Document:

Exhibit
10.20

 

April 27, 2004

 

 

PRIVATE AND CONFIDENTIAL

 

DLJ Merchant Banking II,
Inc.

11 Madison Avenue

New York, NY 10010

 

Von Hoffmann
Corporation

1000 Camera Avenue

St. Louis, MO
63126

 

Ladies and Gentlemen:

 

Reference is hereby made
to that certain letter agreement dated March 26, 2002, as amended (the “Amendment”)
on October 31, 2003 (as amended, the “Agreement”), a copy of which is
attached hereto, between Credit Suisse First Boston Corporation (n/k/a Credit
Suisse First Boston LLC “CSFB”) and Von Hoffmann Corporation (the “Company”).  Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in the Agreement.

 

CSFB hereby assigns as of
the date hereof all of its rights and obligations under the Agreement to DLJ
Merchant Banking II, Inc. (“Merchant Banking”), and Merchant Banking
hereby assumes as of the date hereof all of the rights and obligations of CSFB
under the Agreement.  The Company hereby
consents to such assignment and assumption, and the Company shall pay to
Merchant Banking, instead of the amounts and the times set forth in paragraph
2(a) of the Agreement, the Annual Fee in the amount, and at the times, set
forth in the following paragraph.

 

Merchant Banking and the
Company hereby agree that after giving effect to the foregoing assignment (i)
the waiver of the Annual Fee referenced in the Amendment is hereby terminated;
(ii) the Agreement shall be valid and effective for a term of one (1) year from
the date hereof; (iii) the Annual Fee due and payable for 2004 (i.e. $500,000)
shall be paid by the Company within three (3) business days following the date
hereof; and (iv) paragraph 5 (Additional Services) of the Agreement is deleted
in its entirety.

 

Notwithstanding the
foregoing, CSFB and its affiliates shall have the rights and benefits provided
by the indemnity set forth on Annex A to the Agreement (in addition to, and not
to the exclusion of, Merchant Banking) for any advisory services rendered or
failed to be rendered by CSFB to the Company pursuant to the Agreement prior to
the date hereof.

 

Please confirm your
agreement with the foregoing by signing in the space indicated below and
returning an executed copy of this letter to CSFB.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CREDIT SUISSE FIRST
  BOSTON LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Edward Yorke

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Edward Yorke

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
					

 

 

Accepted and agreed to

this 27th day of
April, 2004

 

	
  DLJ MERCHANT BANKING
  II, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Michael Isikow

  	
   

  
	
   

  	
  Name:

  	
  Michael Isikow

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Acknowledged and agreed
  to

  
	
  this 27th day of April,
  2004

  
	
   

  	
   

  	
   

  
	
  VON HOFFMANN
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Gary Wetzel

  	
   

  
	
   

  	
  Name:

  	
  Gary Wetzel

  
	
   

  	
  Title:

  	
  Chief Financial OfficerExhibit
10.1

 

STOCK PURCHASE AGREEMENT

 

This STOCK PURCHASE AGREEMENT (the “Agreement”) is dated as of
March 23, 2004, by and among FMW Acquisition, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (hereinafter
referred to as “Purchaser”), Tempus International Corp., a corporation duly
organized and existing under the laws of the State of Florida (hereinafter
referred to as “Tempus” or the “Company”) and Jack Barouh, an individual
residing in the State of Florida (hereinafter referred to as “Seller”).

 

RECITALS

 

WHEREAS,  Seller
owns 100% of the issued and outstanding shares of common stock of the Company
(the “Shares”); and

 

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

 

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

 

ARTICLE
1

DEFINITIONS

 

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

 

“Accountants” shall mean the accounting firm
of Gerson, Preston, Robinson & Company PA.

 

“Agreed Balance Sheet” means the combined
balance sheets of the Company and MW Watch SA as at December 31, 2003 attached
hereto as Exhibit 1.

 

“Business Day” shall mean a day other than
Saturday or Sunday or a public holiday in Miami, Florida or Dallas, Texas.

 

“Cash-on-Hand” shall mean the
amount of the cash deposits as reflected in the bank accounts of the Company as
of the close of business on the Business Day immediately prior to Closing, less
the amount of any checks outstanding on such accounts.

 

“Closing” shall have the
meaning defined in Section 4.1 hereof.

 

“Closing Balance Sheet” means
the combined balance sheets of the Company and MW Watch SA as of the date of
Closing as determined in accordance with US GAAP, consistently applied.

 

“Closing Payment” shall have
the meaning defined in Section 3.1(a) hereof.

 

 

“Closing Stockholders’ Equity Amount”
shall have the meaning defined in Section 3.3(b)(ii) hereof.

 

“Collateral Transaction Documents” shall
mean, collectively: (i) the Asset Purchase 
Agreement between Pace International Ltd. and the Purchaser (or
subsidiary of Purchaser) in accordance, in all material respects, with the
terms and conditions attached hereto as Exhibit 6 (ii) the Stock Option Award
Agreement between Fossil, Inc. and Seller to be effective as of Closing.

 

“Disclosure Schedule” shall
mean the disclosure schedule prepared by Seller and attached hereto as Schedule
5.

 

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

 

“Escrow Account” shall mean
the escrow account established pursuant to the provisions of Section  3.3.

 

“Escrow Amount” shall mean the sum of
$1,000,000 to be deposited in the Escrow Account at Closing.

 

“Group Companies” shall mean, collectively,
Tempus and MW Swiss.

 

“HSR Act” shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.

 

“Indemnified Liabilities”
shall mean all losses, liabilities, damages, costs, charges and expenses
identified in Section 7.1 with respect to the Company or Seller and in Section
7.2 with respect to Purchaser.

 

“Independent Accountants”
means Ernst & Young LLP.

 

“Intellectual Property” shall include, (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 Marks 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
Marks;  (ii) all goodwill associated
therewith; and (iii) all patents of any kind, pending or issued.

 

“Intellectual Property Rights”
shall mean Seller’s and the Company’s right, title and interest in the
Intellectual Property.

 

2

 

“International Registrations”
shall mean the following International Trademark Registrations: MW COQUETTE, IR
785602; MW “Logo”, IR 779538; MW MICHELE and design, IR 702980; MW DECO, IR
779536; and MW URBAN, IR 779537.

 

“Marks” shall mean the
trademarks and names as listed on Schedule 1.

 

“MW Swiss” shall mean MW Watch
SA.

 

“Party”
shall mean each of Purchaser, the Company and Seller (collectively, the “Parties”).

 

“Patents” shall mean the
design patents listed on Schedule 1.1.

 

“Post-Closing Balance Sheet Adjustments”
shall mean the adjustments in the Purchase Price in accordance with the
provisions hereof.

 

“Purchase Price” shall mean
the purchase price for the Shares according to the provisions of Section 3.1

 

“Stockholders’ Equity” shall
mean the stockholders’ equity of the Company as of any date of determination.

 

“Survival Period” shall have
the meaning defined in Section 7.4 hereof.

 

“Tempus Financial Statements”
shall mean the financial statements of the Company for the years ended December
31, 2003 and December 31, 2002 attached hereto as Exhibit 2.

 

ARTICLE
2

PURCHASE
AND SALE

 

Section 2.1            Sale and Transfer of Shares.  In consideration of and in reliance upon the
representations, warranties and covenants contained herein and subject to the
terms and conditions of this Agreement, the Seller agrees to sell free and
clear of any Encumbrance, and Purchaser agrees to purchase, at the Closing, all
of the Shares.

 

ARTICLE
3

CONSIDERATION

 

Section 3.1             Purchase Price.  Subject to the Post-Closing Balance Sheet
Adjustment herein, the total purchase price (the “Purchase Price”) for the
Shares shall be an amount equal to the sum of:

 

(a)                                  $40,000,000 (the “Closing Payment”) plus

 

(b)                                 the Stockholders’ Equity as of the Closing
Date.

 

3

 

Section 3.2             Payment
of Purchase Price.  The Purchase
Price payable pursuant to Section 3.1 above shall be paid as follows:

 

(a)           Closing Payment:  The Closing Payment, less the Escrow Amount,
shall be paid to Seller at Closing in accordance with the provisions hereof.

 

(b)           Stockholders’
Equity as of the Closing Date:  At
Closing, Purchaser shall pay to Seller an amount equal to the Stockholders’
Equity of the Company as reflected on the Agreed Balance Sheet in the following
manner:

 

(i)                                     The
Cash-on-Hand shall be distributed to Seller, and

 

(ii)                                  The difference
between the Stockholders’ Equity as reflected on the Agreed Balance Sheet and
the Cash-on-Hand shall be paid to Seller in cash (the “Closing Stockholders’
Equity Amount”).

 

The Post Closing Balance Sheet Adjustment
Amount shall be paid to Seller or Purchaser as the case may be in accordance
with the provisions of Section 3.2(c) hereof.

 

(c)           Post-Closing
Balance Sheet Adjustment:  As soon
as practical following the approval of the Closing Balance Sheet in accordance
with the provisions of Section 3.2(d) hereof, the Post Closing Balance Sheet
Adjustment Amount shall be paid as follows:

 

(i)                                     In the event
that the Stockholders’ Equity of the Company as reflected on the Closing
Balance Sheet is greater than the Stockholders’ Equity of the Company as
reflected on the Agreed Balance Sheet, then Purchaser shall remit such
difference to Seller as an increase in the Purchase Price.

 

(ii)                                  In the event
that the Stockholders’ Equity of the Company as reflected on the Closing
Balance Sheet is less that the Stockholders’ Equity of the Company reflected on
the Agreed Balance Sheet, then the Seller shall remit such difference to
Purchaser as a decrease in the Purchase Price from the Escrow Account.

 

(d)           Closing Balance
Sheet Preparation:  Within
seventy-five (75) days following Closing, the Seller, at Seller’s cost, shall
cause the Accountants to prepare the Closing Balance Sheet reflecting the
assets and liabilities of the Company as of Closing and submit the Closing
Balance Sheet to Purchaser for its approval. The Closing Balance Sheet shall be
prepared in accordance with US GAAP, consistently applied.  Purchaser shall have a period of twenty (20)
Business Days after delivery of the Closing Balance Sheet by Seller to approve
the Closing Balance Sheet or to provide recommended adjustments in writing to
the Seller.  The Seller shall have a
period of ten (10) Business Days following receipt of such requests to approve
such requested adjustments or to provide written notice to Purchaser detailing
the reason for its disagreement with such requested adjustments. In the event
the Parties are unable to agree on the Closing Balance Sheet within five (5)
Business Days following receipt of such notice, then the matter shall be
submitted to the Independent Accountants for determination of the Closing

 

4

 

Balance Sheet.  The determination
of the Independent Accountants shall be final and binding on the Parties.  Each of the Parties shall pay one-half of
the costs and expenses of the Independent Accountants.

 

Section 3.3             Escrow Account.  The Parties shall deposit at Closing the Escrow
Amount into the Escrow Account, to be held by Purchaser or Fossil, Inc., which
account shall bear interest and shall be utilized for the purpose of: (i)
funding payments due and payable towards established Indemnified Liabilities as
may hereinafter arise pursuant to Section 7.1 and (ii) for payment of the
Post-Closing Balance Sheet Adjustment to Purchaser in accordance with the
provisions of Section 3.2(c)(ii) hereof. 
The Escrow Funds, including interest thereon, shall be retained in the
Escrow Account and released by the Purchaser (i) upon an undisputed Indemnitee
Notice pursuant to Section 7.3 (ii) upon a final decision by an arbitrator
pursuant to Section 10.5, (iii) upon the first anniversary of the Closing Date,
or (iv) a joint written consent of Purchaser and Seller, whereupon in each
case, any remaining funds in the Escrow Account, less the amount of any
unresolved indemnification claim made by an Indemnitee pursuant to Section
7.3., shall be released to Seller.  The
Escrow Account shall be under the exclusive control of Purchaser and the Escrow
Amount may be commingled with other moneys of Purchaser and there shall be no
requirement for segregation or separation of the funds in the Escrow Account
from general corporate funds.

 

ARTICLE
4

CLOSING

 

Section 4.1             Closing Time Date and Place.  The purchase and sale contemplated herein
shall be consummated at a closing (the “Closing”) to take place at the offices
of Seller on April 5, 2004 or at such other date (the “Closing Date”) and place
as the Parties may agree upon in writing.

 

Section
4.2             Seller’s Obligations at Closing.  At Closing, Seller shall
deliver to Purchaser or its nominee:

 

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

 

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

 

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

 

(d)           resignations in the agreed form, attached hereto as Schedule
4, from each
director and officer of the Company;

 

(e)           all consents and approvals of government agencies and/or
third parties set forth on Schedule 6;

 

5

 

(f)            a waiver from City National Bank of Florida (the “Bank”)
of its right to accelerate the balance due under that certain Promissory Note
between the Bank and the Company dated October 1, 1997;

 

(g)           a countersigned original of the Stock Option Award
Agreement and the Confidentiality Agreement between Seller and Fossil, Inc. in
the form attached hereto as Exhibit 4; and

 

(h)           a certification that (i) the Company’s and Seller’s
representations and warranties set forth in Article 6 are true and correct as
of the Closing Date as set forth in Section 5.1(a), and (ii) the Company and
Seller have complied with their respective covenants set forth in Article 6 as
set forth in Section 5.1(b) and (iii) the Company has complied with the
provisions of Section 5.1(h).

 

Section 4.3             Purchaser’s Obligations at
Closing.  At the Closing, Purchaser
shall deliver to Seller:

 

(a)           The Closing
Payment, less the Escrow Amount, in accordance with the provisions hereof;

 

(b)           The
Cash-On-Hand;

 

(c)           The Closing
Stockholders’ Equity Amount;

 

(d)           Evidence of the authority of each person executing a document referred
to herein on Purchaser’s and Fossil, Inc.’s behalf;

 

(e)           A copy of the minutes of a duly held meeting of
the directors of Purchaser (or a duly
constituted committee thereof) authorizing the execution by Purchaser of the document and,
where such execution is authorized by a committee of the board of directors of Purchaser, a copy of the
minutes of a duly held meeting of the directors constituting such committee or
the relevant extract thereof; or a copy of the power of attorney conferring the
authority;

 

(f)            An offer of
employment to Seller in the form and under the terms and conditions specified
on Exhibit
5 hereto;

 

(g)           A countersigned original of the Stock Option
Award Agreement and Confidentiality Agreement between Seller and Fossil, Inc.
in the form attached hereto as Exhibit 4; and

 

(h)           A
certification that (i) the Purchaser’s representations and warranties set forth
in Article 6 are true and correct as of the Closing Date and (ii) Purchaser has
complied with its covenants set forth in Article 6.

 

Section 4.4             Further Actions of the Parties.  Seller shall take all actions following
Closing as may be necessary to more fully perfect title in the Shares to
Purchaser.  Purchaser

 

6

 

shall, for a period of seven (7) years from the Closing Date, preserve
and keep any books and records of the Company which may be needed by Seller in
connection with the preparation of tax returns for, or the prosecution or
defense of tax audits relating to, the Company for any period ending on or
before the Closing Date. After the Closing, Purchaser shall permit Seller and
his professional advisors reasonable access to all books and records of the
Company, and shall provide such assistance to Seller, as may be necessary or
advisable in connection with the preparation of tax returns and amended tax
returns for, the securing of tax refunds of, or the prosecution or defense of
tax audits relating to, the Company or other third party claims or as may
otherwise be reasonably requested by Seller for a reasonable business purpose.

 

ARTICLE 5

CONDITIONS PRECEDENT

 

Section 5.1             Purchaser’s Conditions Precedent.  Except as may be waived by Purchaser, the
obligations of Purchaser are subject to the fulfillment at or prior to Closing
of the following conditions:

 

(a)           Representations and Warranties – The representations and warranties made by the
Company and Seller in this Agreement, as qualified by the Disclosure Schedule, or any certificates or documents delivered
pursuant to the provisions hereof shall be true and correct when made, and
shall be true and correct in all respects (to the extent qualified by
materiality) and in all material respects (to the extent not qualified by
materiality) on the Closing Date as though such representations and warranties
were made on and as of such date.

 

(b)           Covenants – The Company and Seller shall have
performed and complied in all material respects with all covenants to be
performed by it or him prior to Closing.

 

(c)           Material Change. 
No material adverse change in the financial condition or results of
operation of the Group Companies, taken as a whole, shall have occurred prior
to Closing.

 

(d)           Collateral Transaction Documents – The
Collateral Transaction Documents shall have been executed and delivered
by the Company and/or Seller and, if applicable, Pace International, Ltd.

 

(e)           HSR clearance – The applicable waiting period under
the HSR Act shall have expired or been terminated.

 

(f)            Intellectual Property - Seller shall have
performed and complied with the Pre-Closing Intellectual Property Obligations
attached hereto as Schedule 2.

 

(g)           Pace Assets – Seller shall have acquired all
designs, drawings, technical specifications, molds and other similar items
related to the business of the Company and owned, or in the possession of, Pace
International, Ltd.,  free and clear of
any Encumbrance from Pace International Ltd. prior to Closing.

 

7

 

Section 5.2             Seller’s Conditions Precedent.  Except as may be waived by Seller, the
obligations of Seller are subject to the fulfillment at or prior to Closing of
the following conditions:

 

(a)         Representations and Warranties –
Purchaser’s representations and warranties shall be true and correct in all
material respects as of the Closing.

 

(b)         Covenants – Purchaser shall have
performed and complied with all covenants to be performed prior to Closing.

 

(c)         HSR clearance – The applicable
waiting period under the HSR Act shall have expired or been terminated.

 

ARTICLE
6

REPRESENTATIONS,
WARRANTIES AND COVENANTS

 

Section 6.1             Representations
and Warranties of Seller.  Each of
the Seller and the Company represents and warrants to Purchaser that the
statements contained in this Section 6.1 are correct and complete as of the
date of this Agreement, as qualified by the 
Disclosure Schedule prepared by them and attached hereto as Schedule
5 (the “Disclosure Schedule”).

 

(a)           Incorporation
and existence.

 

(i)            Tempus International Corp. (“Tempus” or the “Company”) is
a company incorporated under the laws of the State of Florida with the right,
power and authority to conduct its business as conducted at the date of this
Agreement.

 

(ii)           MW Watch SA (“MW Swiss” and together with Tempus, the
“Group Companies”) is a company incorporated under Swiss law with the right,
power and authority to conduct its business as conducted at the date of this
Agreement.

 

(b)           Right,
Power, Authority and Action – Each of the Seller and the Company has the
right, power and authority, and has taken all action necessary, to execute,
deliver and exercise the rights, and perform the obligations, under this
Agreement and each document to be executed by him or it, at or before Closing,
in connection with this Agreement.

 

(c)           Binding
Agreements – The obligations of each of the Seller and the Company under this
Agreement and each document to be executed by him or it, at or before Closing,
in connection with this Agreement are, or when the relevant document is
executed will be, valid, binding, and enforceable against him or it in
accordance with their terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally or general equitable principles,
regardless of whether such enforceability is considered in a proceeding at law
or in equity.

 

(d)           Information
– To the best of the Seller’s knowledge, none of the information or documents
concerning the Group Companies supplied to Fossil by the Group Companies or the

 

8

 

Seller, taken as a whole, contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make each
statement contained therein not misleading.

 

(e)           The
Shares.

 

(i)            The authorized capital stock of Tempus consists of 7,500
shares of common stock, $1.00 par value, of which 2,333 shares are duly and
validly issued, outstanding, fully paid and non-assessable (the “Shares”).

 

(ii)           The Seller is the sole legal and beneficial owner of the
Shares, with full right, power and authority to transfer the Shares that they
may be freely transferred without infringing any third party’s rights.

 

(iii)          Tempus owns 100 shares of MW Swiss representing 100% of
outstanding capital stock of MW Swiss (the “MW Swiss Shares”).

 

(iv)          Neither Tempus nor MW Swiss is the legal or beneficial
owner of the capital stock of any entity other than those entities identified
in Section 6.1(e)(iii) above.

 

(v)           Except for this Agreement and other than as stipulated in
their respective organizational documents, there are no outstanding options,
warrants, rights, commitments, preemptive rights or agreements of any kind for
the issuance, sale or transfer of the Shares or the MW Swiss Shares, or
outstanding securities convertible into any additional shares of capital stock
of any class of the Group Companies.

 

(vi)          There are no voting trusts, voting agreements, proxies or
other agreements, instruments or undertakings with respect to the voting of the
Shares or the MW Swiss Shares  to which
the Company or Seller is a party.

 

(vii)         There is no Encumbrance, and there is no agreement,
arrangement or obligation to create or give an Encumbrance, in respect of any
of the Shares or the MW Swiss Shares  or
any unissued shares of the capital stock of the Company or MW Swiss.

 

(f)            Financial
Statements.

 

(i)            Seller has
previously furnished to Purchaser copies of the financial statements of the
Company for the years ended December 31, 2003 and December 31, 2002
(collectively, the “Tempus Financial Statements”) attached hereto as Exhibit 2.  The Tempus Financial Statements have been
prepared from the Company’s books and records in accordance with GAAP (except
as noted therein) and the Company’s accounting practices applied on a basis
consistent with prior periods, and present fairly in all material respects the
assets, liabilities and the financial condition of the Company as at each
respective date.

 

(ii)           Seller has
previously furnished to Purchaser copies of the financial statements of MW
Swiss for the period ended December 31, 2003, attached hereto as

 

9

 

Exhibit 3,
(collectively, the “MW Swiss Financial Statements” and together with the Tempus
Financial Statements, the “Financial Statements”).  The MW Swiss Financial Statements have been prepared from MW
Swiss’ books and records in accordance with generally accepted accounting
principles in the jurisdiction of its incorporation (except as noted therein)
and present fairly in all material respects the assets, liabilities and the
financial condition of MW Swiss as at such date.

 

(iii)          None of the
accounts receivable reflected on the December 31, 2003 balance sheets contained
in the Financial Statements (the “Most Recent Balance Sheets”) is subject to
counterclaims or set offs other than in the ordinary course of business, and,
to the Seller’s knowledge, all such accounts receivable are good and
collectible at the aggregate amounts reflected on the Most Recent Balance
Sheets, subject to the allowances set forth therein and set offs arising in the
ordinary course of business.

 

(iv)          The inventory, in
the aggregate amount reflected on Section 6.1(f)(iv) of the Disclosure
Schedule as “Sellable Inventory”, is valued at the lower of cost or fair market
value, is fit and suitable for sale and is in saleable condition in the
ordinary course of business at usual and customary margins.

 

(g)           Changes Since The
Last Accounting Date.

 

(i)            Since December 31, 2003, the Group Companies’ businesses
have been operated in the ordinary course of business, consistent with past
practice and  there has been no material
adverse change in the financial condition or results of operations of the Group
Companies, taken as a whole.

 

(ii)           Since December 31, 2003, none of the Group Companies has:

 

(a)           acquired or disposed of, or agreed to acquire or dispose
of, any asset which is material to the Group Companies’ businesses, taken as a
whole, other than in the ordinary course of its business;

 

(b)           assumed or incurred, or agreed to assume or incur, any
liability, obligation or expense (actual or contingent) which is material to
the Group Companies’ businesses, taken as a whole, other than in the ordinary
course of its business;

 

(c)           declared,
paid or made a dividend or distribution except as  contemplated hereby;

 

(d)           changed
their respective fiscal years or changed in any material respect their
respective accounting methods or practices;

 

(e)           created,
issued, acquired, repaid or redeemed any of their respective capital stock or
made an agreement or arrangement or undertaken an obligation to do any of those
things;

 

10

 

(f)            hired,
or terminated the employment of, or altered the terms of employment of, any of
their respective employees who is entitled to remuneration at an annual rate,
or has been entitled to remuneration at an average annual rate over the last
three fiscal years, of more than $100,000 nor have they paid a bonus to any
such person(s) to which they are not entitled under the terms of their employment;
or

 

(g)           issued
any note, bond or other debt security or created, incurred, assumed or
guaranteed any indebtedness for borrowed money or capitalized lease obligation
involving more than $25,000 in the aggregate (including, without limitation,
any such indebtedness to the Seller).

 

(iii)          Since December 31, 2003, the Group Companies’ businesses,
taken as a whole, have not been materially and adversely affected by the
termination of, or a change in the terms of, an agreement or by the loss of a
customer or supplier;

 

(h)           Taxes.
Each of the Group Companies has filed on a timely basis all material federal,
state, local, foreign and other tax reports or returns required to be filed by
it and has either discharged or adequately provided or reserved for the discharge
of all taxes owed by it.  Since January
1, 2002, neither the Group Companies nor the Seller have been notified of any
issues by any taxing authority in connection with any tax returns or other tax
filings of any of the Group Companies, and no such matters are currently
pending.  There is no investigation or
other proceeding pending or, to the Seller’s knowledge, threatened in writing
by any taxing authority that relates to a potential tax liability involving any
of the Group Companies.  There are no
agreements, waivers or other arrangements providing for an extension of time
with respect to the filing of any tax return by, or payment of any tax against
any of the Group Companies.

 

(i)            Title
to Assets.  Each asset included in
the Financial Statements or acquired by the Group Companies since December 31,
2003 (other than inventory or other assets disposed of in the ordinary course
of business) and which is owned by any of the Group Companies is:

 

(i)            legally and beneficially owned solely by such
company free from any Encumbrance, except as otherwise set forth on the
Financial Statements;

 

(ii)           where capable of possession, in the possession or
under the control of such company; and

 

(iii)          except as would not reasonably be expected to have a
material adverse effect on the businesses of the Group Companies, taken as a
whole, is in good repair and good operating condition, ordinary wear and tear
excepted, and is suitable for use in the ordinary course of business.

 

(j)            Intellectual
Property

 

11

 

(i)            Section
6.1(j)(i) of the Disclosure Schedule lists all of the
Intellectual Property that is material to the conduct of the businesses of the
Group Companies as currently conducted, taken as a whole, and is legally and
beneficially owned by Tempus and/or MW Swiss or which the Group Companies are
licensed to use (the “Intellectual Property Rights”).  The Intellectual Property Rights are free from any license or
encumbrance and no officer or stockholder of the Group Companies (other than
Tempus) has any interest in any Intellectual Property Rights used in connection
with the businesses of the Group Companies.

 

(ii)           The Group Companies
have received notice of the pending claims against and/or oppositions to the
Intellectual Property Rights set forth on Section 6.1(j)(ii) of the Disclosure
Schedule.  Except as set forth on Section
6.1(j)(ii) of the Disclosure Schedule, to the Seller’s
knowledge, the Intellectual Property Rights do not infringe the Intellectual
Property rights of any third party.

 

(iii)          All renewal and maintenance fees and
taxes due in respect of jurisdictions in which the Group Companies operate or
will operate and which are or will be 
payable prior to Closing in respect of each of the Intellectual Property
Rights have been paid in full, except as would not reasonably be expected to
have a material adverse effect on the businesses of the Group Companies, taken
as a whole.

 

(iv)          Except as set forth
on Section
6.1(j)(iv) of the Disclosure Schedule, to the Seller’s knowledge,
there is no infringement or unauthorized use of any of the Intellectual
Property Rights by any third party.

 

(k)           Insurance

 

(i)            Policies - Each
insurance policy to which any of the Group Companies is a party, a named
insured or otherwise a beneficiary of coverage is valid and in full force and
effect.

 

(ii)           Premiums - All premiums
which are due under the insurance policies referred to in Section 6.1(k)(i)
have been paid.

 

(iii)          Claims - Neither the
Seller nor any of the Group Companies has received notice from any of the Group
Companies’ insurance carriers disclaiming or reserving rights with respect to
any insurance policy or claim thereunder.

 

(l)            Real Property

 

(i)            Extent of
property -  Section
6.1(l)(i) 5 of the Disclosure Schedule contains a true and
correct list of (i) each parcel of real property owned by the Group Companies
(or any of them), and (ii) each parcel of real property leased by the Group
Companies (or any of them).  The Group
Companies have good and marketable fee simple title to and are in possession of
each parcel of real property referred to in clause (i) above.  Seller has furnished or prior to Closing
will furnish to Purchaser, true and

 

12

 

complete copies of all deeds, mortgages,
certificates of occupancy, title insurance policies, title reports and similar
documents with respect to the real property referred to in clause (i)
above.   The property identified in
Section 10.1 of the Disclosure Schedule comprises all of the land and premises
occupied or used by, or in the possession of, the Group Companies.

 

(ii)           Lease - The copy of
the lease(s) furnished to or to be furnished prior to Closing to Purchaser
is/are a true and correct copy(ies) of the lease(s). The Group Companies and,
to the best of the Sellers’ knowledge, the landlord(s), is/are not in material
breach of the terms of the lease(s).

 

(iii)          Property
compliance with business activity - To the Seller’s knowledge, all of the
parcels of real property listed on Section 6.1(l)(i) of the Disclosure
Schedule (the “Properties”) occupied by the Group Companies have been operated and maintained in compliance
with all applicable laws, and all authorizations of governmental authorities
required in connection with the operation thereof have been received, except
where the failure to comply or the failure to obtain authorization would not
reasonably be expected to have a material adverse effect on the businesses of
the Group Companies, taken as a whole.

 

(iv)          Environmental
- To the Seller’s knowledge there are no underground storage tanks located on
the Properties in which any hazardous or toxic substance, material or waste
which is regulated by any relevant governmental authority, is or was
stored.  The Group Companies are in
compliance with any environmental regulations relating to the Group Companies
or the Properties, except where the failure to comply would not reasonably be
expected to have a material adverse effect on the businesses of the Group
Companies, taken as a whole.

 

(m)          Material
Contracts

 

(i)            Section
6.1(m) of the Disclosure Schedule contains (i) a true and
correct list of each written agreement, arrangement or obligation to which the
Group Companies are (or any of them is) a party and (ii) a description of the
material terms, conditions and provisions of each agreement, arrangement or
obligation to which the Group Companies are (or any of them is) a party which
is not evidenced by a written agreement (each a “Contract”) which are material
to the Group Companies’ businesses taken as a whole (each a “Material
Contract”).  The Seller has furnished
or  prior to Closing will furnish to
purchaser copies of each Material Contract and copies of each Contract which
has a significant effect on the day-to-day operation of the Group Companies’
businesses.

 

(ii)           Neither the
Group Companies (nor any of them) nor, to the Seller’s knowledge, any party
with whom the Group Companies have (or any of them has) entered into a Material
Contract, is in material breach of the Material Contract.

 

(n)           Suppliers
and Customers.  Since December 31,
2003, no substantial supplier or customer of the Group Companies (being one
which supplies or purchases, as appropriate,

 

13

 

greater than 10% of the Group Companies’ combined annual purchases or
sales, as appropriate), who is at the date of this Agreement still a supplier
or customer of the Group Companies, has:

 

(i)            stopped, or
to the Seller’s knowledge, indicated an intention to stop (as a direct result
of the execution or performance of this Agreement or otherwise), trading with
the Group Companies;

 

(ii)           reduced, or
to the Seller’s knowledge, indicated an intention to reduce (as a direct result
of the execution or performance of this Agreement or otherwise), substantially
its trading with the Group Companies; or

 

(iii)          changed, or
to the Seller’s knowledge, or indicated an intention to change (as a direct
result of the execution or performance of this Agreement or otherwise),
substantially the terms on which it is prepared to trade with the Group
Companies.

 

(o)           Effect of Sale.  Neither the execution nor the performance of
this Agreement or any document to be executed at or before Closing in
connection with this Agreement will:

 

(i)            conflict
with;

 

(ii)           result in a
breach of; or

 

(iii)          give rise to
an event of default under,

 

any agreement or arrangement to which the Group Companies are (or any
of them is) a party or any legal or administrative requirement by which the
Group Companies are (or any of them is) bound, other than any such conflicts,
breaches or defaults which would not reasonably be expected to materially
adversely affect the validity or enforceability of this Agreement or such other
document or to have a material adverse effect on the businesses of the Group
Companies, taken as a whole.

 

(p)           Employees

 

(i)            General
-  Section 6.1(p) of the Disclosure
Schedule sets forth:

 

(a)                      the total number of the
Group Companies’ employees, including those who are on maternity leave or
absent because of disability or other long-term leave of absence and who have
or may have a right to return to work with the Group Companies;

 

(b)                     the name, date of start of
employment, salary and age of each such employee; and

 

(c)                      all “employee benefit plans”
as defined in Section 3(3) of ERISA, all specified fringe benefit plans as
defined in Section 6039D of the Internal

 

14

 

Revenue Code, and all other bonus, incentive,
deferred compensation, profit sharing and stock plans of the Group Companies.

 

 (ii)              Records
– Since January 1, 2002, the Group Companies have maintained materially
accurate records regarding the employment of each of its employees and
termination of employment.

 

 (iii)             Labor
and Employment - None  of the
employees of any of the Group Companies is party to a collective bargaining
agreement.

 

(q)           Guarantees. 
None of the Group Companies has granted any kind of surety, guarantee or
comfort letter to secure the debt of third parties, employees, shareholders or
directors.

 

(r)            Litigation and Compliance with Law.

 

(i)            Except for the collection of debts in the
ordinary course of business, the Group Companies are not involved in any civil,
criminal, arbitration, administrative or other proceeding. No civil, criminal,
arbitration, administrative or other proceeding is pending or, to the Seller’s
knowledge, threatened against the Group Companies.  There are no facts, circumstance or events that the Seller
believes are likely to give rise to material litigation.

 

(ii)           To the Seller’s
knowledge, there is no outstanding judgment, order, decree, arbitral award or
decision of a court, tribunal, arbitrator or governmental agency against the
Group Companies which would reasonably be expected to result in the issuance of
an order restraining, enjoining or otherwise prohibiting or making illegal the
consummation of the transactions contemplated by this Agreement or to have a
material adverse effect of the businesses as of the Group Companies, taken as a
whole;

 

(iii)          To the
Seller’s knowledge, the Group Companies have conducted their respective
business and dealt with their respective assets in compliance with all
applicable legal and administrative requirements, except where the failure to
comply would not reasonably be expected to have a material adverse effect on
the businesses of the Group Companies, taken as a whole; and

 

(iv)          There is not
pending and has not been any government or other investigation, inquiry or
disciplinary proceeding involving the Group Companies and none is, to the Seller’s
knowledge, threatened.

 

(s)           Powers of Attorneys.  The Group Companies have not given a power of attorney or other
authority by which a person may enter into an agreement, arrangement or
obligation on behalf of the Group Companies (or any of them) (other than an
authority for a director, officer, 
sales representative or employee to enter into an agreement in the
ordinary course of that person’s duties).

 

15

 

(t)            Brokerage or Commissions - Except for Marketing
Management Group, no person or firm is entitled to receive a finder’s fee,
brokerage or commission from the Group Companies in connection with this
Agreement.

 

(u)           Insider Agreements - Except for employment
agreements, there is not, and during the two years ending on the date of this
Agreement there has not been, any agreement or arrangement (legally enforceable
or not) to which the Group Companies are or were (or any of them is or was) a
party and in which a shareholder, director, officer or employee of the Group
Companies (or any of them) is or was interested in any way.

 

Section 6.2             Covenants
of Seller.  Each of Seller and the
Company covenants to Purchaser as follows:

 

(a)           Business Operation:  Prior to Closing, the Company will, and Seller shall cause the
Company to, operate its business only in the ordinary course and will use its
best efforts to preserve the business intact, to retain its present customers
and suppliers so that they will be available to Purchaser after Closing and to
cause the consummation of the transactions contemplated by this Agreement.

 

(b)           Access: 
Prior to Closing, the Company shall permit Purchaser and its
representatives access to its  property,
business, customers, suppliers and employees and furnish all documents regarding
the affairs of the Company as Purchaser may reasonably request.

 

(c)           Material Change: 
Prior to Closing, the Company shall promptly notify Purchaser of any
material adverse change in the results of operation of the Group Companies,
taken as a whole.

 

(d)           Third Party Approvals:  Prior to Closing, the Company shall obtain the approvals,
assignments, releases, waivers and consents of the third parties and
governmental authorities listed on Schedule 7.

 

(e)           Mortgages; Liens: Prior to Closing, the Company shall
not enter into or assume any mortgage, pledge, conditional sale or other title
retention agreement or permit any lien or claim against the assets of the Group
Companies except transactions in the ordinary course of business.

 

(f)            Changes in Inventory: Prior to Closing, the
Company will not alter the physical contents or character of any of its
inventory other than as a result of transactions in the ordinary course of
business.

 

(g)           Intellectual Property Undertakings:  The Company and Seller shall use its and his
commercially reasonable efforts to comply with the Intellectual Property
Undertakings prior to Closing outlined on Schedule 3.

 

Section 6.3             Representations and Warranties
of Purchaser. Purchaser hereby represents and warrants to Seller that, as
of the date of this Agreement and as of the Closing Date:

 

16

 

(a)           It is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.

 

(b)           Execution, delivery
and performance by it of this Agreement or any document to be executed at or
before Closing in connection with this Agreement will not conflict with or
violate (i) any provisions of its charter, bylaws or other similar documents;
(ii) any agreement or arrangement to which it is a party; or (iii) any law,
rule, regulation or order binding on it.

 

(c)           Its obligations
under this Agreement, and each document executed by it in connection with this
Agreement are, or when the relevant document is executed will be, valid,
binding on, and enforceable against the it in accordance with their terms
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally or general equitable principles, regardless of
whether such enforceability is considered in a proceeding at law or in equity.

 

Section 6.4  Covenants of
Purchaser.

 

(a)           Simultaneously
with the execution hereof, Purchaser will deliver to Seller and the Company the
Guaranty of Payment and Performance made by Fossil, Inc. in favor of the
Company and Seller in the form attached hereto as Exhibit 7.

 

(b)           Prior
to Closing, Purchaser shall obtain the 
approvals, assignments, releases, waivers and consents of all third
parties and governmental authorities listed on Schedule 7.

 

ARTICLE
7

INDEMNIFICATION

 

Section 7.1             Indemnification by Seller.
Subject to the limitations of Section 7.5, Seller shall indemnify and hold
Purchaser, its employees, officers, directors, affiliates, representatives,
agents, and other control persons harmless from, against and in respect of the
following (a “Purchaser’s Claim”):

 

(a)           Any and all loss, liability or damage
suffered or incurred by Purchaser (including interest, penalties and attorney
fees) by reason of any untrue written representation, breach of warranty or
non-fulfillment of any covenant or agreement by Seller contained herein or in
any exhibit, schedule, certification, document or instrument delivered to
Purchaser by the Company
or Seller hereunder (each of such untrue
written representation, breach of warranty or non-fulfillment of any covenant
or agreement a “Breach”); and

 

(b)           Any and all actions, suits, proceedings, claims, demands, assessments,
judgments, damages, costs and expenses, including but not limited to,
reasonable legal fees and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.

 

Section 7.2             Indemnification by Purchaser.  Subject to the limitations of Section 7.5,
Purchaser shall indemnify and hold the Company and Seller, and
their respective representatives,

 

17

 

agents, and other control persons harmless from,
against and in respect of the following (a “Seller’s Claim”):

 

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

 

(b)           Any product
liability or breach of warranty claims relating to products sold by Purchaser
or relating to any occurrences of any nature after Closing;

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)           An Indemnitee shall promptly give the Indemnitor written
notice (an “Indemnity Notice”) of any matter which an Indemnitee has determined
has given or could give rise to a right of an indemnification under this
Agreement, stating the amount of the loss, if known, and method of computation
thereof, all with reasonable particularity and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is being claimed or arises.  If the
Indemnitor notifies the Indemnitee that it does not dispute the claim described
in such Indemnity Notice or fails to notify the Indemnitee within 20 days of
receipt of such Indemnity Notice whether the Indemnitor disputes the claim
described in such Indemnity Notice,

 

18

 

then the loss in the amount specified in the
Indemnity Notice will be conclusively deemed a liability of the Indemnitor, and
the Indemnitor shall pay the amount of such loss to the Indemnitee on
demand.  If the Indemnitor has timely disputed
its liability with respect to such claim in writing (a “Dispute Notice”), the
Indemnitor and the Indemnitee will proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through negotiations within 45
days of the delivery of such Dispute Notice to the Indemnitee, such dispute
shall be resolved by arbitration in accordance with Section 10.5 hereof.

 

(c)           If an Indemnitee shall receive notice of any claim by a
third party which is or may be subject to indemnification (a “Third Party
Claim”) the Indemnitee shall give the Indemnitor prompt written notice of such
Third Party Claim and shall permit the Indemnitor, at its option, to
participate in the defense of such Third Party Claim by counsel of its own at
its own costs and expense. If, however, the Indemnitor acknowledges in writing
its obligation to indemnify the Indemnitee hereunder against all losses that
may result from such Third Party Claim (subject to the limitations set forth
herein), then the Indemnitor shall be entitled, at its option, to assume and
control the defense of such Third Party Claim at its expense and through
counsel of its choice. In the event the Indemnitor exercises its rights to
undertake the defense of any such Third Party Claim, the Indemnitee shall
co-operate with the Indemnitor in such defense and make available to the
Indemnitor, at the Indemnitor’s expense, all witnesses, pertinent records,
materials and information in its possession or under its control relating
thereto as is reasonably required by the Indemnitor. Similarly, in the event
the Indemnitor is directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnitor shall cooperate with the Indemnitee in
such defense and make available in it all such witnesses, records, materials
and information in its possession  or under its control relating thereto as
is reasonably required by the Indemnitee. 
No such Third Party Claim may be settled by the Indemnitor without the
written consent of the Indemnitee, unless the settlement involves only the
payment of money by the Indemnitor. No Third Party Claim shall be settled by
the Indemnitee without the written consent of the Indemnitor.

 

Section 7.4             Survival of Representations and Warranties: 
Notwithstanding any investigation by any Party, the representations,
warranties, covenants and other agreements contained herein shall survive the
Closing until the first annual anniversary thereof, provided, however that the
representations, warranties, covenants and other agreements contained in (i)
Sections 6.1(a), (b) and (e) shall survive the Closing indefinitely, and (ii)
Section 6.1(h) shall survive the Closing until the expiration of the applicable
statute of limitations (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.

 

Section 7.5  Indemnification Limitation.  To the extent that a Party seeks
indemnification for damages hereunder following the Closing, the Indemnitee’s
remedy will at all times be limited to the amount of $20 million (the
“Indemnification Cap Amount”). The indemnification provided for herein will not
apply unless and until the aggregate amount of the damages for which the
Indemnitee seeks indemnifications exceeds $400,000 in the aggregate, in which
event the indemnification provided for will include all damages up to the
Indemnification Cap Amount.  The Parties
seeking indemnification pursuant hereto shall only be entitled to be

 

19

 

reimbursed for the actual indemnified expenditures or damages incurred
by them for the above described losses.

 

Section 7.6  Sole Remedy.  The Parties’ respective rights and remedies
under Section 7.1 and Section 7.2 hereof shall be such Parties’ sole and
exclusive rights and remedies on account of any claims arising out of or in
connection with this Agreement.

 

Section 7.7  Reduction for Tax Benefit.  To the extent that Purchaser shall receive
any tax benefit as a result of any Purchaser’s Claim arising under Section 7.1,
the amount (if any) payable Seller on account of such Purchaser’s Claim shall
be reduced by the amount of the tax benefit actually received by Purchaser
(assuming the application of the average effective State and Federal tax rates
applicable to Purchaser in the year in which such tax benefit is
received).  To the extent that the
Company or Seller, as the case may be, shall receive any tax benefit as a
result of any Seller’s Claim arising under Section 7.2, the amount (if any)
payable by Purchaser on account of such Seller’s Claim shall be reduced by the
amount of the tax benefit actually received by the Company or Seller, as the
case may be (assuming the application of the average effective State and
Federal tax rates applicable to the Company or Seller, as the case may be, in
the year in which such tax benefit is received).

 

Section 7.8  Reduction for Insurance Proceeds.  To the extent that Purchaser shall receive
payment under any insurance policies or from any other source on account of any
Purchaser’s Claim arising under Section 7.1, the amount (if any) payable by
Seller on account of such Purchaser’s Claim shall be reduced by the amount of
such payment or, if Purchaser shall have already collected on such Purchaser’s
Claim from Seller, then Purchaser shall repay to Seller the amount of such
payment.  To the extent that the Company
or Seller, as the case may be, shall receive payment under any insurance
policies or from any other source on account of any Seller’s Claim arising
under Section 7.2, the amount (if any) payable by Purchaser on account of
such Seller’s Claim shall be reduced by the amount of such payment or, if the
Company or Seller, as the case may be, shall have already collected on such
Seller’s Claim from Purchaser, then the Company or Seller, as the case may be,
shall repay to Purchaser the amount of such payment.  

 

ARTICLE
8

CONFIDENTIALITY

 

Section 8.1             Confidentiality.  The Parties agree that the terms of that
certain confidentiality agreement between Fossil, Inc. and Michele Watches
dated June 10, 2003 shall be incorporated herein by reference; provided,
however, that the terms and provisions shall apply to the Parties hereto and
shall survive the Closing.

 

ARTICLE
9

TERMINATION

 

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

 

(a)           by the mutual consent the Parties;

 

20

 

(b)           by Purchaser if any of the conditions
to the Closing as set forth in Section 5.1 is not fulfilled or waived by
Purchaser on or prior to the Closing Date; or

 

(c)           by Seller if any of the conditions to the Closing as set
forth in Section 5.2 is not fulfilled or waived by Seller on or prior to the
Closing Date; or

 

(d)           by either Party if the Closing has not occurred on or
prior to April 30, 2004.

 

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

 

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

 

ARTICLE
10

MISCELLANEOUS

 

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

 

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

 

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

 

	
   

  	
  For Seller or

  	
  Jack Barouh

  	
   

  
	
   

  	
  the Company:

  	
  President

  	
   

  
	
   

  	
   

  	
  Tempus International Corp.

  	
   

  
	
   

  	
   

  	
  20201 N. E. 16th
  Place

  	
   

  
	
   

  	
   

  	
  Miami, FL 33179

  	
   

  

 

21

 

	
   

  	
   

  	
  Phone: 305-650-9770

  	
   

  
	
   

  	
   

  	
  Fax:  305-650-9729

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with copy to:

  	
  Donn Beloff, Esq.

  	
   

  
	
   

  	
   

  	
  Akerman Senterfitt

  	
   

  
	
   

  	
   

  	
  350 East Las Olas Blvd.

  	
   

  
	
   

  	
   

  	
  Ft. Lauderdale, FL 33301

  	
   

  
	
   

  	
   

  	
  Phone: 954-468-2478

  	
   

  
	
   

  	
   

  	
  Fax: 954-463-2224

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  For Purchaser:

  	
  T.R. Tunnell

  	
   

  
	
   

  	
   

  	
  Executive Vice President &
  Chief Legal Officer

  	
   

  
	
   

  	
   

  	
  Fossil, Inc.

  	
   

  
	
   

  	
   

  	
  2280 North Greenville Ave.

  	
   

  
	
   

  	
   

  	
  Richardson, Texas 75082

  	
   

  
	
   

  	
   

  	
  Phone: 972-699-2139

  	
   

  
	
   

  	
   

  	
  Fax: 972-498-9639

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with copy to:

  	
  Ron Frappier, Esq.

  	
   

  
	
   

  	
   

  	
  Jenkens & Gilchrist

  	
   

  
	
   

  	
   

  	
  1445 Ross Avenue

  	
   

  
	
   

  	
   

  	
  Dallas, TX 75202

  	
   

  
	
   

  	
   

  	
  Phone: 214-855-4743

  	
   

  
	
   

  	
   

  	
  Fax: 214-855-4300

  	
   

  

 

Notices sent via certified mail or courier shall
be deemed to have been received as of the date indicated by the postal or
courier’s receipt as having been received by the intended recipient.  Notices sent via electronic mail or
facsimile shall be deemed to have been received one (1) Business Day after the
date on which they were transmitted against confirmation.

 

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

 

Section 10.5           Dispute Resolution.  The Parties will submit any and
all disputed issues hereunder 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

 

22

 

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
Miami, Florida.  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 10. 5, 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 findings
of fact and conclusions of law.

 

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

 

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

 

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

 

23

 

revisions therein that the other Party may
reasonable request.

 

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

 

 

	
  FMW
  ACQUISITION, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  
	
  TEMPUS
  INTERNATIONAL, CORP.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  
	
  JACK
  BAROUH, individually

  
	
   

  
	
   

  	
   

  
				

 

24

 

EXHIBIT 1

 

AGREED BALANCE SHEET AS OF DECEMBER 31, 2003

 

 

EXHIBIT 2

 

TEMPUS FINANCIAL STATEMENTS

 

 

EXHIBIT 3

 

MW SWISS FINANCIAL STATEMENTS

 

 

EXHIBIT 4

 

FORM OF

STOCK OPTION AWARD AGREEMENT AND

CONFIDENTIALITY AGREEMENT

 

 

EXHIBIT 5

 

OFFER LETTER TO JACK BAROUH

 

 

EXHIBIT 6

 

TERM SHEET RELATED TO

THE ASSET PURCHASE AGREEMENT BETWEEN

PACE INTERNATIONAL, LTD. AND THE COMPANY

 

 

EXHIBIT 7

 

GUARANTY OF PAYMENT AND PERFORMANCE
OF FOSSIL, INC.

 

 

SCHEDULE 1

 

TRADEMARK APPLICATIONS AND REGISTRATIONS

 

 

SCHEDULE 1.1

 

DESIGN PATENTS

 

 

SCHEDULE 2

 

PRE-CLOSING INTELLECTUAL PROPERTY OBLIGATIONS

 

 

SCHEDULE 3

 

PRE-CLOSING INTELLECTUAL PROPERTY UNDERTAKINGS

 

 

SCHEDULE 4

 

FORM OF RESIGNATION OF DIRECTORS

AND OFFICERS OF THE COMPANY

 

 

SCHEDULE 5

 

SELLER’S DISCLOSURE SCHEDULE

 

 

SCHEDULE 6

 

SELLER’S REQUIRED CONSENTS

 

 

SCHEDULE 7

 

PURCHASER’S REQUIRED CONSENTS

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