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ASSET PURCHASE AGREEMENT    
  

        THIS ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of October    , 2001 to be effective as of the Closing Date is made by and between Meliga
Habillement Horloger SA ("Seller") and Montres Antima SA ("Purchaser"). 

 
 

W I T N E S S E T H:    
  

        WHEREAS, Seller is in the business of manufacturing, marketing and distributing Swiss-made watches and components (the "Business"); 

        WHEREAS,
Seller desires to sell, and Purchaser desires to purchase, certain of Seller's assets relating to the Business, on the terms and subject to the conditions and limitations set
forth herein; and 

        WHEREAS,
the parties hereto desire to transfer from Seller to Purchaser only those assets and liabilities which are specifically designated in this Agreement, and not to structure the
present transaction as a transfer of a business with assets and liabilities in accordance with article 181 of the Swiss Code of Obligations of March 30, 1911 (as amended) ("CO"). 

        NOW,
THEREFORE, in consideration of the mutual representations, warranties and covenants contained in this Agreement, and on the terms and subject to the conditions herein set forth, the
parties hereto agree as follows: 

Definitions

        For
the purposes of this Agreement, the following terms shall have the respective meanings indicated below: 

        "Aggregate
Provisions Amount" shall mean, collectively, the A/R Provision and the Inventory Provision. 

        "Agreed
Balance Sheet" means the balance sheet of the Seller as at June 30, 2001 in the agreed form. 

        "A/R
Provision" shall mean 138,000 CHF, as evidenced by the Agreed Balance Sheet. 

        "Assets"
shall mean all of Seller's assets and properties listed on Schedule 1(A)-(E) as reflected on the Agreed Balance Sheet, less the Excluded Assets. 

        "Assumed
Contracts" shall mean the contracts and agreements related to Seller's business listed on Schedule 2 that will be assigned by Seller to, and assumed by, Purchaser at
Closing. 

        "Assumed
Obligations" shall mean (i) the obligations of Seller under the Assumed Contracts the causes of which arise after the Closing Date, and (ii) the other obligations
of Seller listed on Schedule 2 that will be assigned by Seller to, and assumed by, Purchaser at Closing. 

        "Balance
Sheet Adjustments" shall mean the adjustments in the purchase price in accordance with the provisions of Section 1.4(a) hereof. 

        "Closing"
shall mean the consummation of the transactions contemplated by this Agreement. 

        "Closing
Assets" shall mean the classes of Seller's assets and properties as listed on Schedule 1(A)-(E) as they exist as of Closing as evidenced by the Closing Balance Sheet,
less the Excluded Assets. 

        "Closing
Date" shall mean October 31, 2001, or such other date of Closing as mutually agreed to in writing by the parties. 

        "Closing
Balance Sheet" shall mean the balance sheet of Seller as of the date of Closing as determined in accordance with Swiss GAAP, consistently applied. 

 

        "Collateral
Transactions" shall mean, collectively, (i) the Purchase and Sale Agreement between Montres Antima SA and Flavio Rota, individually and Meliga Habillement Horloger SA
and (ii) the Purchase and Sale Agreement between Swiss Technology Holding AG and Michel Geiger. 

        "Company"
shall mean Meliga Habillement Horloger SA 

        "Encumbrance"
means a mortgage, charge, pledge, lien, option, restriction, right of first refusal, right of pre-emption, third-party right or interest, retention of title,
other encumbrance or security interest of any kind, or another type of preferential arrangement (including, without limitation, a title transfer or retention arrangement) having similar effect. 

        "Excluded
Assets" shall mean the excluded assets and properties listed on Schedule 3. 

        "Inventory
Provision" shall mean 225,000 CHF, as evidenced by the Agreed Balance Sheet. 

        "Lease"
shall mean the lease relating to the Real Estate dated January 1, 2001 between Sessler Immobilien AG and the Seller. 

        "Post
Closing Adjustments" shall mean, collectively, the Balance Sheet Adjustments and the Receivables/Inventory Adjustment. 

        "Receivables/Inventory
Adjustment" shall have the meaning given to it in Section 1.4(b). 

        "Real
Estate" shall mean the property located at Ch. de la Clôture 6, Bienne, Switzerland and improvements described in the Lease. 

        "Swiss
GAAP" shall mean, generally accepted accounting principles applicable in Switzerland. 

        "Test
Date" shall mean the first anniversary date following Closing. 

        "Test
Period" shall mean the period from Closing until the Test Date. 

        "UBS
Loan" shall mean the credit facility dated September 10, 1999, as amended, supplemented and modified, between UBS AG and Seller. 

 
 

ARTICLE 1
  Purchase and Sale

        1.1 Sale and Purchase of Assets. Subject to and upon the terms and conditions contained herein, Seller sells to
Purchaser, and Purchaser purchases from Seller, the Assets less the Excluded Assets as they exist as of the Closing Date. 

        1.2 Closing. Unless this Agreement shall have been terminated and the transactions contemplated herein shall have
been abandoned pursuant to Article 9, and subject to the satisfaction or waiver of the conditions set forth in Articles 6 and 7, the Closing shall take place on the Closing Date at the offices
of Seller or at such other place as shall be mutually agreed to by the parties. 

        1.3 Consideration. The consideration of Purchaser for Seller's selling the Assets and transferring the Assumed
Contracts, the Lease and the Employees to Purchaser shall be (i) payment of the Purchase Price (as defined below), and (ii) the assumption of the Assumed Obligations. 

        Subject
to the Post Closing Adjustments contained in Section 1.4, the total purchase price (the "Purchase Price") shall be as follows: 

        (a)
1,628,920 CHF payable at Closing (the "Closing Payment") which amount is equal to the sum of the following: 

        (i)    268,313
CHF representing the net book value of fixed assets as listed on Schedule 1(A) and the intellectual property as listed on Schedule I(B);  less

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        (ii)  225,802
CHF representing the net book value of the Excluded Assets; plus

        (iii)  13,917
CHF for the pre-paid expenses as listed on Schedule 1(E); plus

        (iv)  588,511
CHF representing the net inventory valuation as listed on Schedule 1(C); plus

        (v)  770,514
CHF representing the net accounts receivable valuation of Seller as of June 30, 2001 as listed on Schedule 1(D);  less

        (vi)  10,374
CHF for trade payables to Montres Antima SA; less

        (vii) 13,536
CHF for trade payable to Synergies Horlogeres SA; plus

        (viii)83,000
CHF for the Navivision software; plus

        (ix)  200,000
CHF; less

        (x)  45,623
CHF (composed of (i) 28,008 CHF representing Seller's prorated portion of the 13th month salary accrual for 2001 and (ii) 17,615 CHF
representing Seller's prorated portion of the October 2001 payroll). 

        (b)
the Aggregate Provisions Amount to be paid within ten (10) days following the calculation of the Receivable/Inventory Adjustment in accordance with Section 1.4(b). 

        The
Closing Payment shall be paid to Seller at the Closing by cashier's check or wire transfer in accordance with written instructions to be issued from Seller to Purchaser at least
three (3) business days prior to Closing. 

        1.4 Post Closing Adjustments. The following adjustments to the Purchase Price shall be made following Closing: 

        (a)
Balance Sheet Adjustments. Within 45 days following Closing, the Purchaser shall procure that the Company prepare the Closing
Balance Sheet reflecting the assets and liabilities of the Company as of Closing. The Closing Balance Sheet shall be prepared in accordance with Swiss GAAP, consistently applied. In the event that the
gross value of the Closing Assets, net of any applicable depreciation/amortization, of the Company is greater than the gross value of the Assets, net of any applicable depreciation/amortization, of
the Company, then Purchaser shall remit such difference to Seller as an increase in the Purchase Price within 30 days. In the event that the gross value of the Closing Assets, net of any
applicable depreciation/amortization, of the Company is less than the gross value of the Assets, net of any applicable depreciation/amortization, of the Company, then Seller shall refund such
difference to Purchaser as a decrease in the Purchase Price within 30 days. 

        (b)
Receivables/Inventory Adjustment. The Purchaser shall procure that within forty-five (45) days following the Test
Date, the Company shall test whether, as of the Test Date, the accounts receivable and the inventory existing as of Closing as evidenced by the Closing Balance Sheet have been fully collected (with
respect to the accounts receivable) or fully utilized (with respect to the inventory, assuming realization of normal gross profit margins on such inventory). To the extent that such receivables have
not been fully collected, or such inventory has not been fully utilized, then the value of such assets shall be written to zero and taken against the deferred payment of the Aggregate Provisions
Amount, which amount, if any, shall be payable within ten (10) days. 

        1.5 Assumption of Liabilities. Except for (i) the Assumed Obligations, and (ii) the obligations
assumed in accordance with Section 1.6, Purchaser shall not bear any liabilities or obligations of Seller or otherwise related to the Assets or the Business, whether accrued, absolute,
contingent or otherwise, including without limitation, liabilities based on or arising out of or in connection with (a) any defects in products manufactured or sold by Seller, or (b) any
implied or express warranties relating to such products. In addition, Purchaser shall not bear any liabilities or obligations with respect to the Assumed Contracts which arose, or the cause of which
arose, prior to the Closing Date. Therefore, Seller 

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undertakes to indemnify Purchaser for any of the liabilities and obligations referred to in this Section 1.5 which may transfer to, or accrue on the account of, Purchaser by operation of law. 

        1.6 Seller Employees; Noncompetition. Effective as of the Closing Date, Seller shall transfer to Purchaser and
Purchaser shall assume from Seller the employment of the employees of Seller listed on Schedule 4 (the "Employees") in accordance with art. 333 CO. If the Employees do not refuse such
employment with Purchaser within one month after the Closing Date (art. 333 para. 1 CO), Purchaser will employ
the Employees effective as of the Closing Date on the same terms and conditions as those applicable to their employment by Seller prior to the Closing Date. Effective the Closing Date, Purchaser shall
assume the vacation claims of the Employees accrued during 2001 and all payroll obligations with respect to the Employees for the pay period from October 1, 2001 through October 31,
2001. No other liabilities and obligations with regard to, or in connection with, the employment of the Employees (including, but not limited to, any social security, pension or other benefit
liability relating to the Employees for the time before the Closing Date) shall be assumed by Purchaser, and Seller agrees to indemnify Purchaser for any such liability or obligation which may
transfer to, or accrue on the account of, Purchaser by operation of law. 

        The
provisions of this Section 1.6 shall inure solely to the benefit of Seller, and no third party (including, without limitation, any Employee) shall be permitted to rely hereon
as a third party beneficiary or otherwise. 

        Effective
as of the Closing Date, Purchaser shall also enter into an employment agreement with Jorg Bader in accordance with the provisions of Section 1.8(k) hereof. Seller shall
not, for a period of at least 18 months following Closing, employ or offer employment to Employees who have accepted Purchaser's offers of employment under this Section 1.6 unless such
Employees have received the written consent of Purchaser prior to such offer. 

        1.7 Lease. Effective as of the Closing Date, Seller shall assign to Purchaser and Purchaser shall assume from
Seller the Lease, which is attached as Schedule 5 hereto. For a period of time beginning on the Closing Date and continuing for thirty (30) days thereafter, Purchaser shall provide to
Seller reasonable access to the Real Estate during Purchaser's normal business hours for the purposes of (i) removing the Excluded Assets from the premises; (ii) allowing Seller to
transfer its continuing operations, including all non-Business related records and corporate documentation of Seller, to a new facility; (iii) allowing the Seller to effect items
(i) and (ii) above; provided, however, that any activities conducted under this Section 1.7 shall not hinder, in any manner, the operations of Purchaser. 

        1.8 Seller's Instruments of Transfer; Further Assurances. In order to consummate the transactions contemplated by
this Agreement, the following documents shall be executed and delivered by Seller to Purchaser at the Closing: 

        (a)
a Bill of Sale covering the Assets, substantially in form and substance as set forth in Exhibit A; 

        (b)
a Deed of Transfer and Assumption for the employment contracts of the Employees, substantially in form and substance as set forth in Exhibit B; 

        (c)
a Deed of Transfer and Assumption for the Assumed Contracts and Assumed Obligations, substantially in form and substance as set forth in Exhibit C; 

        (d)
a Deed of Transfer and Assumption for the Lease, substantially in form and substance as set forth in Exhibit D; 

        (e)
written instruments evidencing all consents necessary for Seller to consummate the transaction contemplated hereby, including consents relating to the assignment of the Lease of the
Real Estate and the assignment of the Assumed Contracts; 

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        (f)
a certificate duly executed by the President of Seller substantially in form and substance as set forth in Exhibit E that certifies (i) the due adoption by the Board of
Directors of Seller of corporate resolutions, and the due adoption by the shareholders of Seller of shareholder resolutions, each of which shall be attached to such certificate, and each of which
shall be authorizing the transactions and the execution and delivery of this Agreement and the other agreements and documents contemplated hereby and the taking of all actions contemplated by this
Agreement and such other agreement and documents; (ii) that the copy of the Articles of Association of Seller provided by Seller, which shall be attached to such certificate, is a true and
correct copy of such Articles of Association and that such Articles of Association are in full force and effect; and (iii) that Seller's representations and warranties set forth in
Article 3 are true and correct as of the Closing Date. 

        (g)
original copies of all Assumed Contracts and all amendments, supplements or modifications thereto; 

        (h)
all of Seller's business records to the extent such records constitute a part of the Assets; 

        (i)
possession of the Assets; 

        (j)
the written consent from UBS AG, together with copies of all release of the UBS Loan with respect to the sale of the Assets hereunder, and all other necessary releases of
Encumbrances affecting the Assets, executed by the lien holders thereof and otherwise in a form acceptable for filing; 

        (k)
a countersigned original of the employment agreement between Jorg Bader and the Company in the form attached hereto as Exhibit F; and 

        (l)
such other documents as Purchaser may reasonably request. 

        At
the Closing, and at all times thereafter as may be necessary, Seller shall execute and deliver to Purchaser such other instruments of transfer as shall be reasonably necessary or
appropriate to vest in Purchaser good and indefeasible title to the Assets and to comply with the purposes and intent of this Agreement. In particular, Seller will cooperate in, and execute all
necessary instruments for, the transfer of the intellectual property as listed on Schedule 1(B). 

        1.9 Purchaser's Instruments of Transfer; Further Assurances. In order to consummate the transactions contemplated
by this Agreement, the following shall be executed and delivered by Purchaser to Seller at the Closing: 

        (a)
the Closing Payment by cashier's check or wire transfer of immediately available funds; 

        (b)
a Deed of Transfer and Assumption for the employment contracts of the Employees, substantially in form and substance as set forth in Exhibit B; 

        (c)
a Deed of Transfer and Assumption for the Assumed Contracts and Assumed Obligations, substantially in form and substance as set forth in Exhibit C; 

        (d)
a Deed of Transfer and Assumption for the Lease, substantially in form and substance as set forth in Exhibit D; and 

        (e)
a certificate duly executed by an authorized officer of Purchaser substantially in form and substance as set forth in Exhibit G that certifies the due adoption by the Board of
Directors of Purchaser of corporate resolutions, which shall be attached to such certificate, authorizing the transactions and the execution and delivery of this Agreement and the other agreements and
documents contemplated hereby and the taking of all actions contemplated by this Agreement and such other agreements and documents. 

        At
the Closing, and at all times thereafter as may be reasonably necessary, Purchaser shall execute and deliver to Seller such other instruments as shall be reasonably necessary or
appropriate to comply with the purposes and intent of this Agreement. 

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        1.10 Certain Contracts. Notwithstanding any other provision of this Agreement, to the extent that the assignment
by Seller of any Assumed Contract or Obligation to be assigned or assumed hereunder shall require the consent or approval of another party thereto, the consummation of the transactions contemplated by
this Agreement shall not constitute an assignment, assumption or an attempted assignment or assumption thereof if such assignment or assumption, or attempted assignment or assumption would constitute
a breach thereof. Seller shall obtain the written consent or approval to the assignment or assumption to the Purchaser of each such Assumed Contract or Obligation with respect to which such consent is
required for such assignment or assumption. 

 
 

ARTICLE 2
  Representations and Warranties of Purchaser

        Purchaser
represents and warrants that the following are true and correct as of the date of this Agreement and will be true and correct through the Closing Date as if made on that date: 

        2.1 Incorporation and Good Standing. Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of Switzerland, with all requisite power and authority to carry on the business in which it is engaged, to own the properties it owns and to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. 

        2.2 Authorization and Validity. The execution, delivery and performance of this Agreement and the other agreements
contemplated hereby by Purchaser, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by Purchaser. This Agreement has been and each other agreement
contemplated hereby will be prior to Closing duly executed and delivered by Purchaser and this Agreement constitutes and each agreement contemplated hereby will constitute legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms. 

        2.3 No Violation. Neither the execution and performance of this Agreement or the other agreements contemplated
hereby, nor the consummation of the transactions contemplated hereby or thereby, will (a) conflict with, or result in a breach of the terms, conditions and provisions of, or constitute a
default under, the Certificate of Incorporation or Bylaws of Purchaser or any agreement or other instrument under which Purchaser is bound, or (b) violate or conflict with any judgment, decree,
order, statute, rule or regulation of any court or any public, governmental or regulatory agency or body having jurisdiction over Purchaser or the properties or assets of Purchaser. 

        2.4 Consents and Regulatory Compliance. No authorization, consent, approval, permit or license of, or filing with,
any governmental or public body or authority, any lender or lessor or any other person or entity is required to authorize, or is required in connection with, the execution, delivery and performance of
this Agreement or the agreements contemplated hereby on the part of Purchaser. 

        2.5 Finder's Fee. Purchaser has not incurred any obligation for any finder's, broker's or agent's fee in
connection with the transactions contemplated hereby in a manner that will result in liability on the part of Seller. 

 
 

ARTICLE 3
  Representations and Warranties of Seller

        Seller
represents and warrants that the following are true and correct as of the date of this Agreement and will be true and correct through the Closing Date as if made on that date: 

        3.1 Incorporation and Good Standing; No Subsidiary. Seller is a corporation duly incorporated, validly existing
and in good standing under the laws Switzerland, with all requisite power and authority to carry on the business in which it is engaged, to own the properties it owns and to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. Seller is duly 

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qualified and licensed to do business and is in good standing in all jurisdictions where the nature of its business makes such qualification necessary or where failure to so qualify does not have a
material adverse effect on Seller's business. Except for Seller's interest in Synergies Horlogeres SA, Seller does not own, directly or indirectly, any interest or investment (whether equity or debt)
in any corporation, partnership, limited liability company, business, trust or other entity. 

        3.2 Corporate Records. The copies of the Deed of Incorporation and all amendments thereto and the Articles of
Association of Seller that have been delivered to Purchaser are true, correct and complete copies thereof. The records provided to Purchaser are the true and complete records of Seller with respect to
the Business. 

        3.3 Vote Required. The approval of this Agreement, and the transactions contemplated hereby, by the holders of all
outstanding shares of Seller's common stock is the only vote of holders of any class or series of the capital stock of Seller required to approve this Agreement, the sale of the Assets and the other
transactions contemplated hereby. 

        3.4 Authorization and Validity. The execution, delivery and performance of this Agreement and the other agreements
contemplated hereby by Seller, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by Seller. This Agreement has been and each other agreement
contemplated hereby will be prior to Closing duly executed and delivered by Seller and this Agreement constitutes and each other agreement contemplated hereby will constitute legal, valid and binding
obligations of Seller, enforceable against each of them in accordance with their respective terms. 

        3.5 Financial Information; Absence of Changes; Liabilities.

        (a)
Financial Statements. Schedule 6 sets forth the balance sheet of Seller as of December 31, 1998, December 31,
1999 and December 31, 2000, and the related statements of income and retained earnings for the three years ending on those dates, audited by Seller's independent public accountants.
Schedule 7 sets forth unaudited balance sheet of Seller as June 30, 2001, together with related unaudited statements of income and retained earnings for the period ending on such date,
as certified by the chief financial officer of Seller. The balance sheets and the statements of income have been prepared by Seller throughout the periods indicated in all material respects in
accordance with Swiss GAAP, consistently applied. All financial information provided to Purchaser by Seller in connection with the transactions contemplated by this Agreement, including the financial
statements of Seller, is true, correct and complete and fairly reflects the financial condition and results of operations of Seller as of the dates and for the periods indicated in all material
respects. 

        (b)  No Changes. Since June 30, 2001, there has not been any: 

	(i)
	transaction
by Seller except in the ordinary course of business;

	(ii)
	material
adverse change in the financial condition, liabilities, assets, business or prospect of Seller;

	(iii)
	changes
in accounting methods or practices by Seller;

	(iv)
	declaration,
setting aside or payment of a dividend or other distribution in respect to the capital stock of Seller, or any direct or indirect
redemption, purchase or other acquisition by Seller of any of its shares of capital stock; or

	(v)
	material,
non-scheduled, increase in the salary or other compensation payable or to become payable by Seller to any of its employees,
directors or officers. 

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        3.6 Assets; Title; Leased Assets.

        (a)
Real Property. Seller owns no real property. The only real property leased to Seller is the Real Estate, and the Lease is a true and
correct copy of the lease agreement for the Real Estate. 

        (b)
Personal Property. Schedule 1(A) sets forth a complete and accurate schedule describing all machinery, equipment, supplies and
all other tangible personal property owned by Seller in connection with the Business, including the date of acquisition, original purchase price and book value as of June 30, 2001. 

        (c)
Accounts Receivable. Schedule 1(D) sets forth a complete and accurate schedule of the accounts receivable of Seller as of
June 30, 2001, as reflected in the balance sheet as of that date, together with an accurate aging of these accounts. These accounts receivable, and all accounts receivable of Seller created
after that date, arose from valid sales in Seller's ordinary course of business. 

        (d)  Assumed Contracts. Each Assumed Contract attached hereto as Schedule 2 is a true and correct copy thereof. 

        (e)
Title. Except with respect to the lien on the Assets related to the UBS Loan, which will be released at the time of Closing, Seller
owns the Assets (not including those Assets that are leased by Seller as of the date of this Agreement), free and clear of all Encumbrances. Upon consummation of the transactions contemplated hereby
and receipt of the required consents, Purchaser shall receive good, valid and marketable title to the Assets, and will be entitled to use all of the Assets that are currently leased to Seller,
including the Real Estate, as lessee, free and clear of all Encumbrances, other than statutory landlord liens on assets located in or on the Real Estate. 

        (f)
Leased Property. To the extent any of the Assets are leased or rented, such leases or rental agreements are in full force and effect
(subject only to any applicable statutory landlord's liens), and no lessor or renter has declared any default thereunder and, to the knowledge of Seller, no circumstances exists which, upon notice or
passage of time, would create an event of default or a default under any such agreement. 

        (g)  Software. Purchaser has a valid right and license to use all software currently utilized in the conduct of the Business, and such
software is adequate for the proper conduct of the Business. 

        3.7 Commitments. Seller has not received notice of any plan or intention of any of its customers or suppliers to
exercise any right to cancel or terminate any present arrangement or agreement with Seller as a result of the transactions contemplated by this Agreement, and Seller does not know of any fact that
would justify the exercise of such right. Seller does not currently contemplate, nor have reason to believe any other person or entity currently contemplates, any amendment or change to any
arrangement or agreement. None of the customers or suppliers of Seller has refused, or communicated that it will or may refuse to purchase or supply goods or services, as the case may be, or has
communicated that it will or may substantially reduce the amounts of goods or services that it is willing to purchase from, or sell to, Seller as a result of the transactions contemplated by this
Agreement. 

        3.8 Insurance. All the insurable properties of Seller are insured for their respective benefit under valid and
enforceable policies, issued by insurers of recognized responsibility in amounts and against such risks and losses as is customary in Seller's industry. The respective insurance policies are all in
full force and effect, and no premium payments of Seller thereunder are due. No notice of termination or cancellation with regard to any of the insurance contracts has been given or received by
Seller, and neither Seller nor the respective insurance companies have requested or announced any amendments to the insurance contracts and no such termination, cancellation or request for amendment
is to be expected. True, complete and correct copies of all such policies as they relate to the Assets have been made available to Purchaser prior to the date hereof. Seller will maintain such
insurance until the Closing Date, at which time Seller shall assign such insurance to Purchaser. 

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        3.9 No Violation. Neither the execution and performance of this Agreement or the agreements contemplated hereby
nor the consummation of the transactions contemplated hereby or thereby will (a) materially conflict with, or result in a breach of the terms, conditions and provisions of, or constitute a
default under, the Articles of Association of Seller or any agreement or other instrument under which Seller is bound or to which any of the Assets are subject, (including, but not limited to, any of
the Assumed Contracts) or result in the creation of any Encumbrance upon any of the Assets, or (b) materially violate or conflict with any judgment, decree, order, statute, rule or regulation
of any court or any public, governmental or regulatory agency or body having jurisdiction over Seller or the properties or assets of Seller or the Business. 

        3.10 Taxes and Social Security. There is no material deficiency or delinquency for the payment of any tax,
assessment, governmental charge or social security charge (including mandatory and voluntary pension plan payments) asserted against Seller with respect to the Assets, the Real Estate, the Business or
the Employees, nor are there any unpaid assessments or taxes or governmental charges or social security charges, or any deficiency or delinquency in the payment of any of the taxes, assessments,
governmental charges or social security charges of Seller that could be asserted by any taxing authority against Purchaser, nor is there any material violation by Seller of any federal, cantonal,
municipal or foreign tax or social security law that could be asserted against Purchaser. There are no present disputes as to taxes or social security charges of any nature payable by Seller. There
are no special agreements with, or concessions from, tax or other authorities, formal or informal, which have an impact on the taxes chargeable in connection with the Business. Seller shall deliver to
Purchaser a certificate of the President of Seller evidencing the representations of this Section 3.10. 

        3.11 Consents. Except with respect to the assignment of the Lease and the assignment of the Assumed Contracts, no
authorization, consent, approval, permit or license of, or filing with, any governmental or public body or authority, any lender or lessor or any other person or entity is required to authorize, or
is required in connection with, the execution, delivery and performance of this Agreement or the agreements contemplated hereby on the part of Seller. 

        3.12 Compliance with Laws; Regulatory Compliance. There are no existing violations by Seller of any applicable
federal, canton or local law or regulation that could materially adversely affect the Assets, the Real Estate or the Business. Seller has complied in all material respects with all applicable laws,
regulations and licensing requirements, and has filed with the proper authorities, all necessary statements and reports relating to the Business. Seller possesses all necessary licenses, franchises,
permits and governmental authorizations to own the Assets and conduct the Business as now conducted. 

        3.13 Finder's Fees. Seller has not incurred any obligation for any finder's, broker's or agent's fee in connection
with the transactions contemplated hereby in a manner that will result in liability on the part of Purchaser. 

        3.14 Litigation. Seller has not had any legal action or administrative proceeding or investigation instituted or,
to the best knowledge of Seller, threatened against or affecting, or that could affect, any of the Assets, the Real Estate or the Business. Seller is not subject to any continuing court or
administrative order, writ, injunction or decree applicable to Seller or to the Assets, the Real Estate or the Business. Seller knows of no basis for any such action, proceeding or investigation. 

        3.15 Accuracy of Information Furnished. All information furnished to Purchaser by Seller in this Agreement or in
any exhibit, schedule or certificate related to this Agreement is true, correct and complete in all material respects. Such information states all material facts required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which such statements are made, true, correct and complete in all material respects. 

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        3.16 Condition of Assets and Equipment. All of the Assets that are tangible property are in good condition and
repair for their intended use in the ordinary course of business consistent with past practice and conform in all material respects with all applicable ordinances, regulations and other laws and there
are no known latent defects therein. 

        3.17 Customers. Seller has provided Purchaser with a complete and accurate list of Seller's customers and
suppliers relating to the Business, which is attached hereto as Schedule 8. 

        3.18 Pricing. Seller has provided Purchaser with a complete and accurate list of Seller's standard prices and any
applicable discounts by customer name, which is attached hereto as Schedule 9. 

        3.19 Product Warranties. To Seller's knowledge, there is no claim against or liability of Seller on account of
product warranties or with respect to the manufacture, sale or rental of defective products, and, to the actual knowledge of Seller, there is no basis for any such claim on account of defective
products heretofore manufactured, sold or rented. 

        3.20 Burdensome Obligations. To the best knowledge of Seller, (i) Seller is not a party to or bound by any
Assumed Contract which is so unusual or burdensome as in the foreseeable future could reasonably be expected to have a material adverse effect on the Assets, the Real Estate or the Business, and
(ii) Seller is not in violation of any law, ordinance, statute, code, rule, regulation, order or decree of the Switzerland, any canton, or any municipality in which Seller operates pertaining
to occupational safety, except for violations which could not reasonably be expected to have a material adverse effect on the Assets, the Real Estate or the Business. 

        3.21 Intellectual Property Rights.

        (a)
Intellectual Property Rights. Seller owns, or is licensed or otherwise possesses legally sufficient rights to use, all trademarks,
service marks, trade names, patents, copyrights, and any applications therefor, technology, know-how, trade secrets, computer software programs or applications (in both source code and
object code form) and tangible or intangible proprietary information or material that are used or proposed to be used in the Business, including all current patents, patent applications, registered
and material unregistered copyrights, and any applications therefor owned or licensed by the Seller (the "Intellectual Property Rights") free and clear of all Encumbrances. 

        (b)
All Intellectual Property Rights which can be registered are duly and validly registered, and there are no appeals, oppositions or other actions pending against such registrations.
All application, registration, renewal and other fees relating to the Intellectual Property Rights have been fully paid in due time. 

        (c)
Seller has disclosed the Intellectual Property Rights to the extent necessary for Purchaser to practice and utilize such rights in its Business. Without limiting the generality of
the foregoing, Schedule 9 is a true and complete list of Seller's customers and Schedule 10 is a true and complete list of Seller's computer systems and programs. 

        (d)
Purchaser's use of the Intellectual Property Rights will not infringe upon the rights of any third party. 

        (e)
To Seller's best knowledge, there has been no breach with respect to any license or right relating to any of the Intellectual Property Rights. 

        3.22 Employees. Schedule 4 sets forth the true and complete terms and conditions of employment of the
Employees, including, but not limited to, their salaries, fringe benefits, bonuses and other benefits. Except for (i) Seller's prorated portion of the accrued, unpaid vacation for the Employees
during 2001, (ii) Seller's prorated portion of the 13th month salary payable to the Employees and (iii) the October 2001 payroll, all claims of Employees against
Seller which are based on occurrences 

10

 

before the Closing Date have been fully discharged by Seller, and Purchaser will not incur any liability with regard to such claims. 

 
 

ARTICLE 4
  Purchaser's Covenants

        4.1 Consummation of Agreement. Purchaser agrees that on or prior to the Closing, Purchaser agrees to use its best
efforts to (i) cause the Board of Directors of Purchaser to authorize all necessary corporate action; and (ii) cause the consummation of the transactions contemplated by this Agreement
in accordance with its terms and conditions. 

        4.2 Retention of Records. Purchaser shall retain all documents, books and records of Seller which Purchaser
receives from Seller for a period of two (2) years following the Closing Date. Seller shall be provided an opportunity to retain photostatic copies of those books, records, corporate document.
After the Closing, Seller and its representatives shall have reasonable access to all such books, records and documents during normal business hours. 

 
 

ARTICLE 5
  Seller's Covenants

        Seller
agrees that on or prior to the Closing: 

        5.1 Business Operations. Seller shall operate the Business only in the ordinary course, will not introduce any new
method of management or operation and Seller shall use its best efforts to preserve the Business intact, to retain its present customers and suppliers so that it will be available to Purchaser after
the Closing and to cause consummation of the transactions contemplated by this Agreement in accordance with its terms and conditions. Seller shall not take any action that might reasonably be expected
to impair the Assets, the Real Estate or the Businesses without the prior written consent of
Purchaser or take or fail to take any action that would cause or permit the representations made in Article 3 hereof to be inaccurate at the time of Closing or preclude Seller from making such
representations and warranties at the Closing. 

        5.2 Access. Seller shall permit Purchaser and its authorized representatives full access to, and make available
for inspection, all of the Assets, the Real Estate and the Business, including Seller's employees, customers and suppliers, and furnish Purchaser all documents, records and information with respect to
the affairs of Seller as Purchaser and its representatives may reasonably request, all for the sole purpose of permitting Purchaser to become familiar with the Assets, the Real Estate and the
Business. 

        5.3 Shareholder Approval. Seller will, as soon as practicable following the execution of this Agreement, duly
call, give notice of, convene and hold a meeting of shareholders for the purpose of approving this Agreement and the transactions contemplated hereby. 

        5.4 Material Change. Prior to the Closing, Seller shall promptly inform Purchaser in writing of any material
adverse change in the condition of the Assets, the Real Estate or the Business or any event that renders the representations and warranties made in Article 3 to be inaccurate, to the extent
such change or event is known to Seller or should reasonably be known to Seller in the ordinary course of its operation of the Assets or the Business. Any such disclosure shall not be deemed a waiver
by Purchaser of any representation or warranty of Seller contained in this Agreement. 

        5.5 Approvals of Third Parties. As soon as practicable after the execution of this Agreement, but in any event
prior to the Closing Date, Seller will secure all necessary approvals, assignments, releases and consents of all third parties and governmental authorities required on the part of Seller for the
consummation of and contemplated by this Agreement, including, without limitation, the assignment of the Assumed Contracts and the Lease. 

11

 

        5.6 Employees. Seller will cooperate with all reasonable requests made by Purchaser for the purpose of allowing
Purchaser to hire the Employees. Seller will inform the Employees of the contemplated transfer to Purchaser in accordance with art. 333a CO in due time before the Closing Date and will advise them
that they are deemed to have accepted such transfer if they do not explicitly refuse the transfer by written notice to Seller and Purchaser within one month after the Closing Date. 

        5.7 Employee Compensation. Except with Purchaser's prior written consent, no material, non-scheduled
increase will be made in the compensation or rate of compensation payable or to become payable to the Employees, and no bonus, profit sharing, retirement, insurance, death, fringe benefit or other
extraordinary or indirect compensation shall accrue, be set aside or be paid to, for or on behalf of any
of such Employees other than as required by presently existing pension, profit sharing, bonus and similar benefit plans as presently constituted, and no agreement or plan other than those now in
effect shall be adopted or committed for. 

        5.8 Contracts. Except with Purchaser's prior written consent, Seller shall not waive any material right or cancel
any of the Assumed Contracts, debt or claim relating to the Assets, the Real Estate or the Business, nor will Seller, except in the ordinary course of business, assume or enter into any contract,
lease, license, obligation, indebtedness, commitment, purchase or sale relating to the Assets, the Real Estate or the Business. 

        5.9 Mortgages, Liens. Except with Purchaser's prior written consent, Seller will not enter into any agreement
establishing, and will not otherwise permit, any Encumbrance over the Assets, the Real Estate or the Business, whether now owned or hereafter acquired, except for transactions in the usual and
ordinary course of business. 

        5.10 Changes in Inventory. Seller will not alter the physical contents or character of any of its inventory as
listed on Schedule 1(C) so as to affect the nature of the Business or result in a change in the total franc valuation thereof other than normal period-end adjustments in accordance
with Swiss GAAP and other than as a result of transactions in the ordinary course of business. 

        5.11 No Disclosure or Negotiation with Others. Seller will prevent the disclosure of any of the terms or
conditions of this Agreement to any other person, other than to its employees, legal counsel and accountants, or as otherwise required by law or court order. Additionally, Seller shall not, directly
or indirectly, through representatives or otherwise, solicit, entertain, or negotiate with respect to, or in any manner encourage, discuss or consider any offer or proposal to sell the Business, in
whole or in part, to any person or entity other than Purchaser or its affiliates, whether directly or indirectly, through purchase, merger, consolidation or otherwise and neither Seller nor any
representative of Seller shall provide information relating to the Business to any other person or entity in connection with a possible transaction involving the Business. The foregoing restrictions
shall continue only until the Closing. Seller agrees to immediately notify Purchaser in the event of any known contact among Seller or Seller's representative and any other person or entity regarding
any such offer or proposal or any related inquiry. 

        5.12 Noncompetition Agreement. Seller and the shareholders of Seller shall enter into a Confidentiality and
Non-Competition Agreement with Purchaser substantially in the form and substance as set forth in Exhibit H whereby Seller and agrees not to compete with Purchaser in any respect in
connection with the Business and Seller and the shareholders of Seller agree to maintain the confidentiality of all confidential information relating to the Business following Closing. The term of the
non-competition provisions applicable to Seller and the shareholders of Seller shall be three (3) years beginning on the Closing Date and shall be in effect in, and cover all of
Europe. 

        5.13 Information for Tax Returns. Seller shall cooperate with Purchaser after the Closing Date by providing
Purchaser, without any additional consideration but at the expense of Purchaser, promptly upon request, such records and other information regarding the Assets, the Real Estate and/or the 

12

 

Business as may reasonably be requested from time to time by Purchaser in connection with the preparation or audit of its federal, canton and municipal income and other tax returns, and audits,
disputes, refund claims or litigation relating thereto. In connection therewith, Seller will afford Purchaser's tax advisors, and such other persons as may be mutually agreed upon, access to books and
records relating to the Assets, the Real Estate and the Business; provided, however, that Purchaser shall cause its tax advisors and such other persons to hold in strict confidence all such
information (except as required to be disclosed in connection with such tax returns and audits, disputes, refund claims and litigation relating thereto). 

        5.14 Swiss Value Added Tax. Seller will file on, or without delay after, Closing (but in no case later than
30 days after the Closing Date) a notification to the Federal Tax Administration in accordance with art. 47 para. 3 of the Federal Statute on Value Added Tax of September 2, 1999 (as
amended) and will use its best efforts to successfully complete these notification procedures. 

 
 

ARTICLE 6
  Purchaser's Conditions Precedent

        Except
as may be waived in writing by Purchaser, the obligations of Purchaser hereunder are subject to the fulfillment at or prior to the Closing of each of the following conditions: 

        6.1 Representations and Warranties. The representations and warranties of Seller contained herein shall be true
and correct as of the Closing, and Purchaser shall not have discovered any error, misstatement or omission therein. 

        6.2 Covenants. Seller shall have performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by it prior to the Closing. 

        6.3 Officer's Certificate. Seller shall have delivered to Purchaser a certificate duly executed by Seller's
President substantially in form and substance as set forth in Exhibit E certifying as to the statements contained in Section 6.1 and Section 6.2 to this Agreement. 

        6.4 Proceedings. No action, proceeding or order by any court or governmental body or agency or third party shall
have been threatened in writing, asserted, instituted or entered to restrain or prohibit the
carrying out of the transactions contemplated by this Agreement or which would materially affect the ability of the Purchaser to consummate the transactions contemplated by this Agreement. 

        6.5 Shareholder Approval and Other Approval. The execution and delivery of this Agreement by Seller, and the
performance of its covenants and obligations hereunder, shall have been duly authorized by all necessary corporate and shareholder action, and Purchaser shall have received copies of all resolutions
pertaining to that authorization, certified by the secretary of Seller. 

        6.6 No Material Adverse Change. No material, adverse change in the Assets, the Real Estate or the Business shall
have occurred after the date hereof and prior to the Closing. 

        6.7 Due Diligence. Purchaser, acting through its own advisers, agents, consultants, personnel, counsel,
accountants or other representatives designated by Purchaser, shall have been afforded full and complete opportunity to inspect and/or examine the Assets, the Real Estate, the Business and the books
and records, titles and leases to properties, loans and other agreements, any pending or threatened litigation, and other matters pertaining to the legal structure, regulatory compliance, assets and
obligations of Seller. The conclusion of any such inspection and/or examination shall be satisfactory, in the opinion of Purchaser and its advisors. 

        6.8 Instruments of Transfer. Seller shall have delivered to Purchaser each of those documents enumerated in
Section 1.8 hereto. 

13

 

        6.9 Third Party Consents. All necessary agreements and consents of any parties to the consummation of the
transactions contemplated by this Agreement, or otherwise pertaining to the matters covered by it, shall have been obtained by Seller and delivered to Purchaser, including, but not limited to, all
consents to the assignment of the Assumed Contracts and the Lease. 

        6.10 Collateral Transactions. The Collateral Transactions shall have closed, or simultaneously close, in
accordance with their respective terms and conditions. 

 
 

ARTICLE 7
  Seller's Conditions Precedent

        Except
as may be waived in writing by Seller, the obligations of Seller hereunder are subject to the fulfillment at or prior to the Closing of each of the following conditions: 

        7.1 Representations and Warranties. The representations and warranties of Purchaser contained herein shall be true
and correct as of the Closing, subject to any changes contemplated by this Agreement, and Seller shall not have discovered any error, misstatement or omission therein. 

        7.2 Covenants. Purchaser shall have performed and complied in all material respects with all covenants or
conditions required by this Agreement to be performed and complied with by it prior to the Closing. 

        7.3 Corporate Approval. The execution and delivery of this Agreement by Purchaser, and the performance of its
covenants and obligations hereunder, shall have been duly authorized by all necessary corporate and shareholder action, and Purchaser shall have received copies of all resolutions pertaining to that
authorization, certified by the secretary of Purchaser. 

        7.4 Officer's Certificate. Purchaser shall have delivered to Seller a certificate duly executed by an officer of
Purchaser certifying as to the statements contained in Section 7.1 and Section 7.2 of this Agreement. 

        7.5 Proceedings. No action, proceeding or order by any court or governmental body or agency or third party shall
have been threatened in writing, asserted, instituted or entered to restrain or prohibit the carrying out of the transactions contemplated by this Agreement or which would materially affect the
ability of Seller to consummate the transactions contemplated by this Agreement. 

        7.6 Instruments of Transfer. Purchaser shall have delivered to Seller each of those items enumerated in
Section 1.9 of this Agreement. 

 
 

ARTICLE 8
  Indemnification

        8.1 Seller's Indemnity. Subject to the terms and conditions of this Article 8, Seller agrees to indemnify,
defend and hold Purchaser and its shareholders, officers, directors, agents, attorneys and affiliates harmless from and against all losses, claims, obligations, demands, assessments, penalties,
liability, costs, damages, reasonable attorneys' fees and expenses (collectively, "Damages"), asserted against or incurred by Purchaser by reason of or resulting from any of the following: 

        (a)
A breach by Seller of any representation, warranty or covenant contained herein or in any agreement executed pursuant hereto; 

        (b)
Any product liability claims relating to products sold by Seller, and all general liability claims relating to the Assets, the Real Estate or the Business arising out of or relating
to occurrences of any nature prior to the Closing, whether any such claims are asserted prior to or after the Closing; 

        (c)
Any obligation or liability not expressly assumed by Purchaser in accordance with Sections 1.5 and 1.6; or 

14

 

        (d)
Any tax filing or return or payment made, or position taken, by Seller which any governmental authority challenges and which results in an assertion of Damages against Purchaser. 

        8.2 Purchaser's Indemnity. Subject to the terms and conditions of this Article 8, Purchaser agrees to
indemnify, defend and hold Seller and its officers, directors, agents, attorneys and affiliates harmless from and against all Damages asserted against or incurred by Seller by reason of or resulting
from any of the following: 

        (a)
A breach by Purchaser of any representation, warranty or covenant contained herein or in any agreement executed pursuant hereto; 

        (b)
Any product liability or breach of warranty claims relating to products sold by Purchaser, and all general liability claims relating to the Assets, the Real Estate or the Business
arising out of or relating to occurrences of any nature after the Closing; 

        (c)
Any obligation or liability with respect to the Employees arising out of or relating to occurrences of any nature after the Closing; 

        (d)
Any tax filing or return or payment made, or position taken, by Purchaser, after Closing, which any governmental authority challenges and which results in an assertion of Damages
against Seller; or 

        (e)
The failure of Purchaser to pay, perform and discharge any of the Assumed Obligations. 

        8.3 Indemnification Procedures in Case of Third Party Claims. The respective obligations and liabilities of Seller
and Purchaser (the "indemnifying party") to the other (the "party to be indemnified") under Sections 8.1 and 8.2, respectively, hereof with respect to claims resulting from the assertion of liability
by third parties shall be subject to the following terms and conditions: 

        (a)
Within 20 days (or such earlier time as might be required to avoid prejudicing the indemnifying party's position) after receipt of notice of commencement of any action
evidenced by service of process or other legal pleading, or with reasonable promptness after the assertion in writing of any claim by a third party, the party to be indemnified shall give the
indemnifying party written notice thereof together with a copy of such claim, process or other legal pleading, and the indemnifying party shall have the right to undertake the defense thereof by
representatives of its own choosing and at its own expense; provided, however, that the party to be indemnified may participate in the defense with
counsel of its own choice and at its own expense. 

        (b)
In the event that the indemnifying party, by the 30th day after receipt of notice of any such claim (or, if earlier, by the 10th day preceding the day on which an answer or other
pleading must be served in order to prevent judgment by default in favor of the person asserting such claim), does not elect to defend against such claim, the party to be indemnified will (upon
further notice to the indemnifying party) have the right to undertake the defense, compromise or settlement of such claim on behalf of and for the account and risk of the indemnifying party and at the
indemnifying party's expense, subject to the right of the indemnifying party to assume the defense of such claims at any time prior to settlement, compromise or final determination thereof. 

        (c)
Anything in this Section 8.3 to the contrary notwithstanding, the indemnifying party shall not settle any claim without the consent of the party to be indemnified unless such
settlement involves only the payment of money and the claimant provides to the party to be indemnified a release from all liability in respect of such claim. If the settlement of the claim involves
more than the payment of money, the indemnifying party shall not settle the claim without the prior consent of the party to be indemnified. 

        (d)
The party to be indemnified and the indemnifying party will each cooperate with all reasonable requests of the other. 

15

 

        8.4 Survival of Representations, Warranties and Covenants. Notwithstanding any investigation before or after
Closing made by any party or on its behalf, the representations, warranties, covenants and other agreements contained herein shall survive the Closing for a period (such period being referred to as
the "Survival Period") ending on the expiration of twenty-four (24) calendar months following the month in which the Closing shall occur, and all statements contained in any
certificate, exhibit or other instrument delivered by or on behalf of Seller or Purchaser pursuant to this Agreement shall be
deemed to have been representations and warranties by Seller or Purchaser, as the case may be, and shall survive the Closing and any investigation before or after Closing made by any party or on its
behalf for a period expiring upon completion of the Survival Period; provided, however, that (i) any claim which is submitted in writing to the
indemnifying Party on or before the expiration of the Survival Period may still be enforced after expiration of the Survival Period, and (ii) any claim relating to Seller's representations made
in Section 3.10 (Taxes and Social Security) may still be raised after expiration of the Survival Period, but not later than one year after notification of the respective claims to Purchaser by
the tax authorities or social security institutions. The limitations, time limits and Purchaser's investigation and notification and other duties under articles 200, 201 and 210 of the Swiss Code of
Obligations are hereby expressly waived. 

        8.5 Remedies Not Exclusive. The remedies provided in this Article 8 shall not be exclusive of any other
rights or remedies available by one party against the other, either at law or in equity. 

 
 

ARTICLE 9
  Termination

        9.1 Termination by Purchaser. Purchaser may terminate this Agreement by written notice to Seller prior to Closing
if any of the conditions precedent to its obligation to close stated in Article 6 have not been fulfilled prior to the Closing Date, or if in Purchaser's reasonable opinion Seller has
materially failed to comply with any term or condition of this Agreement, or Seller or any of Seller's officers or other representatives has provided Purchaser with materially inaccurate information
or has failed to disclose fully to Purchaser any materially unfavorable information about the Business or the Assets, or there has been a materially adverse change in the Assets, the Real Estate or
the Business or in the ability of Seller to carry out any obligation under this Agreement; or for any reason other than a default by Purchaser if the Closing has not occurred on or before
October 31, 2001. 

        9.2 Termination by Seller. Seller may terminate this Agreement by written notice to Purchaser prior to Closing if
any of the conditions precedent to its obligations to close stated in Article 7 have not been fulfilled prior to the Closing Date, or if in Seller's reasonable opinion Purchaser has materially
failed to comply with any term or condition of this Agreement, or Purchaser or any of Purchaser's officers or other representatives has provided Seller with materially inaccurate information; or for
any reason other than a default by Seller, if the Closing has not occurred on or before October 31, 2001. 

 
 

ARTICLE 10
  Miscellaneous    
  

        10.1 Amendment. This Agreement may be amended, modified or supplemented only by an
instrument in writing executed by the party against which enforcement of the amendment, modification or supplement is sought. 

        10.2 Assignment and Denial of Third Party Rights. Except as otherwise provided in this Section 10.2,
neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof nor any of the documents executed in connection herewith may be assigned or delegated by any
party without the written consent of the other parties. Any attempted assignment or delegation of such rights in violation of this Section 10.2 will be null and void and of no force and effect.
Nothing contained herein, express or implied, is intended to confer upon any person or entity (including 

16

 

minority shareholders or stockholders of the parties hereto) other than the parties indemnified under Article 8 and parties hereto and their successors in interest and permitted assignees any
rights or remedies under or by reason of this Agreement unless so stated herein to the contrary. 

        10.3 Notice. Any notice or communication must be in writing and given by depositing the same in the mail,
addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, or by delivering the same in person. Such notice shall be deemed received on the date
on which it is hand-delivered or on the third business day following the date on which it is so mailed. For purposes of notice, the addresses of the parties shall be: 

	If to Seller:	 	Meliga Habillement Horloger SA

Ch. de la Clôture 6

C.P. 95

2502 Bienne, Switzerland

Attention: Jorg Bader

Telephone: 032-344-2999

Facsimile: 032-344-2983
	

If to Purchaser:	
 	

Montres Antima SA

Rue Th. Kocher 11

CH-2502 Bienne

Switzerland

Attention: Enrico Margaritelli

Telephone: 032-322-3462

Facsimile: 032-322-0471
	

with a copy to:	
 	

Fossil, Inc.

2280 N. Greenville Ave.

Richardson, Texas 75082

Attention: T.R. Tunnell, Executive Vice President

Telephone: 972-699-2139

Facsimile: 972-498-9639

        Any
party may change its address for notice by written notice given to the other parties. 

        10.4 Confidentiality. The parties shall keep this Agreement and its terms confidential, but any party may make
such disclosures after the Closing as it reasonably considers are required by law, but each party will notify the other party in advance of any such disclosure. In the event that the transactions
contemplated by this Agreement are not consummated for any reason, the parties agree not to disclose or use any confidential information they may have concerning the affairs of the other parties,
except for information which is required by law to be disclosed. Confidential information includes, but is not limited to: customer lists and files, prices and costs, business and financial records,
surveys, reports, plans, proposals, financial information, information relating to personnel contracts, stock ownership, liabilities and litigation. Should the transactions contemplated hereby not be
consummated, nothing contained in this Section 10.4 shall be construed to prohibit the parties from operating a business in competition with each other, provided that such party does not use
the confidential information of the other party to operate such business. After the Closing Date, neither party hereto shall use in any way or disclose any of such confidential information, directly
or indirectly, except as required by law or court order. After the Closing, all files, records, documents, information, data and similar items relating to the Business shall remain the exclusive
property of Purchaser. 

17

 

        10.5 Entire Agreement. This Agreement and the schedules hereto supersede all prior agreements and understandings
relating to the subject matter hereof, except that the obligations of any party under any agreement executed pursuant to this Agreement shall not be affected by this Section 10.5. 

        10.6 Costs, Expenses and Legal Fees. Whether or not the transactions contemplated hereby are consummated, each
party shall bear its own costs and expenses (including attorney's fees) of preparation, negotiation and consummation of this Agreement and the transactions contemplated hereby. 

        10.7 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under
present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 

        10.8 Specific Performance. Seller acknowledges that a refusal by Seller to consummate the transactions
contemplated hereby, or a breach by Seller of the provisions of this Agreement, will cause irrevocable harm to Purchaser, for which there may be no adequate remedy at law and for which the
ascertainment of damages would be difficult. Therefore, Purchaser shall be entitled, in addition to, and without having to prove the inadequacy of, other remedies at law, to specific performance of
this Agreement, as well as injunctive relief (without being required to post bond or other security). 

        10.9 Governing Law. This Agreement and the rights and obligations of the parties shall be governed, construed and
enforced in accordance with the laws of Switzerland. 

        10.10 Captions. The captions in this Agreement are for convenience of reference only and shall not limit or
otherwise affect any of the terms or provisions hereof. 

        10.11 Counterparts; Facsimile Execution. This Agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same instrument. A telecopy or facsimile transmission of a signed counterpart of this Agreement shall be sufficient to bind
the party or parties whose signature(s) appear(s) thereon. 

        10.12 Taxes. Each party shall be responsible for all sales, use, transfer or other taxes applicable to such party
resulting from the transactions contemplated hereby. 

        10.13 Public Announcements. Seller and Purchaser shall cooperate with each other in the development and
distribution of all news releases and other public information disclosures with respect to this Agreement or any of the transactions contemplated hereby and shall not issue any public announcement or
statement with respect thereto prior to consultation with the other party. The parties agree that the initial press release or releases to be issued in connection with the execution of this Agreement
shall be mutually agreed upon prior to the issuance thereof. 

        10.14 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 Zurich, Switzerland. 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 within a further month and the third one,who will act as chairman of the arbitral tribunal, by the others. Any arbitrator not appointed
as provided above shall be appointed by the Zurich High Court (§ 239 para. 2 Zurich Code of Civil Procedures applicable pursuant to Art. 179 para. 2 Swiss Federal Statute on International
Private Law, 

18

 

"IPRG") at the request of one party. The language of such arbitration shall be English and such arbitration shall be conducted according to the rules of the IPRG). As far as the IPRG does not contain
mandatory provisions, the arbitrators shall apply the procedural provisions of the International Arbitration Rules of the Zurich Chamber of Commerce as in force at the time of the commencement of the
arbitration proceedings, provided, however, that such rules shall not apply to the extent that (i) they contravene the present arbitration clause, or (ii) they call for an involvement of
the Zurich Chamber of Commerce.

        IN
WITNESS WHEREOF, the undersigned parties have hereunto duly executed this Agreement as of the date first written above. 

	 	 	PURCHASER:
	

 	
 	
MONTRES ANTIMA SA
	

 	
 	

By:	
 	

	 	 	Its:

	

 	
 	
SELLER:
	

 	
 	

MELIGA HABILLEMENT HORLOGER SA
	

 	
 	

By:	
 	

	 	 	Its:

19

 
 

Exhibit A
  
    Agreed Form of Bill of Sale    
  

        (See Attached) 

 
 

Exhibit B
  
    Agreed Form of Deed of Transfer and Assumption for Employment Agreements    
  

        (See
Attached) 

 
 

Exhibit C
  
    Agreed Form of Deed of Transfer and
  Assumption for the Assumed Contracts and Assumed Obligations    
  

        (See
Attached) 

 
 

Exhibit D
  
    Agreed Form of Deed of Transfer and Assumption for the Lease    
  

        (See
Attached) 

 
 

Exhibit E
  Agreed Form of Certificate by the President of Seller    
  

        (See
Attached) 

 
 

Exhibit F
  Agreed Form of Employment Agreement with Jorg Bader    
  

        (See
Attached) 

 
 

Exhibit G
  Agreed Form of Certificate by an Officer of Purchaser    
  

        (See Attached) 

 
 

Exhibit H
  Agreed Form of Non-Competition Agreement    
  

        (See Attached) 

 
 

Schedule 1(A)
  Fixed Assets    
  

        (See Attached) 

 
 

Schedule 1(B)
  Intellectual Property    
  

 
 

Schedule 1(C)
  Inventory    
  

        (See Attached) 

 
 

Schedule 1(D)
  Accounts Receivable    
  

        (See Attached) 

 
 

Schedule 1(E)
  Pre-Paid Expenses    
  

 
 

Schedule 2
  Assumed Contracts and Obligations    
  

 
 

Schedule 3
  Excluded Assets    
  

        (See Attached) 

 
 

Schedule 4
  List of Employees    
  

        (See Attached) 

 
 

Schedule 5
  Lease    
  

        (See Schedule 2) 

 
 

Schedule 6
  1998, 1999, and 2000 Balance Sheets and Related Income Statements    
  

        (See Attached) 

 
 

Schedule 7
  June 30, 2001 Balance Sheet    
  

        (See Attached) 

 
 

Schedule 8
  Customer List    
  

        (See Attached) 

 
 

Schedule 9
  Price List    
  

        (See Attached) 

 
 

Schedule 10
  Software Licenses    
  

QuickLinks

ASSET PURCHASE AGREEMENT

W I T N E S S E T H

ARTICLE 1 Purchase and Sale

ARTICLE 2 Representations and Warranties of Purchaser

ARTICLE 3 Representations and Warranties of Seller

ARTICLE 4 Purchaser's Covenants

ARTICLE 5 Seller's Covenants

ARTICLE 6 Purchaser's Conditions Precedent

ARTICLE 7 Seller's Conditions Precedent

ARTICLE 8 Indemnification

ARTICLE 9 Termination

ARTICLE 10 Miscellaneous

Exhibit A Agreed Form of Bill of Sale

Exhibit B Agreed Form of Deed of Transfer and Assumption for Employment Agreements

Exhibit C Agreed Form of Deed of Transfer and Assumption for the Assumed Contracts and Assumed Obligations

Exhibit D Agreed Form of Deed of Transfer and Assumption for the Lease

Exhibit E Agreed Form of Certificate by the President of Seller

Exhibit F Agreed Form of Employment Agreement with Jorg Bader

Exhibit G Agreed Form of Certificate by an Officer of Purchaser

Exhibit H Agreed Form of Non-Competition Agreement

Schedule 1(A) Fixed Assets

Schedule 1(B) Intellectual Property

Schedule 1(C) Inventory

Schedule 1(D) Accounts Receivable

Schedule 1(E) Pre-Paid Expenses

Schedule 2 Assumed Contracts and Obligations

Schedule 3 Excluded Assets

Schedule 4 List of Employees

Schedule 5 Lease

Schedule 6 1998, 1999, and 2000 Balance Sheets and Related Income Statements

Schedule 7 June 30, 2001 Balance Sheet

Schedule 8 Customer List

Schedule 9 Price List

Schedule 10 Software LicensesQuickLinks
 -- Click here to rapidly navigate through this document

 
 

STOCK PURCHASE AGREEMENT    
  

        This STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of October    , 2001, to be effective as of
the Closing Date by and between Swiss Technology Holding AG, a corporation duly organized and existing under the laws of Switzerland (hereinafter referred to as "Purchaser") and Michel Geiger, an
individual (hereinafter referred to as "Seller"). 

 
 

RECITALS    
  

        WHEREAS, Seller owns 100% of the issued and outstanding shares of common stock of Montres Antima SA (the
"Shares"); and 

        WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, the Shares upon the terms and conditions
hereinafter described; and 

        NOW, THEREFORE, Purchaser and Seller, in consideration of mutual premises and covenants contained herein, do hereby agree as follows: 

 
 

ARTICLE 1
  DEFINITIONS    
  

        For the purposes of this Agreement, the following terms shall have the respective meanings indicated below: 

        "Agreed
Balance Sheet" means the balance sheet of the Company as at December 31, 2000 in the agreed form as reflected on Exhibit A hereto. 

        "Aggregate
Closing Provisions Amount" shall mean, collectively, the Closing A/R Provision and the Closing Inventory Provision. 

        "Balance
Sheet Adjustments" shall mean the adjustments in the purchase price in accordance with the provisions of Section 3.3 hereof. 

        "Closing
Balance Sheet" shall mean the balance sheet of the Company as of the date of Closing as determined in accordance with Swiss GAAP, consistently applied. 

        "Closing
A/R Provision" shall mean the accounts receivable provision, as evidenced by the Closing Balance Sheet, representing the estimated portion of the gross value of the accounts
receivable of the Company that will not be fully collected within one (1) year from the date of the Closing Balance Sheet. 

        "Closing
Inventory Provision" shall mean the inventory provision, as evidenced by the Closing Balance Sheet, representing the estimated portion of the gross value of Inventory that will
not be sold during a period of one (1) year from the date of the Closing Balance Sheet and to compensate for the loss of gross profit margin should the inventory be sold for less than
historical gross profit margins. 

        "Collateral
Transactions" shall mean, collectively, (i) the Stock Purchase Agreement between Montres Antima SA and Flavio Rota, individually and Meliga Habillement Horloger SA and
(ii) the Asset Purchase Agreement between Montres Antima SA and Meliga Habillement Horloger SA. 

        "Company"
shall mean Montres Antima, S.A. 

        "Confidential
Information" shall mean any information a Party may exchange with, or acquire from, the other Party including but not limited to the Company's procedures, product
specifications, methods, technology, suppliers, customers, trade secrets, marketing and business research and plans, that relate to or affects the Company's asset, but excluding any information to the
extent that such information becomes publicly known, through no fault of the Party receiving such information from the other Party. 

        "Cost
of Goods Sold" as used in the definition of "Pre-tax Profit" shall mean, Swiss landed cost of components used to produce such products, plus after-sales service and
repair costs (as historically 

 

calculated), plus an amount equal to twenty percent (20%) of net sales of such goods to cover production costs and outside labor costs. 

        "Credit
Suisse Loan" shall mean the Credit Line Agreement between the Company and Credit Suisse dated April 24, 2001. 

        "Earnings
Multiple" shall mean a multiple of seven (7). 

        "Earnout
Period Factor" shall mean a number equal to the number of fiscal years (or fractions thereof) from Closing until December 31, 2004. 

        "Encumbrance"
means a mortgage, charge, pledge, lien, option, restriction, right of first refusal, right of pre-emption, third-party right or interest, retention of title,
other encumbrance or security interest of any kind, or another type of preferential arrangement (including, without limitation, a title transfer or retention arrangement) having similar effect. 

        "Equity
Deficit" shall mean 555,000 CHF. 

        "Fixed
Operating and Interest Expense Charge" shall mean 621,000 CHF. 

        "Net
Sales of Antima Products" shall mean wholesales sales and assembly sales plus all after sales service and repair sales, net of returns and refunds, to the companies/customers listed
on Schedule 3, excluding, however, sales of products to such companies/customers incorporating the Golfer's Watch patent as disclosed in the Employment Agreement between the Company and
Mr. Michel Geiger attached hereto as Exhibit D. 

        "Party"
shall mean Purchaser and Seller (collectively, the "Parties"). 

        "Post
Closing Adjustments" shall mean, collectively, the Balance Sheet Adjustments and the Receivables/Inventory Adjustment. 

        "Pre-tax
Profit" shall mean, for any date of determination, the pre-tax profit of the Company determined on the following basis, but in no event in an amount
greater than the Pre-tax Profit Cap Amount: Net
Sales of Antima Products less Cost of Goods Sold, less the Fixed Operating and Interest Expense Charge. 

        "Pre-tax
Profit Cap Amount" shall mean 260,000 CHF. 

        "Pre-tax
Profit Base Amount" shall mean 144,000 CHF. 

        "Receivables/Inventory
Adjustment" shall have the meaning given to it in Section 3.4. 

        "Shareholder
Loan" shall mean the subordinated loan agreement granted by Seller to the Company as assigned to Credit Suisse. 

        "Stockholders'
Equity at Closing" shall mean the stockholders' equity of the Company as evidenced by the Closing Balance Sheet. 

        "Stub
Period" shall mean the fiscal period from the Closing until December 31, 2001. 

        "Subordinated
Loan Agreement" shall mean the subordinated loan agreement between Credit Suisse and the Company dated April 24, 2001. 

        "Swiss
GAAP" shall mean generally accepted accounting principles applicable in Switzerland. 

        "Test
Date" shall mean the first anniversary date following Closing. 

        "Test
Period" shall mean the period from Closing until the Test Date. 

2

 

 
 

ARTICLE 2
  PURCHASE AND SALE    
  

        Section 2.1 Sale and Transfer of 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 hereby sells with full title guarantee, free and clear of any Encumbrance, and Purchaser
purchases, the Shares. 

 
 

ARTICLE 3
  CONSIDERATION    
  

        Section 3.1 Purchase Price. Subject to the Post Closing Adjustments, the total purchase price (the
"Purchase Price") for the shares shall be: 

        (a)
an amount equal to the sum of: 

	(i)
	400,000
CHF, payable at Closing (the "Closing Payment"); plus or minus (as applicable)

	(ii)
	the
difference between the Stockholders' Equity at Closing and the Equity Deficit, as determined in accordance Swiss GAAP, to be paid to Seller or
Purchaser, as applicable, in accordance with the provisions of Section 3.3; plus

	(iii)
	the
Aggregate Closing Provisions Amount, to be paid within ten (10) days following the calculation of the Receivable/Inventory Adjustment each
in accordance with the provisions of Section 3.4; and 

        (b)
subject to the provisions of Section 3.2, an amount up to a maximum of 1,200,000 CHF in future earnout payments (the "Earnout Payment") payable to Seller in accordance with
the provisions of Section 3.2. 

        For
the sake of clarity, the Parties agree that the full amount of the Purchase Price shall be deemed to constitute consideration for the Shares, and that no part or component of the
Purchase Price is payable to Seller as consideration for his services rendered under the employment agreement between Seller and the Company, regardless of whether such part or component of the
Purchase Price is paid to Seller on or after Closing. 

        Section 3.2
Earnout Payment Amount. Within forty-five (45) days following the conclusion of the Stub Period and
each fiscal year thereafter during the Earnout Period, Purchaser shall procure that the Company determine the average Pre-tax Profit of the Company for the period or periods since Closing.
In the event that the average Pre-tax Profit for such period exceeds the Pre-Tax Profit Base Amount, then such difference (the "Excess Amount") shall be multiplied by the
Earnings Multiple, the product of which shall be divided by the Earnout Period Factor (the "Earnout Base Amount"). The Earnout Base Amount shall then be divided by the actual number of fiscal years
(or fractions thereof) that have elapsed since Closing to arrive at an "Earnout Payment Amount". The Earnout Payment Amount, less any earnout payments previously made, will be paid to Seller within
ten (10) days accompanied by a calculation of such amount substantially in the form attached hereto on Schedule 2. 

        Within
forty-five (45) days following the end of the Company's 2004 fiscal year, the final average Pre-tax Profit over the period from Closing through
December 31, 2004 will be multiplied by the Earnings Multiple. Such amount will be decreased by the Equity Deficit, plus 100,000 CHF for increase in equipment valuation, plus 247,000 CHF for
the value of the Antima name less all previous Earnout Payments to the Seller. Such amount, if any, will be paid to Seller within ten (10) days. 

        Section 3.3
Balance Sheet Adjustments. Within forty-five (45) days following Closing, the Purchaser shall
procure that the Company prepare the Closing Balance Sheet reflecting the assets and liabilities of the Company as of Closing. The Closing Balance Sheet shall be prepared in accordance with Swiss 

3

 

GAAP, consistently applied. For purposes of calculating the amount referenced in Section 3.1(a)(ii), (a) in the event that the Stockholders' Equity of the Company as reflected on the
Closing Balance Sheet is greater than the Equity Deficit, then Purchaser shall remit such difference to Seller as an adjustment to purchase price within thirty (30) days, and (b) in the
event that the Stockholders' Equity of the Company as reflected on the Closing Balance Sheet is less that the Equity Deficit, then the Seller shall remit such difference to Purchaser as a decrease in
the purchase price within thirty (30) days. 

        Section 3.4
Receivables/Inventory Adjustment. The Purchaser shall procure that within forty-five (45) days
following the Test Date, the Company shall test whether, as of the Test Date, the accounts receivable and the inventory existing as of Closing as evidenced by the Closing Balance Sheet have been fully
collected (with respect to the accounts receivable) or fully utilized (with respect to the inventory, assuming realization of normal gross profit margins on such inventory) (the "Receivables/Inventory
Adjustment"). For purposes of the calculation and the payment referenced in Section 3.1(a)(iii), to the extent that such receivables have not been fully collected, or such inventory has not
been fully utilized, then the value of such assets shall be written to zero and applied against the deferred payment of the Aggregate Closing Provisions Amount which amount, if any, shall be payable
within ten (10) days. 

 
 

ARTICLE 4
  CLOSING    
  

        Section 4.1 Conditions of Closing. The transaction stipulated in Article 2 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 Collateral Transactions shall have closed, or simultaneously close, in accordance with their respective terms and conditions. 

        (c)
The Parties shall have carried out their respective obligations as specified in Sections 4.3 and 4.4. 

        Section 4.2
Closing Time Date and Place. The purchase and sale contemplated herein shall be consummated at a Closing to take place
by mail, facsimile or at the offices of Seller on October 31, 2001, or at such other time and place as the Parties may agree upon in writing. 

        Section 4.3
Seller's Obligations at Closing. At the Closing, the Seller shall carry out the following obligations: 

	(a)
	At
Closing the Seller shall deliver to Purchaser or its nominee:

	(i)
	the
share certificates duly endorsed to Purchaser or its nominee;

	(ii)
	evidence
of the authority of each person executing a document on the Company's behalf;

	(iii)
	the
common seal (if any) of the Company and each register and minute book made up to Closing; 

4

 

	(iv)
	resignations
in the agreed form, in the form attached hereto as Schedule 4, from each director and secretary of the Company, expressed to take
effect from the end of the meeting held pursuant hereto;

	(v)
	all
consents and approvals of government agencies and/or third parties necessary to effect the transfer of the Shares, including releases of
Encumbrances affecting the Shares, executed by the lien holders thereof and otherwise in a form acceptable for filing; and

	(vi)
	a
countersigned original of the employment agreement between Michel Geiger and the Company in the form attached hereto as Exhibit D. 

	(b)
	The
Seller shall ensure that at Closing a meeting of the board of directors of the Company is held at which the directors take the following actions and adopt the minutes of the Board
Meeting in the agreed form attached hereto as Schedule 5:

	(i)
	vote
in favour of the registration of Purchaser or its nominees as members of the Company in respect of the Shares (subject to the production of
properly stamped transfers which shall be at Purchaser's cost);

	(ii)
	with
effect from the end of the meeting, authorise the secretary to notify the specimen signatures of the new officers of the Company in connection
with each existing mandate given by the Company for the operation of its bank accounts. 

	(c)
	The
Seller shall ensure that at Closing a shareholders' meeting of the Company is held at which the shareholders take the following actions by adopting the resolutions in the agreed
form attached hereto as Schedule 6:

	(i)
	appoint
persons nominated by Purchaser as directors and secretary of the Company with effect from the end of the meeting;

	(ii)
	accept
the resignations of each director and secretary pursuant hereto so as to take effect from the end of the meeting. 

        Section 4.4
Purchaser's Obligations at Closing. At the Closing, Purchaser will (i) deliver the Closing Payment to Seller and
(ii) pay-off the existing balance of the Shareholder Loan, the Subordinated Loan and the Credit Suisse Loan. 

        Section 4.5
Further Actions. Seller shall execute the instruments transferring the Shares to Purchaser effective as of the Closing
Date and shall take all actions following Closing as may be necessary to more fully perfect title in the Shares to Purchaser. 

 
 

ARTICLE 5
  [Reserved]    
  

 
 

ARTICLE 6
  REPRESENTATIONS, WARRANTIES AND COVENANTS    
  

        Section 6.1 Representations, Warranties and Covenants of Seller. Seller represents and warrants to
Purchaser that, as of the date of this Agreement and as of the Closing Date: 

        (a)
The information on the Company's excerpt from the Commercial Register attached hereto as Schedule 1 is true and correct; 

        (b)
The Company is a corporation duly organized, validly existing and in good standing under the laws of Switzerland and is duly empowered or licensed under the relevant laws in
Switzerland to conduct the business as stipulated in its Articles of Association; 

5

 

        (c)
The Company does not have any subsidiaries, and does not own any minority interests in any other business entities; 

        (d)
The Company is in compliance with the provisions of the Articles of Association and applicable law; 

        (e)
The Company's financial and accounting records (the "Accounts"), including but not limited to the financial statements of the Company of fiscal years 1998, 1999 and 2000, attached
hereto as Exhibits A,
and the interim financial statements as of and for the six and one-half month period ended July 15, 2001, attached hereto as Exhibit B, are
up-to-date, in its possession or under its control and are properly completed in all material respects in accordance with the law and Swiss GAAP; 

        (f)
The Company is operating and has always operated its business in all material respects in accordance with its Articles of Association at the relevant time. The copy of the Articles
of Association of the Company disclosed to Purchaser and attached hereto as Exhibit C is true and correct copy of the original; 

        (g)
Except for the Shareholder Loan, the Credit Suisse Loan, the Subordinated Loan, the Company does not have outstanding, and has not agreed to create or incur loan capital, borrowings
or indebtedness in the nature of borrowings (including, without limitation, any such indebtedness to the Seller); 

        (h)
As of October 8, 2001, the balance due under the Shareholder Loan is 278,218 CHF; the balance due under the Credit Suisse Loan is zero; and balance due under the Subordinated
Loan is 310,000 CHF; 

        (i)
Execution delivery and performance by Seller of this Agreement will not conflict with or violate (i) any provision of the Company's charter, bylaws or other similar documents;
(ii) any law, rule, regulation or order effective and binding on the Company; and (iii) result in any Encumbrance on any property owned by the Company; 

        (j)
The Shares being acquired hereunder by Purchaser have been duly and validly authorized, and, when delivered to and paid for by Purchaser pursuant to this Agreement, will be fully
paid and nonassessable; 

        (k)
The certificates of the Shares are in valid and sufficient form; the holders of outstanding shares of any class of stock of the Company are not entitled to preemptive or other rights
to subscribe for the Shares; and, except as set forth in this Agreement, no options, warrants or other rights to purchase, agreements or other obligations to issue, or rights to convert any
obligations or exchange any securities for, shares of common stock of or ownership interests in the Company are outstanding; 

        (l)
To the best of Seller's knowledge, the Company has no liabilities or obligations (whether known, absolute, contingent etc.) that were not fully and appropriately reflected in the
Accounts; 

        (m)
The Company has timely, fully and correctly completed and filed all tax returns, reports and other filings required under the applicable laws with regard to Taxes and Duties and has
at all times fully and
truly informed the competent authorities in compliance with the applicable laws ("Taxes and Duties" as used herein being all taxes, social security and pension contributions (statutory, contractual
and voluntary) to public and private institutions, customs duties and other duties levied by public entities, agencies and institutions, in each case in Switzerland and abroad); 

        All
liabilities of the Company with regard to Taxes and Duties have been fully discharged or completely reflected in the financial statements of the Company, and no such liabilities are
overdue. The Company has made appropriate provisions for all future obligations with regard to Taxes and Duties which will be levied on assessment periods (partially or fully) before the Closing date
in accordance with Section 4.2; 

6

 

        The
Company has not made distributions to shareholders or affiliated persons or companies which could result in additional liabilities of the Company for Taxes and Duties; 

        The
Company has at its disposal all supporting documents in connection with (i) all filed tax returns, reports and other filings, and (ii) all tax returns, reports and
other filings still to be filed which refer to assessment periods (partially or fully) before the Closing date in accordance with Section 4.2, in each case in form and substance in accordance
with the statutory requirements; 

        There
are no special agreements with, or concessions from, tax or other authorities, formal or informal, which have an impact on the taxes and duties chargeable on the Company; 

        (n)
There has been no audit by any governmental authority of any tax return of the Company; 

        (o)
Since July 15, 2001, there has been no material adverse change in the business prospects, or financial conditions of the Company and, to Seller's knowledge, the Balance Sheet
dated July 15, 2001 attached hereto as Exhibit B accurately reflects the assets and liabilities of the Company as of such date; 

        (p)
To the best of Seller's knowledge, the Company has not violated any material statutes, rules, ordinances or other applicable laws in Switzerland; 

        (q)
There has been no material litigation, pending or threatened against the Company; 

        (r)
None of the contracts which the Company is a party to contains a change-of-control clause which, as a consequence of the conclusion or Closing of this
Agreement, (i) gives the other party the right to fully or partially terminate, amend or newly negotiate the contract, (ii) automatically amends or terminates the contract, or
(iii) operates in any other way as a result of the conclusion or Closing of this Agreement; 

        (s)
The Company has the insurance coverage customary in its line of business. Such insurance coverage is sufficient both with regard to its kind and the coverage amounts in order to
cover the risks which reasonably have to be expected for businesses such as the ones conducted by the Company. The respective insurance contracts are all in full force and effect, and no premium
payments of the Company thereunder are due. No notice of termination or cancellation with regard to any of the insurance contracts has been given or received by the Company, and neither the Company
nor the respective insurance companies have requested or announced any amendments to the insurance contracts and no such termination, cancellation or request for amendment is to be expected; 

        (t)
Seller owns, or is licensed or otherwise possesses legally sufficient rights to use, all trademarks, service marks, trade names, patents, copyrights, and any applications therefor,
technology, know-how, trade secrets, computer software programs or applications (in both source code and object code form) and tangible or intangible proprietary information or material
that are used or proposed to be used in the business, including all current patents, patent applications, registered and material unregistered copyrights, and any applications therefor owned or
licensed by the Seller (the "Intellectual Property Rights") free and clear of all Encumbrances. All Intellectual Property Rights which can be registered are duly and validly registered, and there are
no appeals, oppositions or other actions pending against such registrations. All application, registration, renewal and other fees relating to the Intellectual Property Rights have been fully paid in
due time. Purchaser's use of the Intellectual Property Rights will not infringe upon the rights of any third party. To Seller's best knowledge, there has been no breach with respect to any license or
right relating to any of the Intellectual Property Rights; and 

        (u)
In making the representations, warranties and covenants of this Article, Seller has not made any untrue statements of material fact or omitted to state a material fact necessary in
order to make the representation made, in light of the circumstances under which they were made, not misleading. 

7

 

        Section 6.2
Representations Warranties and Covenants of Purchaser. Purchaser hereby represents and warrants to Seller that, as of
the date of this Agreement and as of the Closing Date: 

        (a)
Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Switzerland; and 

        (b)
Execution delivery and performance by Purchaser of this Agreements will not conflict with or violate (i) any provisions of Purchaser's charter, bylaws or other similar
documents; or (ii) any law, rule, regulation or order binding on Purchaser. 

 
 

ARTICLE 7
  INDEMNIFICATION    
  

        Section 7.1 Indemnification by Seller. Seller shall indemnify and hold Purchaser, its employees, officers,
directors, affiliates, representatives, agents, and other control persons harmless from, against and in respect of the following: 

        (a)
Any and all loss, liability or damage suffered or incurred by Purchaser (including interest, penalties and attorney fees) by reason of any untrue written representation, breach of
warranty or non-fulfillment of any covenant or agreement by Seller contained herein or in any exhibit, schedule, certification, document or instrument delivered to Purchaser by Seller
hereunder (each of such untrue written representation, breach of warranty or non-fulfillment of any covenant or agreement a "Breach"), it being expressly agreed, for the sake of clarity,
that Seller shall indemnify Purchaser on a franc-by-franc basis for any loss, liability or damage which the Company suffers or incurs due to a Breach, or which encumbers the
Company provided that non-disclosure of such encumbrance to Purchaser constitutes a Breach; 

        (b)
Any and all loss, liability or damage suffered or incurred by Purchaser (including interest, penalties and attorney fees) by reason of or in connection with any claim for any
finder's or brokerage fee or other commission resulting from any services alleged to have been rendered to, or at the insistence of or on behalf of or for Seller with respect to this Agreement or any
of the transactions contemplated hereby; 

        (c)
Any and all liabilities of Seller which relate to the ownership of the Shares or the operation of the Company prior to the Closing Date that are not expressly assumed or waived by
Purchaser under this Agreement, including but not limited to liabilities arising from or related to any tax due, or to be due, and penalties and interest related thereto, imposed on the Company with
respect to any period prior to the Closing Date; and 

        (d)
Any and all actions, suits, proceedings, claims, demands, assessments, judgments, damages, costs and expenses, including but not limited to, legal fees and expenses as shall be
determined by a court of competent jurisdiction, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this
indemnity. 

        Section 7.2
Indemnification by Purchaser. Purchaser shall indemnify and hold Seller, its representatives, agents, and other control
persons harmless from, against and in respect of the following: 

        (a)
Any and all loss, liability or damage suffered or incurred by Seller (including interest, penalties and attorney fees) by reason of any untrue written representation, breach of
warranty or non-fulfillment of any covenant or agreement by Purchaser contained herein or in any certificate document or instrument delivered by Purchaser to Seller hereunder; 

        (b)
Any and all loss, liability or damage suffered or incurred by Seller (including interest, penalties and attorney fees) by reason of or in connection with any claim for any finder's
or brokerage fee or other commission resulting from any services alleged to have been rendered to, or at the insistence of, 

8

 

or on behalf of or for Purchaser with respect to this Agreement or any of the transactions contemplated hereby; 

        (c)
Any and all actions, suits, proceedings, claims, demands, assessments, judgments, damages, costs and expenses, including but not limited to, legal expenses as shall be determined by
a court of competent jurisdiction, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity. 

        Section 7.3
Indemnification Procedures. In seeking indemnification under Article 7.1 or 7.2, the Parties agree to abide by
the following procedure: 

        (a)
For the purposes of this Article 7.3, the term "Indemnitee" shall mean the person(s) entitled, or claiming to be entitled, to be indemnified pursuant in the provisions of
Article 7.1 or 7.2 hereof. The term "Indemnitor" shall mean the person(s) having the obligation to indemnify pursuant to such provisions. 

        (b)
An Indemnitee shall promptly give the Indemnitor written notice of any matter which an Indemnitee has determined has given or could give rise to a right of an indemnification under
this Agreement, stating the amount of the loss, if known, and method of computation thereof, all with reasonable particularity and containing a reference to the provisions of this Agreement in respect
of which such right of indemnification is being claimed or arises. If an Indemnitee shall receive notice of any claim by a third party which is or may be subject to indemnification (a "Third Party
Claim") the Indemnitee shall give the Indemnitor prompt written notice of such Third Party Claim and shall permit the Indemnitor, at its option, to participate in the defense of such Third Party Claim
by counsel of its own at its own costs and expense. If, however, the Indeinnitor acknowledges in writing its obligation to indemnify the Indemnitee hereunder against all losses that may result from
such Third Party Claim (subject to the limitations set forth herein), then the Indemnitor shall be entitled, at its option, to assume and control the defense of such Third Party Claim at its expense
and through counsel of its
choice. In the event the Indemnitor exercises its rights to undertake the defense of any such Third Party Claim, the Indemnitee shall co-operate with the Indemnitor in such defense and
make available to the Indemnitor, at the Indemnitor's expense, all witnesses, pertinent records, materials and information in its possession or under its control relating thereto as is reasonably
required by the Indemnitor. Similarly, in the event the Indemnnitor is directly or indirectly, conducting the defense against any such Third Party Claim, the Indemnitor shall cooperate with the
Indemnitee in such defense and make available in it all such witnesses, records, materials and information in its possession or under its control relating thereto as is reasonably required by the
Indemnitee. No such Third Party Claim may be settled by the Indemnitor without the written consent of the Indemnitee, unless the settlement involves only the payment of money by the Indemnitor. No
Third Party Claim which is being defended in good faith by the Indemnitor shall be settled by the Indemnitee without the written consent of the Indemnitor. 

        Section 7.4
Survival of Representation, Warranties and Indemnity. All representations and warranties made by the Parties in this
Agreement or in any certificate document or instrument furnished in connection herewith, and the indemnification obligations contained in this Agreement, shall survive the Closing and any
investigation at any time before or after Closing made by or on behalf of the Parties hereto and shall expire on the first anniversary of the Closing Date, provided,
however, that (i) any claim which is submitted in writing to the indemnifying Party prior to such first anniversary may still be enforced thereafter, and (ii) any
claim relating to Seller's representations made in Section 6.1 (m) (Taxes and Duties) may still be raised after the first anniversary of the Closing Date, but not later than one year
after notification of the respective claims to Purchaser by the tax authorities or social security institutions. The limitations, time limits and Purchaser's investigation and notification and other
duties under articles 200, 201 and 210 of the Swiss Code of Obligations are hereby expressly waived. 

9

 

 
 

ARTICLE 8
  CONFIDENTIALITY    
  

        Section 8.1 Confidentiality. The Parties agree to preserve the confidential nature of the Confidential
Information which is disclosed by either Party (the "Disclosing Party") to the other (the "Receiving Party") and to take any and all necessary steps to insure that such Information is not revealed to
third parties or to any person unauthorized in writing by the Disclosing Party. The responsibilities set forth herein shall survive the termination of this Agreement unless the prior written consent
of the Disclosing Party has been obtained or unless any such information has previously been publicly disclosed. Should the Receiving Party be ordered by a court of competent jurisdiction or
administrative authority to disclose this Agreement or confidential information disclosed by the Disclosing Party to the Receiving Party, it shall give written notice to the Disclosing Party before
making any disclosure not permitted by this Article, shall use its best efforts to either resist disclosure or disclose solely subject to an attorneys' eyes-only protective order or such
other protective order as the Disclosing Party shall approve. This Article shall survive the termination of this Agreement. 

 
 

ARTICLE 9
  TERMINATION    
  

        Section 9.1    Termination of Agreement.    This Agreement may be terminated, and the transactions contemplated
hereby may be abandoned at any time prior to Closing: 

        (a)
by the mutual consent of the Parties; 

        (b)
by either Party if any of the conditions to the Closing as set forth in Article 4.1 is not fulfilled or waived by the Party for whose benefit the conditions exist on or prior
to the Closing Date; or 

        (c)
by either Party if the Closing has not occurred on or prior to October 31, 2001. 

        Section 9.2    Rights of Termination.    The rights of termination as provided for under Article 9.1
hereof may be exercised at any time after the occurrence of an event or the discovery of circumstances which gives rise to a right of termination. However, failure to assert a right of termination
upon the occurrence of an event or the discovery of circumstances which give rise to a right of termination shall not be, or be deemed, a waiver of such right. 

        Section 9.3    No Waiver of Rights.    A termination under Article 9.1 hereof shall not relieve either
Party of any liability for a Breach, and any such termination shall not be deemed to be a waiver of any available remedy for any such Breach, and in the event of any such Breach, the prevailing Party
shall also be entitled to its reasonable attorneys' fees and expenses. 

 
 

ARTICLE 10
  MISCELLANEOUS    
  

        Section 10.1    Expenses.    The Parties shall each pay their own expenses incident to the negotiation
preparation and execution of this Agreement and the consummation of the transactions contemplated hereunder, including any and all disbursements to their respective counsel. 

        Section 10.2    Assignment.    Unless specifically consented to in writing by the other Party, neither Party
may assign or transfer this Agreement or any of its rights hereunder, and any attempted assignment thereof shall be void and of no force and effect. It is expressly understood and agreed that either
Party is under no obligation to consent to any proposed assignment on the part of the other Party and that each of the Parties, in its sole discretion, shall have absolute authority to decide whether
or not a consent to assignment shall be given. 

10

 

        Section 10.3    Notice.    Notices to be given to any Party under this Agreement shall not be effective unless
given in writing and hand delivered or mailed by certified mail, or via overseas courier, or sent by electronic mail or facsimile to such Party at the following addresses. Any Party may change its
address by giving notice of such change in the manner above provided. 

	For Seller:	 	Michel Geiger

Rue Th. Kocher 11

2502 Bienne

Switzerland

Phone: 032-322-3465

Fax: 032-322-0471
	

For Purchaser:	
 	

Swiss Technology Holding AG

c/o Verex Treuhand AG

Salzhausstrasse 5

CH-2501 Bienne

Switzerland

Attention: Enrico Margaritelli

Phone: 032-327 35 15

Fax: 032-327 35 19
	

with copy to:	
 	

Fossil, Inc.

2280 North Greenville Ave.

Richardson, Texas 75082

Attention: T.R. Tunnell, Executive Vice President

Phone: 972-699-2139

Fax: 972-498-9639

E-mail: trtunnell@fossil.com

        Notices
sent via certified mail or oversees courier shall be deemed to have been received as of the date indicated by the postal or courier's receipt as having been received by the
intended recipient. Notices sent via electronic mail or facsimile shall be deemed to have been received two (2) business days after the date on which they were transmitted, provided the Party
transmitting any such notice mails a copy of the notice on the next business day to the Party to be notified via certified or registered mail or via overseas courier 

        Section 10.4    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws
of Switzerland. 

        Section
10.5    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 Zurich, Switzerland. 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 within a further month and the third one,who will act as chairman of the arbitral tribunal by the others. Any arbitrator not appointed as
provided above shall be appointed by the Zurich High Court (§ 239 para. 2 Zurich Code of Civil Procedures applicable pursuant to Art. 179 para. 2 Swiss Federal Statute on
International Private Law, "IPRG") at the request of one party. The language of such arbitration shall be English and such arbitration shall be conducted according to the rules of the IPRG). As far as
the IPRG does not contain mandatory provisions, the arbitrators shall apply the procedural provisions of the International Arbitration Rules of the Zurich Chamber of Commerce as in force at the time
of the commencement 

11

 

of the arbitration proceedings, provided, however, that such rules shall not apply to the extent that (i) they contravene the present arbitration clause, or (ii) they call for an
involvement of the Zurich Chamber of Commerce.

        Section 10.6    Binding Effect; Entire Agreement.    All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties herein and to their respective successors. This Agreement contains the entire agreement between the Parties with respect to the subject matter
hereof and shall supersede all previous and contemporaneous negotiations, commitments and undertakings, whether written or oral. No waiver or amendment to this Agreement will be effective unless it is
in writing and is signed by a duly authorized representative of the Party sought to be bound thereby. 

        Section 10.7    Counterparts.    This Agreement may be executed simultaneously in two or more counterparts each
of which shall be deemed an original, but all of which together shall constitute one and the same instrument 

        Section 10.8    Publicity.    Except as may otherwise be required by law, neither Party may make any
announcement including any announcement to employees, customers, or suppliers or otherwise make publicly available any statement or release concerning this Agreement or the transactions contemplated
hereunder without first obtaining the other Party's written approval of any proposed statement or release. If either Party is required by law to make any statement or other disclosure concerning this
Agreement or the transactions contemplated hereby (the Disclosing Party), the Disclosing Party shall provide the other Party the opportunity to review and comment upon such statement or disclosure
prior to its filing or release and shell make any revisions therein that the other Party may reasonable request. 

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

 
 

SWISS TECHNOLOGY Holding AG    
  

	

By: 
Name: 
Title: 
	
 	

 
	
MICHEL GEIGER, individually	
 	

 
	

 	
 	

 
	
	 	 

12

 
 

SCHEDULE 1
  
    COMPANY EXCERPT FROM COMMERCIAL REGISTER    
  

 
 

SCHEDULE 2
  
    EARNOUT PAYMENT AMOUNT CALCULATION    
  

 
 

SCHEDULE 3
  
    LIST OF CUSTOMERS FOR PURPOSES OF
  CALCULATION OF NET SALE OF ANTIMA PRODUCTS    
  

 
 

SCHEDULE 4
  
    AGREED FORM OF RESIGNATION OF DIRECTORS    
  

 
 

SCHEDULE 5
  
    AGREED FORM OF MINUTES OF BOARD MEETING    
  

 
 

SCHEDULE 6
  
    AGREED FORM OF SHAREHOLDER RESOLUTIONS    
  

 
 

EXHIBIT A
  
    1998, 1999 and 2000 FINANCIAL STATEMENTS    
  

 
 

EXHIBIT B
  
    INTERIM FINANCIAL STATEMENTS
  AND BALANCE SHEET DATED JULY 15, 2001    
  

 
 

EXHIBIT C
  
    ARTICLES OF ASSOCIATION    
  

 
 

EXHIBIT D
  
    AGREED FORM OF EMPLOYMENT
  AGREEMENT WITH MICHEL GEIGER    
  

QuickLinks

STOCK PURCHASE AGREEMENT

RECITALS

ARTICLE 1 DEFINITIONS

ARTICLE 2 PURCHASE AND SALE

ARTICLE 3 CONSIDERATION

ARTICLE 4 CLOSING

ARTICLE 5 [Reserved]

ARTICLE 6 REPRESENTATIONS, WARRANTIES AND COVENANTS

ARTICLE 7 INDEMNIFICATION

ARTICLE 8 CONFIDENTIALITY

ARTICLE 9 TERMINATION

ARTICLE 10 MISCELLANEOUS

SWISS TECHNOLOGY Holding AG

SCHEDULE 1 COMPANY EXCERPT FROM COMMERCIAL REGISTER

SCHEDULE 2 EARNOUT PAYMENT AMOUNT CALCULATION

SCHEDULE 3 LIST OF CUSTOMERS FOR PURPOSES OF CALCULATION OF NET SALE OF ANTIMA PRODUCTS

SCHEDULE 4 AGREED FORM OF RESIGNATION OF DIRECTORS

SCHEDULE 5 AGREED FORM OF MINUTES OF BOARD MEETING

SCHEDULE 6 AGREED FORM OF SHAREHOLDER RESOLUTIONS

EXHIBIT A 1998, 1999 and 2000 FINANCIAL STATEMENTS

EXHIBIT B INTERIM FINANCIAL STATEMENTS AND BALANCE SHEET DATED JULY 15, 2001

EXHIBIT C ARTICLES OF ASSOCIATION

EXHIBIT D AGREED FORM OF EMPLOYMENT AGREEMENT WITH MICHEL GEIGER

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