JOINT VENTURE AGREEMENT
BY AND BETWEEN
Sucesores De A. Cadarso
AND
FOSSIL EUROPE B.V.
dated as of JuLY 27, 2000
JOINT VENTURE AGREEMENT
This Joint Venture Agreement is entered into as of the ____ day of
July, 2000, by and between Fossil Europe B.V., a corporation duly organized and
existing under the Netherlands and having its principal place of business at Xx
Xxxxxxxxx 0, Xxxxxxxx X, 0000 XX Amsterdam, the Netherlands (hereinafter
referred to as "Fossil") and Sucesores De A. Cadarso, a corporation duly
organized and operating under the laws of Spain, and having its principal place
of business at Xxxxxxx Xxxxxxxx, 000 xxx, 0 Xxxxxx, 00000 Xxxxxxxxx, Xxxxx
(hereinafter referred to "Cadarso")
RECITALS
WHEREAS, Fossil is engaged in the business of manufacturing, marketing
and distributing fashion watches and accessories in the United States and
throughout the world; and
WHEREAS, Cadarso has knowledge of the market for watches in Spain; and
WHEREAS, Fossil has previously formed Fossil S.L., (the "Company")
which is engaged in the business of manufacturing, marketing, distributing,
importing and exporting watches, including, but not limited to, watches under
the FOSSIL Brand in Spain; and
WHEREAS, Cadarso desires to acquire ownership of certain stock
participation of the Company to be issued as a result of an increase in the
capital of the Company (the "Stock Participation"); and
WHEREAS, Cadarso and Fossil desire to enter into this Agreement in
order to define their respective rights and obligations hereunder.
NOW, THEREFORE, the Parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
respective meanings indicated below:
"Affiliate" means any person or entity that directly or indirectly
through one of more intermediaries controls, is controlled by or is under the
common control with such first person or entity.
"Agreement" means this Joint Venture Agreement, as it may be amended
from time to time in accordance with the terms hereof.
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"Ancillary Agreements" shall mean, collectively, this Agreement, the
Distribution Agreement, the Market Research Agreement and the Services
Agreement.
"Board" means the Board of Directors of Fossil S.L.
"Bylaws" means the bylaws of Fossil S.L., in the form attached hereto
as Exhibit A as amended from time to time.
"Closing" means the consummation of the transactions set forth in
Section 11.2 of this Agreement.
"Closing Date" shall mean September 1, 2000, or such other date as may
be agreed upon by the Parties.
"Distribution Agreement" means the Amended and Restated International
Marketing and Distribution Agreement, to be dated as of Closing, by and between
Fossil Partners and the Company substantially in the form attached as Exhibit D
hereto.
"Director" means any member of the Board.
"Earnings Multiple Amount" means, with respect to any date of
determination, an amount in United States dollars equal to the net income of the
Company, as determined in accordance with GAAP by the auditors of the Company,
over the four (4) immediately preceding completed fiscal quarters, multiplied by
five, multiplied by the applicable Shareholder Percentage.
"Fossil Partners" means Fossil Partners, L.P., a Texas limited partner-
ship.
"GAAP" means generally accepted accounting principles in Spain.
"Market Research Agreement" means the Market Research Agreement, to be
dated as of Closing, by and between Fossil Partners and Cadarso substantially in
the form attached as Exhibit C hereto.
"Operating Plan" means the plan for the operations of the Company to be
prepared by management and approved by the Board pursuant to Section 3.2 hereof.
"Party" means either of Fossil or Cadarso, and collectively, the
"Parties".
"Person" means any natural person, partnership, corporation, limited
liability company, association, trust, estate or any other legal entity.
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"Products" means the products distributed by the Company from time to
time, including, but not limited to, watches bearing the FOSSIL Brand.
"Service Agreement" means the Service Agreement, to be dated as of the
Closing, by and between Fossil Partners and Cadarso, substantially in the form
attached as Exhibit B hereto.
"Stockholding Percentage," with respect to either Stockholder, means
the percentage represented by dividing (a) the stock participations in the
Company issued to such Stockholder, by (b) the stock participations in the
Company issued to all of the Stockholders.
"Stockholder" means either of Fossil or Cadarso, and collectively, the
"Stockholders".
"Stock Participations" means the stock participation of the Company to
be issued and subscribed by Cadarso hereunder, which shall represent fifty
percent (50%) of the authorized capital of the Company following Closing.
ARTICLE 2
ISSUANCE OF STOCK PARTICIPATION
Section 2.1 Issuance of Stock Participations. At closing, Fossil shall cause the
Company to take such measures as may be necessary to increase the authorize
capital of the Company and to issue the Stock Participations to be subscribed by
Cadarso pursuant to the terms of this Agreement. The issuance, subscription and
payment of the Stock Participation to be issued by the Company shall take place
at Closing in accordance with the provisions of Article 4 hereof.
Section 2.2 Meeting of the Board. Following Closing, the Parties shall cause the
Directors to hold a meeting of the Board to elect the officers of the Company
and to take such other actions as may be necessary to carry out the intent of
this Agreement. The Parties agree to execute such documents, and take such other
actions, and to cause all Affiliates and the Company to execute such documents
and take such other actions, as may be necessary to carry out the intent of this
Agreement.
ARTICLE 3
BUSINESS OF THE COMPANY
Section 3.1 General Description of the Company. The business (the "Business") of
the Company will be the marketing, distribution, importing and exporting of
watches in Spain principally bearing the FOSSIL brand.
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Section 3.2 Operating Plan. In order to implement the Business, at least thirty
(30) days prior to the beginning of each fiscal year, the officers of the
Company shall present an Operating Plan to the Board for approval by the Board.
The Operating Plan shall set forth the plans according to which the Company
shall be operated for such fiscal year and shall include, at a minimum, the
following:
(i) operating budgets;
(ii) budgets for working capital requirements;
(iii) three-year summary budget projections;
(iv) projected stock keeping unit ("SKU") count levels by
product category and introduction dates for the
upcoming year; and
(v) the manner (including, third party financing,
additional capital contributions or stockholder
financing) by which to raise the working capital
requirements and detailed terms and conditions
thereof.
Notwithstanding the foregoing, within thirty (30) days after the Closing, the
officers of the Company shall present to the Board an Operating Plan for the
remainder of fiscal year 2000 for approval by the Board. Any Operating Plan
approved by the Board may be amended from time to time by the Board.
ARTICLE 4
CAPITALIZATION OF THE COMPANY AND FINANCING
Section 4.1 Authorized Capital. At Closing, the Company shall have authorized
capital consisting of two million pesetas represented by 2,000 stock
participations with par value of 1,000 Pts. each. All of the Company's stock
participations shall be the same class and otherwise alike in all respects and
the holders thereof shall be entitled to identical rights and privileges
including, without limitation of the foregoing, identical rights and privileges
with respect to dividends, voting power and distribution of assets in the event
of any voluntary or involuntary liquidation, dissolution or winding-up of the
Company.
Section 4.2 Capital Contribution at Closing. At Closing, the Company shall issue
1,000 Stock Participations, which shall be fully subscribed and paid in by
Cadarso by means of a capital contribution in cash in an amount equal to
Fossil's shareholder's equity ("Fossil's Equity") in the Company immediately
prior to Closing (the "Initial Capital Contribution"). The Parties agree that
Fossil's Equity in the Company as reflected on the balance sheet as of June 30,
2000 is US$720,824. The Initial Capital Contribution shall consist of 1,000,000
Pesetas corresponding to the nominal value of the Stock Participations and the
balance will be paid as a subscription premium.
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Section 4.3 Pre-Closing Equity Calculation. Immediately prior to Closing, the
Parties shall determine Fossil's Equity as of such date as reflected on the
balance sheet of the Company. The Parties currently estimate that Fossil's
Equity as of Closing will be approximately US$ 740,824. Such amount as finally
determined in accordance with this section shall constitute Cadarso's Initial
Capital Contribution.
Section 4.4 Additional Working Capital.
(a) Third Party Financing. Any additional working capital requirements
of the Company shall primarily be met, to the extent possible, by obtaining
third party financing (the "Third Party Loan"). In the event the Board
determines that all or part of the working capital requirements of the Company
shall be met through obtaining Third Party Loan, such Third Party Loan shall be
in such amounts and subject to such terms as the Board may determine. To the
extent one of the conditions of the extension of the Third Party Loan so
approved by the Board is the subordination of any Stockholder Loans to such
Third Party Loan, then the Stockholders agree to take such action as necessary
to subordinate such Stockholder Loan. To the extent that the Board determines
that it is necessary to provide a guaranty of the Stockholders to obtain such
Third Party Loan, then each of Cadarso and Fossil shall negotiate in good faith
to provide a guaranty in favor of the lender of such Third Party Loan so that
the Parties guaranty an amount equal to their respective Shareholder Percentage
as of the date of any such guaranty. If the lender of such Third Party Loan
requires a guaranty of the entire amount of the loan by each Party, then the
Parties each agree to provide such a guaranty. Notwithstanding the provisions of
the foregoing sentence, if either Party does not have net assets in excess of
the amount of the guaranteed amount, then a Third Party Loan may not be obtained
without the expressed consent of the other Party.
(b) Additional Capital Contribution. In the event the Board determines
that the working capital requirements of the Company should not be raised by
obtaining Third Party Loan pursuant to Section 4.4(a), then the working capital
requirements of the Company may be met through additional capital contributions
by the Stockholders. In the event the Board determines that all or part of the
working capital requirements of the Company shall be met through additional
capital contributions of the Stockholders, then the Stockholders shall provide
such additional capital contributions to the Company, provided, however, that
(i) such additional capital contribution is made in cash; (ii) each Stockholder
shall make such additional capital contribution in an amount equal to the total
amount of such additional capital contribution, multiplied by such Stockholder's
Stockholding Percentage; and (iii) such additional capital contribution shall
otherwise be made in accordance with the resolution of the Board.
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(c) Stockholder Loans. In the event the Board determines that the
working capital requirements of the Company should not be raised by obtaining
Third Party Loan pursuant to Section 4.4(a), then the working capital
requirements of the Company may be met by obtaining financing from the
Stockholders (the "Stockholder Loan"). In the event the Board determines that
all or part of the working capital requirements of the Company shall be met by
obtaining Stockholder Loan, then the Stockholders shall provide such Stockholder
Loan to the Company, provided, however, that (i) each Stockholder shall provide
such Stockholder Loan in an amount equal to the total amount of such Stockholder
Loan, multiplied by the Stockholding Percentage of each Stockholder as of such
date; and (ii) such Stockholder Loan shall otherwise be made in accordance with
the resolution of the Board. Unless otherwise determined by the Board, the
interest rate of such Stockholder Loan shall not exceed the interest rate
available to the Company through Third Party Loans with similar terms,
conditions and principal amounts as the Stockholder Loan in question, and shall
be payable only at such times as the principal amount of such Stockholder Loan
shall become payable in accordance with Section 5.1 hereof.
ARTICLE 5
DIVIDENDS AND REPAYMENTS OF STOCKHOLDER LOANS
Section 5.1 Stockholder Loan Repayment Policy. Except as otherwise determined by
the Board, the Company shall covenant to repay all of the outstanding principal
and interest on all Stockholder Loans pursuant to the terms of the loan
agreement before the Company is permitted under the terms of such loan agreement
to make distributions of any dividends to the Stockholders.
Section 5.2 Dividend Policy. Subject to Section 5.1, dividends may be
distributed to the Stockholders from time to time as determined by a majority of
the Board and the General Meeting of Stockholders.
ARTICLE 6
TRANSFER OF SHARES
Section 6.1 Transfer Restrictions.
(a) Transfer to Affiliates. With the prior written consent of the other
Stockholder, which consent shall not be unreasonably withheld, and without the
application of Section 6.1(b) hereof, either Stockholder may transfer all or any
portion of its shares in the Company to any Affiliate of such Stockholder.
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(b) Transfer to Non-Affiliates. Except as provided in Section 6.1(a),
Section 12.3 or Section 13.2, neither Stockholder shall sell, assign, transfer,
encumber, pledge or grant a security interest in any of its shares of the
Company (collectively, a "Transfer") without the prior written consent of the
other Stockholder, which consent may be withheld in such Stockholder's sole and
absolute discretion.
Section 6.2 Agreement to be Bound. As a condition to the valid transfer of any
shares to any party hereunder, the transferor shall be responsible for obtaining
from the transferee prior to such transfer, written agreement of the transferee
to comply with, be bound by and perform all of the terms and conditions of this
Agreement. Thereafter, the transferee shall be a party to this Agreement.
Section 6.3 Transfer in Violation of Transfer Restrictions. Any purported
Transfer of shares in the Company not expressly authorized by the terms of this
Agreement shall be void and of no force and effect.
ARTICLE 7
ACTIONS OF STOCKHOLDERS
Section 7.1 Meeting. The meetings and resolutions of the Stockholders shall be
conducted or obtained according to the Bylaws.
Section 7.2 Restricted Actions. The Stockholders agree that during the term of
this Agreement they will not, nor will they allow any of their employees,
representatives or Affiliates to:
(a) Commingle the Company's funds with the funds of any other Person or use
the Company's funds for other than Company purposes or as directed by the Board;
(b) Take any action or allow the Directors or the Company to take any
action that would result in any violation of this Agreement, the Bylaws or the
laws of the United States of America or Spain, including, but not limited to,
the U.S. Foreign Corrupt Practices Act; or
(c) Enter into any agreement (other than the applicable Ancillary
Agreements) or establish any relationship with the Company except as specified
herein, unless such agreement or relationship is on terms and conditions that
would be established between unrelated parties dealing at arm's length.
Section 7.3 Further Assurance. Fossil and Cadarso additionally shall execute
such further documents and cooperate in taking such further actions as may be
necessary to give effect to this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and to obtain any other approvals and consents
necessary therefor.
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ARTICLE 8
BOARD OF DIRECTORS
Section 8.1 Power. The Board shall carry out the resolutions passed at the
meetings of the Stockholders and of the Board, including, but not limited to,
the implementation of the Operating Plan. The Board shall decide by resolution
all other important matters relating to the policies and management of the
business of the Company, except those matters which are reserved by this
Agreement, the Bylaws or by law to the decision of the Stockholders.
Section 8.2 Election of Directors. The Directors shall be duly elected at
general meetings of the Stockholders in accordance with the Bylaws, and the
Board shall consist of four (4) Directors. Subject to the provisions of Section
14.13, two (2) of the Directors shall be nominated by Cadarso and two (2)
Director shall be nominated by Fossil. The Stockholders hereby agree to cast
their votes from time to time to elect or re-elect each of such nominees.
Section 8.3 Chairman. The Chairman of the Board shall represent the Company and
administer the affairs of the Company in accordance with the policies and
programs established by the Bylaws, the Stockholders and the Board from time to
time. Subject to the provisions of Section 14.13, the Stockholders agree that
Fossil may designate the director that shall serve as the Chairman of the Board
from time to time. Fossil shall designate Xxxxxxx Xxxxxx as the initial Chairman
of the Board. The Parties agree to take such action as may be necessary to carry
out the foregoing, including making necessary amendments to the Bylaws.
Section 8.4 Vacancy on Board. In case the position of a Director becomes vacant
for any reason, the Stockholders agree to elect as a replacement any such person
as may be nominated by the Stockholder who nominated the person whose office is
vacant. In the event that the Stockholder who nominated the person whose office
is vacant does not nominate a replacement within thirty (30) days after such
office becoming vacant, then the other Stockholder shall have the right to
nominate such replacement. The Stockholders agree to cast their votes to elect
such replacement nominee.
Section 8.5 Meetings. The meetings of the Board shall be held at such times
and with such notice as is specified in the Bylaws.
ARTICLE 9
BASIC CORPORATE AND OPERATING POLICIES
Section 9.1 Officers. The officers of the Company shall be elected by the Board
from time to time. The Managing Director of the Company following Closing shall
be Xxxxxx Xxxxx Cadarso Font who shall be responsible for the day-to-day
management of the Company. The initial Secretary of the Company following
Closing shall be Xx. Xxxxx Xxxxxxxxx-Xxxxxxxxx Xxxxxxx. The Stockholders hereby
agree to cause their nominated Directors to vote for the election of the
Managing Director and Secretary of the Company as provided for in this Section
9.1.
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Section 9.2 Operating Plan. The Stockholders hereby agree to cause their
nominated Directors and other representatives to effectuate the Operating Plan
adopted by the Board, to implement such other basic corporate and operating
policies established by the Stockholders or the Board during the continuance of
this Agreement, and to act in accordance with the Bylaws, this Agreement and the
Ancillary Agreements.
Section 9.3 Financial Statements. The financial statements of the Company shall
be prepared in accordance with GAAP, consistently applied. The Company will make
and keep books and records and accounts which, in reasonable detail, accurately
and fairly reflect the business transactions of the Company (including, but not
limited to, any asset disposition), and the Company shall devise and maintain a
system of internal financial controls sufficient to provide reasonable
assurances that the financial statements of the Company are maintained according
to GAAP and by applicable law. In addition, the Company shall have its
financials audited by an independent public accountant at the end of every year.
ARTICLE 10
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 10.1 Fossil's Representations, Warranties and Covenants. Fossil
represents, warrants and covenants to Cadarso as follows:
(a) Fossil is a corporation duly organized, validly existing and in
good standing under the laws of the Netherlands and has all requisite corporate
power and authority to enter into this Agreement, perform its obligations
hereunder and consummate the transactions contemplated hereby.
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action of Fossil. This Agreement has been duly
executed and delivered by a duly authorized officer of Fossil or other Person
pursuant to a validly issued power of attorney and constitutes the legal, valid
and binding obligation of Fossil. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not conflict
with or result in any violation of any provisions of the article of
incorporation or bylaws of Fossil or conflict with, or result in any violation
of or default under any provision of any mortgage, indenture, lease, instrument,
agreement, judgment, order, decree, statute, law, ordinance, rule, regulation,
or other governmental authorization or approval applicable to Fossil.
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(c) Fossil will cause the Directors nominated by Fossil to operate the
Company in strict compliance with this Agreement and all applicable laws.
(d) Fossil hereby agrees to indemnify and hold Cadarso harmless from
and against all losses, damages and costs resulting from any breach of any of
the provisions of this Agreement by Fossil.
(e) The stock participations being issued hereunder by the Company have
been duly and validly authorized, and, when issued and delivered to and paid for
by Cadarso pursuant to this Agreement, will be fully paid and nonassessable.
(f) The holders of outstanding stock participations of the Company are
not entitled to preemptive or other rights to subscribe for the shares; and,
except as set forth in this Agreement, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to convert any
obligations or exchange any securities for, shares or ownership interests in the
Company are outstanding.
Section 10.2 Cadarso's Representations, Warranties and Covenants. Cadarso
represents, warrants and covenants to Fossil as follows:
(a) Cadarso is a corporation duly organized, validly existing and in
good standing under the laws of Spain and has all requisite corporate power and
authority to enter into this Agreement, perform its obligations hereunder and
consummate the transactions contemplated hereby.
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated thereby have been duly authorized
by all necessary corporate action of Cadarso. This Agreement has been duly
executed and delivered by a duly authorized officer of Cadarso and constitutes
the legal, valid and binding obligation of Cadarso enforceable in accordance
with its terms. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with or
result in any violation of any provisions of the articles of incorporation or
bylaws of Cadarso or conflict with, or result in any violation of or default
under any provision of any mortgage, indenture, lease, instrument, agreement,
judgment, order, decree, statute, law, ordinance, rule, regulation, or other
governmental authorization or approval applicable to Cadarso or any of its
Affiliates.
(c) Cadarso will cause the Directors nominated by Cadarso to operate
the Company in strict compliance with this Agreement and all applicable laws.
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(d) Cadarso hereby agrees to indemnify and hold Fossil harmless from
and against all losses, damages and costs resulting from any breach of any of
the provisions of this Agreement by Cadarso.
ARTICLE 11
CLOSING AND CONDITIONS THEREOF
Section 11.1 Closing. The Closing of the transactions contemplated by this
Agreement shall take place on the Closing Date at the offices of Cadarso. The
Parties agree that this Agreement and the Ancillary Agreements may be executed
in any number of counterparts, each of which shall be an original.
Section 11.2 Events of Closing. At the Closing, the Parties shall take the
following actions:
(a) The Stockholders shall elect the Board of Directors nominated by
the Stockholders and transact such other business as may be necessary or proper
to be transacted at said meeting;
(b) Each Director shall accept his position as director of the Company;
(c) The Board shall hold a meeting for the purposes of electing
officers of the Company and to transact such other business as may be necessary
or proper to be transacted at said meeting;
(d) Xxxxxx Xxxxx Cadarso Font shall accept the position as Managing
Director of the Company under terms and conditions reasonably acceptable to the
Parties;
(e) Cadarso shall each make the Initial Capital Contribution required
by Section 4.2(a) hereof, and in exchange for such capital contribution, the
Company shall issue to Cadarso the Stock Participation specified in Section
4.2(a) hereof.
(f) Each of the Company, Cadarso, Fossil and their respective
Affiliates shall execute and deliver each of the Ancillary Agreements to which
it is a party.
Section 11.3 Closing Date. Unless otherwise agreed by the Stockholders, the
Closing shall take place within five (5) days after satisfaction of the
conditions set forth in Section 11.4 hereof but in no event later than the
Closing Date. If the Closing does not occur on or before the Closing Date, then
this Agreement shall thereupon terminate automatically and shall be of no
further force or effect, without any further liability or obligation of either
Stockholder to the other Stockholder.
Section 11.4 Conditions to the Closing. All obligations of each Stockholder
hereunder to take the actions contemplated by this Agreement and otherwise take
the action necessary to consummate the Closing, are subject to the fulfillment
of each of the following conditions:
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(a) The final terms and conditions of each of the Ancillary Agreements
shall have been agreed upon by each of the parties signatories thereto;
(b) All actions, proceedings, instruments, opinions and documents
required to carry out this Agreement and the Ancillary Agreements or incidental
hereto or thereto, and all other related legal matters, shall be reasonably
satisfactory to the respective legal counsel of the Parties;
(c) All other terms, covenants and conditions of this Agreement and the
Ancillary Agreements to be complied with and performed by the respective parties
hereto and thereto prior to or at the Closing shall have been complied with and
performed in all material respects (with the right of such parties in compliance
with such terms, covenants and conditions to waive the non-compliance by the
other Party);
(d) No action, suit, proceeding or investigation by or before any
court, administrative agency or other governmental authority shall have been
instituted or threatened to restrain, prohibit or invalidate any of the
transactions contemplated by this Agreement or any Ancillary Agreements;
(e) All consents and approvals of third parties required for the
performance by each Party and the Ancillary Agreements, the consummation of the
transactions herein or therein contemplated and the fulfillment of and
compliance with the terms and conditions hereof and thereof, shall have been
obtained or valid waivers or consents obtained.
Neither Party shall deliberately cause any condition set forth in this Article
11 not to be satisfied, and each Party shall, as to events, causes and
circumstances within its control, take such action as shall be reasonably
necessary to cause such condition to be satisfied and shall keep the other Party
currently informed as to the status of such actions. In the event the Closing
takes place, each Party shall be deemed to have represented and warranted to the
other Party as of the Closing Date that all of the aforementioned conditions
precedent to such Party's obligations hereunder shall have been fulfilled prior
to or as of the Closing Date.
Section 11.5 Closing Documents and Materials to be Delivered by Fossil. At the
Closing, Fossil will deliver to Cadarso:
(a) Stock participations along with all duly executed instruments
effecting the transfer and such other documents as requested by Cadarso to
perfect Cadarso's rights thereto.
(b) All consents and approvals necessary to effect the transfer of the
Shares.
(c) The Ancillary Agreements, duly executed by Fossil or its
Affiliates.
Section 11.6 Closing Document and Material to be delivered by Cadarso. At the
Closing, Cadarso will deliver to Fossil or the Company as applicable:
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(a) The Initial Capital Contribution.
(b) A duly executed Managing Director agreement for Xxxxxx Xxxxx
Cadarso Font, wherein he agrees to assume the position of Managing Director of
the Company and to devote time and effort to the business and such other terms
reasonably acceptable to Fossil and the Company.
(c) The Ancillary Agreements, duly executed by Cadarso.
ARTICLE 12
DEADLOCK
Section 12.1 Definition. As used in this Agreement the term "Deadlock" shall
mean any circumstance in which the Stockholders or the Board of the Company are
unable, by reason of lack of a quorum or inability to achieve the votes that are
required under this Agreement, the Bylaws and/or the applicable law to arrive at
a decision on any matter or issue which, under this Agreement and/or applicable
law requires action, provided that an inability of the Stockholders or the Board
to arrive at such a decision or take such action shall not constitute a Deadlock
unless the Board or the Stockholders shall have failed within a forty-five (45)
day period to decide the matter or shall have failed within such period to
implement such decision.
Section 12.2 Notice of Deadlock. No Deadlock shall be deemed to have occurred
until either Stockholder gives the other Stockholder a written notice of
Deadlock. Such notice of Deadlock shall specify in reasonable detail the nature
of the issue giving rise thereto. Within twenty (20) business days after the
delivery of the notice of Deadlock, representatives of both Cadarso and Fossil
shall meet for the purpose of amicably resolving the Deadlock.
Section 12.3 Rights in Event of Deadlock. In the event after good faith
discussions the Deadlock is not resolved within twenty (20) business days from
the date of the notice of Deadlock is delivered (the "Resolution Date"), then
the following procedure shall apply: (a) within thirty (30) days after the end
of such twenty (20) business day period, Fossil shall have the option to acquire
all, but not less than all, of the shares in the Company owned by Cadarso at a
purchase price equal to the Earnings Multiple Amount; (b) in the event that
Fossil shall have failed to exercise its option to acquire Fossil's shares
pursuant to the foregoing (a), then, within an additional thirty (30) day
period, Cadarso shall have the option to acquire all, but not less than all, of
the shares owned by Fossil in the Company at a purchase price equal to the
Earnings Multiple Amount. In the event neither Cadarso nor Fossil exercises its
rights pursuant to the foregoing sentence, then the Company shall be dissolved
and liquidated pursuant to Section 13.3 and in accordance with applicable law.
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ARTICLE 13
TERMINATION
Section 13.1 Events Permitting Termination. This Agreement shall become
effective as of the date of this Agreement and shall continue for an indefinite
period thereafter, until terminated as follows:
(a) By mutual consent of the Stockholders to terminate this Agreement
in writing;
(b) By either Stockholder upon giving written notice to the other
Stockholder (the "Defaulting Stockholder") if the Defaulting Stockholder is in
default hereunder or under any of the Ancillary Agreements and such default is
not cured within thirty (30) days after written notice of such default;
(c) By either Stockholder upon giving written notice to the other
Stockholder (the "Insolvent Stockholder") if (i) the ownership, management or
control of such Insolvent Stockholder or all or substantially all of such
Insolvent Stockholder's assets are transferred to a person or entity other than
the person or entity exercising ownership, management or control at the date of
this Agreement, or (ii) a court having jurisdiction in the premises shall enter
a decree or order for relief in respect of the Insolvent Stockholder in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereinafter in effect, or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator of such Insolvent Stockholder or for any
substantial part of its property, or order the winding up or liquidation of its
affairs, and such decree or order shall remain unstayed and in effect for a
period of sixty (60) consecutive days, or (iii) the Insolvent Stockholder shall
commence a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in any involuntary case under any such law, or shall consent to
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator of such other Party or for any substantial part
of its property, or shall make any general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due or shall
take any action in furtherance of any of the foregoing;
(d) By either Stockholder upon giving written notice to the other
Stockholder (the "Merging Stockholder") if, without the prior written consent of
the other Stockholder, the Merging Stockholder is merged or consolidated with
another entity or if there is a change of control of the Merging Stockholder;
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(e) By either Stockholder upon giving written notice to the other
Stockholder (the "Prevented Stockholder") if the Prevented Stockholder is
prevented from performing its obligations under this Agreement for a continuous
period of six (6) months or more as a result of any intervention, direct or
indirect, by any government or governmental authority;
(f) By either Stockholder upon giving written notice to the other
Stockholder (the "Affected Stockholder") if the Affected Stockholder is
prevented from performing its obligations under this Agreement for a continuous
period of six (6) months or more as a result of an event of Force Majeure.
(g) Automatically upon the sale of all of the Stock Participations
in the Company to a third party unrelated to the Stockholders;
(h) Automatically upon the acquisition of one hundred percent (100%) of
the Stock Particiations in the Company by one of the Stockholders;
(i) Automatically in the event the Closing does not occur on or before
the Closing Date;
(j) By Fossil upon giving written notice to Cadarso (the "Defaulting
Stockholder") in the event that the Company fails to achieve a minimum of 70% of
the sales projection in any fiscal year as defined in the Services Agreement
between the Company and Cadarso unless failure to achieve such percentage of the
sales projections is due solely to a Force Mejeure; or
(k) Automatically in the event that the Market Research Agreement, the
Services Agreement or the Distribution Agreement is terminated in accordance
with its terms.
Section 13.2 Rights Upon Termination.
(a) Survival. Termination of this Agreement shall not extinguish debts
and other obligations created or arising between the Stockholders by virtue of
this Agreement or by virtue of contracts entered into hereunder before the date
of termination. Without limiting the generality of the foregoing, the respective
obligations of the Parties under Sections 13.2 and 13.3 shall survive
termination of this Agreement.
(b) Rights. Without limiting the generality of Section 13.2(a), if this
Agreement is terminated pursuant to Section 13.1(b), Section 13.1(c), Section
13.1(d), Section 13.1(e), Section 13.1(f), Section 13.1(j), Section 13.1(k) or
Section 13.1(l) hereof, the non-Defaulting Stockholder, the non-Insolvent
Stockholder, the non-Merging Stockholder, the non-Prevented Stockholder or the
non-Affected Stockholder, as applicable, shall be entitled to, in addition to
any other remedies it may have in law, equity or contract: (i) require the other
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Stockholder to purchase any or all of the shares in the Company of the
non-Defaulting Stockholder, non-Insolvent Stockholder, non-Merging Stockholder,
non-Prevented Stockholder or non-Affected Stockholder, as applicable, at the
Earnings Multiple Amount, (ii) purchase all, but not less than all of the shares
in the Company held by the other Stockholder at the Earnings Multiple Amount, or
(iii) require the Company to be dissolved and liquidated pursuant to Section
13.3 hereof. Upon termination, the Services Agreement, Market Research Agreement
and Distribution Agreement shall automatically terminate.
Section 13.3 Liquidation. Upon the occurrence of a dissolution event set forth
in Section 12.3, the termination of the Agreement pursuant to Section 13.1(i) or
in the event either Stockholder elects to require to dissolve the Company
pursuant to Section 13.2(b)(iii), then in no event later than one hundred twenty
(120) days after the occurrence of such dissolution event or such election, as
applicable, the Stockholders shall vote for and otherwise take all requisite
actions to cause the dissolution and liquidation of assets of the Company as
follows:
(a) All assets of the Company (including, but not limited to, all
Products remaining at the Company) shall be sold within such one hundred twenty
(120) day period at the best price offered by any party therefor;
(b) The proceeds of such sale shall be used as follows: (i) first, to
pay in full all third party creditors (including, but not limited to, any
amounts outstanding under the Third Party Loan); (ii) second, to pay any
outstanding accounts payable owed to Fossil Partners under the International
Marketing and Distribution Agreement or to Cadarso under the Services Agreement,
pro rata according to the respective amounts due to each such party; (iii)
third, to pay any outstanding loan liability of the Company (including, but not
limited to, any amounts outstanding under the Stockholders Loans and any amount
paid by Cadarso and Fossil in guaranteeing Third Party Loan) to Cadarso and
Fossil pro rata according to the respective amounts of loans and/or liabilities
due to each such Party; and (iv) fourth, any remaining proceeds shall be
distributed to the Stockholders pro rata in accordance with their respective
Stockholding Percentages.
ARTICLE 14
MISCELLANEOUS
Section 14.1 Force Majeure. Any delay or failure by either Party to perform any
of its obligations hereunder shall be excused if and to the extent caused by
occurrences beyond such Party's reasonable control, including, but not limited
to, acts of God, strikes or other labor disturbances, war, whether declared or
not, sabotage, civil insurrections or commotion, acts by governmental
authorities and any other cause or causes whether similar of dissimilar to those
herein specified which cannot reasonably be controlled by such Party ("Force
Mejeure").
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Section 14.2 Governing Law. The validity, performance, construction and effect
of this Agreement shall be governed by the laws of Spain without regard to
principles of conflict of laws.
Section 14.3 Assignment. Except in accordance with the transfer provisions set
forth in Article 6, this Agreement and the rights and obligations hereunder
shall not be assigned by either Party hereto, by contract or by operation of
law, without the prior written consent of the other Party.
Section 14.4 Expenses and Enforcement Costs. Each Party agrees to pay its own
costs and expenses incurred in connection with the preparation, negotiation and
execution of this Agreement and in obtaining the necessary approvals and other
action contemplated herein. Each Party hereto agrees to pay and discharge all
reasonable costs, attorney fees and expenses (including, but not limited to the
costs of arbitration and litigation) that are incurred by the other Party in
enforcing the terms of this Agreement or in defending itself in an action to
enforce the terms of this Agreement provided that such other Party shall
substantially prevail in such proceedings as determined by the arbitrator(s) or
judges, as applicable.
Section 14.5 Severability; Waiver. If any provision of this Agreement is or
becomes illegal, invalid or unenforceable under applicable law, such provision
shall be fully severable, and the remaining provisions hereof shall not be
affected thereby and shall remain in full force and effect. Failure of either
Party at any time to require performance by the other of any provision of this
Agreement shall not affect its rights to require full performance thereof at any
time thereafter, and a waiver by either Party of a breach of any provision shall
not constitute a waiver of rights arising from any subsequent breach or nullify
the effectiveness of such provision.
Section 14.6 Notices. Unless otherwise agreed in writing, all notices required
hereunder shall be in writing and in English. Notices to be given to any party
under this Agreement shall not be effective unless given in writing and hand
delivered or mailed by registered mail, or via overseas courier, or sent by
electronic mail or facsimile to such party at the following addresses:
If to Cadarso: Sucesores De A. Xxxxxxx
Xxxxxxx Xxxxxxxx, 000 xxx., 0 Planta
________________________
________________________
Phone: ________________
Fax: __________________
E-mail: _______________
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If to Fossil: Fossil Europe, B.V.
c/o Fossil, Inc.
0000 Xxxxx Xxxxxxxxxx Xxx.
Xxxxxxxxxx, Xxxxx 00000
Attn: X.X. Xxxxxxx, Chief Legal Officer
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: xxxxxxxxx@xxxxxx.xxx
Any party may change its address by giving notice of such change in the manner
above provided. Notices sent via certified or registered mail or oversees
courier shall be deemed to have been received as of the date indicated by the
postal or courier's receipt as having been received by the intended recipient.
Notices sent via electronic mail or facsimile shall be deemed to have been
received two (2) business days after the date on which they were transmitted,
provided the party transmitting any such notice mails a copy of the notice on
the next business day to the party to be notified via certified or registered
mail or via overseas courier
Section 14.7 Language. This Agreement may be translated into other languages,
but the English language version shall be the official version and shall control
the construction and interpretation hereof.
Section 14.8 Amendment. This Agreement may be amended only by a written document
signed by the Parties.
Section 14.9 Headings. Headings or Articles in this Agreement are for
convenience only and do not substantively affect the terms of this Agreement.
Section 14.10 Inconsistencies. In case of any inconsistency or conflict between
this Agreement, on the one hand, and the Bylaws of the Company, on the other
hand, this Agreement shall govern, and the Parties agree to take all necessary
steps to amend the Article of Incorporation or Bylaws, as applicable, to conform
to this Agreement promptly upon the discovery of any such inconsistency or
conflict.
Section 14.11 Ownership of Intellectual Property; Non-Compete; Corporate
Opportunity. Except as otherwise provided in the Ancillary Documents, the
proprietary designs, trademarks, tradenames, processes and systems created by
the Company shall remain the property of the Company.
Section 14.12 Arbitration of Disputes. If any dispute, controversies or
differences arise between the parties hereto in connection with any provision of
this Agreement, or any breach thereof, the parties shall first attempt to settle
same through friendly consultation carried out in good faith and with sincerity.
In the event the dispute, controversy or difference is not so settled in the
above manner, then such dispute or controversy shall be finally settled under
the Commercial Arbitration Rules of the American Arbitration Association by
three (3) arbitrators appointed as set forth below. The arbitration venue shall
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be Barcelona, Spain. Arbitration shall be conducted by a panel of three (3)
members, one member selected by Cadarso, one member selected by Fossil and the
third member selected by agreement between the other two members. Such
arbitration shall be conducted in the English language. The parties' obligations
under this Article shall survive termination or expiration of this Agreement.
The provisions herein shall not be construed as prohibiting any party to this
Agreement from applying to any court of competent jurisdiction for such
injunctive or other provisional relief as may be necessary to protect that party
from irreparable harm or injury or to preserve the status quo pending resolution
of a dispute or controversy. As part of the arbitration award, the prevailing
party shall be entitled to recover its reasonable costs and expenses (including
attorney's fees) incurred in connection with the arbitration.
Section 14.13 Change of Stockholding Percentage. In the event that either Party
acquires some, but not all, of the other Party's equity ownership in the Company
pursuant to this Agreement, including, but not limited to, pursuant to Article
6, then the following shall apply:
(a) The following changes shall be made in the number of Directors each
Party may nominate on the Board pursuant to Section 8.2 based upon the
respective Stockholding Percentages of Cadarso and Fossil following such
acquisition:
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No. of Fossil No. of Cadarso
Fossil Stockholding Percentage Cadarso Stockholding Percentage Directors Directors
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Less than 20% 80% or more 0 4
20% or more but less 50% More than 50% but less than 80% 1 3
50% 50% 2 2
More than 50% but less than 80% 20% or more but less 50% 3 1
80% or more Less than 20% 4 0
----------------------------------------------------------------------------------------------------------------------
(b) In the event the Stockholding Percentage of Cadarso becomes more
than fifty percent (50%), Cadarso shall be entitled to designate the Chairman of
the Board pursuant to Section 8.2.
Section 14.14 Confidentiality.
(a) Definition. As used in this Section 14.14, the term "Confidential
Information" shall mean any information disclosed by one Party to the other
pursuant to this Agreement which is in written, graphic, machine readable or
other tangible form and is marked "Confidential," "Proprietary" or in some other
manner to indicate its confidential nature, or is otherwise known by the
recipient to be information of a type generally maintained in confidence by the
disclosing Party. Confidential Information may also include oral information
disclosed by one Party to the other pursuant to this Agreement, provided that
such information is either (a) directly related to written Confidential
Information, or (b) designated as confidential at the time of disclosure and
reduced to a written summary by the disclosing Party, within a reasonable time
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(not to exceed sixty (60) days) after its oral disclosure, which is marked in a
manner to indicate its confidential nature and delivered to the receiving Party.
(b) Confidentiality Obligations. Each Party shall treat as confidential
all Confidential Information of the other Party, shall not use such Confidential
Information except as set forth herein, shall implement reasonable procedures to
prohibit the disclosure, duplication, misuse or removal of the other Party's
Confidential Information and shall not disclose such Confidential Information to
any non-Affiliate third party. Without limiting the foregoing, each of the
Parties shall use at least the same procedures and degree of care which it uses
to prevent the disclosure of its own confidential information of like importance
to prevent the disclosure of Confidential Information disclosed to it by the
other Party under this Agreement, but in no event less than the care exercised
by the disclosing Party with respect to its own Confidential Information. Each
Party shall use its best efforts to enforce compliance with the provisions of
this Section 14.14 by its directors, officers, employees, agents and any third
party having access to the other Party's Confidential Information.
(c) Non-Confidential Information. Notwithstanding the above, neither
Party shall have liability to the other with regard to any Confidential
Information of the other which:
(i) was generally known and available in the public domain at
the time it was disclosed, or which becomes generally known and available in the
public domain through no fault of the receiver;
(ii) was known to the receiver at the time of disclosure as
shown by the files of the receiver in existence at the time of disclosure;
(iii) is disclosed with the prior written approval of the
initial disclosing Party;
(iv) was independently developed by the receiver without any
use of the disclosing Party's Confidential Information or by employees or other
agents of (or independent contractors hired by) the receiver who have not been
exposed to the disclosing Party's Confidential Information;
(v) becomes known to the receiver from a source other than the
disclosing Party without breach of this Agreement by the receiver and otherwise
not in violation of the disclosing Party's rights; or
(vi) is disclosed pursuant to the order or requirement of a
court, administrative agency, or other governmental body; provided, that the
receiver shall provide prompt, advance notice thereof to enable the disclosing
Party to seek a protective order or otherwise prevent such disclosure.
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In addition, neither Party shall be restricted in any way by this Agreement as
to that Party's use of any Confidential Information of the other described in
subsections (a), (b), (d) and (e) above.
(d) Equitable and Other Relief. Each Party acknowledges that the other
Party's Confidential Information is an extremely valuable business asset, the
misuse or improper disclosure of which would cause irreparable harm to the
business interests of such Party. Accordingly, if either Party breaches any of
its obligations with respect to confidentiality and unauthorized use of
Confidential Information hereunder, the other Party shall be entitled to
equitable relief to protect its interest therein, including, but not limited to,
injunctive relief, as well as money damages.
Section 14.15 Currency Conversion. In the event that any exchange rate
conversion is necessary with respect to any payment made or report provided
hereunder, Distributor shall use the Internet historical currency conversion
table located at "xxx.xxxxx.xxx" to calculate the average exchange rate over the
applicable period, or other mutually agreeable conversion source.
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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.
FOSSIL EUROPE B.V. Sucesores De A. Cadarso
By: _____________________ By: _____________________
Name: _____________________ Name: _____________________
Title: _____________________ Title: _____________________
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EXHIBIT A
Bylaws
EXHIBIT B
Services Agreement
EXHIBIT C
Market Research Agreement
EXHIBIT D
Amended and Restated
International Marketing and Distribution Agreement
