Prepared by MERRILL CORPORATION









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