EXHIBIT 10.2*
SECOND AMENDMENT TO LICENSE AGREEMENT
DATED JUNE 3, 1999 BETWEEN
XXXXX XXXXXXXX LICENSING, INC. AND MOVADO GROUP, INC.
AGREEMENT entered into as of the 1st day of August 2002 by and between
XXXXX XXXXXXXX LICENSING, INC., a Delaware corporation, having an address at
University Plaza - Bellevue Building, 000 Xxxxxxx Xxxx, Xxxxx 000X, Xxxxxx,
Xxxxxxxx 00000 (hereinafter referred to as "Hilfiger") and MOVADO GROUP, INC., a
New York corporation having its offices at 000 Xxxx Xxxx, Xxxxxxx, Xxx Xxxxxx
00000 ("MGI") and MOVADO WATCH COMPANY, S.A., successor by merger with N.A.
TRADING, S.A., a Swiss corporation, having its offices at Xxxxxxxxxxxxxxx 0,
0000 Xxxxxxxx, Xxxxxxxxxxx ("MWC"). MGI and MWC are hereinafter jointly referred
to as "Licensee".
W I T N E S S E T H:
WHEREAS, Hilfiger and Licensee entered into a license agreement dated June
3, 1999, which license agreement was previously amended by amendment dated
January 16, 2002 (the "License"); and
WHEREAS, the parties have agreed to the amendments to the License
contained herein.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
agreements contained and promises herein expressed, and for other good
consideration acknowledged by each of them to be satisfactory and adequate, do
hereby agree as follows:
1. All capitalized terms used herein shall have the meanings ascribed to
them in the License.
2. The following is inserted into the License as Paragraph 1.3A:
"1.3A DISTRIBUTOR means a wholesale distributor approved by Hilfiger
to purchase Licensed Products from Licensee and to resell the same
to
*(CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED FROM PAGES 3, 5, 6 AND
FROM EXHIBITS "R" AND "S" THERETO AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE
ACT OF 1934 ("1934 ACT")).
approved customers as set forth in Paragraph 7.7 below and who shall
agree in writing to be bound by paragraphs 7.7 and 7.8."
3. Paragraph 1.10 of the License is hereby amended by inserting the
following after the word "achieve":
"in each Region and Area of the Territory"
4. Paragraph 1.11 of the License is hereby amended by inserting the
following immediately before the word "retailers":
"Distributors and to"
5. Paragraph 1.19 of the License is hereby amended by deleting the same in
its entirety and replacing it with the following:
"1.19 TERRITORY means the following regions ("Regions") defined
below:
a. WESTERN HEMISPHERE means the Region including the United
States (including its territories and possessions as of the
date of this Agreement), Canada, the Caribbean Islands (as set
forth in Exhibit N), duty free shops (such as, but not limited
to, DFS) only worldwide, United States military bases
worldwide and Mexico.
b. EUROPE means the Region including the following areas
("Areas"):
(i) NORTH EUROPE means the Area including Germany, Austria,
Switzerland, Benelux, France, Denmark, Sweden, Iceland, Norway
and Finland;
(ii) SOUTH EUROPE means the Area including Spain, Portugal,
Greece, Turkey, Italy and the Middle East; and
(iii) UNITED KINGDOM means the Area including England,
Ireland, Northern Ireland, Scotland and Wales.
c. PAN PACIFIC means the Region including Hong Kong, Southeast
Asia and Australia (specifically not including Japan or
Korea)."
6. Paragraph 3.1 is hereby amended by deleting the words "December 31,
2005" and substituting in lieu thereof "December 31, 2006".
7. Paragraph 3.2 is hereby amended by deleting the words "December 31,
2010" and substituting in lieu thereof "December 31, 2011".
8. Paragraph 4.1 of the License is hereby amended by:
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(a) deleting the first two sentences thereof and replacing them with
the following:
"Licensee will, at its sole cost and expense, employ the
following persons or persons with similar titles and
responsibility, who will all, except as specifically
indicated, work exclusively with Hilfiger's representatives on
Licensee's business arising under this Agreement and will
report directly to the President of Licensee or his or her
designee:
Region Position
------ --------
Global President
Western Hemisphere Vice President of Sales
Global Vice President of Marketing
Global Designer
Global Vice President of Design and
Product Development
Europe General Manager (non-exclusive)
Europe Vice President of Sales
Pan Pacific General Manager (non-exclusive)
Pan Pacific Sales Manager
(b) inserting the following after the end of the last sentence:
"Licensee shall also establish a separate division based in
Switzerland for the Europe Region."
9. Paragraph 7.5 of the License is hereby amended by deleting the same in
its entirety and replacing it with the following:
"During each Annual Period, Licensee must achieve the Minimum Sales
Levels indicated on Exhibit R for each Region/Area in the Territory.
The Minimum Sales Level for each Region/Area in the Territory for
each Annual Period must be the greater of (a) the amounts set forth
in Exhibit R for such Region/Area in the Territory, if any, and (b)
* of the actual Net Sales in such Region/Area for the immediately
preceding Annual Period (except when the immediately preceding
Annual Period is more than twelve months, in which case only the
last twelve (12) months of such Annual Period shall apply). In no
event, other than for the fourth Annual Period for the Areas/Regions
other than the Western Hemisphere, may the Minimum Sales Level for
any Annual Period be less than the Minimum Sales Level for the
immediately preceding Annual Period."
* (CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE
SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT).
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10. Paragraph 7.7 of the License is hereby amended by deleting the same in
its entirety and replacing it with the following:
"7.7 APPROVED RETAIL CUSTOMERS. Licensee and its Distributors may
sell Licensed Products only to those specialty shops, department
stores and retail outlets (including those that sell directly to the
consumer) that carry high quality and prestige merchandise and whose
operations are consistent with Hilfiger's reputation and sales
policies. In addition, Licensee may sell Licensed Products to
corporate accounts, which have been approved in writing by Hilfiger,
for the use of the employees of such corporate accounts ("Approved
Corporate Accounts"). Approved Corporate Accounts shall in no event
include corporate accounts selling alcohol, tobacco, gaming and
firearms products. A list of Approved Corporate Accounts is annexed
hereto as Exhibit P. Upon execution of this Agreement, and prior to
the opening of each selling season (and whenever Licensee or its
Distributors wish to sell Licensed Products to retail customers not
previously approved by Hilfiger), Licensee must submit a list of
such proposed retail customers (not including previously approved
retail customers) for Hilfiger's written approval. Hilfiger has the
right to withdraw any such approval on written notice to Licensee,
provided, however, that Hilfiger will not withdraw approval of a
retail customer which is then carrying any products of Hilfiger's
men's sportswear licensee unless Hilfiger is reasonably dissatisfied
with the display, delivery or inventory model of Licensed Products
of such retail customer. After such notice, Licensee may not accept
additional orders for Licensed Products from such retail customer,
but may fill any existing order. Anything herein to the contrary
notwithstanding, Licensee may sell Licensed Products to advertising
specialty companies for resale only to Approved Corporate Accounts,
for the use of their employees, and not for resale, provided that
such advertising specialty companies shall, prior to receiving any
Licensed Products from Licensee, execute an agreement substantially
in the form annexed hereto as Exhibit Q and provide an original
executed copy of such agreement to Hilfiger."
11. Paragraph 7.8 is hereby amended by:
(a) deleting clause (c) thereof and substituting in lieu thereof
the following: "(c) sell or distribute any Licensed Products
to jobbers, diverters, catalog vendors or any other entity
that does not operate retail stores exclusively other than to
its Distributors which distribute only to U.S. military bases
or to retail customers in the Territory that satisfy the
criteria set forth in Paragraph 7.7 hereof"; and
(b) deleting the words "Licensee shall include and shall enforce
the following on all invoices to its customers" and
substituting in lieu thereof the words
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"Licensee shall include and shall enforce the following on all
invoices to its retail customers".
12. Paragraph 7.9c of the License is hereby amended by changing the chart
heading from "Fixturing Obligation" to "U.S. Fixturing Obligation".
13. Paragraph 7.12 of the License is hereby amended by deleting the third
sentence thereof in its entirety and replacing it with the following:
"The price for such Close-Outs and Seconds and any other Licensed
Products purchased by Outlet Stores will be *
14. Paragraph 7.13 of the License is hereby amended by deleting the same
in its entirety and replacing it with the following:
"7.13 PURCHASES BY FRANCHISEES AND XXXXX XXXXXXXX STORES. For the
purposes hereof, "Franchisee" means the operator of stores not owned
by or affiliated with Hilfiger that bear the name "Xxxxx Xxxxxxxx",
"Hilfiger" or any derivative thereof. Beginning on the first day of
each of Licensee's market periods, Franchisees and Xxxxx Xxxxxxxx
Stores may purchase Licensed Products from Licensee. The prices
charged to each shall be as follows:
*
All of the foregoing purchases will be on standard industry terms.
Licensee will fill such orders in a manner at least as favorable as
Licensee fills orders from its other customers.
15. Paragraph 8.1 of the License is hereby amended by deleting the chart
contained therein and replacing it with the following:
Guaranteed Minimum
"Annual Period Advertising Payment
-------------- -------------------
First
Second
Third *
Fourth
Fifth
Sixth
*(CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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16. Paragraph 8.2 of the License is hereby amended by
(a) adding the following at the end thereof:
"Licensee may, with Hilfiger's approval in each instance, receive
credit towards the Guaranteed Minimum Advertising Payments otherwise
due, for cooperative advertising paid for by Licensee. Such approval
may be withheld in Hilfiger's sole discretion and, if approved, such
credit may be given only upon submission to Hilfiger of such proof
of Licensee's expenditures and such advertising as is acceptable to
Hilfiger." and
(b) deleting Paragraph 8.2b in its entirety, effective as of July 1,
2002.
17. Paragraph 8.3b is hereby amended by inserting the following after the
first sentence thereof:
"Hilfiger will, during the Term hereof, make its best efforts to
expend an amount equivalent to *
18. Paragraph 9.1 of the License is hereby amended by
(a) deleting the first sentence thereof and replacing it with the
following:
"Licensee shall, during each Annual Period or portion thereof
(calculated on a pro rata basis), pay to Hilfiger the
Guaranteed Minimum Royalties set forth on Exhibit S."
(b) deleting the chart contained therein.
19. Paragraph 15.3a of the License is hereby amended by deleting the third
sentence thereof and replacing it with the following:
"If Licensee fails to achieve a Minimum Sales Level for one Annual
Period in any period of five (5) consecutive Annual Periods,
provided that Licensee promptly pays to Hilfiger the Guaranteed
Minimum Royalty for such Annual Period, this Agreement shall not be
terminated. Notwithstanding the foregoing, if Licensee fails to meet
a Minimum Sales Level for a second Annual Period during a period of
five (5) consecutive Annual Periods, a notice of termination shall
be effective on thirty (30) days notice as follows:
(i) If the Minimum Sales Level which Licensee fails to meet
is for the Western Hemisphere, this entire Agreement
shall be
*(CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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terminable;
(ii) If the Minimum Sales Level which Licensee fails to meet
is for either Europe or Pan Pacific, this Agreement
shall be terminable only as to the Region for which the
Minimum Sales Level is not achieved;
(iii) If the Minimum Sales Level which Licensee fails to meet
is for one of the Areas in Europe, this Agreement shall
be terminable as to that Area only."
20. Exhibits R, and S annexed to this amendment are hereby added to the
License.
21. Except as modified hereby, all other paragraphs contained therein
shall remain in full force and effect and nothing contained herein shall alter
them in any way and are hereby in all respects ratified and confirmed.
IN WITNESS WHEREOF, Hilfiger and Licensee have respectively signed this
agreement as of the date first written above.
XXXXX XXXXXXXX LICENSING, INC. MOVADO GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxx
Title: Assistant Secretary Title: Exec.V.P./Chief Operating Officer
MOVADO WATCH COMPANY, S.A.
By: /s/ Xxxxxxx Xxxx
Title: Director
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EXHIBIT R
MINIMUM SALES LEVELS
*
*(CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT).
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EXHIBIT S
GUARANTEED MINIMUM ROYALTIES
*
*(CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.)
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