certificates or documents delivered pursuant to the provisions
hereof or in connection with the transactions contemplated herein shall be true
and correct in all material respects when made, and shall be true and correct in
all material respects on the Closing Date as though such representations and
warranties were made on and as of such date.

 

(b)           The Parties shall have carried out their respective obligations as
specified in Sections 3.2 (a), 3.2(b) and 3.2(c).

 

(c)           The SELLER shall cause the Company to clean its balance sheet as
of the Closing date from all debt and other liabilities, but liabilities of less
than FRF 50.000 pertaining to normal course of business.

 

The purchase and sale contemplated herein shall be consummated at a Closing to
take place by mail, facsimile or at the offices of the Company on August 6, 2001
(the "Closing Date "), or at such other time and place as the Parties may agree
upon in writing.

 

 

3.2          Actions to be taken at the Closing

 

The following actions shall be taken at the Closing:

 

(a)                FOSSIL’s Obligation

 

At Closing FOSSIL shall deliver to SELLER:

 

(i)            the Purchase Price in accordance with Section 1.2(d)(i) hereof;
and

 

(ii)           a countersigned original of the Award Agreement and
Confidentiality Agreement in the form attached hereto as Exhibit B and C,
respectively.

 

(iii)                As evidence of the authority of each person executing a
document referred to herein on FOSSIL's behalf:

 

(a)a copy of the minutes of a duly held meeting of the directors of FOSSIL (or a
duly constituted committee thereof) authorizing the execution by FOSSIL of the
document and, where such execution is authorized by a committee of the board of
directors of FOSSIL, a copy of the minutes of a duly held meeting of the
directors constituting such committee or the relevant extract thereof; or

(b)a copy of the power of attorney conferring the authority

 

 

(b)                SELLER’s Obligation

 

At Closing, the SELLER shall deliver, or cause to be delivered, to FOSSIL:

 

(i)                "Registre de mouvement des titres" duly completed with the
transcription of the transfer of all Company Shares to FOSSIL:

 

(ii)                As evidence of the authority of each person executing a
document referred to herein on SELLER’s behalf:

 

(c)a copy of the minutes of a duly held meeting of the directors of each
corporate Seller (or a duly constituted committee thereof) authorizing the
execution by such Seller of the document and, where such execution is authorized
by a committee of the board of directors of a Seller, a copy of the minutes of a
duly held meeting of the directors constituting such committee or the relevant
extract thereof; or

(d)a copy of the power of attorney conferring the authority

 

in each case certified to be true by a director or the secretary of such Seller;

 

(iii)                Each register and minute book containing the minutes of all
meetings of the Board of Directors, all Shareholders meetings and attendance
sheets of the Company;

 

(iv)                The resignations of all of the Directors of the Company and
all of the members of the supervisory board of VEDETTE.

 

(c)                GALLOU and MATT obligations

 

At Closing:

 

(i)            Mr. MATT and Mr. GALLOU shall each deliver to Fossil a
countersigned original of the Award Agreement and Confidentiality Agreement in
the form attached hereto as Exhibit B and C.

 

(ii)                Mr. MATT and Mr. GALLOU shall have accepted the positions of
Director General and Director Administration and Finance of VEDETTE,
respectively

 

 

3.3                Transfer Taxes.

 

All transfer taxes, fees and duties under applicable law incurred in connection
with the sale and transfer of the Company Shares under this Agreement will be
borne and paid by FOSSIL. In this respect all of the Parties shall sign, if any,
necessary tax return.

 

Section 4                Representations and warranties

 

 

4.1                Representations and Warranties of the SELLER :

 

As a material inducement to FOSSIL to enter into this Agreement and consummate
the transactions contemplated hereby, the SELLER hereby warrants to FOSSIL that
each representation and warranty contained on Exhibit D hereto is true and
accurate as of the date of this Agreement.

 

 

4.2                Representations and Warranties of FOSSIL :

 

(a)           Making of Representations and Warranties

 

As a material inducement to SELLER to enter into this Agreement and consummate
the transactions contemplated hereby, FOSSIL hereby makes to SELLER the
representations and warranties contained in this Section 4.2.

 

(b)                Organization and Qualifications of FOSSIL

 

FOSSIL is a corporation duly organized, validly existing and in good standing
under the laws of the Netherlands with full corporate power and authority to
enter into this Agreement and perform its obligations hereunder.

 

(c)                Authority of FOSSIL

 

FOSSIL has full right, authority and power to enter into this Agreement and each
agreement, document and instrument to be executed and delivered by FOSSIL
pursuant to this Agreement and to carry out the transactions contemplated
hereby.

 

The execution, delivery and performance by FOSSIL of this Agreement and each
such other agreement, document and instrument have been duly authorized by all
necessary corporate action of FOSSIL and no other action on the part of FOSSIL
is required in connection therewith.

 

The representative of FOSSIL has been duly authorized to conclude the present
Agreement by the Board of Directors of FOSSIL.

 

(d)                Litigation

 

There is no litigation pending or, to its best knowledge threatened against
FOSSIL which would prevent or hinder the consummation of the transactions
contemplated by this Agreement.

 

(e)                Brokerage

 

FOSSIL has not incurred or become liable for any broker's commission or finder's
fee relating to or in connection with the transactions contemplated by this
Agreement.

 

 

Section 5                Indemnification

 

 

5.1                Indemnification by the SELLER

 

Subject to Section 4.1, the SELLER agrees subsequent to the Closing to indemnify
FOSSIL, the Company and/or its subsidiaries (together "the Indemnified Parties")
from and against any damages, liabilities, losses and taxes (the “Losses”),
which may be sustained or suffered by the Indemnified Parties arising from an
event prior to the Closing Date and based upon :

 

-               an intentional misrepresentation or a breach by the SELLER of
any of its material representations, warranties or covenants under this
Agreement,

 

-               any liability of the Group Companies for taxes and/or social
security charges arising from an event or transaction or pertaining to the
conduct of the Business prior to June 30,2001 which have not been paid or
provided for or reserved against by the Company or any of its subsidiaries in
the balance sheets as of June 30, 2001, as well as any accrued or unpaid
liability of the Group Companies for taxes and/or social security charges
arising from an event or transaction prior to Closing Date and which does not
pertain to the normal conduct of the Business.

 

-               any liability of the Group Companies in respect of any claim
made by any third party and relating to, arising out of or in connection with
any event occurring prior to the Closing Date, and not mentioned in Schedule 4
hereto.

 

 

5.2                Limitations of Indemnification by the SELLER

 

Notwithstanding the foregoing, the right of the Indemnified Parties to
indemnification under Section 5.1 shall be subject to the following provisions:

 

Every and all future Losses, which should be charged to the SELLER as a
consequence of the representations and warranties made by him in Section 4.1
hereof, shall :

 

•       first be deducted from the amount of the Group Companies consolidated
Stockholders' Equity as of June 30, 2001 exceeding FRF 29,100,000 : the “Equity
Excess”;

 

•       then be deducted from the amount actually collected against SBIG on
basis of the Court decision rendered or any other future settlement in “Affaire
SBIG”(as reported hereinafter on Schedule 4): the “SBIG Indemnity”.

 

The SELLER will only indemnify an Indemnified Party when the cumulative sum of
such Losses exceeds the sum of the Equity Excess and the SBIG Indemnity : the
“Total Excess”.

 

Should the SBIG Indemnity be totally or partly collected after a payment made by
the SELLER in accordance with section 5.5., the SELLER will be entitled to claim
refund of such payment, within the limit of the amount actually collected
against SBIG.

 

Then after the Losses exceed the Total Excess, the Indemnified Parties shall
have no right of indemnification for breaches of any representation or warranty
until the total amount of Losses exceeds in the aggregate FRF 710,000 (seven
hundred ten thousand French Francs) (i.e. about USD 100,000).

 

The liability of the SELLER shall be limited to the amount exceeding FRF 710,000
(seven hundred ten thousand French Francs) (i.e. about USD 100,000) up to a
total amount:

 

•       that should not exceed the Purchase Price actually paid according to
Section 1.2. here-above, in the event of the breach of representations,
warranties and covenants made under section 1.1, 1.2, 1.3, 3.1.1, 3.1.2, 3.1.3,
3.1.4, 7.2 and 10.1 of Exhibit D attached hereto;

•       that should not exceed  FRF 14.200.000 (fourteen million two hundred
thousand French Francs) (i.e. about USD 2.000.000), in the event of another
cause of indemnification.

 

Notwithstanding anything in this Section 5 to the contrary, no indemnification
shall be payable by SELLER with respect to any claim for which notice has not
been provided to the SELLER during the “Initial Indemnification Period” which is
lasting one year from the Closing Date, except for tax and URSSAF (French social
organization) matters, in which case the indemnification period shall be
specially extended to June 30, 2004 (the “Extended Indemnification Period”)

 

5.3          Notice; Defense of Claims

 

(a)

 

An Indemnified Party may only make claims for indemnification hereunder by
giving written notice and evidence thereof to the SELLER within (i) the Initial
Indemnification Period, or (ii) the Extended Indemnification Period for tax and
URSSAF matters.

 

If indemnification is sought for a claim or liability asserted by a third party
(a “Third Party Claim”), the Indemnified Party shall also give written notice
thereof to the SELLER within ten (10) business days after it receives notice of
the Third Party Claim, provided however the failure to give such notice shall
not limit the Indemnified Party’s right to indemnification except however that
such failure does not prejudice SELLER's ability to remedy such breach and
defend any resulting claim, and the indemnification shall not be extended to the
prejudice caused by the delay.

 

All notices to SELLER shall be sent as required in Section 7.5. hereunder.

 

(b)

 

Within twenty (20) business days after receiving notice from the Indemnified
Party, the SELLER shall give written notice to the Indemnified Party stating
whether it disputes the claim for indemnification and whether it will defend
against any Third Party Claim at its own cost and expense.

 

If the SELLER fails to give notice that it disputes an indemnification claim
within 20 business days after receipt of notice thereof, it shall be deemed to
have accepted and agreed to the claim.

 

(c)

 

The SELLER with his own selected counsel may direct the defense against a Third
Party Claim. The Indemnified Party shall at all times have the right to fully
participate in the defense against a Third Party Claim at its own expense
directly or through counsel.

 

If the Third Party Claim is one that by its nature cannot be defended solely by
the SELLER or by the Indemnified Party, then the SELLER and the Indemnified
Party shall make available such information and assistance to the other as the
other may reasonably request and shall cooperate with the other in such defense.

 

FOSSIL shall ensure that the SELLER or his agents and counsels shall be entitled
to participate in tax or others audits and discussions with tax authorities or
other third party regarding tax matters or any other issue in relation with the
representations and warranties given by the SELLER in the hereabove Section 4.1.

 

FOSSIL shall cause VEDETTE to make available any relevant facts, documents and
paperwork to inform the SELLER completely. On request of the SELLER, FOSSIL and
VEDETTE shall authorize the SELLER to take legal steps against tax assessments
and other rulings of the tax authorities or against third parties at SELLER’s
own expense.

 

 

5.4                Calculation of SELLER Indemnification Obligations.

 

In order to satisfy the indemnification obligations of the SELLER pursuant to
Sections 5.1 and 5.2. above, and only if the SELLER has not disputed the claim
and if the Indemnified Party has paid the amounts qualified as Losses, the
amount due by the SELLER shall be calculated as follows :

 

The Losses incurred by an Indemnified Party on account of all such claims
decreased by:

 

(1)           all increase of assets or decrease of indebtedness based on facts
happened before June 30, 2001; and by

 

(2)           any savings in taxes that Group Companies would realize due to the
increase in liabilities caused by such Losses; and by

 

(3)           any penalties in the form of an increased tax assessment the
effect of which is only to postpone a claimed tax benefit without creating any
net additional tax liability.

 

 

5.5                Satisfaction and Payment by SELLER of its Indemnification
Obligations.

 

(a)

 

Any and all Losses notified with evidence by the Indemnified Party and accepted
by the SELLER during the Initial Indemnification Period shall be supported by
the SELLER as follows:

 

-

 

Banque DEGROOF

 

45% of the total Indemnification Obligation

 

-

 

Eric GALLOU

 

25% of the total Indemnification Obligation

 

-

 

Christian MATT

 

25% of the total Indemnification Obligation

 

-

 

ACTIV' INVEST

 

5% of the total Indemnification Obligation

 

 

And each Stockholder of the Company shall directly and personally indemnify and
pay FOSSIL.

 

 

(b)

 

During the Extended Indemnification Period, any and all Losses shall be and may
only be deducted from the Earnout Payment to be possibly made on April 30, 2004.

 

 

Section 6                Active Management - FOSSIL Options

 

 

(a)

 

Except as otherwise provided herein, FOSSIL shall cause VEDETTE to retain
Christian MATT and Eric GALLOU (the “Active Management”), in the capacity as
Director General and Director, Administration and Finance, respectively, until
December 31, 2003, unless they, or one of them, is discharged for good cause.

 

Active Management will receive the FOSSIL stock options at the Closing Date upon
the terms and conditions contained in their respective Award Agreement attached
hereto as Exhibit A. In addition, each of them will have the opportunity to be
granted additional options each following year in accordance with Fossil’s
policies and procedures.

 

Notwithstanding the provisions of section 1.2 (c):

•       if Active Management or one of its members voluntarily quits before
December 31, 2003, the Earnout Payment will be USD 1 (One US Dollar) for his
respective payment.

•       If Active Management or one of its members is involuntarily and without
any real and serious reason (according to French social regulation “licenciement
sans cause réelle et sérieuse”) dismissed before December 31, 2003, then the
respective Earnout Payment  to such dismissed manager shall be USD 750.000
(Seven Hundred And Fifty Thousand US Dollar).

•       If Active Management or one of its members die before the end of the
Earnout period, i.e. December 31, 2003, then the heirs of the deceased shall be
entitled to receive a prorated Earnout Payment (the “Prorated Earnout”) within
45 days following the end of the fiscal year of such member’s death in
accordance with the provisions of section 6(b).

 

(b)

 

The Prorated Earnout shall be based upon the attainment of the cumulative
Earnout Targets as set forth on Exhibit A (with respect to both Net Sales and
Operating Income) for (i) the fiscal year end immediately following the death of
a member of Active Management and (ii) all prior periods (the “Cumulative
Targets”).  The achieved results and Prorated Earnout calculation are as
follows:

 

Achieved Results (Net Sales)

 

Base Earnout Amount

 

 

100% and more of Cumulative Target

 

USD 750,000

times the Prorated Amount

 

From 95% to 99.9% of Cumulative Target

 

USD 600,000

times the Prorated Amount

 

From 90% to 94.9% of Cumulative Target

 

USD 450,000

times the Prorated Amount

 

From 85% to 89.9% of Cumulative Target

 

USD 375,000

times the Prorated Amount

 

Less than 85% of Cumulative Target

 

USD 1

times the Prorated Amount

 

 

Achieved Results (Operating Income)

 

Base Earnout Amount

 

 

100% or more of Cumulative Target

 

USD 750,000

times the Prorated Amount

 

From 50% to 99.9% of Cumulative Target

 

17.48251% USD of EUR Operating Income times the Prorated Amount

 

Less than 50% of the Cumulative Target

 

USD 1

 

 

 

The Prorated Amount shall be a percentage represented by the quotient of the
number of fiscal quarters from the July 01, 2001 until the year end immediately
following the death of the member of Active Management divided by the total
number of fiscal quarters from the July 01, 2001 until December 31, 2003 (10
fiscal quarters).

 

 

Section 7                Miscellaneous

 

 

7.1          Fees and Expenses

 

Each of the parties shall bear its own expenses in connection with the
negotiation and the consummation of the transactions contemplated by this
Agreement.

 

Each party shall pay all costs incurred by it in furtherance of the preparation
and negotiation of this Agreement and the performance by each such party of its
obligations pursuant to this Agreement.

 

 

7.2          Entire Agreement

 

This Agreement, as well as its exhibits and schedules, attached hereto and
incorporated herein by reference, reflect the entire agreement of the Parties
related to the subject matter hereof and thereof and supersedes all prior
negotiations and agreements between the Parties concerning the subject matter
hereof and thereof and can be amended or changed validly only by an instrument
in writing signed by all Parties. This form requirement shall also apply to any
change, modification or waiver of the form requirement set forth in the
preceding sentence.

 

In the event individual provisions of this Agreement should in its entirety or
partially be or become invalid or impracticable, then the validity of the
remaining provisions of this Agreement shall not be affected thereby. Instead of
the invalid or impracticable provision, such reasonable provision or provisions
shall apply which come as close as legally possible to what the Parties would
have agreed according to the sense and purpose of this Agreement had they
considered the matter initially in the light of such invalidity or
impracticability.

 

 

7.3                Publicity and Disclosures

 

No Party to this Agreement shall make any public or private statement or any
disclosure with respect to this agreement and the transaction comtemplated
herein without the express written approval of the other(s) Party(ies);
provided, however, that nothing herein shall prevent one Party from making any
such disclosures or statements as may be required by law, regulation or rule of
any stock exchange, except that the disclosing Party shall use all reasonable
efforts to notify and consult with the other Party(ies) prior to any such
disclosure or statement.

 

 

7.4                Governing Law

 

This Agreement shall be governed by, construed under and enforced in accordance
with the laws of France.

 

7.5          Notices

 

Any notice, request, demand or other communication required or permitted
hereunder shall be done in writing and shall be deemed to have been given if
delivered or sent by registered or certified mail, upon the sooner of the date
on which receipt is acknowledged or the expiration of three days after deposit
in United States or French post office facilities properly addressed with
postage prepaid.  All notices to a Party will be sent to the addresses set forth
below or to such other address or person as such Party may designate by notice
to each other party hereunder:

 

 

TO FOSSIL:

 

FOSSIL EUROPE, B.V.

 

 

c/o Fossil, Inc.
2280 N. Greenville Ave.
Richardson, Texas 75082
USA

 

 

Attn:

T. R. Tunnell, Executive Vice President

 

 

Tel:

972-699-2139

 

 

Fax:

972-498-9639

 

 

Email:

trtunnell@fossil.com

 

 

 

 

TO SELLER:

(i)

BANQUE DEGROOF LUXEMBOURG SA

 

 

7, boulevard Joseph II
L  - 1840 – LUXEMBOURG

 

 

 

 

Attn:

M. Benoît DUVIEUSART

 

 

Tel:

+352 45 35 45

 

 

Fax:

+352 25 14 33

 

 

Email:

jeanlouis.waucquez@degroof.lu

 

 

 

 

 

(ii)

M. CHRISTIAN MATT

 

 

23, rue du Serpent

 

 

F -  67700  - SAVERNE

 

 

 

 

 

(iii)

M. ERIC GALLOU

 

 

5, rue des Seigneurs

 

 

F - 67330 - BOUXWILLER

 

 

 

 

 

(iv)

ACTIV'INVEST

 

 

23, avenue Monterey
L-2086 Luxembourg

 

 

Attn:

M. François UHL

 

 

Tel:

+352 46 61 11

 

 

Fax:

+352 46 61 11 34 00

 

 

 

 

 

With a copy to:

 

Landwell et Associés

 

 

Centre d’Affaires Urbania
230 Avenue de Colmar
B.P. 263
67021 Strasbourg Cedex 01
France

 

 

Attn:

Maître Philippe Gramling

 

 

Tel:

+33.3.90.40.26.24

 

 

Fax:

+33.3.90.40.26.26

 

 

Email:

philippe.gramling@fr.landwellglobal.com

 

Any notice given hereunder may be given on behalf of any Party by his counsel or
other authorized representatives.

 

 

7.6          Dispute Resolution

 

 

Any and all dispute, controversies, differences which may arise out of or in
relation to or in connection with this Agreement or the transactions
contemplated hereby including its legal validity shall be finally settled and
binding upon the Parties hereto by an arbitration process to be held in
Strasbourg, France (or such other location as the Parties may agree).

 

The arbitration tribunal will be comprised of an arbitrator jointly designated
by the Parties or, if the Parties cannot agree on an arbitrator within a time
period of one month, then by three arbitrators, one designated by each Party and
the third one ,who will act as chairman of the arbitral tribunal by the others.

 

In this respect, the SELLER irrevocably appoint M. François UHL, or in case of
prevention M. Eric GALLOU, as their common “REPRESENTATIVE”.

 

Any legal proceedings made by or delivered to this “REPRESENTATIVE” will be
deemed having been made by or delivered to all of the sellers.

 

The REPRESENTATIVE is in particular irrevocably entitled to appoint the
arbitrator on behalf of all of the Sellers. Should the REPRESENTATIVE fail to
appoint an arbitrator on behalf of the Sellers within a time period of three
months from the date of the Request for Arbitration, then FOSSIL shall be
irrevocably entitled to initiate legal proceedings before the Tribunal de Grande
Instance in Strasbourg.

 

Reciprocally, should FOSSIL fail to appoint an arbitrator within a time period
of three months from the Request for Arbitration, then the SELLER shall be
irrevocably entitled to initiate legal proceedings before the Tribunal de Grande
Instance in STRASBOURG.

 

 

In case the two arbitrators cannot agree on a third, the third shall be
appointed by le Président du Tribunal de Grande Instance in Strasbourg at the
request of the most diligent party;

 

The language of such arbitration shall be English and such arbitration shall be
conducted according the special arbitration rules of the Nouveau Code de
Procédure Civile.

 

 

7.7          Binding effect, Assignment

 

This Agreement shall be binding upon and insure to the benefit of the Parties
and their successors. This Agreement may not be assigned by any Party without
the prior written consent of the other Party.

 

 

7.8          List of Schedules and Exhibits

 

Schedule 1 : List of VEDETTE’s Shareholders

 

Schedule 2 : Consolidated statement as of 6/30, 2001

 

Schedule 3 : Due diligence : List of initial documents and information.

 

Schedule 4 : List and description of claims and litigations

 

Schedule 5 : Last approved accounts of each of the Group Companies (Excl. GUM).

 

Schedule 6 : List of business’ encumbrances, liens and pledges

 

Schedule 7 : Intellectual property rights list

 

Schedule 8 : Employees detailed list

 

Schedule 9 : Insider Agreements list

 

Schedule 10: Financial commitment

 

 

Exhibit A:                 Earnout Targets

 

Exhibit B:                 Form of Option Award Agreement

 

Exhibit C:                 Form of Confidentiality Agreement

 

Exhibit D:                 Sellers’ Representations and Warranties

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date set forth above by their duly authorized representatives.

 

 

Signed in Saverne and in Richardson, on August 3, 2001.

 

 

For FOSSIL EUROPE B. V. (« FOSSIL »)

 

Represented by , T.R. TUNNELL,

 

Executive Vice President and Chief Legal Officer, Fossil Inc;

 

 

 

 

 

BANQUE DEGROOF LUXEMBOURG

 

Represented by Jean-Louis WAUCQUEZ,

 

Fondé de Pouvoirs Principal

 

 

 

 

 

 

 

And by Benoît DUVIEUSART,

 

Secrétaire Général

 

 

 

 

 

 

 

 

 

BY ERIC GALLOU

 

 

 

 

 

 

 

 

 

BY CHRISTIAN MATT

 

 

 

 

 

FOR ACTIV’INVEST SA

 

Represented by François M.UHL,

 

Administrateur Délégué

 

 

Exhibit A