EXHIBIT 10.3
Asset Purchase Agreement
between
Junghans UK Limited
and
Fossil (UK) Ltd.
Page 2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), dated as of August ___, 1999
is made by and between Junghans UK Limited, a United Kingdom corporation
("Seller"), and Fossil (UK) Ltd., a United Kingdom corporation ("Purchaser").
WITNESSETH:
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, certain of
Seller's assets relating to its business (the "Business"), on the terms and
subject to the conditions and limitations 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:
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 (as defined below), Seller shall sell,
transfer, assign, convey and deliver to Purchaser, and Purchaser shall
purchase, accept and acquire from Seller, the following assets that relate
to the Business as they exist as of the Closing Date (as defined below),
identified in Schedule 1.1 hereto (the "Assets").
1.2 Assumption of Liabilities. The Purchaser assumes the liabilities which are
identified in Schedule 1.2.1.
In addition, the Purchaser assumes the contractual obligations as
identified in Schedule 1.2.2..
Except the obligations and liabilities as enumerated in Schedule 1.2.1. and
1.2.2. (the "Assumed Obligations"), 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 sold by Seller, (b) any implied
or express warranties relating to such products, or (c) any pension or
other benefit liability (except legal obligations -- if existing --)
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relating to Seller's employees which may be hired by Purchaser. In
addition, Purchaser shall not be obligated to assume or agree to pay,
perform or discharge any liabilities or obligations with respect to the
Assumed Obligations which arose, or the cause of which arose, prior to the
Closing Date.
1.3 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall be deemed to be effective as of September 1, 1999,
unless another such date is agreed upon in writing by the parties hereto
(the "Closing Date"). The Closing shall take place on the Closing Date at
the offices of Seller at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or at such other place as shall be mutually
agreed to by the parties.
1.4 Purchase Price. Subject to the adjustments contained in this section 1.4,
as shown in schedule 1.4 the total purchase price for the Assets (the
"Purchase Price") shall be (pound)1,000,000 (Sterling one million) based on
the balance sheet as of July 31, 1999. The Purchase Price shall be paid to
Seller at closing by wire transfer confirmed by a first class UK bank.
In addition to the payment of the Purchase Price to Seller, Purchaser also
agrees to assume the Assumed Obligations.
All assets and liabilities -- except fixed assets and warranties -
transferred hereunder shall be revalued to their actual value at the
Closing Date (August 31, 1999). The amount of net asset value ensuing from
such revaluation which is owed by either party to the other party hereto as
per August 31, 1999 shall be paid by the respective party within fifteen
(15) days after the Closing Date. The final balance of assets and
liabilities of Junghans UK as of the Closing Date may be audited by the
Purchaser or its respective nominees within fifteen (15) days after such
date for which the Purchaser shall bear the expense.
1.5 Seller Employees: Noncompetition. Effective as of the Closing Date,
Purchaser shall offer employment to the employees of Seller listed on
Schedule 1.5 (the "Employees"). If the Employees accept such offers,
Purchaser will employ those Employees on terms and conditions not less
favorable than those applicable to their employment by Seller prior to the
Closing Date. Seller shall not, for a period of at least 18 months
following Closing, employ or offer employment to Employees who have
accepted Purchaser's offers of employment under this Section 1.5 unless
such Employees have received the written consent of Purchaser prior to such
offer. Effective as of the Closing, Seller shall release each of the
Employees hired by
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Purchaser from all non-competition agreements relating to their
employment with Seller.
1.6 Leases. (a) Effective as of the Closing Date, Seller shall be obligated
to cause its sister company ▇▇▇▇▇ Controls Limited to terminate the
existing sub lease agreement with the Seller and assign to Purchaser
the lease agreement (the "Lease") for the real property and
improvements (the "Real Estate") which is attached as Schedule 1.6.
During the period of time beginning on the Closing Date and continuing
for one hundred and twenty (120) days thereafter (the "Transition
Period"), Purchaser shall provide to Seller and its sister company
▇▇▇▇▇ Controls Limited reasonable access to the Real Estate for the
purposes of (i) removing any properties owned by ▇▇▇▇▇ Controls Limited
from the premises; (ii) allowing Seller to transfer its continuing
operations, including all non-Business related records and corporate
documentation of Seller, to a new facility; and (iii) allowing the
employees of Seller to effect items (i) and (ii) above; provided,
however, that any activities conducted under this Section 1.6 (b) shall
not substantially hinder the operations of Purchaser.
1.7 Seller's Instruments of Transfer: Further Assurances. In order to
consummate the transactions contemplated by this Agreement, the
following documents shall be delivered by Seller to Purchaser at the
Closing:
(a) a ▇▇▇▇ of Sale covering the Assets;
(b) an assignment of the Lease for the Real Estate to Purchaser,
executed and delivered by Seller;
(c) written instruments evidencing all consents necessary for
Seller to consummate the transaction contemplated hereby,
including consents relating to the assignment of the Lease of
the Real Estate and the assignment of the Assumed Contracts;
(d) a certificate duly executed by the President of Seller that
certifies the due adoption by the Board of Directors of Seller
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 agreement and
documents.
(e) original copies of all Assumed Contracts and all amendments,
supplements or modifications thereto; together with original
written assignments thereof to Purchaser, where applicable;
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(f) all of Seller's business records to the extent such records
constitute a part of the Assets;
(g) possession of the Assets.
At the Closing, and at all times thereafter as may be necessary, Seller
shall execute and deliver to Purchaser such other instruments of
transfer as shall be reasonably necessary or appropriate to vest in
Purchaser good and indefeasible title to the Assets and to comply with
the purposes and intent of this Agreement.
1.8 Purchaser's Instruments of Transfer: Further Assurances. In order to
consummate the transactions contemplated by this Agreement, Purchaser
shall deliver to Seller at the Closing the Purchase Price, in cash or
by wire transfer confirmed by first class UK bank of immediately
available funds. 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.
1.9 Certain Contracts. Notwithstanding any other provision of this
Agreement, to the extent that the assignment by Seller of any Assumed
Contract to be assigned hereunder shall require the consent or approval
of another party thereto, the consummation of the transactions
contemplated by this Agreement shall not constitute an assignment or an
attempted assignment thereof if such assignment or attempted assignment
would constitute a breach thereof. Seller shall obtain the written
consent or approval to the assignment to the Purchaser of each such
Assumed Contract with respect to which such consent is required for
such assignment.
Article 2 Representations and Warranties of Purchaser
Purchaser represents and warrants that the following are true and correct as of
the date of this Agreement and will be true and correct through the Closing Date
as if made on that date:
2.1 Incorporation and Good Standing. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of
the United Kingdom, 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 delivery this Agreement and to consummate the
transactions contemplated hereby.
2.2 Authorization and Validity. The execution, delivery and performance
of this Agreement and the other agreements contemplated hereby by
Purchaser and the
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consummation of the transactions contemplated hereby and thereby, have
been duly authorized by Purchaser. This Agreement has been and each
other agreement contemplated hereby will be prior to Closing duly
executed and delivered by Purchaser and this Agreement constitutes and
each agreement contemplated hereby will constitute legal, valid and
binding obligations of Purchaser, enforceable against Purchaser in
accordance with their respective terms.
2.3 No Violation. Neither the execution and performance of this Agreement
or the other agreements contemplated hereby, nor the consummation of
the transactions contemplated hereby or thereby, will (a) conflict
with, or result in a breach of the terms, conditions and provisions of,
or constitute a default under, the Certificate of Incorporation or
Bylaws of Purchaser or any agreement or other instrument under which
Purchaser is bound, or (b) violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over
Purchaser or the properties or assets of Purchaser.
2.4 Consents and Regulatory Compliance. No authorization, consent,
approval, permit or license of, or filing with, any governmental or
public body or authority, any lender or lessor or any other person or
entity is required to authorize, or is required in connection with, the
execution, delivery and performance of this Agreement or the agreements
contemplated hereby on the part of Purchaser.
2.5 Finders' Fee. Purchaser has not incurred any obligation for any
finder's, broker's or agent's fee in connection with the transactions
contemplated hereby in a manner that will result in liability on the
part of Seller.
Article 3 Representations and Warranties of Seller
Seller represents and warrants that the following are true and correct as of the
date of this Agreement and will be true and correct through the Closing Date as
if made on that date:
3.1 Incorporation and Good Standing. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of
the United Kingdom, with all requisite power and authority to carry on
the business in which it is engaged, 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.
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3.2 Vote Required. The approval of this Agreement, and the transactions
contemplated hereby, by the holders of all of the 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 Assets and the other transactions contemplated
hereby.
3.3 Financial Information: Absence of Changes.
a) The balance sheets and the statements of income as of December
31, 1998 (audited) and as of July 31, 1999 (unaudited) have been
prepared as far as the assets and liabilities of the contemplated
transaction are concerned in all material respects in accordance
with Generally Accepted Accounting Principles consistently
applied by Seller throughout the periods indicated. All financial
information provided to Purchaser by Seller in connection with
the transactions contemplated by this Agreement, including the
financial statements of Seller is true, correct and complete and
fairly reflects the financial condition and results of operations
of Seller as of the dates and for the periods indicated in all
material respects.
b) No changes. Since July 31, 1999, there has not been any
(i) transaction by Seller except in the ordinary course of
business;
(ii) material adverse change in the financial condition,
liabilities, assets business or prospect of Seller;
(iii) changes in accounting methods or practices by Seller;
(iv) material, non-scheduled, increase in the salary or other
compensation payable or to become payable by Seller to any
of its employees, directors or officers.
3.4 Assets: Title: Leased Assets.
(a) Real Property. Seller owns no real property. The only real
property leased to Seller is the Real Estate, and the Lease is
a true and correct copy of the lease agreement for the Real
Estate.
(b) Accounts Receivable. Schedule 1.1 sets forth a complete and
accurate schedule of the accounts receivable of Seller as of
July 31 1999, as reflected in the balance sheet as of the
date, together with an accurate aging of these accounts.
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These accounts receivable, and all accounts receivable of the
Seller created after that date, arose from valid sales in
Seller's ordinary course of business.
(c) Assumed Contracts. Each Assumed Contract attached hereto as
Schedule 1.2.2 is a true and correct copy thereof.
(d) Title. Except as set forth on Schedule 3.4(d), Seller owns the
Assets (not including those Assets that are leased by Seller
as of the date of this Agreement), free and clear of all
liens, claims and encumbrances. Upon consummation of the
transactions contemplated hereby and receipt of the required
consents, Purchaser shall receive good, valid and marketable
title to the Assets, and will be entitled to use all of the
Assets that are currently leased to Seller, including the Real
Estate, as lessee, free and clear of all liens, claims and
encumbrances, other than statutory landlord liens on the
leased Real Estate.
(e) Software. Purchaser has a valid right and license to use all
software currently utilized in the conduct of Business, and
such software is adequate for the proper conduct of Business.
3.5 Commitments. Seller has not received notice of any plan or intention of
any of its customers or suppliers to exercise any right to cancel or
terminate any present arrangement or agreement with Seller as a result
of the transactions contemplated by this Agreement, and Seller does not
know of any fact that would justify the exercise of such right. Seller
does not currently contemplate, nor have reason to believe any other
person or entity currently contemplates, any amendment or change to any
arrangement or agreement. None of the customers or suppliers of Seller
has refused, or communicated that it will or may refuse to purchase or
supply goods or services, as the case may be, or has communicated that
it will or may substantially reduce the amounts of goods or services
that it is willing to purchase from, or sell to, Seller as a result of
the transactions contemplated by this Agreement.
3.6 Insurance. All the insurable properties of Seller are insured for their
respective benefit under valid and enforceable policies, issued by
insurers of recognized responsibility in amounts and against such risks
and losses as is customary in Seller's industry. True, complete and
correct copies of all such policies as they relate to the Assets have
been made available to Purchaser prior to the date hereof. Seller will
maintain such insurance until the Closing Date, after which ▇▇▇▇ ▇▇▇▇▇▇
shall provide written notice to Purchaser of the elimination of such
insurance.
3.7 No Violation. Neither the execution and performance of this Agreement
or the agreements contemplated hereby nor the consummation of the
transactions
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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.
3.8 Taxes. There is no material deficiency or delinquency for the payment
of any tax, assessment or governmental charge asserted against Seller
with respect to the Real Estate, nor are there any unpaid assessments
or taxes or governmental charges, or any deficiency or delinquency in
the payment of any of the taxes, assessments or governmental charges of
Seller that could be asserted by any taxing authority against the
purchaser.
3.9 Consents. Except with respect to the assignment of Seller's current
lease for the Real Estate and the assignment of the Assumed Contracts,
no authorization, consent, approval, permit or license of, or filing
with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is
required in connection with the execution, delivery and performance of
this Agreement or the agreements contemplated hereby on the part of
Seller.
3.10 Compliance with Laws: Regulatory Compliance. There are no existing
violations by Seller of any applicable law or regulation that could
materially adversely affect the Assets, the Real Estate or the
Business. Seller has complied in all material respects with all
applicable laws, regulations and licensing requirements, and has filed
with the proper authorities, all necessary statements and reports
relating to the Business. Seller possesses all necessary licenses,
franchises, permits and governmental authorizations to own the Assets
and conduct the Business as now conducted.
3.11 Finder's Fees. Seller has not incurred any obligation for any finder's,
broker's or agent's fee in connection with the transactions
contemplated hereby in a manner that will result in liability on the
part of Purchaser.
3.12 Litigation. Seller has not had any legal action or administrative
proceeding or investigation instituted or, to the best knowledge of
Seller, threatened against or affecting, or that could affect, any of
the Assets, the Real Estate or the Business. Seller is not subject to
any continuing court or administrative order, writ, injunction or
decree applicable to Seller or to the Assets, the Real Estate or the
Business.
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3.13 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.
3.14 Condition of Assets and Equipment. All of the assets that are tangible
property are in the condition as inspected and accepted by the
Purchaser during the due diligence review.
3.15 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 3.15.
3.16 Pricing. Seller has provided Purchaser with a complete and accurate
list of Seller's standard prices and any applicable discounts by
customer name, which is attached hereto as Schedule 3.16.
3.17 Product Warranties. There is no claim against or liability of Seller on
account of product warranties or with respect to the manufacture, sale
or rental of defective products, and, to the actual knowledge of
Seller, there is no basis for any such claim on account of defective
products heretofore manufactured, sold or rented.
3.18 Year 2000. To Seller's knowledge, all of Seller's proprietary software
included in the Assets is in full compliance with the Year 2000
transition requirements and will be unaffected by the millennium date
change.
3.19 Intellectual Property Rights.
(a) Intellectual Property Rights. Seller owns, or is licensed or
otherwise possesses legally sufficient rights to use, all
trademarks, trade names, copyrights, and any applications
therefor, know-how, trade secrets, computer software programs
or applications (in both source code and object code form) and
tangible or intangible proprietary information or material
that are used or proposed to be used in the Business (the
"Intellectual Property Rights") free and clear of all liens,
claims and encumbrances.
(b) Seller has disclosed the Intellectual Property Rights to the
extent necessary for Purchaser to practice and utilize such
rights in its Business. Schedule 3.19(b) is a true and
complete list of Seller's trade secrets, including customer
lists and
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computer systems and programs, together with all materials
documenting the trade secret to allow Purchaser the full and
proper use of the trade secret without reliance on the special
knowledge or memory of others.
(c) Purchaser's use of the Intellectual Property Rights will not
infringe upon the rights of any third party.
(d) To Seller's best knowledge, there has been no breach with
respect to any license or right relating to any of the
Intellectual Property Rights.
3.20 Employees. Schedule 3.20 sets forth the true and complete terms and
conditions of employment of the Employees, including, but not limited
to, their salaries, fringe benefits, bonuses and other benefits.
Article 4 Purchaser's Covenants
4.1 Consummation of Agreement. Purchaser agrees that on or prior to the
Closing, Purchaser agrees to use its best efforts to (i) cause the
Board of Directors of Purchaser to authorize all necessary corporate
action; and (ii) cause the consummation of the transactions
contemplated by this Agreement in accordance with its terms and
conditions.
4.2 Retention of Records. Purchaser shall retain all documents, books and
records of Seller which Purchaser receives from Seller for a period of
three (3) years following the Closing Date. Seller shall be provided an
opportunity to retain photostatic copies of those books, records,
corporate document. After the Closing, Seller and its representatives
shall have reasonable access to all such books, records and documents
during normal business hours.
4.3 Employees. On the Closing Date Purchaser shall assume the employment of
the Employees who are listed in Schedule 1.5 on the terms and
conditions stated in the Employment Contracts with Seller prior to the
Closing Date. Effective on the Closing Date, Purchaser shall assume all
payroll obligations with respect to the Employees for all pay periods
that (i) commenced prior to the Closing Date and (ii) will expire after
the Closing Date. The provisions of this Section 4.3 shall inure solely
to the benefit of Seller, and no third party (including, without
limitation, any Employee) shall be permitted to rely hereon as a third
party beneficiary or otherwise.
4.4 Information for Tax Returns. Purchaser shall cooperate with Seller
after the Closing Date by providing Seller, without any additional con-
sideration but at the expense of
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Seller, promptly upon request, such records and other information
regarding the Assets, the Real Estate and/or the Business as may
reasonably be requested from time to time by Seller in connection with
the preparation or audit of its tax returns, and audits, disputes,
refund claims or litigation relating thereto. In connection therewith,
Purchaser will afford Seller's tax advisors, and such other persons as
may be mutually agreed upon, access to books and records relating to
the Assets, the Real Estate and the Business; provided. however, that
Seller shall cause its tax advisors and such other persons to hold in
strict confidence all such information (except as required to be
disclosed in connection with such tax returns and audits, disputes,
refund claims and litigation relating thereto).
Article 5 Seller's Covenants
Seller agrees that on or prior to the Closing:
5.1 Delivery of Assets. Upon payment of purchase price at Closing by the
Purchaser according to Section 1.4 above, Seller shall deliver to
Purchaser a ▇▇▇▇ of Sale, or other appropriate documents, conveying
title to the Assets as set forth in Schedule 1.1, free and clear of all
liens, security interests, charges and encumbrances.
5.2 Business Operations. Seller shall operate the Business only in the
ordinary course, will not introduce any new method of management or
operation and Seller shall use its best efforts to preserve the
Business intact, to retain its present customers and suppliers so that
it will be available to Purchaser after the Closing and to cause
consummation of the transactions contemplated by this Agreement in
accordance with its terms and conditions. Seller shall not take any
action that might reasonably be expected to impair the Assets, the Real
Estate or the Businesses without the prior written consent of Purchaser
or take or fail to take any action that would cause or permit the
representations made in Article 3 hereof to be inaccurate at the time
of Closing or preclude Seller from making such representations and
warranties at the Closing.
5.3 Material Change. Prior to the Closing, Seller shall promptly inform
Purchaser in writing of any material adverse change in the condition of
the Assets, the Real Estate or the Business or any event that renders
the representations and warranties made in Article 3 to be inaccurate,
to the extent such change or event is known to Seller or should
reasonably be known to Seller in the ordinary course of its operation
of the Assets or the Business. Any such disclosure shall not be deemed
a waiver by Purchaser of any representation or warranty of Seller
contained in this Agreement.
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5.4 Approvals of Third Parties. As soon as practicable after the execution
of this Agreement, but in any event prior to the Closing Date, Seller
will secure the assignment of the lease for the Real Estate to the
Purchaser. For other assets Seller will use its best efforts to secure
all necessary approvals, assignments, releases and consents of all
third parties and governmental authorities required on the part of
Seller for the consummation of and contemplated by this Agreement.
5.5 Hiring Employees. Seller will cooperate with all reasonable requests
made by Purchaser for the purpose of allowing Purchaser to hire the
Employees.
5.6 Employee Compensation. Except with Purchaser's prior written consent,
no increase will be made in the compensation or rate of compensation
payable or to become payable to the Employees, and no bonus, profit
sharing, retirement, insurance, death, fringe benefit or other
extraordinary or indirect compensation shall accrue, be set aside or be
paid to, for or on behalf of any such Employees other than as required
by presently existing pension, profit sharing, bonus and similar
benefit plans as presently constituted, and no agreement or plan other
than those now in effect shall be adopted or committed for.
5.7 Contracts. Except with Purchaser's prior written consent, Seller shall
not waive any material right or cancel any of the Assumed Contracts,
debt or claim relating to the Assets, the Real Estate or the Business,
nor will Seller, except in the ordinary course of business, assume or
enter into any contract, lease, license, obligation, indebtedness,
commitment, purchase or sale relating to the Assets, the Real Estate or
the Business.
5.8 Liens. Except with Purchaser's prior written consent, Seller will not
enter into or assume any pledge, conditional sale or other title
retention agreement, permit any lien, encumbrance or claim of any kind
to attach to the Assets, the Real Estate or the Business, whether now
owned or hereafter acquired, except for transactions in the usual and
ordinary course of business.
5.9 Changes in Inventory. Seller will not alter the physical contents or
character of any of its inventory so as to affect the nature of the
Business other than normal adjustments in accordance with generally
accepted accounting principles and other than as a result of
transactions in the ordinary course of business.
5.10 No Disclosure or Negotiation with Others. Seller will prevent the
disclosure of any of the terms or conditions of this Agreement to any
other person, other than to its employees, legal counsel and
accountants, or as otherwise required by law or court order.
Additionally, Seller shall not, directly or indirectly, through
representatives or otherwise, solicit, entertain, or negotiate with
respect to, or in any manner encourage,
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discuss or consider any offer or proposal to sell the Business, in whole or
in part, to any person or entity other than Purchaser or its affiliates,
whether directly or indirectly, through purchase, merger, consolidation or
otherwise and neither Seller nor any representative of Seller shall provide
information relating to the Business to any other person or entity in
connection with a possible transaction involving the Business. The
foregoing restrictions shall continue only until the Closing. Seller agrees
to immediately notify Purchaser in the event of any known contact among
Seller or Seller's representative and any other person or entity regarding
any such offer or proposal or any related inquiry.
5.11 Information for Tax Returns. Seller shall cooperate with Purchaser after
the Closing Date by providing Purchaser, without any additional
consideration but at the expense of Purchaser, promptly upon request, such
records and other information regarding the Assets, the Real Estate and/or
the Business as may reasonably be requested from time to time by Purchaser
in connection with the preparation or audit of its tax returns, and audits,
disputes, refund claims or litigation relating thereto. In connection
therewith, Seller will afford Purchaser's tax advisors, and such other
persons as may be mutually agreed upon, access to books and records
relating to the Assets, the Real Estate and the Business; provided,
however, that Purchaser shall cause its tax advisors and such other persons
to hold in strict confidence all such information (except as required to be
disclosed in connection with such tax returns and audits, disputes, refund
claims and litigation relating thereto).
Article 6 Purchaser's Conditions Precedent
Except as may be waived in writing by Purchaser, the obligations of
Purchaser hereunder are subject to the fulfillment by Closing of each of the
following conditions:
6.1 Representations and Warranties. The material representations and warranties
of Sellers contained herein shall be true and correct by Closing, and
Purchaser shall not have discovered any material error, misstatement or
omission therein.
6.2 Covenants. Sellers shall have performed and complied with all material
covenants and conditions required by this Agreement to be performed and
complied with by it prior to the Closing.
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6.3 Officer's Certificate. Sellers shall have delivered to Purchaser a
certificate duly executed by Sellers' respective President certifying as to
the statements contained in Section 6.1 and Section 6.2 to this Agreement.
6.4 Proceedings. No action, proceeding or order by any court or governmental
body or agency or third party shall have been threatened in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of
the transactions contemplated by this Agreement or which would materially
affect the ability of the Purchaser to consummate the transactions
contemplated by this Agreement.
6.5 Shareholder Approval. Sellers' respective shareholders shall have approved
this Agreement and the transactions contemplated hereby.
6.6 No Material Adverse Change. No material, adverse change in the Assets, the
Real Estate or the Business shall have occurred after the date hereof and
prior to the Closing.
6.7 Instruments of Transfer. Sellers shall have delivered to Purchaser each of
those documents enumerated in Section 1.7 of this Agreement.
Article 7 Sellers' Conditions Precedent
Except as may be waived in writing by Sellers, the obligations of
Sellers hereunder are subject to the fulfillment at or prior to the Closing of
each of the following conditions:
7.1 Representations and Warranties. The representations and warranties of
Purchaser contained herein shall be true and correct as of the Closing,
subject to any changes contemplated by this Agreement, and Sellers shall
not have discovered any error, misstatement or omission therein.
7.2 Covenants. Purchaser shall have performed and complied in all material
respects with all covenants or conditions required by this Agreement to be
performed and complied with by it prior to the Closing.
7.3 Corporate Approval. The execution and delivery of this Agree- ment 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.
Page 16
7.4 Officer's Certificate. Purchaser shall have delivered to Sellers a
certificate duly executed by an officer of Purchaser certifying as to the
statements contained in Section 7.1 and Section 7.2 of this Agreement.
7.5 Proceedings. No action, proceeding or order by any court or governmental
body or agency or third party shall have been threatened in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of
the transactions con- templated by this Agreement or which would materially
affect the ability of Seller to consummate the transactions contem- plated
by this Agreement.
7.6 Instruments of Transfer. Purchaser shall have delivered to Sellers each of
those items enumerated in Section 1.8 of this Agreement.
Article 8 Indemnification
8.1 Seller's Indemnity. Subject to the terms and conditions of this Article 8,
Seller agrees to indemnify, defend and hold Purchaser and its 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 or breach of warranty 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, the Real Estate or the Business prior
to the Closing, whether any such claims are asserted prior to
or after the Closing;
(c) Any obligation or liability with respect to the Employees
arising out of or relating to occurrences of any nature prior
to the Closing, whether any such claims are asserted prior to
or after the Closing; or
(d) Any tax filing or return or payment made, or position taken,
by Seller which any governmental authority challenges and
which results in an assertion of Damages against Purchaser.
Page 17
8.2 Purchaser's Indemnity. Subject to the terms and conditions of this Article
8, Purchaser agrees to indemnify, defend and hold Seller and its officers,
directors, agents, attorneys and affiliates harmless from and against all
Damages asserted against or incurred by Seller by reason of or resulting
from any of the following:
(a) A breach by Purchaser of any representation, warranty or cove-
nant 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, the Real Estate or the Business after the Closing;
(c) Any obligation or liability with respect to the Employees arising
out of or relating to occurrences of any nature after the
Closing;
(d) Any tax filing or return or payment made, or position taken, by
Purchaser, after Closing, which any governmental authority
challenges and which results in an assertion of Damages against
Seller, or
(e) The failure of Purchaser to pay, perform and discharge any of the
Assumed Obligations.
8.3 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 8.1 and 8.2, respectively, hereof with
respect to claims resulting from the assertion of liability by third
parties shall be subject to the following terms and conditions:
(a) Within 20 days (or such earlier time as might be required to
avoid prejudicing the indemnifying party's position) after
receipt of notice of commencement of any action evidenced by
service of process or other legal pleading, or with reasonable
promptness after the assertion in writing of any claim by a third
party, the party to be indemnified shall give the indemnifying
party written notice thereof together with a copy of such claim,
process or other legal pleading, and the indemnifying party shall
have the right to undertake the defense thereof by
representatives of its own choosing and at its own expense;
provided. however, that the party to be indemnified may
participate in the defense with counsel of its own choice and at
its own expense.
(b) In the event that the indemnifying party, by the 30 day after
receipt of notice of any such claim (or, if earlier, by the 10th
day preceding the day on which an
Page 18
answer or other pleading must be served in order to prevent
judgment by default in favor of the person asserting such
claim), does not elect to defend against such claim, the party
to be indemnified will (upon further notice to the
indemnifying party) have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for
the account and risk of the indemnifying party and at the
indemnifying party's expense, subject to the right of the
indemnifying party to assume the defense of such claims at any
time prior to settlement, compromise or final determination
thereof.
(c) Anything in this Section 8.3 to the contrary notwithstanding,
the indemnifying party shall not settle any claim without the
consent of the party to be indemnified unless such settlement
involves only the payment of money and the claimant provides
to the party to be indemnified a release from all liability in
respect of such claim. If the settlement of the claim involves
more than the payment of money, the indemnifying party shall
not settle the claim without the prior consent of the party to
be indemnified.
(d) The party to be indemnified and the indemnifying party will
each cooperate with all reasonable requests of the other.
8.4 Indemnification Limitation. To the extent that a party seeks
indemnification for Damages under this Article 8 following the Closing, the
indemnified party's remedy will at all times be limited to the Purchase
Price. The indemnification provided for in this Article 8 will not apply
unless and until the aggregate amount of Damages for which the indemnified
party seeks indemnification exceeds (pound)50,000 in the aggregate, in
which event the indemnification provided for will include all Damages
exceeding the above mentioned amount of (pound)50,000 up to the Purchase
Price. The parties seeking indemnification pursuant to this Article 8 shall
only be entitled to be reimbursed for the actual indemnified expenditures
or Damages incurred by them for the above described losses.
Article 9 Termination
Either party may terminate this Agreement by written notice to the other party
if Closing has not occurred by October 1, 1999.
Article 10 Miscellaneous
10.1 Amendment. This Agreement may be amended, modified or supplemented only
by an instrument in writing executed by the party against which
enforcement of the amendment, modification or supplement is sought.
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10.2 Assignment and Denial of Third Party Rights. Except as otherwise
provided in this Section 10.2, neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof
nor any of the documents executed in connection herewith may be
assigned or delegated by any party without the written consent of the
other parties. Any attempted assignment or delegation of such rights in
violation of this Section 10.2 will be null and void and of no force
and effect. Nothing contained herein, express or implied, is intended
to confer upon any person or entity (including minority shareholders or
stockholders of the parties hereto) other than the parties indemnified
under Article 8 and parties hereto and their successors in interest and
permitted assignees any rights or remedies under or by reason of this
Agreement unless so stated herein to the contrary.
10.3 Notice. Any notice or communication must be in writing and given by
depositing the same in the mail, addressed to the party to be notified,
postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person. Such notice shall be
deemed received on the date on which it is hand-delivered or on the
third business day following the date on which it is so mailed. For
purposes of notice, the addresses of the parties shall be:
If to Seller: Junghans UK Ltd.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
MK139HA
Attn.: ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Facsimile: 0044 1908 220411
with a copy to: Junghans Uhren GmbH
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Attn.: ▇▇▇▇-▇▇▇▇▇▇▇ Bublath
Telephone: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: 0049 7422 18666
If to Purchaser: Fossil (UK) Ltd.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
Attn.: ▇▇▇▇▇ Scheurl
Telephone: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Facsimile: 001 972 6996971
Page 20
with a copy to: Fossil
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn. ▇.▇. ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Any party may change its address for notice by written notice given to
the other parties.
10.4 Confidentiality. The parties shall keep this Agreement and its terms
confidential, but any party may make such disclosures after the Closing as
it reasonably considers are required by law, but each party will notify
the other party in advance of any such disclosure. In the event that the
transactions contemplated by this Agreement are not consummated for any
reason, the parties agree not to disclose or use any confidential
information they may have concerning the affairs of the other parties,
except for information which is required by law to be disclosed.
Confidential information includes, but is not limited to: customer lists
and files, prices and costs, business and financial records, surveys,
reports, plans, proposals, financial information, information relating to
personnel contracts, stock ownership, liabilities and litigation. Should
the transactions contemplated hereby not be consummated, nothing contained
in this Section 10.4 shall be construed to prohibit the parties from
operating a business in competition with each other, provided that such
party does not use the confidential information of the other party to
operate such business. After the Closing Date, neither party hereto shall
use in any way or disclose any of such confidential information, directly
or indirectly, except as required by law or court order. After the
Closing, all files, records, documents, information, data and similar
items relating to the Business shall remain the exclusive property of
Purchaser. The provisions of this Section 10.4 shall supplement, and shall
not supersede, any existing confidentiality agreement between the parties,
including, but not limited to, that certain Non-Disclosure Agreement,
dated July 9, 1999 between Junghans UK Limited and Fossil, Inc.
10.5 Entire Agreement. Except as set forth in Section 10.4 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 10.5.
10.6 Costs, Expenses and LegaI Fees. Whether or not the transactions
contemplated hereby are consummated, each party shall bear its own costs
and expenses (including attorneys
Page 21
fees) of preparation, negotiation and consummation of this Agreement and
the transactions contemplated hereby.
10.7 Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during the
term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provisions or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of
this Agreement, a provision as similar in its terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid
and enforceable.
10.8 Specific Performance. The parties acknowledge that a refusal by either
party to consummate the transactions contemplated hereby, or a breach by
either party of the provisions of this Agreement, will cause irrevocable
harm to the other party, for which there may be no adequate remedy at law
and for which the ascertainment of damages would be difficult. Therefore,
such party shall be entitled, in addition to, and without having to prove
the inadequacy of, other remedies at law, to specific performance of this
Agreement, as well as injunctive relief (without being required to post
bond or other security).
10.9 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 twelve (12) 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.
10.10 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 United Kingdom.
Page 22
10.11 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.
10.12 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.
10.13 Taxes. Each party shall be responsible for all sales, use, transfer or
other taxes applicable to such party resulting from the transactions
contemplated hereby.
10.14 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.
10.15 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.
Arbitration will be held in London in accordance with the Rules of
Conciliation and Arbitration of the Intentional Chamber of Commerce by one
or more arbitrators in accordance with said Rules. The language of
arbitration shall be English. Any award shall be enforceable in any court
of competent jurisdiction having cognizance over the persons or property
of the parties. The arbitrator(s) shall decide and award and decide costs
of the proceedings.
Page 23
IN WITNESS WHEREOF, the undersigned parties have hereunto duly executed this
Agreement as of the date first written above.
PURCHASER: SELLER:
FOSSIL UK LTD. JUNGHANS UK LTD.
By: /s/ ▇▇▇▇▇ Scheurl By: /s/ Hans-J Bublath
----------------------------- --------------------------------
Page 24
Asset Purchase Schedules List
Junghans UK
1.1 Assets
a) Junghans UK Limited
b) ▇▇▇▇▇ Controls Limited
c) Prepayments
d) Inventory
e) Accounts Receivable
1.2 Assumption of Liabilities
1.2.1 Warranties, Trade Liabilities
1.2.2 Contracts
1.4 Purchase Price
1.5 Employees List
1.6 Lease Agreement (to be assigned ▇▇▇▇▇ UK)
3.4(d) Encumbered Assets
3.15 List of Sellers Customers and Suppliers
3.16 List of Sellers Standard Prices and Discounts by Customer
3.19(b) List of Seller's Trade Secrets including Customers List! Computer
Systems & Programs
3.20 Terms & Conditions of Employer/Employees