Document:

Prepared by MERRILL CORPORATION

Exhibit 10.3

 

 

 

 

 

 

 

Share

Purchase Agreement

(Hereinafter referred to as the “Agreement”)

 

 

by and between

 

 

 

 

FOSSIL EUROPE B.V.

 

 

 

 

 

and

 

 

 

 

 

Banque DEGROOF Luxembourg

SA,

Mr. Eric GALLOU, Mr. Christian MATT,

ACTIV’INVEST SA

 

 

 

 

 

This Agreement is entered into

as of August 3, 2001 by and among :

 

FOSSIL EUROPE B. V.

A company incorporated under the laws of the Netherlands, with its

registered office at 

De Boelelaan 7, Officiia I, 1083 HJ AMSTERDAM, The NETHERLANDS

Represented by Mr. T.R. TUNNELL, Executive Vice President and Chief Legal

Officer, 

Fossil Inc;

 

(Hereinafter referred to as "FOSSIL")

 

And

 

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

A bank incorporated under the laws of Luxembourg

With its head office at Luxembourg, 7 Boulevard Joseph II

Registered under the number B 23 459

in the Register of Trade and Companies of Luxembourg

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

and by Mr. Benoît DUVIEUSART, Secrétaire Général

Owning 1.800 Shares of GUM

 

2.     Mr. Eric GALLOU

A French citizen

Born in Strasbourg (France) on 01.13.1967

Living in Bouxwiller (France) 5 rue des Seigneurs

Owning 1000 Shares of GUM

 

3.     Mr.

Christian MATT

A French citizen

Born in Strasbourg (France) on 04.29.1964

Living in Saverne (France) 23 rue du Serpent

Owning 1000 Shares of GUM

 

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

A company incorporated under the laws of Luxembourg

With its head office at Luxembourg, 23 avenue Monterey

Registered under the number B 66 828

in the Register of Trade and Companies of Luxembourg

Represented by Mr.François Michel UHL,  Administrateur Délégué

Owning 200 Shares of GUM

 

(Hereinafter collectively referred as the "SELLER" or as the

“Stockholders of the Company”)

 

FOSSIL and the SELLER are

hereinafter individually / collectively referred to as the “Party” / the

“Parties”.

 

WITNESSETH

 

Whereas FOSSIL wishes to

acquire indirectly through GUM SA not less than 99,6 % of the outstanding share

capital of VEDETTE INDUSTRIES SA (hereinafter referred to as

"VEDETTE"), a company incorporated under the laws of France, with its

head office at Saverne, 31 rue de la Vedette, and registered under the number B

675 680 516 in the Register of Trade and Companies of Saverne;

 

Whereas the SELLER owns

all of the issued and outstanding shares of GUM (the "Company"), a

company incorporated under the laws of France, having a capital of

EUR 40,000, whose head office is located at Saverne, 31 rue de la Vedette,

registered under the number B 425 122 884 in the Register of Trade and

Companies of Saverne, which as of the date hereof consists of 4,000 (four

thousand) shares, par value EUR 10 (ten Euro) ("the Company Shares");

 

Whereas the Company owns

124,534 shares of VEDETTE, which represents 99,6 % of the outstanding shares of

VEDETTE;

 

Whereas each of Mrs. V.

GALLOU, Mrs. S. KIEFFER, Mrs. S. MATT and Mr. Fr. UHL own 5 shares of VEDETTE,

then a total of 20 shares that shall be transferred to the Company before the

Closing Date.

 

Whereas the remaining 446

shares of VEDETTE are split up among 21 other shareholders as described in Schedule

1;

 

Whereas VEDETTE

INDUSTRIES SA  is a leading French

wholesaler for clocks and watches, controlling 3 subsidiaries :

 

	

  -

  	

   

  	

  LOGISAV, a logistic and

  after sales company,

  A company incorporated under the laws of France 

  With its head office at Saverne, 31 rue de la Vedette

  Registered under the number B 392 217 980

  in the Register of Trade and Companies of Saverne

  (100% of its shares are owned by VEDETTE)

  
	

   

  	

   

  	

   

  
	

  -

  	

   

  	

  SEM, an after sales

  company,

  A company incorporated under the laws of France

  With its head office at Reims, 8 rue Daniel Berger

  Registered under the number B 378 298 830

  in the Register of Trade and Companies of Reims

  (100 % of its shares are owned by LOGISAV)

  
	

   

  	

   

  	

   

  
	

  -

  	

   

  	

  TROTIME ESPANA, a clock

  and watch wholesaler

  A company incorporated under the laws of Spain

  With its head office at Coslada (Madrid), c/Alcaria 7, 1-10

  Registered under the number B 816 35 922

  in the Register of Trade and Companies of Madrid

  (51 % of its shares are owned by VEDETTE)

  

 

Whereas the Company, VEDETTE and each of the three subsidiaries

may be hereafter referred to as the "Group Companies".

 

Whereas SELLER desires to

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

the Company Shares;

 

NOW, THEREFORE, in order

to consummate said purchase and sale in consideration of the mutual agreements

set forth herein, the parties hereto agree as follows:

 

 

Section 1                Sale

of Shares and Purchase Price

 

1.1.         Sale and Transfer of Company Shares

 

In consideration of and in

reliance upon the representations, warranties and covenants contained herein

and subject to the terms and conditions of this Agreement, the SELLER agrees to

sell with full title guarantee, and FOSSIL agrees to purchase, at the Closing

Date (as defined in Section 3), all of the 4,000 Company Shares.

 

At the Closing, the SELLER

shall deliver an order of movement transferring all the Company Shares to

FOSSIL. The transfer of shares shall be mentioned on the same date in the share

transfer ledger ("Registre de mouvements des titres") of the

Company. All the shares shall be transferred at the Closing free and clear of

any and all liens, encumbrances, charges or claims.

 

The Stockholders of the Company each waive all rights

of preemption and other restrictions on transfer over the Company Shares

conferred on them pursuant to the articles of association of the Company or

applicable law or statute.

 

 

1.2.                Purchase Price

 

 

(a)           Amount of the Purchase Price

 

Assuming the Group Companies

consolidated Stockholders’ Equity amounts to FRF 29,100,000,- as of June 30,

2001 and subject to the adjustments referenced below, the total purchase price

(the "Purchase Price") to be paid by FOSSIL to the SELLER for the

Company Shares shall be:

 

(i) subject to adjustments pursuant to Section 1.2(b), USD 5,300,000

(FIVE MILLION THREE HUNDRED THOUSAND USD) payable upon the Closing of the

acquisition (the "Closing Payment ") split between the

Stockholders of the Company as follows :

 

	

  -

  	

   

  	

  Banque

  DEGROOF

  	

   

  	

  USD

  	

   

  	

  3,000,000

  	

   

  
	

  -

  	

   

  	

  Eric GALLOU

  	

   

  	

  USD

  	

   

  	

  1,000,000

  	

   

  
	

  -

  	

   

  	

  Christian

  MATT

  	

   

  	

  USD

  	

   

  	

  1,000,000

  	

   

  
	

  -

  	

   

  	

  ACTIV'

  INVEST

  	

   

  	

  USD

  	

   

  	

  300,000

  	

   

  

 

and (ii) subject to the

provisions of paragraph 1.2(c) hereof, up to USD 1.5 million in future earn-out

payments (the "Earnout Payment ") payable to Eric GALLOU and

Christian MATT on April 30, 2004.

 

The  Purchase Price shall then

not exceed USD 6.8 million.

 

 

(b)           Price

Adjustment in reliance upon the Group Companies consolidated Stockholder's

Equity

 

On

basis of the balance sheets as of June 30, 2001, already reviewed by the

statutory auditor (VEDETTE, LOGISAV), or closed by the respective external

accountants (SEM, TROTIME), SELLER shall prepare the consolidated balance

sheets and statements of stockholders equity on the Group Companies (the

“Certified Statement”) in order to determine the amount of the Group Companies

consolidated Stockholder's Equityas of

June 30, 2001, and cause the statutory auditor of the Company to certify them

on or before September 30, 2001. For purposes of this section, the “Group

Companies consolidated Stockholder’s Equity” is defined as being theamount shown on consolidated statement as of

June 30,2001 (see Schedule 2).

 

The Certified Statement will be

prepared consistent with generally accepted accounting principles in the

Republic of France (French GAAP) and on the same basis and using the same

accounting methods and policies as the Group Companies balance sheets as of

December 31, 2000.

 

If the amount of the

Group Companies consolidatedStockholder's Equity

as of June 30, 2001 as reflected on the Certified Statement is less than TWENTY

SEVEN MILLION SIX HUNDRED FORTY FIVE THOUSAND French Francs (FRF 27,645,000),

then the Purchase Price will be decreased by an amount equal to the difference

between the amount of the Group Companies consolidated Stockholder's Equity as

of June 30, 2001 and FRF 29,100,000.

 

In the event such an

adjustment  is made, each stockholder of

the Company shall support the corresponding decrease of Purchase Price and

shall consequently reimburse FOSSIL within 10 days as follows:

 

	

  -

  	

   

  	

  Banque

  DEGROOF

  	

   

  	

  45% of the total decrease of Purchase Price

  	

   

  
	

  -

  	

   

  	

  Eric GALLOU

  	

   

  	

  25% of the total decrease of Purchase Price

  	

   

  
	

  -

  	

   

  	

  Christian

  MATT

  	

   

  	

  25% of the total decrease of Purchase Price

  	

   

  
	

  -

  	

   

  	

  ACTIV'

  INVEST

  	

   

  	

  5% of the total decrease of Purchase Price

  	

   

  

 

If any of the Stockholders of

the Company fails to pay any amount due to FOSSIL as a consequence of such

adjustment when due, an interest rate equal to the interest rate on standing

facilities practiced by ECB increased of 4 points shall be applied to the amount

due.

 

 

(c)           Price

Adjustment in reliance upon Earnout Payment

 

In

the event that the Group Companies achieves the consolidated net sales and

consolidated operating earnings targets (the “Earnout Targets“) as set forth on

Exhibit “A” hereto, then, subject to the provisions of section 6, Mr. Eric

GALLOU and Mr. Christian MATT shall each be entitled to receive fifty percent

(50%) of the Earnout Payment on April 30, 2004.

 

For purposes of calculating the

Earnout Payment, the Earnout Targets shall be based on consolidated net sales

and consolidated operating income as determined in accordance with French GAAP.

 

The Earnout Targets shall

be (i) prepared in accordance with French GAAP, consistently applied, on the

same basis and using the same accounting methods and policies as the VEDETTE

balance sheet as of December 31, 2000, and (ii) calculated on a consolidated

basis (100%) for the Group companies and any other company that may integrate

this group as a subsidiary before December 31, 2003.

 

Should any material change in

the business operations of the Group companies be decided by FOSSIL against the

opinion of Mr. Eric GALLOU and Mr. Christian MATT, the negative impact on the

consolidated net sales and consolidated operating income of such decision shall

be taken into account when checking achievement of Earnout Targets.

 

The maximum Earnout Payment

shall be USD 1,500,000 (ONE MILLION FIVE HUNDRED THOUSAND United States

Dollars).

 

(d)           Payment of the Purchase Price

 

(i)            The Closing Payment shall be payable at the Closing by

wire transfer in United States dollars to the bank account as specified by each

Stockholder of the Company within five (5) business days prior to Closing. At

the Closing Date the banks of each SELLER shall confirm to each SELLER that the

amount specified in section 1.2(a), has been transferred by swift wire transfer

to the accounts of each respective SELLER, and that the money is available free

of any and all transfer or other tax or fee.

 

(ii)           Pursuant to Section 1.2.(c), the

Earnout Payment shall be payable by wire transfer in United States dollars on

April 30, 2004, to the bank account as specified by Mr. GALLOU and Mr. MATT

within five (5) business days prior to such date, and the banks of Mr. GALLOU

and Mr. MATT shall confirm to each of them that the funds are available free of

any and all transfer or other tax or fee.

 

If FOSSIL fails to pay any such amount due to Mr. GALLOU and Mr. MATT

on a such date, an interest rate equal to the interest rate on standing

facilities practiced by ECB increased of 4 points shall be applied to the

amount due.

 

 

Section

2                Pre-closing Covenants

 

Before

the signature of this Agreement, FOSSIL has been allowed to carry out the due

diligence review (the “Due Diligence”) it considers appropriate on the Group

Companies.

 

This Due Diligence has

been based on the documents and information as required by FOSSIL in Schedule

3.

 

Section

3                Closing

 

3.1          Closing

Date

 

The transaction stipulated in Section 1.1 is subject to the

fulfillment, prior to or at the Closing, of each of the following conditions

unless otherwise waived in writing by the Party for whose benefit the

conditions exist.

 

(a)           The

representations and warranties made by the Parties in this Agreement or any

certificates or documents delivered pursuant to the provisions hereof or in

connection with the transactions contemplated herein shall be true and correct

in all material respects when made, and shall be true and correct in all

material respects on the Closing Date as though such representations and warranties

were made on and as of such date.

 

(b)           The

Parties shall have carried out their respective obligations as specified in

Sections 3.2 (a), 3.2(b) and 3.2(c).

 

(c)           The

SELLER shall cause the Company to clean its balance sheet as of the Closing

date from all debt and other liabilities, but liabilities of less than FRF

50.000 pertaining to normal course of business.

 

The purchase and sale contemplated herein

shall be consummated at a Closing to take place by mail, facsimile or at the

offices of the Company on August 6, 2001 (the "Closing Date "),

or at such other time and place as the Parties may agree upon in writing.

 

 

3.2          Actions

to be taken at the Closing

 

The following actions shall be taken at the

Closing:

 

(a)                FOSSIL’s

Obligation

 

At Closing FOSSIL shall deliver to SELLER:

 

(i)            the Purchase Price in accordance

with Section 1.2(d)(i) hereof; and

 

(ii)           a countersigned original of the Award

Agreement and Confidentiality Agreement in the form attached hereto as Exhibit

B and C, respectively.

 

(iii)                As

evidence of the authority of each person executing a document referred to

herein on FOSSIL's behalf:

 

(a)a copy of the minutes of a duly held meeting of the directors of

FOSSIL (or a duly constituted committee thereof) authorizing the execution by

FOSSIL of the document and, where such execution is authorized by a committee

of the board of directors of FOSSIL, a copy of the minutes of a duly held

meeting of the directors constituting such committee or the relevant extract

thereof; or

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

 

 

(b)                SELLER’s Obligation

 

At Closing, the SELLER shall deliver, or

cause to be delivered, to FOSSIL:

 

(i)                "Registre

de mouvement des titres" duly completed with the transcription of the

transfer of all Company Shares to FOSSIL:

 

(ii)                As

evidence of the authority of each person executing a document referred to

herein on SELLER’s behalf:

 

(c)a copy of the minutes of a duly held meeting of the directors of

each corporate Seller (or a duly constituted committee thereof) authorizing the

execution by such Seller of the document and, where such execution is

authorized by a committee of the board of directors of a Seller, a copy of the

minutes of a duly held meeting of the directors constituting such committee or

the relevant extract thereof; or

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

 

in each case

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

 

(iii)                Each

register and minute book containing the minutes of all meetings of the Board of

Directors, all Shareholders meetings and attendance sheets of the Company;

 

(iv)                The

resignations of all of the Directors of the Company and all of the members of the

supervisory board of VEDETTE.

 

(c)                GALLOU

and MATT obligations

 

At Closing:

 

(i)            Mr. MATT and Mr. GALLOU shall each deliver to Fossil a

countersigned original of the Award Agreement and Confidentiality Agreement in

the form attached hereto as Exhibit B and C.

 

(ii)                Mr. MATT and Mr. GALLOU shall

have accepted the positions of Director General and Director Administration and

Finance of VEDETTE, respectively

 

 

3.3                Transfer Taxes.

 

All transfer taxes, fees and duties under

applicable law incurred in connection with the sale and transfer of the Company

Shares under this Agreement will be borne and paid by FOSSIL. In this respect all of the Parties

shall sign, if any, necessary tax return.

 

Section 4                Representations and warranties

 

 

4.1                Representations and Warranties of the SELLER :

 

As a material inducement to FOSSIL to enter into this Agreement and consummate

the transactions contemplated hereby, the SELLER hereby warrants to FOSSIL that

each representation and warranty contained on Exhibit D hereto is true and accurate as

of the date of this Agreement.

 

 

4.2                Representations and Warranties of FOSSIL :

 

(a)           Making of Representations and Warranties

 

As a material inducement to SELLER to enter into this Agreement and

consummate the transactions contemplated hereby, FOSSIL hereby makes to SELLER

the representations and warranties contained in this Section 4.2.

 

(b)                Organization and Qualifications

of FOSSIL

 

FOSSIL is a corporation duly

organized, validly existing and in good standing under the laws of the

Netherlands with full corporate power and authority to enter into this

Agreement and perform its obligations hereunder.

 

(c)                Authority of FOSSIL

 

FOSSIL has full right, authority and power to enter into this Agreement

and each agreement, document and instrument to be executed and delivered by

FOSSIL pursuant to this Agreement and to carry out the transactions

contemplated hereby.

 

The execution, delivery and performance by FOSSIL of this Agreement and

each such other agreement, document and instrument have been duly authorized by

all necessary corporate action of FOSSIL and no other action on the part of FOSSIL

is required in connection therewith.

 

The representative of FOSSIL has been duly authorized

to conclude the present Agreement by the Board of Directors of FOSSIL.

 

(d)                Litigation

 

There is no litigation pending or, to its best knowledge threatened against

FOSSIL which would prevent or hinder the consummation of the transactions

contemplated by this Agreement.

 

(e)                Brokerage

 

FOSSIL has not incurred or become liable for any broker's commission or

finder's fee relating to or in connection with the transactions contemplated by

this Agreement.

 

 

Section 5                Indemnification

 

 

5.1                Indemnification by the SELLER

 

Subject to Section 4.1, the

SELLER agrees subsequent to the Closing to indemnify FOSSIL, the Company and/or

its subsidiaries (together "the Indemnified Parties") from and

against any damages, liabilities, losses and taxes (the “Losses”), which may be

sustained or suffered by the Indemnified Parties arising from an event prior to

the Closing Date and based upon :

 

-               an intentional

misrepresentation or a breach by the SELLER of any of its material

representations, warranties or covenants under this Agreement,

 

-               any liability of

the Group Companies for taxes and/or social security charges arising from an

event or transaction or pertaining to the conduct of the Business prior to June

30,2001 which have not been paid or provided for or reserved against by the

Company or any of its subsidiaries in the balance sheets as of June 30, 2001,

as well as any accrued or unpaid liability of the Group Companies for taxes and/or

social security charges arising from an event or transaction prior to Closing

Date and which does not pertain to the normal conduct of the Business.

 

-               any liability of

the Group Companies in respect of any claim made by any third party and

relating to, arising out of or in connection with any event occurring prior to the

Closing Date,

and not mentioned in Schedule 4 hereto.

 

 

5.2                Limitations

of Indemnification by the SELLER

 

Notwithstanding

the foregoing, the right of the Indemnified Parties to indemnification under

Section 5.1 shall be subject to the following provisions:

 

Every and all future Losses,

which should be charged to the SELLER as a consequence of the representations

and warranties made by him in Section 4.1 hereof, shall :

 

•       first be deducted from the amount of the

Group Companies consolidated Stockholders' Equity as of June 30, 2001 exceeding

FRF 29,100,000 : the “Equity Excess”;

 

•       then be deducted from the amount actually

collected against SBIG on basis of the Court decision rendered or any other

future settlement in “Affaire SBIG”(as reported

hereinafter on Schedule 4): the “SBIG Indemnity”.

 

The SELLER will only indemnify an Indemnified Party when the cumulative

sum of such Losses exceeds the sum of the Equity Excess and the SBIG Indemnity

: the “Total Excess”.

 

Should the SBIG Indemnity be totally or partly collected after a

payment made by the SELLER in accordance with section 5.5., the SELLER will be

entitled to claim refund of such payment, within the limit of the amount

actually collected against SBIG.

 

Then after the Losses exceed the Total Excess, the Indemnified Parties

shall have no right of indemnification for breaches of any representation or

warranty until the total amount of Losses exceeds in the aggregate

FRF 710,000 (seven hundred ten thousand French Francs) (i.e. about USD

100,000).

 

The liability of the SELLER shall be limited to the amount exceeding FRF

710,000 (seven hundred ten thousand French Francs) (i.e. about USD 100,000) up

to a total amount:

 

•       that should not exceed the Purchase Price

actually paid according to Section 1.2. here-above, in the event of the breach

of representations, warranties and covenants made under section 1.1, 1.2, 1.3,

3.1.1, 3.1.2, 3.1.3, 3.1.4, 7.2 and 10.1 of Exhibit D attached hereto;

•       that should not exceed  FRF 14.200.000 (fourteen million two hundred

thousand French Francs) (i.e. about USD 2.000.000), in the event of another

cause of indemnification.

 

Notwithstanding anything in

this Section 5 to the contrary, no indemnification shall be payable by SELLER

with respect to any claim for which notice has not been provided to the SELLER

during the “Initial Indemnification Period” which is lasting one year from the

Closing Date, except for tax and URSSAF (French social organization) matters,

in which case the indemnification period shall be specially extended to June

30, 2004 (the “Extended Indemnification Period”)

 

5.3          Notice; Defense of Claims

 

(a)

 

An Indemnified Party may only make claims for

indemnification hereunder by giving written notice and evidence thereof to the

SELLER within (i) the Initial Indemnification Period, or (ii) the Extended

Indemnification Period for tax and URSSAF matters.

 

If indemnification is sought for a claim or

liability asserted by a third party (a “Third Party Claim”), the Indemnified

Party shall also give written notice thereof to the SELLER within ten (10)

business days after it receives notice of the Third Party Claim, provided

however the failure to give such notice shall not limit the Indemnified Party’s

right to indemnification except however that such failure does not prejudice

SELLER's ability to remedy such breach and defend any resulting claim, and the

indemnification shall not be extended to the prejudice caused by the delay.

 

All notices to SELLER shall be sent as

required in Section 7.5. hereunder.

 

(b)

 

Within twenty (20) business days after

receiving notice from the Indemnified Party, the SELLER shall give written

notice to the Indemnified Party stating whether it disputes the claim for

indemnification and whether it will defend against any Third Party Claim at its

own cost and expense.

 

If the SELLER fails to give notice that it

disputes an indemnification claim within 20 business days after receipt of

notice thereof, it shall be deemed to have accepted and agreed to the claim.

 

(c)

 

The SELLER with his own selected counsel may

direct the defense against a Third Party Claim. The Indemnified Party shall at

all times have the right to fully participate in the defense against a Third

Party Claim at its own expense directly or through counsel.

 

If the Third Party Claim is one that by its

nature cannot be defended solely by the SELLER or by the Indemnified Party,

then the SELLER and the Indemnified Party shall make available such information

and assistance to the other as the other may reasonably request and shall

cooperate with the other in such defense.

 

FOSSIL shall ensure that the SELLER or his

agents and counsels shall be entitled to participate in tax or others audits

and discussions with tax authorities or other third party regarding tax matters

or any other issue in relation with the representations and warranties given by

the SELLER in the hereabove Section 4.1.

 

FOSSIL

shall cause VEDETTE to make available any relevant facts, documents and paperwork

to inform the SELLER completely. On request of the SELLER, FOSSIL and VEDETTE

shall authorize the SELLER to take legal steps against tax assessments and

other rulings of the tax authorities or against third parties at SELLER’s own

expense.

 

 

5.4                Calculation of SELLER

Indemnification Obligations.

 

In order to satisfy the indemnification

obligations of the SELLER pursuant to Sections 5.1 and 5.2. above, and only if

the SELLER has not disputed the claim and if the Indemnified Party has paid the

amounts qualified as Losses, the amount due by the SELLER shall be calculated

as follows :

 

The Losses incurred by an

Indemnified Party on account of all such claims decreased by:

 

(1)           all increase of assets or decrease of

indebtedness based on facts happened before June 30, 2001; and by

 

(2)           any savings in taxes that Group

Companies would realize due to the increase in liabilities caused by such

Losses; and by

 

(3)           any penalties in the form of an

increased tax assessment the effect of which is only to postpone a claimed tax

benefit without creating any net additional tax liability.

 

 

5.5                Satisfaction

and Payment by SELLER of its Indemnification Obligations.

 

(a)

 

Any and all Losses

notified with evidence by the Indemnified Party and accepted by the SELLER

during the Initial Indemnification Period shall be supported by the SELLER as

follows:

 

	

  -

  	

   

  	

  Banque

  DEGROOF

  	

   

  	

  45% of the total Indemnification Obligation

  	

   

  
	

  -

  	

   

  	

  Eric GALLOU

  	

   

  	

  25% of the total Indemnification Obligation

  	

   

  
	

  -

  	

   

  	

  Christian

  MATT

  	

   

  	

  25% of the total Indemnification Obligation

  	

   

  
	

  -

  	

   

  	

  ACTIV'

  INVEST

  	

   

  	

  5% of the total Indemnification Obligation

  	

   

  

 

And each Stockholder of the Company shall directly and personally

indemnify and pay FOSSIL.

 

 

(b)

 

During the Extended Indemnification Period, any and all Losses shall be

and may only be deducted from the Earnout Payment to be possibly made on April

30, 2004.

 

 

Section 6                Active

Management - FOSSIL Options

 

 

(a)

 

Except as otherwise

provided herein, FOSSIL shall cause VEDETTE to retain Christian MATT and Eric

GALLOU (the “Active Management”), in the capacity as Director General and

Director, Administration and Finance, respectively, until December 31, 2003,

unless they, or one of them, is discharged for good cause.

 

Active Management will

receive the FOSSIL stock options at the Closing Date upon the terms and

conditions contained in their respective Award Agreement attached hereto as

Exhibit A. In addition, each of them will have the opportunity to be granted

additional options each following year in accordance with Fossil’s policies and

procedures.

 

Notwithstanding the

provisions of section 1.2 (c):

•       if Active

Management or one of its members voluntarily quits before December 31, 2003,

the Earnout Payment will be USD 1 (One US Dollar) for his respective payment.

•       If Active

Management or one of its members is involuntarily and without any real and

serious reason (according to French social regulation “licenciement sans cause

réelle et sérieuse”) dismissed before December 31, 2003, then the respective

Earnout Payment  to such dismissed

manager shall be USD 750.000 (Seven Hundred And Fifty Thousand US Dollar).

•       If Active

Management or one of its members die before the end of the Earnout period, i.e.

December 31, 2003, then the heirs of the deceased shall be entitled to receive

a prorated Earnout Payment (the “Prorated Earnout”) within 45 days following

the end of the fiscal year of such member’s death in accordance with the

provisions of section 6(b).

 

(b)

 

The Prorated

Earnout shall be based upon the attainment of the cumulative Earnout Targets as

set forth on Exhibit A (with respect to both Net Sales and Operating Income)

for (i) the fiscal year end immediately following the death of a member of

Active Management and (ii) all prior periods (the “Cumulative Targets”).  The achieved results and Prorated Earnout

calculation are as follows:

 

	

  Achieved

  Results (Net Sales)

  	

   

  	

  Base Earnout Amount

  	

   

  	

   

  
	

  100% and more of Cumulative Target

  	

   

  	

  USD 750,000

  	

  times the Prorated

  Amount

  	

   

  
	

  From 95% to 99.9% of Cumulative Target

  	

   

  	

  USD 600,000

  	

  times the Prorated

  Amount

  	

   

  
	

  From 90% to 94.9% of Cumulative Target

  	

   

  	

  USD 450,000

  	

  times the Prorated

  Amount

  	

   

  
	

  From 85% to 89.9% of Cumulative Target

  	

   

  	

  USD 375,000

  	

  times the Prorated

  Amount

  	

   

  
	

  Less than 85% of Cumulative Target

  	

   

  	

  USD 1

  	

  times the Prorated

  Amount

  	

   

  

 

	

  Achieved

  Results (Operating Income)

  	

   

  	

  Base Earnout Amount

  	

   

  	

   

  
	

  100% or more of Cumulative Target

  	

   

  	

  USD 750,000

  	

  times the Prorated

  Amount

  	

   

  
	

  From 50% to 99.9% of Cumulative Target

  	

   

  	

  17.48251% USD of EUR

  Operating Income times the Prorated Amount

  	

   

  
	

  Less than 50% of the Cumulative Target

  	

   

  	

  USD 1

  	

   

  	

   

  

 

The Prorated

Amount shall be a percentage represented by the quotient of the number of

fiscal quarters from the July 01, 2001 until the year end immediately following

the death of the member of Active Management divided by the total number of

fiscal quarters from the July 01, 2001 until December 31, 2003 (10 fiscal

quarters).

 

 

Section 7                Miscellaneous

 

 

7.1          Fees and

Expenses

 

Each of the parties shall bear

its own expenses in connection with the negotiation and the consummation of the

transactions contemplated by this Agreement.

 

Each party shall pay all costs incurred by it in furtherance of the

preparation and negotiation of this Agreement and the performance by each such

party of its obligations pursuant to this Agreement.

 

 

7.2          Entire

Agreement

 

This Agreement, as well

as its exhibits and schedules, attached hereto and incorporated herein by

reference, reflect the entire agreement of the Parties related to the subject

matter hereof and thereof and supersedes all prior negotiations and agreements

between the Parties concerning the subject matter hereof and thereof and can be

amended or changed validly only by an instrument in writing signed by all

Parties. This form requirement shall also apply to any change, modification or

waiver of the form requirement set forth in the preceding sentence.

 

In the event individual

provisions of this Agreement should in its entirety or partially be or become

invalid or impracticable, then the validity of the remaining provisions of this

Agreement shall not be affected thereby. Instead of the invalid or

impracticable provision, such reasonable provision or provisions shall apply

which come as close as legally possible to what the Parties would have agreed

according to the sense and purpose of this Agreement had they considered the

matter initially in the light of such invalidity or impracticability.

 

 

7.3                Publicity

and Disclosures

 

No Party to this

Agreement shall make any public or private statement or any disclosure with

respect to this agreement and the transaction comtemplated herein without the

express written approval of the other(s) Party(ies); provided, however, that

nothing herein shall prevent one Party from making any such disclosures or

statements as may be required by law, regulation or rule of any stock exchange,

except that the disclosing Party shall use all reasonable efforts to notify and

consult with the other Party(ies) prior to any such disclosure or statement.

 

 

7.4                Governing

Law

 

This Agreement shall be

governed by, construed under and enforced in accordance with the laws of

France.

 

7.5          Notices

 

Any

notice, request, demand or other communication required or permitted hereunder

shall be done in writing and shall be deemed to have been given if delivered or

sent by registered or certified mail, upon the sooner of the date on which

receipt is acknowledged or the expiration of three days after deposit in United

States or French post office facilities properly addressed with postage

prepaid.  All notices to a Party will be

sent to the addresses set forth below or to such other address or person as

such Party may designate by notice to each other party hereunder:

 

 

	

  TO FOSSIL:

  	

   

  	

  FOSSIL EUROPE, B.V.

  
	

   

  	

   

  	

  c/o Fossil,

  Inc.

  2280 N. Greenville Ave.

  Richardson, Texas 75082

  USA

  
	

   

  	

   

  	

  Attn:

  	

  T. R.

  Tunnell, Executive Vice President

  
	

   

  	

   

  	

  Tel:

  	

  972-699-2139

  
	

   

  	

   

  	

  Fax:

  	

  972-498-9639

  
	

   

  	

   

  	

  Email:

  	

  trtunnell@fossil.com

  
	

   

  	

   

  	

   

  	

   

  
	

  TO SELLER:

  	

  (i)

  	

  Banque

  DEGROOF Luxembourg SA

  
	

   

  	

   

  	

  7, boulevard

  Joseph II
L  - 1840 – LUXEMBOURG

  
	

   

  	

   

  
	

   

  	

   

  	

  Attn:

  	

  M. Benoît

  DUVIEUSART

  
	

   

  	

   

  	

  Tel:

  	

  +352 45 35

  45

  
	

   

  	

   

  	

  Fax:

  	

  +352 25 14

  33

  
	

   

  	

   

  	

  Email:

  	

  jeanlouis.waucquez@degroof.lu

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (ii)

  	

  M. Christian

  MATT

  
	

   

  	

   

  	

  23, rue du

  Serpent

  
	

   

  	

   

  	

  F -  67700 

  - SAVERNE

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (iii)

  	

  M. Eric

  GALLOU

  
	

   

  	

   

  	

  5, rue des

  Seigneurs

  
	

   

  	

   

  	

  F - 67330 -

  BOUXWILLER

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (iv)

  	

  ACTIV'INVEST

  
	

   

  	

   

  	

  23, avenue

  Monterey

  L-2086 Luxembourg

  
	

   

  	

   

  	

  Attn:

  	

  M. François

  UHL

  
	

   

  	

   

  	

  Tel:

  	

  +352 46 61

  11

  
	

   

  	

   

  	

  Fax:

  	

  +352 46 61

  11 34 00

  
	

   

  	

   

  	

   

  	

   

  

 

	

  With a copy

  to:

  	

   

  	

  Landwell et Associés

  
	

   

  	

   

  	

  Centre

  d’Affaires Urbania

  230 Avenue de Colmar

  B.P. 263

  67021 Strasbourg Cedex 01
France

  
	

   

  	

   

  	

  Attn:

  	

  Maître

  Philippe Gramling

  
	

   

  	

   

  	

  Tel:

  	

  +33.3.90.40.26.24

  
	

   

  	

   

  	

  Fax:

  	

  +33.3.90.40.26.26

  
	

   

  	

   

  	

  Email:

  	

  philippe.gramling@fr.landwellglobal.com

  

 

Any notice given

hereunder may be given on behalf of any Party by his counsel or other

authorized representatives.

 

 

7.6          Dispute

Resolution

 

 

Any and all dispute,

controversies, differences which may arise out of or in relation to or in

connection with this Agreement or the transactions contemplated hereby

including its legal validity shall be finally settled and binding upon the

Parties hereto by an arbitration process to be held in Strasbourg, France (or

such other location as the Parties may agree).

 

The arbitration tribunal will

be comprised of an arbitrator jointly designated by the Parties or, if the

Parties cannot agree on an arbitrator within a time period of one month, then

by three arbitrators, one designated by each Party and the third one ,who will

act as chairman of the arbitral tribunal by the others.

 

In this respect, the SELLER

irrevocably appoint M. François UHL, or in case of prevention M. Eric GALLOU,

as their common “REPRESENTATIVE”.

 

Any legal proceedings made by

or delivered to this “REPRESENTATIVE” will be deemed having been made by or

delivered to all of the sellers.

 

The REPRESENTATIVE is in

particular irrevocably entitled to appoint the arbitrator on behalf of all of

the Sellers. Should the REPRESENTATIVE fail to appoint an arbitrator on behalf

of the Sellers within a time period of three months from the date of the

Request for Arbitration, then FOSSIL shall be irrevocably entitled to initiate

legal proceedings before the Tribunal de Grande Instance in Strasbourg.

 

Reciprocally, should FOSSIL

fail to appoint an arbitrator within a time period of three months from the

Request for Arbitration, then the SELLER shall be irrevocably entitled to

initiate legal proceedings before the Tribunal de Grande Instance in

STRASBOURG.

 

 

In case the two arbitrators

cannot agree on a third, the third shall be appointed by le Président du

Tribunal de Grande Instance in Strasbourg at the request of the most diligent

party;

 

The language of such

arbitration shall be English and such arbitration shall be conducted according

the special arbitration rules of the Nouveau Code de Procédure Civile.

 

 

7.7          Binding

effect, Assignment

 

This Agreement shall be

binding upon and insure to the benefit of the Parties and their successors.

This Agreement may not be assigned by any Party without the prior written

consent of the other Party.

 

 

7.8          List of

Schedules and Exhibits

 

Schedule 1 :

List of VEDETTE’s Shareholders

 

Schedule 2 :

Consolidated statement as of 6/30, 2001

 

Schedule 3 :

Due diligence : List of initial documents and information.

 

Schedule 4 :

List and description of claims and litigations

 

Schedule 5 :

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

 

Schedule 6

: List of business’ encumbrances, liens and pledges

 

Schedule 7

: Intellectual property rights list

 

Schedule 8

: Employees detailed list

 

Schedule 9

: Insider Agreements list

 

Schedule 10:

Financial commitment

 

 

Exhibit A:                 Earnout

Targets

 

Exhibit B:                 Form

of Option Award Agreement

 

Exhibit C:                 Form

of Confidentiality Agreement

 

Exhibit D:                 Sellers’

Representations and Warranties

 

IN WITNESS WHEREOF, the

Parties hereto have caused this Agreement to be executed as of the date set

forth above by their duly authorized representatives.

 

 

Signed in Saverne and in

Richardson, on August 3, 2001.

 

 

	

  For FOSSIL

  EUROPE B. V. (« FOSSIL »)

  	

   

  
	

  Represented

  by , T.R. TUNNELL,

  	

   

  
	

  Executive

  Vice President and Chief Legal Officer, Fossil Inc;

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  Banque DEGROOF Luxembourg

  	

   

  
	

  Represented

  by Jean-Louis WAUCQUEZ,

  	

   

  
	

  Fondé de

  Pouvoirs Principal

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  And by

  Benoît DUVIEUSART,

  	

   

  
	

  Secrétaire

  Général

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  By Eric GALLOU

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  By Christian MATT

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  For

  ACTIV’INVEST SA

  	

   

  
	

  Represented

  by François M.UHL,

  	

   

  
	

  Administrateur

  Délégué

  	

   

  

 

Exhibit APrepared by MERRILL CORPORATION

Exhibit

10.4

ASSET PURCHASE

AGREEMENT

 

BETWEEN

 

GENENDER

INTERNATIONAL, INC.

 

AND

 

FOSSIL, INC.

 

August 27, 2001

 

ASSET PURCHASE

AGREEMENT

 

THIS ASSET

PURCHASE AGREEMENT (this “Agreement”), dated as of August __, 2001 is made by

and between Genender International, Inc., an Illinois corporation (“Seller”),

and Fossil, Inc., a Delaware corporation (“Purchaser”).

 

W

I T N E S S E T H:

 

WHEREAS,

Seller is in the business of distributing “ZODIAC” brand watches in the United

States and throughout the world (the “Business”); and

 

WHEREAS,

Seller desires to sell, and Purchaser desires to purchase, certain of Seller’s

intellectual property and inventory relating to the Business, on the terms and

subject to the conditions and limitations set forth herein.

 

WHEREAS, Purchaser

desires to retain Montres Consulting, L.L.C. to perform certain Services for

Purchaser related to the Business as set forth herein.

 

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

 

                “Affiliate” shall have the meaning given to

it in the United States Securities and Exchange Act of 1934, as amended.

 

                “Articles” shall mean products bearing the

Mark.

 

                “Assets” shall mean, collectively, the

Intellectual Property, the Inventory and the Memorabilia.

 

                “Closing” shall mean the consummation of the

transactions contemplated by this Agreement.

 

                “Closing

Date” shall mean the date of Closing, which shall be no later than ten (10)

business days from the date this Agreement is signed or such other date as

mutually agreeable to the Parties;

 

                “Consulting Agreement” shall mean the

Consulting Agreement between Fossil Partners, L.P.and Montres Consulting,

L.L.C., an Illinois limited liability company in the form attached hereto as

Exhibit A.

 

                “Encumbrance”

shall mean any lien, pledge, security interest, claim, injunction, easement,

limitation, right of first refusal, purchase option, restriction or encumbrance

of any kind or nature whatsoever.

 

                “Escrow Account”

shall mean the escrow account established pursuant to the provisions of

paragraph 1.4 and the Escrow Agreement.

 

                “Escrow Agent” shall mean The Chicago Trust

Company, 171 North Clark Street, Chicago, Illinois.

 

                “Escrow Agreement” shall mean the agreement

between Seller, Purchaser and the Escrow Agent related to the Escrow Account in

the form attached hereto as Exhibit B.

 

                “Initial Escrow Amount” shall mean the sum of

Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00).

 

                “Intellectual Property” shall mean, (i) all trademarks, tradenames, service marks,

and any applications, filings (whether prepared, submitted, withdrawn, accepted

or rejected) and renewals for any of the foregoing, as well as all common law

rights to the foregoing associated with the Mark including any derivations

thereof and registered designs, applications and rights to apply for any of

those rights, trade, business, domain and company names incorporating the Mark,

unregistered trade marks and service marks, copyrights, rights in designs and

inventions related to the Mark; and (ii) all goodwill associated therewith.

 

                “Intellectual

Property Rights” shall mean Seller’s entire right, title and interest in the

Intellectual Property, including, without limitation, Seller’s legal and

beneficial ownership of the Intellectual Property.

 

                “International Registrations” shall mean the

International Trademark Registrations No. R262 818, No. R284,064, No. 644,363,

No. R394 019, No. R256 389, No. R256 831, No. 466 002, No. 271 305 and No. 375

410.

 

                “Inventory” shall mean all watch inventory of

Seller bearing the Mark (including associated packaging and displays).

 

                “Knowledge” shall mean, with

respect to a Party, the actual state of knowledge or awareness

of such Party upon reasonable inquiry.

 

                “Mark” shall

mean the trademarks and names “ZODIAC”, “ZODIAC ASTROGRAPHIC”, “ZODIAC

CORSAIR”, “ZODIAC OLYMPOS”, “KING LINE”, “ARISTE CALAME” and “SEA WOLF” as

listed on Schedule 1.

 

                “Memorabilia”

shall include all memorabilia, catalogs, ads, watch samples bearing the Mark

excluding a collection of five (5) gold and diamond watches bearing the Mark

referred to as collection number 4.

 

                “Nouvelle

Marks” shall mean any and all Marks held by Nouvelle Montres Zodiac S.A. on

behalf of Seller.

 

                “Person”

shall mean any individual, firm, company, corporation or other body corporate,

government, state or agency of a state or any joint venture, association or

partnership.

 

                “Recordal Action Notice” shall mean written

notice from Purchaser to Seller delivered pursuant to the provisions of

paragraph 2.2.6 hereof.

 

                “Services”

shall mean the services provided by Montres Consulting, L.L.C. pursuant to the

Consulting Agreement.

 

ARTICLE

1

Purchase

and Sale

 

1.1          Sale and Purchase of Assets.  Subject to and upon the terms and conditions

contained herein, at the Closing, Seller shall sell, transfer, assign, convey

and deliver to Purchaser, and Purchaser shall purchase, accept and acquire from

Seller, the Intellectual Property, the Memorabilia and Inventory free and clear

of any Encumbrance 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 10, and subject to the satisfaction or waiver of the

conditions set forth in Articles 7and8, the Closing shall take place on the

Closing Date, unless another such date is agreed upon in writing by the parties

hereto. The Closing shall take place on the Closing Date at the offices of

Fossil, Inc. at 2280 N. Greenville Ave., Richardson, Texas or at such other

place as shall be mutually agreed to by the parties.

 

1.3          Purchase Price.  Subject to the provisions of paragraphs 10.1,

10.2, and 10.3, the total purchase price for the Assets (the “Purchase Price”)

shall be as follows:

 

(a)           Intellectual Property and

Memorabilia  - $4,000,000;

 

(b)           Inventory - Purchaser shall acquire

the Inventory as of the Closing Date at Seller’s cost as shown on Schedule 2.

 

The Purchase Price, less the Initial Escrow

Amount, 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          Escrow

Account.

 

1.4.1        At or prior to

Closing, the parties shall execute the Escrow Agreement and the Initial Escrow

Amount shall be deposited into the Escrow Account which account shall be

utilized for the purpose of:  (i)

funding all fees and expenses associated with the recordation of the assignment

of the Marks to Seller as set forth in Paragraph 2.2 hereof (ii) funding all

fees and expenses which may be associated with any new applications or

opposition or cancellation proceedings that may be required as hereinafter

provided in paragraph 2.2.7 (the “New Filings”); (iii) funding any penalties as

hereinafter provided in paragraph 2.2.4; (iv) funding any Inventory shortfall

as hereinafter provided in paragraph 6.1; (v) funding of all fees and expenses

associated with the French Litigation and the French Dispute and (vi) funding,

to the extent available at the time of Purchaser’s demand therefor in

accordance with the requirements of paragraph 9.2 amounts as a set-off to payments

otherwise due and payable towards an established Indemnified Obligation as may

hereinafter arise pursuant to paragraph 9.4. In the event that the Initial

Escrow Amount is insufficient to cover those fees and expenses associated with

each Recordation (as hereinafter defined), New Filings, the French

Litigation,  the French Dispute or

Escrow Agent Fees, then Seller shall from time to time deposit additional funds

into the Escrow Account in such amounts reasonably estimated by Seller, and

agreed upon by Purchaser, as sufficient to cover such fees and expenses. At Closing, the Initial Escrow Amount shall

be deducted from the Purchase Price and delivered to the Escrow Agent by

Purchaser by cashier’s check or wire transfer for deposit in accordance with

the provisions of this Agreement and the Escrow Agreement.

 

                1.4.2        The Escrow Funds are to be retained in

the Escrow Account and shall only be released 

by the Escrow Agent:

 

a.     To

Seller, upon presentment of valid fee statements, including any penalties, from

Seller’s intellectual property counsel or its associates and agents related to

the Recordation (as hereinafter defined),

the French Dispute or the French Litigation;

b.     To

Purchaser following the expiration of a Recordal Action Notice, upon

presentment of valid fee statements from Purchaser’s intellectual property

counsel or its associates and agents related to the Recordation (as hereinafter defined);

c.     To

Purchaser, upon presentment of valid fee statements from Purchaser’s

intellectual property counsel or its associates and agents related to the New

Filings, the French Dispute, or  the

French Litigation;

d.     To

Purchaser, upon presentment of a certification of any Inventory shortfall in

accordance with paragraph 6.1;

e.     To

Purchaser, upon demand for an established Indemnified Obligation pursuant to

the provisions of paragraph 9.1;

f.      To

Seller or Purchaser, as applicable, in accordance with the provisions of the

Escrow Agreement; or

g.     To

Seller in accordance with paragraph 2.2.9.

 

                1.4.3        If

the Seller or the Purchaser are entitled to money from the Escrow Account in

accordance with this Agreement, the Seller and the Purchaser shall within five

(5) Business Days starting on the day after the date the entitlement arises

jointly instruct the Escrow Agent in writing to release the money to the Seller

or the Purchaser, as the case may be.  

 

                1.4.4        Interest

accruing from time to time on the balance of money standing to the credit of

the Escrow Account shall be added to the money standing to the credit of the

Escrow Account and shall form part of it for the purposes of this Agreement.

 

                1.4.5        The

Seller shall be responsible for all fees, expenses and Escrow Agent's costs in

respect of any work done pursuant to this Agreement or the Escrow Agreement

(the “Escrow Agent Fees”).

 

                1.5          Assumption of Liabilities.   Purchaser shall not assume or agree to pay,

perform or discharge any liabilities or obligations of Seller, of 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.

 

1.6          Seller’s Instruments of Transfer;

Further Assurances.  In order to consummate the transactions contemplated by this

Agreement, Seller shall deliver to Purchaser, and shall cause its Affiliates to

deliver to Purchaser, as applicable, the following documents at Closing:

 

(a)           a

Bill of Sale covering the Assets in the form attached hereto as Exhibit C;

 

(b)           an

Assignment of the Intellectual Property in the form attached hereto as Exhibit

D and an assignment of the domain name “zodiacwatches.com” and any other domain

name which includes the word “Zodiac” owned or controlled by Seller and its

Affiliates in a form satisfactory to Purchaser;

 

(c)           written

instruments evidencing all consents necessary for Seller or its Affiliates to

consummate the transaction contemplated hereby, including consents relating to

the assignment of the Intellectual Property;

 

(d)           a certificate duly executed by the

President of Seller 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; and (ii)

that Seller’s representations and warranties set forth in Article 4 are true

and correct as of the Closing Date.

 

(e)           all

of Seller’s and/or its Affiliate’s business records to the extent such records

constitute a part of the Assets;

 

(f)            possession

of the Assets;

 

(g)           written

consent from LaSalle Bank, N.A., together with copies of necessary UCC-3

termination statements and other releases for liens and Encumbrances affecting

the Assets, executed by the lien holders thereof and otherwise in a form

acceptable for filing;

 

(h)           a

counter-signed original of the Escrow Agreement;

 

(i)            a

counter-signed original of the Consulting Agreement; and

 

(j)            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, and shall cause its Affiliates to execute and deliver,

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.

 

1.7          Purchaser’s Instruments of Transfer; Further

Assurances.   In order to

consummate the transactions contemplated by this Agreement, the following shall

be delivered by Purchaser to Seller at the Closing:

 

(a)           except

as otherwise provided in paragraph 1.3, the Purchase Price by wire transfer of

immediately available funds; and

 

(b)           a

certificate duly executed by an authorized officer of Purchaser 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.

 

                (c)           a counter-signed

original of the Consulting Agreement; and

 

                (d)           a counter-signed

original of the Escrow Agreement.

 

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.

 

ARTICLE

2

Additional

Undertakings

 

2.1          Pre-Closing Undertakings:  The Parties agrees

to take the following actions at, or prior to, Closing:

 

                                2.1.1            Seller shall pay, at its

sole cost and expenses, any and all renewal and maintenance fees and taxes due

in respect of jurisdictions in which the Marks are registered as may be

necessary to maintain the Marks.

 

2.1.2            Seller

shall discontinue sales of the Articles as of the date hereof .

 

2.1.3          Seller

shall refrain, and shall direct and instruct its intellectual property counsel

to refrain, from taking any action with respect to the Marks and the

Intellectual Property Rights that would hinder Purchaser’s ability to effect

the assignment of the Intellectual Property Rights of Seller acquired

hereunder, including, but not limited to, filing any assignment documents with

the trademark offices in any jurisdiction, without the prior consent of

Purchaser and its counsel.

 

                2.2          Post-Closing Undertakings. The

Parties agree to take the following actions following Closing:

 

2.2.1        Upon

written instructions by Purchaser to Seller, Seller agrees to instruct Equity

Management Systems, S.A. to assign the International Registrations to any

entity requested by Purchaser and to instruct Nouvelle Montres Zodiac S.A. to

assign the Nouvelle Marks to any entity requested by Purchaser.

 

2.2.2        Purchaser

acknowledges that the only registrations for the Marks to be assigned by the

Seller or its fiduciary agent or an Affiliate at the time of Closing to

Purchaser or its designee are with respect to those identified in the specific

countries listed on Schedule1.  The

Seller acknowledges that the chain of record ownership reflecting the

assignments to the Seller have not been recorded with the assignment office of

the country in which the Mark is registered. 

Seller undertakes to instruct its agents and representatives to ensure

that the assignments from the current record owner of the Mark with respect to

those registrations to Seller or its fiduciary agent or an Affiliate are

recorded to enable Purchaser to record the assignment of those registrations

from the Seller or its fiduciary agent or Affiliate to reflect its ownership of

the Marks as a result of the transaction contemplated by this Agreement (with the recordation of each such assignment in

each of such countries hereinafter referred to as a “Recordation”).  All costs, expenses, attorneys fees, agent

fees and penalties associated with the Recordation of the assignments to the

Seller shall be paid from the Escrow Account in accordance with paragraph 1.4.1

hereof and the Escrow Agreement.

 

2.2.3        Seller

agrees to notify Purchaser within five (5) business days upon the completion of

the assignment of such registrations of the Marks in each such country.

 

                                2.2.4        Seller

agrees that in the event any country requires the payment of a penalty of any

kind in connection with the assignment recordation, Seller shall pay such

penalty out of the Escrow Account and will notify Purchaser promptly if any

assignment is refused and  Seller hereby

indemnifies and holds Purchaser harmless from all costs, expenses, fees and

penalties associated with the recordation of any assignment to Seller.

 

2.2.5        Once

the assignment of the registrations for any Mark to Seller or its agent or

Affiliate has been successfully recorded in any country, Purchaser shall be

responsible for the recordation of the assignment of such Mark to Purchaser and

Purchaser shall be responsible for all fees, including any attorneys’ fees,

costs and expenses associated therewith.

 

                                2.2.6 

      In the event that Seller

fails to diligently pursue all steps reasonably necessary to effect the

Recordation for any country on Schedule 1, the Purchaser may give Seller

written notice of Purchaser’s intent to effect the recordal (a “Recordal Action

Notice”) and Seller shall have ten (10) days from the date of such notice to

use its best efforts to effect such recordal. 

In the event that Seller fails to effect the recordal within such ten

(10) day period, Seller irrevocably grants Purchaser the authority to undertake

such recordal through its own agents and to draw on the Escrow Account as

reimbursement for the costs and expenses associated with such recordal.

 

                                2.2.7        In the event that the assignment of any

Mark in Schedule 1 cannot be recorded in any country within twelve (12) months

following the date of the Closing, Seller shall give Purchaser written notice

of same and Purchaser shall have the option, without prejudice to Purchaser’s

other remedies hereunder, to refile for registration of the Mark in that

country.  All fees and expenses

associated with the New Filings, including but not limited to any fees and

expenses for institution of any opposition or cancellation proceedings required

to enable Purchaser to register the Mark, shall be drawn from the Escrow

Account as set forth in paragraph 1.4.1 hereof and in the Escrow Agreement.

 

2.2.8        Seller

agrees to promptly change the corporate name of Nouvelle Montres Zodiac S.A.

and any other corporation or entity in its control to remove all references to

the word “Zodiac”.

 

                                2.2.9        In

connection with the French Dispute, Seller will promptly obtain Zodiac France

S.A.’s voluntary cancellation or partial cancellation of all trademark

registrations in International Class 14 for any mark in any country containing

the word “Zodiac” for jewelry, watches, clocks, other horological instruments,

watchcases, watch bands, and watch and timepiece making equipment.  In the event Seller is unable to obtain such

voluntary cancellation or partial cancellation within forty five (45) days of

the date of this Agreement, Seller shall immediately file a legal action in

France to obtain such cancellation (the “French Litigation”).  Seller and Purchaser shall cooperate with

each other in the French Litigation and Seller agrees that Purchaser shall have

the right to participate in the prosecution of the French Litigation, including

the right to participate in any settlement discussions.  No settlement of either the French Dispute

or the French Litigation shall be reached without Purchaser’s express written

consent.  All fees and expenses

associated with the French Dispute and the French Litigation shall be paid from

the Escrow Account. It is understood that $100,000 of the $250,000 Initial

Escrow Amount is allocated for fees and expenses associated with the French

Dispute and the French Litigation.  When

the French Dispute and/or the French Litigation has been concluded by (i) a

voluntary cancellation or partial cancellation of all trademark registrations

in International Class 14 in connection with jewelry, watches, clocks, other

horological instruments, watchcases, watch bands, and watch and timepiece

making equipment; or (ii) a settlement that includes a prohibition on Zodiac

France S.A. from using the mark “Zodiac” in connection with jewelry, watches,

clocks, other horological instruments, watchcases, watch bands, and watch and

timepiece making equipment which settlement has been entered into with

Purchaser’s consent; or (iii) a final judgment or decree has been entered from

a Court in France with competent jurisdiction from which no further appeals are

available that includes a Court ordered prohibition placed upon Zodiac France,

S.A. from using the mark “Zodiac” in connection with jewelry, watches, clocks,

other horological instruments, watchcases, watch bands, and watch and timepiece

making equipment, then any funds remaining of that $100,000 after payment of

fees and expenses associated with the French Dispute and/or the French

Litigation shall be released to the Seller.

 

ARTICLE 3

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:

 

3.1          Incorporation

and Good Standing.  Purchaser is a corporation duly incorporated, validly existing

and in good standing under the laws of the State of Delaware, 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.

 

3.2          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.

 

3.3          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.

 

3.4          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.

 

3.5          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 4

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:

 

4.1          Incorporation and Good Standing.  Seller is a corporation duly incorporated,

validly existing and in good standing under the laws of the State of Illinois,

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 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.

 

Montres

Consulting, L.L.C. is a limited liability company duly established, validly

existing and in good standing under the laws of the State of Illinois, 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 the

Consulting Agreement and to consummate the transactions contemplated hereby.

 

Nouvelle Montres Zodiac, SA 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 consummate the

transactions contemplated hereby.

 

4.2          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.

 

4.3          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.

 

4.4          Inventory.  Except with respect to the blanket lien from

Seller’s commercial lender, LaSalle Bank, N.A. that will be released at the

time of Closing, Seller owns the Inventory and Memorabilia 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 Inventory and

Memorabilia.  The information on

Schedule 2 hereto, is true, correct and complete and fairly reflects the on-hand

inventory, overseas inventory commitments and open customer purchase orders as

of the dates and for the periods indicated in all material respects.

 

4.5          Insurance.  The Inventory and Memorabilia is insured

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.  True, complete and

correct copies of all such policies as they relate thereto have been made

available to Purchaser prior to the date hereof.  Seller will maintain such insurance until the Closing Date.

 

4.6          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 Incorporation or Bylaws of Seller

or any agreement or other instrument under which Seller is bound or to which

any of the Assets are subject or result in the creation of imposition of any

lien, charge or 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.

 

4.7          Consents.

Except for the consent from

LaSalle Bank N.A. and the release of the blanket lien covering the Assets, to

be delivered at Closing, 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 other than the

performance of undertakings related to filings in connection with the

Recordations described above.

 

4.8          Compliance with Laws; Regulatory

Compliance. 

There are no existing violations by Seller of any applicable federal,

state or local law or regulation that could materially adversely affect the

Assets 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.

 

4.9          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.

 

4.10        Litigation.  Except with respect to certain proceedings

and demands against Zodiac France, S.A. (the “French Dispute”), the status of

such proceedings being described on Exhibit J, 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 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 or the

Business.  Seller knows of no basis for

any such action, proceeding or investigation.

 

4.11        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.

 

4.12        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 3.

 

4.13        Pricing.  Seller has provided Purchaser with a

complete and accurate list of Seller’s standard prices which is attached hereto

as Schedule 4.

 

4.14        Intellectual Property Rights.

 

 

                (a)           Each

of the Intellectual Property Rights is legally or beneficially owned by Seller,

free and clear of any license or Encumbrance;

 

                (b)           Seller

has not received notice that any Intellectual Property Rights:

 

(i)            are the subject of a claim or

opposition from a person as to title, validity, enforceability, entitlement or

otherwise except  the opposition

proceedings to defeat a claim to the Mark “Zodiac” by Zodiac France S.A. as

described in Exhibit J; or

 

(ii)           infringe the intellectual property

rights of any third party.

 

(c)           All renewal and maintenance fees and

taxes due in respect of jurisdictions in which the Marks are used or

registered, and payable prior to Closing in respect of each of the Intellectual

Property Rights have been paid in full.

 

(d)           To the best of Seller’s knowledge,

the Seller has the right to use all Intellectual Property which is necessary

for the effective operation of the Business as operated immediately prior to

the date of this Agreement.

 

(e)           To the best of Seller’s knowledge,

information and belief, there is not any infringement or unauthorized use of

any of the Intellectual Property Rights.

 

(f)            The International Registrations are

being held by Equity Management Systems, S.A. for the account of Seller and

Seller has the valid and enforceable right to assign the International

Registrations to Purchaser.  The

Nouvelle Marks are being held by Nouvelle Montres Zodiac S.A. for the account

of Seller and Seller has the valid and enforceable right to assign the Nouvelle

Marks to Purchaser.

 

                 (g)          Seller represents and warrants that the record owner of the

Marks is that shown as “Applicant” on Schedule 1 attached hereto and further

represents and warrants that the nine (9) international registrations listed on

Schedule 1 cover the countries listed for each such registration on Schedule 1

and the information otherwise contained thereon is true and correct in all

material respects. Seller further represents and warrants that Schedule 1 lists

all Intellectual Property Rights owned by Seller, its Affiliates and

Fiduciaries related to the “Zodiac” brand including all variations and

derivations thereof.

 

                 4.15       Documents Evidencing Ownership of

Intellectual Property.  Seller represents and warrants that it is

the owner of the Intellectual Property and has the right to enter into this

Agreement and to assign its ownership in the Marks to Purchaser. Seller further

represents and warrants that the following documents attached hereto are true

and correct, validly executed and enforceable by Seller:

 

(a)           Sales Contract between Genender

International, Inc. and Zodiac S.A.’s Bankrupt’s Estate dated January 30, 1998

attached hereto as Exhibit E;

 

(b)           Agreement between Montres Zodiac

S.A., bankrupt and Zenith International S.A. on the one hand and Gad Willy

Monnier on the other dated June 9, 1999 attached hereto as Exhibit F;

 

(c)           Declaration of Transfer transferring

Swiss Registration No. 397,551 and International Registration No. 644.363 from

Gad Willy Monnier to Genender International, Inc. dated June 14, 1999 attached

hereto as Exhibit G;

 

(d)           Agreement from Zenith International

S.A.  to execute any documents required

relating to the transfer of the Zodiac trademarks dated January 27, 1998

attached hereto as Exhibit H; and

 

(e)           Agreement between Genender

International, Inc. and Equity Management Systems S.A. relating to the

International Registrations referenced in paragraph 2.2 herein dated July 4,

2001 attached hereto as Exhibit I.

 

(f)            Agreement between Genender International, Inc. and Nouvelle

Montres Zodiac relating to the Nouvelle Marks referenced in paragraph 2.2

herein dated August10, 2001 attached hereto as Exhibit K.

 

ARTICLE

5

(intentionally

omitted)

 

ARTICLE

6

Seller’s

Covenants

 

Seller agrees that on or prior to the

Closing:

 

6.1          Delivery of Assets.  At the Closing,

Seller shall deliver to Purchaser a Bill of Sale, or other appropriate

documents, conveying title to the Assets, free and clear of all Encumbrances

and the Assignment of the Intellectual Property and shall make the Inventory

and Memorabilia available for delivery to the Purchaser F.O.B. Wheeling,

Illinois.  In the event that there is

any shortfall in the Inventory described on Schedule 2, Purchaser shall have

the right to request the value of the shortfall from the Escrow Account.

 

6.2          Business Operations.  Seller shall operate the Business only in

the ordinary course, will not introduce any new method of management or

operation and will cause the 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 or the Business as currently being

conducted by the Seller 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 4 hereof to be inaccurate at the time of Closing or preclude

Seller from making such representations and warranties at the Closing.

 

6.3          Access.  Seller shall permit Purchaser and its

authorized representatives full access to, and make available for inspection,

all of the Assets and the Business and furnish Purchaser all relevant

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 and the

Business.

 

6.4          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.

 

6.5          Material Change.  Prior to the Closing, Seller shall promptly

inform Purchaser in writing of any material adverse change in the condition of

the Assets or the Business or any event that renders the representations and

warranties made in Article 4 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.

 

6.6          Approvals of Third Parties.  As soon as practicable after the execution

of this Agreement, but in any event prior to the Closing Date, Seller and its

Affiliates, as applicable, will secure all necessary approvals, assignments,

releases and consents of all third parties and governmental authorities

required on the part of Seller or its Affiliates for the consummation of and

contemplated by this Agreement.

 

6.7          Mortgages, Liens.  Except with Purchaser’s prior written

consent, Seller and its Affiliates will not enter into or assume any mortgage,

pledge, conditional sale or other title retention agreement, permit any

Encumbrance or claim of any kind to attach to the Assets, whether now owned or

hereafter acquired, except for transactions in the usual and ordinary course of

business.

 

6.8          Changes in Inventory.  Seller will not alter the physical contents

or character of any of the Inventory as listed on Schedule 2 so as to affect

the nature of the Business or result in a change in the total dollar valuation

thereof other than normal year-end adjustments in accordance with generally

accepted accounting principles and other than as a result of transactions in

the ordinary course of business.

 

6.9          No Disclosure or Negotiation with

Others. 

Seller will abide, and shall procure that its Affiliates abide, by the

terms and provisions hereinafter set forth concerning confidentiality and shall

not disclose any of the terms or conditions of this Agreement to any other

person, other than to its employees, commercial lender, legal counsel and

accountants, or as otherwise required by law or court order. Additionally,

neither Seller or its Affiliates shall, directly or indirectly, through

representatives or otherwise, hereafter 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, its

Affiliates, nor any representative of Seller or its Affiliates 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 and its Affiliates or Seller’s or its

Affiliate’s representative and any other person or entity regarding any such

offer or proposal or any related inquiry.

 

ARTICLE 7

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:

 

7.1          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.

 

7.2          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.

 

7.3          Officer’s Certificate.  Seller shall have delivered to Purchaser a

certificate duly executed by Seller’s President certifying as to the statements

contained in Section 7.1 and Section 7.2 to this Agreement.

 

7.4          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.

 

7.5          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.

 

7.6          No Material Adverse Change.  No material, adverse change in the Assets or

the Business shall have occurred after the date hereof and prior to the

Closing.

 

                7.7         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 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.

 

7.8          Instruments

of Transfer. 

Seller shall have delivered to Purchaser each of those documents

enumerated in Section 1.6 hereto.

 

7.9          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

 

7.10        Satisfaction of Pre-Closing

Conditions. 

The Pre-Closing conditions in paragraph 2.1 shall have occurred.

 

7.11        Escrow Deposit.  The Initial Escrow Amount in the Escrow

Account shall have been deposited in accordance with paragraph 1.4.

 

ARTICLE

8

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:

 

8.1          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.

 

8.2          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.

 

8.3          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.

 

8.4          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 8.1 and Section 8.2of this Agreement.

 

8.5          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.

 

8.6          Instruments of Transfer.  Purchaser shall have delivered to Seller

each of those items enumerated in Section 1.7 of this Agreement.

 

ARTICLE 9

Indemnification

 

9.1          Seller’s Indemnity.  Subject to the terms and conditions of this

Article 9, 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 arising out of or relating to occurrences of any nature

relating to the Assets or the Business prior to the Closing, whether any such

claims are asserted prior to or after the Closing (collectively, the

“Indemnified Obligations”);

 

9.2          Purchaser’s Indemnity.  Subject to the terms and conditions of this

Article 9, 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 arising out of or relating to occurrences of any nature

relating to the Assets or the Business after the Closing;

 

9.3          Conditions of Indemnification.  The respective obligations and liabilities

of Seller and Purchaser (the “indemnifying party”) to the other (the “party to

be indemnified”) under Sections 9.1 and 9.2, 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 9.3 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.

 

9.4          Indemnification Limitation.  To the extent that

a party seeks indemnification for Damages under this Article 9 following the

Closing, the indemnified party’s remedy will at all times be limited to the

amount of the Purchase Price.  The

indemnification provided for in this Article 9 will not apply unless and until

the aggregate amount of the Damages for which the indemnified party seeking

indemnification exceeds $25,000 in the aggregate, in which event the

indemnification provided for will include all Damages up to the Purchase

Price.  The parties seeking

indemnification pursuant to this Article 9shall only be entitled to be reimbursed

for the actual indemnified expenditures or Damages incurred by them for the

above described losses.  To the extent

any indemnified expenditures or Damages are established pursuant to this

Section 9, the Purchaser may offset such amounts first against the funds held

in the Escrow.

 

9.5          Remedies Not Exclusive.  The remedies provided in this Article 9

shall not be exclusive of any other rights or remedies available by one party

against the other, either at law or in equity.

 

9.6          Survival.  Notwithstanding Section 11.9, this Article 9 shall survive the

termination of this Agreement for the longer of: (i)  a period of one year following Closing, or (ii) a period of time

ending with the date on which the latest of the following events occurs: (a)

Seller has obtained Recordation in its name or in the name of one of its agents

or affiliates for each of the registrations of the Marks in the countries on

Schedule 1; or (b) the new registration of 

the Marks has been achieved as a result of a New Filing in the last of

the countries on Schedule 1 where required.

 

ARTICLE 10

Termination, Breach and Remedies

 

10.1        Events Permitting 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 7 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 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

the Closing Date.

 

10.2        Failure to Effect Recordation.  In the event (i) that Seller fails or is

unable to effect the Recordation of any of the Marks shown in Schedule 1 within

one (1) year following the date of the Closing, or (ii) Seller is in breach of

paragraph 2.2.9 or (iii) the French Litigation is unsuccessful, then Seller

shall be deemed to have materially breached the Agreement and Purchaser shall

have the right to recover from Seller any damages suffered by Buyer as a result

of such breach, in addition to any other remedies resulting from such breach

including, but not limited to, Purchaser’s rights pursuant to paragraph 2.2.7.

 

10.3        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 the Closing

Date.

 

ARTICLE

11

Miscellaneous

 

11.1        Amendment.  This Agreement may be amended, modified or

supplemented only by an instrument in writing executed by each of the parties

hereto.

 

11.2        Assignment and Denial of Third Party

Rights. 

Except as otherwise provided in this Section 11.2, 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 11.2 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 minority shareholders or stockholders of the

parties hereto) other than the parties indemnified under Article 9 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.

 

11.3        Notice.  Any

notice or communication must be in writing and given by depositing the same in

the United States 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:                                                             Genender

International, Inc.

                                                                                                44 Century Drive

                                                                                                Wheeling, IL 60090

                                                                                                Attn: 

Ken Genender, President

                                                                                                Telephone: 847-279-2010

                                                                                                Facsimile: 

847-279-2110

 

                                                    Copy to:                             Fredric

Prohov, Esq.

                                                                                                Hochman, Dolgin, Delott,  & Prohov, P.C.

                                                                                                30 North LaSalle Street

                                                                                                Suite 4300

                                                                                                Chicago, IL 60602

                                                                                                Telephone: 312-705-2000

                                                                                                Facsimile:  

312-705-2001

 

                If to Purchaser:                                                     Fossil,

Inc.

                                                                                                2280 N. Greenville Ave.

                                                                                                Richardson, Texas

                                                                                                Attn: 

T.R. Tunnell, Executive Vice President

                                                                                                Telephone: 972-699-2139

                                                                                                Facsimile: 972-498-9639

 

                                                    Copy to:                             Molly

Richard, Esq.

                                                                                                Strasburger & Price, L.L.P.

                                                                                                901 Main Street, Suite 4300

                                                                                                Dallas, Texas 75202

                                                                                                Telephone: 

214-651-4720

                                                                                                Facsimile:   

214-659-4052

 

Any party may change its address for notice

by written notice given to the other parties.

 

11.4        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 11.4

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 and all

such confidential information as well as materials or samples of the Assets

shall be returned to the party to whom it belongs.  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.

 

11.5        Entire

Agreement. 

Except as set forth in Section 11.4 above, 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 11.5.

 

11.6        Costs, Expenses and Legal Fees.  Except as otherwise provided in paragraph

1.4, 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.

 

11.7        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.

 

11.8        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).

 

11.9        Survival of Representations,

Warranties and Covenants.  Notwithstanding any investigation by any

party, 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 made by

any party or on its behalf for a period expiring upon completion of the

Survival Period; provided, however, that all such representations

and warranties shall survive indefinitely for all claims which are asserted on

or before the expiration of the Survival Period.

 

11.10      Governing Law.  This Agreement and the rights and obligations of the parties

shall be governed, construed and enforced in accordance with the laws of the

State of Texas.

 

11.11      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.

 

11.12      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.

 

11.13      Taxes.  Each party shall be responsible for all

sales, use, transfer or other taxes applicable to such party resulting from the

transactions contemplated hereby.

 

11.14      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.

 

11.15      Arbitration. 

The parties will submit any and all disputed issues to final and binding

arbitration.  A disputed issue means any

disagreement in regard to any of the terms and conditions of this

Agreement.  Any such dispute will not be

subject to appeal to any court except to permit a party to seek court

enforcement of any arbitration award rendered hereunder.  If the parties agree to the appointment of a

single arbitrator, then the single arbi­trator will determine and decide any

dispute arising here­under.  If the

parties cannot agree to the selection of a single arbitrator, then each party

will designate an attorney to serve as an arbitrator, and the selected

attorneys will select a third arbitrator. 

The arbitrator(s) will establish rules for the conduct of the

arbitration consistent with the rules of the American Arbitra­tion

Association.  The arbitrator(s) will be

impartial and will have no prior or present relationship with any of the

parties.  The arbitrator(s) will be

empowered to hear, conclusively determine and resolve all claims and disputes

between the parties.  The costs of the

arbitration shall be shared equally by the parties, provided that the fees,

costs, and expenses of the prevailing party (as reasonably determined by the

arbitra­tor(s)), including arbitrators’ and reasonable attorney fees incurred

in connection with any such arbitration, shall be paid by the losing party in

the event the arbitrator(s) determine the proceeding was brought or defended in

bad faith by the losing party.  The

costs and expenses of the prevailing party in collecting any such award shall

be paid by the non-prevailing party.

 

In such arbitration proceedings, each of the

parties shall submit to the arbitrator(s) in writing their respec­tive posi­tions

with respect to the dispute for which arbitration proceedings have been

commenced, together with such supporting documentation as such party deems

necessary or as such arbi­trator(s) request. 

Such arbitra­tor(s) shall, as soon as practica­ble after receiving the

written positions of both parties and all subsequent supporting documentation

requested by such arbitrator(s), and after having heard such testimony as they

may deem appropriate, render their decisions as to such dispute, which decision

shall be in writing and final and binding on, and nonappealable by (except as

provided by law), the parties.  The

arbitrator(s) shall issue any injunctive or similar order they deem

appropriate.  Arbitration proceedings

shall be held in Dallas, Texas or Chicago, Illinois and the selection of the

jurisdiction shall be made by the party against whom the proceedings are

brought.  The arbitrator(s) shall be

bound by the laws of the United States of America, and shall be bound by the

obligation to retain confidential information in confidence in perpetuity, and

not to disclose any confidential information of either Purchaser or

Seller.  With respect to any other

provision in this Agreement to the contrary notwithstanding, including the

arbitration clause set forth in this Section 11.15, courts shall retain their

injunctive powers, and either party’s resort to injunctive relief or

arbitration shall not be deemed as an election not to proceed with any other

remedy.  Further (i) the arbitrator(s)

shall expedite the proceedings to reach a final decision within 90 days of the

demand; (ii) the arbitrator(s) shall be bound in their deliberations and their

decision by the terms of the Agreement and applicable law; (iii) the

arbitrator(s) must permit the parties to make reasonable discovery on an

expedited basis; and (iv) the arbitrator(s) must render a reasoned decision,

identifying their conclusions of fact and law.

 

IN WITNESS

WHEREOF, the undersigned parties have hereunto duly executed this

Agreement as of the date first written above.

 

	

   

  	

  PURCHASER:

  
	

   

  	

   

  
	

   

  	

  FOSSIL, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  SELLER:

  
	

   

  	

   

  
	

   

  	

  GENENDER

  INTERNATIONAL, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

  Title:

  	

   

  
	

   

  	

   

  

 

Exhibit A

Consulting Agreement

Exhibit B

Escrow Agreement

Exhibit C

Bill of Sale

Exhibit D

Assignment of Intellectual Property

Exhibit E

Sales Contract

between Genender International, Inc. and Zodiac S.A.’s Bankrupt’s Estate

Exhibit F

Agreement between

Montres Zodiac S.A., and Zenith International S.A. and Gad Willy Monnier 

Exhibit G

Declaration of

Transfer transferring Swiss Registration No. 397,551 and International

Registration No. 644.363 from Gad Willy Monnier to Genender International, Inc.

Exhibit H

Agreement from

Zenith International S.A.

Exhibit I

Agreement between

Genender International, Inc. and Equity Management Systems S.A. 

Exhibit J

Status of Proceedings against Zodiac France,

S.A.

Exhibit K

Agreement between Genender International,

Inc. and Nouvelle Montres Zodiac S.A.

Schedule 1

List of Marks

Schedule 2

On-hand Inventory, Overseas Inventory

Commitments and Open Customer Purchase Orders

Schedule 3

List of Seller’s Customers

Schedule 4

Standard Wholesale Prices of Articles

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00032-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00032-of-00352.parquet"}]]