DATED May 1, 2007 SWICO LIMITED and MOVADO GROUP, INC. and MGS DISTRIBUTION LIMITED JOINT VENTURE AGREEMENT
EXHIBIT
10.47 **
Execution
Copy
DATED May
1, 2007
SWICO
LIMITED
and
MOVADO
GROUP, INC.
and
MGS
DISTRIBUTION LIMITED
____________________________________________
____________________________________________
**
CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED FROM:
|
(1)
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THE
FOLLOWING PAGES OF THE FOUR DISTRIBUTORSHIP AGREEMENTS ANNEXED HERETO
COLLECTIVELY AS ANNEX B: XXXXX XXXXXXXX AGREEMENT - PAGES 6 AND 18; JUICY
COUTURE AGREEMENT – PAGES 6, 7 AND 19; HUGO BOSS AGREEMENT – PAGES 6 AND
18; LACOSTE AGREEMENT – PAGES 38 AND 39 AND SCHEDULE
VIII;
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(2)
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ANNEX
B TO (WHICH IS THE LAST PAGE OF) THE SERVICE AGREEMENT ANNEXED HERETO AS
ANNEX C;
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(3)
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ALL
OF ANNEX D
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AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) PUSUANT TO RULE
24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (“1934
ACT”)
TABLE
OF CONTENTS
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|
List
of Annexes
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Annex
A: The Company governing documents
Annex
B: Distribution Agreements
Annex
C: Service Agreement
Annex
D: 5-year business plan
THIS JOINT VENTURE AGREEMENT
is made on the 1st day of May, 2007
BETWEEN:
SWICO LIMITED a company
incorporated under the laws of England, having its registered office at Xxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxxx, Xxxxxx XX00 0XX, England, registered number 469666
(“Swico”)
;
and
MOVADO GROUP, INC. a company
incorporated under the laws of New York, having its principle office at 000 Xxxx
Xxxx, Xxxxxxx, XX 00000, X.X.X. (“MGI”);
and
MGS DISTRIBUTION
LIMITED a corporation incorporated under the laws of England, having its
registered office x/x Xxxxx, Xxxxxxx, Xxxxxxxxx, Xxxxxx XX00 0XX, Xxxxxxx,
registered
number (“Company”).
WHEREAS
:
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(A)
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MGI
wishes to develop its activities in the United Kingdom through, among
other actions, the development of licensed brands and direct access to the
market.
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(B)
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Swico
is a watch distributor in the United Kingdom and is currently the
distributor there of Hugo Boss watches under an agreement with MGI’s
Affiliate, MGI Luxury Group, S.A., dated May 1, 2005 (“Swico HB
Distributorship”). In order to grow and secure the current
business of its domestic markets, Swico is searching for new brands for
distribution and a strong partner to develop for the long
term.
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(C)
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In
view of their satisfactory relationship and common objectives, Swico and
MGI (collectively, the “Shareholders”)
wish to create a joint venture relationship through ownership in the
Company of, respectively, a 51% interest by MGI (or an entity that is
owned 100% by MGI) and a 49% interest by
Swico.
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(D)
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The
Shareholders wish to set forth herein certain matters relating to the
establishment of the Company, the management and operations thereof, as
well as the transfers by the Shareholders of their interests in the
Company.
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NOW THEREFORE, in
consideration of the premises and the mutual covenants set forth herein, the
Shareholders agree as follows:
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1.
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INTERPRETATION
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1.1
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Definitions: Unless
the context otherwise requires, the following terms shall have the
following meanings for purposes of this
Agreement.
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"Affiliate" means,
with respect to any Person, any other Person that, either directly or indirectly
through one or more intermediate Persons, controls, is controlled by or is under
common control with such first Person.
"Control" of a Person
means (i) ownership of more than 50% of the equity share capital or voting
rights of such Person or (ii) the power to direct the management or
policies of a Person, whether through the ownership of more than 50% of the
voting power of such Person, through the power to appoint at least half of the
members of the board of directors or similar governing body of such Person,
through contractual arrangements or otherwise.
"Person" means any
natural person, firm, company, governmental authority, joint venture,
partnership, association or other entity (whether or not having separate legal
personality).
"Related Party" means
(i) any shareholder, director or officer of the Company, (ii) any Relative of a
shareholder, director or officer of the Company and (iii) any Person in
which any shareholder, director or any officer of the Company or any Relative
thereof has any interest, other than a passive shareholding of less than 5% in a
company whose shares are listed on a recognized investment exchange or dealt in
on the Alternative Investment Market of the London Stock Exchange.
"Relative" of a
natural Person means any spouse, parent, grandparent, child, grandchild or
sibling of such Person and any offspring of any of the foregoing.
"Shares" means the
ordinary shares [of £1 each] in the capital of the Company.
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1.2
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The
following terms are defined in the indicated
Clause:
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“Board”
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4.4.1
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"Business"
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3.1
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“Business
Plan”
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8.1
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“Buy-Out
Date”
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9.1
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“Buy-Out
Price”
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9.2
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“Cash
Flow Value”
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9.2
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“Chairman”
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4.4.2
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"Company"
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Recitals
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"Confidential
Information"
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13.1
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“Director”
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4.4.1
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“Distribution
Agreements”
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3.2
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"First
Refusal Right"
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6.5.2
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“Lock-up
Expiration Date”
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6.4
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“Non-Compete
Covenant”
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10.2.2
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"Offer
Period"
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6.5.2
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"Offer
Price"
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6.5.1
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“Offer
Price Per Share”
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6.5.1
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"Offered
Shares"
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6.5.1
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"Offeree"
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6.5.1
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"Permitted
Transferee"
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6.3
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"Representatives"
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13.1
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"Rules"
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18.2
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“Service
Agreement”
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3.3
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"Shareholders"
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Recitals
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“Shareholders’
Meeting”
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4.1
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"Tag-Along
Right"
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6.5.2
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"Transfer"
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6.1
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"Transfer
Notice"
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6.5.1
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"Transferee"
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6.5.1
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"Transferring
Shareholder"
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6.5.1
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“Swico
Change of Control”
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7.2
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“Swico
HB Distributorship”
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Recitals
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2.
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ESTABLISHMENT
OF THE COMPANY
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2.1
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Contributions. MGI
shall subscribe for 51 Shares at a subscription price of £408,000,
representing 51% of the total Shares to be in issue. Swico
shall subscribe for 49 Shares at a subscription price of £392,000, of
which £372,000 shall be satisfied by Swico procuring the transfer to the
Company of its inventory of Hugo Boss watches in saleable condition and
related display material and spare parts for such watches, the aggregate
fair market value of which is £372,000, and the balance of the
subscription price of £20,000 shall be paid by Swico in cash so that the
shareholding of Swico shall represent 49% of the total Shares to be in
issue. The Memorandum and Articles of Association of the
Company are attached hereto as Annex
A.
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3.
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BUSINESS
OF THE COMPANY AND INITIAL OPERATIONS
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3.1
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Principal
Business. The business of the Company shall be to sell,
market and distribute in the United Kingdom certain watch brands pursuant
to the Distribution Agreements (as defined below) (the "Business") in
accordance with the Business Plan (as defined in Clause 8.1 below) and to engage in such other
businesses or activities or make such other investments as may be approved
by the Shareholders from time to time in accordance with this
Agreement.
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3.2
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Distribution
Agreements. MGI shall, or shall cause its appropriate
Affiliate to, enter into exclusive distribution agreements, substantially
in the form attached hereto as Annex B, except as the parties may
otherwise agree (the “Distribution
Agreements”), with the Company, and the Company will enter into the
Distribution Agreements, pursuant to which MGI or its appropriate
Affiliate shall grant to the Company the exclusive right to distribute
HUGO BOSS, XXXXX XXXXXXXX, LACOSTE and JUICY COUTURE watches in the United
Kingdom. Swico and MGI agree that, upon the effective date of the
Distribution Agreement relating to the distribution of HUGO BOSS watches,
they will take all action or cause their Affiliates, as the case may be,
to take all action, to terminate the Swico HB
Distributorship. In addition, subject to Clause 10.2.2,
MGI will, or will cause its appropriate Affiliate to, offer to the Company
substantially similar watch distribution agreements in the United Kingdom
for any other brands which may hereafter be licensed to MGI or any of its
Affiliates, subject, in each case, to the terms, conditions and
limitations set forth in each licence, and the Company shall enter into,
and the Shareholders will take all action to cause the Company to enter
into, such distribution agreements. All references in this Agreement to
“Distribution Agreements” shall include all such additional distribution
agreements as may be entered into from time to time by the Company and MGI
or any of its Affiliates. Any failure by MGI or its Affiliates to offer or
execute such additional distribution agreements shall be deemed to be a
material breach by MGI of this Agreement, and any failure by either
Shareholder to take all action to cause the Company to enter into such
additional distribution agreements shall be deemed to be a material breach
by such Shareholder of this
Agreement
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3.3
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Service
Agreement. Swico shall enter into a service agreement,
substantially in the form attached as Annex C, with the Company (the
“Service Agreement”), and the Company shall enter into the Service
Agreement with Swico pursuant to which Swico shall provide to the Company
certain services relating to the day-to-day operations of the
Business.
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3.4
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Employees.
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(a)
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Swico
shall arrange in consultation with MGI the hiring of adequate staff,
including sales staff, by the Company. Such staff shall include sales
staff derived from employees of Swico currently dedicated to the HUGO BOSS
brand. Swico shall assume the costs of transferring the employment of such
employees to the Company.
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(b)
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All
employees shall be employed by the Company at market-standard rates of
compensation with market-standard benefits. Employees transferred from
Swico will benefit from the terms and conditions applicable to their
employment on the date of transfer ; provided however that the Company
shall in no event assume any liability or obligation (including, without
limitation, pension liabilities or other accrued liabilities) owed by
Swico to any such employees which arose prior to the date of their
transfer. If, notwithstanding the foregoing, the Company shall be deemed
to have assumed any such liability or obligation, then Swico will
indemnify, defend and hold the Company harmless against and in respect of
all such liabilities and obligations. Swico shall indemnify and
hold harmless the Company from and against any losses and expenses arising
from any claim by any employee of Swico relating to such transfers or the
transactions contemplated hereby, including without limitation any tax
liability or any claim by any such employee that such employee’s
employment should have been transferred to the
Company.
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(c)
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All
agreements with employees (including those relating to compensation,
commissions, benefits other agreements) shall be set forth in writing and
made available for review by, and, if required pursuant to
Clause 4.3.1, the approval of, the Chairman (as defined
below).
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3.5
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Insurance. Swico
shall cause the Company to be covered by Swico’s group umbrella insurance
policies as part of the services provided pursuant to the Services
Agreement, with the exception of marine insurance for goods in transit
which coverage shall be provided by MGI as part of its umbrella coverage
for Affiliates . The Company shall reimburse to MGI MGI’s
incremental costs incurred relating to such insurance coverage promptly
upon receipt from MGI of an invoice
therefor.
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3.6
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Systems. At
any time after the combined sales of the Company for any fiscal year
exceed £10 million, upon the request of MGI, the Company shall implement
and the Shareholders shall take all action to cause the Company to
implement, and Swico shall (in connection with the services provided by it
under the Service Agreement) implement, MGI’s information technology
systems for accounting/financial
reporting.
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4.
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CORPORATE
GOVERNANCE AND MANAGEMENT
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4.1
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General. The
Shareholders shall use their respective voting powers at general meetings
of the Company (each a "Shareholders
Meeting"), and shall take all other actions necessary, including
action that may be taken through its shareholding in the Company, to give
effect to all of the provisions of this Agreement, the Distribution
Agreements and the Service Agreement. In the event of any
conflict between the terms of this Agreement, on the one hand, and the
terms of the governing documents of the Company on the other hand, the
terms of this Agreement shall
prevail.
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4.2
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Managing
Director.
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4.2.1
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Appointment. The
Company shall be managed by a Managing Director. The Shareholders expect
that Swico, based on its knowledge of the watch market in the United
Kingdom, will furnish a recommendation for Managing Director to the
Company for consideration. The Shareholders shall cause the Company to
appoint as Managing Director the person recommended by Swico, following
the prior approval of MGI, which shall not be withheld without good
reason. For the purposes of the preceding sentence, “good
reason” shall include, without limitation, failure of the candidate to
have satisfactory relations with retailers and failure of the candidate to
have achieved satisfactory financial results (as compared to forecasted
results) . The Shareholders will cause the Company to remove
the Managing Director upon request by Swico for any or no reason, or upon
request by MGI, for good cause. For the purposes of the
preceding sentence, “good cause” shall include, without limitation, the
failure of the Managing Director to properly manage the day-to-day
activities of the Company, including without limitation the failure of the
Managing Director to comply with the requirements set forth in
Clause 4.2.3(b) below. The Managing Director shall devote all of his
or her professional time to the business and operations of the Company;
provided that if Xx. Xxxxx Xxxxxxxx becomes the Managing Director, he
shall devote such of his professional time to the business and operations
of the Company as reasonably
necessary.
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4.2.2
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Remuneration. The
remuneration of the Managing Director shall be determined and paid by the
Company, subject to approval by the Chairman. The Managing
Director shall not have a separate employment contract, except as required
by law and in no event shall the Managing Director be entitled to any
severance payment of any kind whatsoever in the event of the termination
of his employment by or resignation from the
Company.
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4.2.3
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Duties and Powers of
the Managing Director.
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(a)
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Subject
to the rights of the Chairman, the Board or of the Shareholders to approve
certain specific decisions and actions as set forth in Clauses 4.3.1,
4.3.2, 4.4.5 or 4.5.1 or as provided by
applicable law, the Managing Director shall conduct the day-to-day
activities of the Company.
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(b)
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The
Managing Director shall:
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(i)
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promote
the development of the Business;
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(ii)
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ensure
the continuity of the sales team
management;
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(iii)
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promote
the continuity and development of customer
relationships;
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(iv)
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liaise
with Swico to ensure the continuity of the Swico personnel providing
services to the Company pursuant to the Service
Agreement;
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(v)
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prepare
for review and approval by the Chairman a draft annual strategic plan,
business plan and budget consistent with the Business Plan, and implement
the approved annual strategic plan, business plan and
budget;
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(vi)
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communicate
regularly with the Chairman regarding the operations of the Company
including meeting not less than quarterly with the Advisory Committee to
discuss and review any material financial, commercial or strategic
developments or issues, including, without limitation, any action taken by
the Managing Director under
Clause 4.2.3(c);
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(vii)
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cause
the Company to adhere to the MGI group ethics and control policies as
communicated by MGI from time to time and to comply with all procedures
relating to MGI internal control over financial
reporting;
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(viii)
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manage
the employees of the
Company; and
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(xi)
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comply
with the requirements of this
Agreement.
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(c)
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Without
limiting the provisions of sub-clause (a) above, the Managing
Director may take the following actions without the prior approval of the
Chairman or of the Board:
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(i)
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hire
or terminate the employment of personnel having annual compensation of
less than £50,000;
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(ii)
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grant
individual salary increases up to 10% higher than the increase based on
the general cost of living index, or equivalent index in the United
Kingdom, so long as total salary increases for such annual period do not
exceed the budgeted salary
increases;
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(iii)
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negotiate
and execute on behalf of the Company any commercial agreements in the
ordinary course of business, consistent with past practice, if any,
involving annual expenditures not to exceed the applicable budgeted amount
for such expense category, or, absent a specific budgeted amount, the
amount set forth in the Business Plan, or, absent any specific amount in
the Business Plan, £50,000; and
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(iv)
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make
payments from and deposits into the bank accounts of the Company in the
ordinary course of business, consistent with past practice, if any, and to
the extent not otherwise inconsistent with any other provision of this
Agreement.
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4.3
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Chairman.
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4.3.1
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Duties and Powers.
The Chairman, who shall be appointed in accordance with
Clause 4.4.2, shall have a role in the management of the business of
the Company, as provided herein. Without limiting the
foregoing, the prior approval of the Chairman is required for any of the
following decisions and actions to be taken, it being understood that the
failure of the Managing Director to obtain the prior approval of the
Chairman, or, failing approval by the Chairman, the approval of the
Board, with respect to any of the following shall be deemed to
be a material breach by Swico of this Agreement referred to under
Clause 15.2 of this Agreement; provided,
that, in the event any annual budget has not been duly approved on or
before December 31st
of any year, then the Business Plan (during the first 5 years of this
Agreement) or the budget of the previous year (after the fifth year of
this Agreement) shall continue to apply on a temporary basis pending such
approval:
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(a)
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hiring
or termination of the employment of personnel with annual compensation in
excess of £50,000 or of any Person who is a Relative of any Board member
appointed by Swico or of the Managing
Director;
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(b)
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any
action or decision that would represent a deviation of more than 5% with
respect to any individual budget or Business Plan line
item;
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(c)
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acquisition
of fixed assets exceeding £50,000 individually or in the aggregate during
any year, except to the extent specifically provided in the approved
budget;
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(d)
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any
material change to the marketing, sales or technology policies established
by the Board;
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(e)
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incurrence
of any liability in excess of £15,000 individually or collectively in any
month, except to the extent specifically provided in the approved
budget;
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(f)
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initiation
or settlement of any litigation or claim exceeding
£35,000;
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(g)
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entering
into any contract not in the ordinary course of the business of the
Company;
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(h)
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entering
into any commercial agreements involving an annual amount exceeding
£50,000, except to the extent specifically provided in the approved
budget;
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(i)
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any
decision or approval required in connection with the Service Agreement;
and
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(j)
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making
payments from the bank accounts of the Company other than in the ordinary
course of business, except as otherwise expressly permitted by this
Agreement.
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4.3.2
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With
respect to the foregoing decisions and actions, the Managing Director
shall notify the Chairman of the Managing Director’s recommendation for
such decision or action. The Chairman shall use reasonable
efforts to inform the Managing Director of his decision thereon within
five business days after such notification. In the event the
Chairman has not notified its decision to the Managing Director within
such five business day period, the Managing Director may consider that the
Chairman disagrees with the recommendation of the Managing Director and
may submit such proposed decision or action to the Board for decision in
accordance with Clause 4.3.3. If the Chairman repeatedly
fails to notify the Managing Director within such five business day period
of its decision on any recommendation from the Managing Director, then
Swico shall have the right to request that MGI replace the Chairman, which
request MGI will consider in good
faith.
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4.3.3
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Disagreement of
Managing Director and the Chairman. Should the Managing
Director and the Chairman disagree with respect to any of the decisions or
actions set forth in Clause 4.3.1, either the Managing Director or
the Chairman may submit such proposed decision or action to the Board for
decision in accordance with this
Agreement.
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4.3.4
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Service
Agreement. The Managing Director shall consult the
Chairman with respect to all decisions relating to the Service
Agreement. The Chairman shall have the opportunity to be
present (including by telephone) or represented at all material
discussions or reporting in connection with the Service Agreement, and the
Managing Director shall provide the Chairman with copies of all material
written communications and summaries of all material oral communications
with Swico relating to the Service Agreement. It is the
intention of the Shareholders that the Chairman shall have the right in
its sole discretion to make any decision to terminate the Service
Agreement on behalf of the Company in accordance with Clause 5(b)
thereof. [Therefore, in the event the Chairman instructs the
Managing Director to terminate the Service Agreement, the Managing
Director shall so terminate the Service Agreement in accordance with the
terms thereof.] Any failure of the Managing Director to so
follow the instructions of the Chairman expressed in compliance with the
Service Agreement shall be deemed to be a material breach of this
Agreement by Swico.
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4.4
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Board of
Directors.
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4.4.1
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Number and
Composition. The board of directors of the Company (the
“Board”)
shall at all times shall be comprised of four members (each, a “Director”), two
of whom shall be designated by MGI and two of whom shall be designated by
Swico.
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4.4.2
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Chairman. The
Board shall be presided by a Chairman (the “Chairman”). He
shall be designated (and may be removed at any time) by MGI from among the
members of the Board appointed by MGI in accordance with Clause 4.4.1, provided, that
MGI shall consult in good faith with Swico prior to so appointing the
Chairman. The Chairman shall not have a second or casting vote
at any meeting of the Board or at any committee
thereof.
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4.4.3
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Removal and
Replacement of Directors.
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Each
Shareholder shall be entitled to remove and replace any Director appointed by it
as provided by Clause 4.4.1.. Each such Shareholder shall indemnify the Company
and keep the Company fully indemnified against any loss or damage or liability
(including without limitation all reasonable legal costs and expenses incurred)
suffered by the Company resulting from the removal or substitution of any
representative Director, or arising from any negligent act or omission of such
representative Director.
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4.4.4
|
Board
Meetings.
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(a)
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Meetings
of the Board shall take place at least once every six-month
period.
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(b)
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A
meeting of the Board may be called by the Chairman or by any Director by
giving notice in writing to the Company and the other Directors specifying
the date, time and agenda for such meeting. Not less than
seven (7) days' notice shall be given to all Directors; provided, however, that
such notice period (i) shall not apply in the case of an adjourned
meeting and (ii) may be reduced with the written consent of all of
the Directors.
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(c)
|
All
meetings of the Board shall require the presence in person, of both
Directors appointed by MGI and both Directors appointed by
Swico. Any Director may, by written notice to all Directors
transmitted by mail, electronic mail or facsimile, appoint his fellow
representative Director as his alternate to attend and vote for such
Director at any Board meeting and in which case such Director shall have
two votes.
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(d)
|
The
adoption of any resolution of the Board shall require the unanimous
approval of all Directors present or represented at a duly constituted
meeting of the Board. In the event the required affirmative
vote is not obtained as to any proposed resolution, then the proposed
resolution will not be adopted and, if it would have resulted in a
modification of the Business Plan or this Agreement, the modification will
not be adopted. The Board shall not at any meeting adopt any
resolution covering any matter that is not specified on the agenda for
such meeting unless all Directors are present at such
meeting.
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(e)
|
Meetings
of the Board, subject to applicable law, may be conducted via telephone or
videoconference, with such participation constituting presence for
purposes of the quorum requirement. Meetings of the Board shall
take place in England.
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(f)
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The
costs of attendance of Directors at meetings of the Board shall, to the
extent permitted by law, be borne by the
Company.
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(g)
|
Any
action that may be taken by the Directors at a meeting of any Board may be
taken by a written resolution signed by all of the Directors in lieu of a
meeting.
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4.4.5
|
Authority of
Board. The Board shall make all major decisions of the
Company and all decisions outside the day- to-day business of the Company,
except for (i) those decisions and actions that may be taken without
such prior approval by the Managing Director alone or with the approval of
the Chairman, in accordance with Clauses 4.2.3(c) or 4.3.1 and
(ii) those decisions and actions that require the approval of the
Shareholders in accordance with Clause 4.5.2. In addition,
the Board shall decide on any matter submitted to it by the Managing
Director or the Chairman in case of disagreement between the Managing
Director and the Chairman. Without limiting the foregoing, the following
decisions and actions shall require the prior approval of the
Board:
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(a)
|
any
acquisition or disposition of assets exceeding £15,000 individually or in
any calendar month, other than as specifically approved by the Chairman or
provided in the approved budget;
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|
(b)
|
entry
into any lease or sublease arrangement of real
property;
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|
|
(c)
|
any
change to the agreed dividend policy set forth in Clause 10.1;
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|
|
(d)
|
incurrence
of indebtedness for borrowed money;
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|
|
(e)
|
acquisition
of the equity of another Person;
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|
|
(f)
|
any
participation in any joint venture or partnership;
and
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|
|
(g)
|
any
material modification to the Business Plan (other than merely adopting
annual budgets), including, without limitation, any such modification that
results in: (i) a decrease in profitability by more than two percent
(2.0%); (ii) an increase of expenses by more than five percent (5.0%)
of the budgeted amount for such category of expenses; or (iii) an
increase in working capital of more than five percent
(5.0%);
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|
|
(h)
|
approval
of the annual budget and strategic plans and business plans proposed by
the Managing Director and approved by the
Chairman.
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|
4.5
|
Shareholder Meetings
and Approval.
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|
4.5.1
|
Meetings of the
Shareholders. Shareholder meetings shall be promptly
convened by the Chairman upon delivery to the Chairman of a written
request therefor by any two Directors. Shareholder Meetings may
otherwise be convened as permitted or required by
law.
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|
4.5.2
|
Shareholder
Approval. The following actions and decisions relating
shall require the approval of the Shareholders by a vote of at least 75%
of all voting rights:
|
|
|
(a)
|
increase,
amortization or reduction of
capital;
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|
|
(b)
|
merger,
spin-off, consolidation or transfer of any portion of the business or
assets of any Company;
|
|
|
(c)
|
nomination
of the statutory auditor;
|
|
|
(d)
|
approval
of the annual accounts and affectation of the
profit;
|
|
|
(e)
|
approval
of agreements with any Related
Party;
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|
|
(f)
|
transformation
of the corporate form of the
Company;
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|
|
(g)
|
dissolution,
liquidation or reorganization or restructuring of the Company;
and
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|
|
(h)
|
all
other matters for which shareholder approval is required in accordance
with applicable law.
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|
5.
|
REPORTING
AND INFORMATION RIGHTS
|
|
5.1
|
Information
Rights. Each Shareholder and its authorized
representatives, the Chairman, and each Director shall have the right,
upon reasonable prior notice, during normal business hours to inspect from
time to time the books and accounting records of the Company, to make
extracts and copies therefrom at its own expense and to have full access
to all of the Company's employees, property and assets. The
Managing Director shall ensure that the foregoing rights and access are
provided.
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5.2
|
Books and
Records. The Company shall, and in particular the
Managing Director shall cause the Company to, maintain proper, complete
and accurate books of account in accordance with generally accepted
accounting principles as applied by MGI and its Affiliates. The
Company shall have its accounts audited annually in accordance with such
standards by a reputable firm of international accountants appointed by
the Shareholders. The Shareholders agree to take all action to
cause the Company to appoint as statutory auditor the firm designated by
MGI, with the initial firm serving as auditor to be
PricewaterhouseCoopers.
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|
5.3
|
Reports. The
Company shall have or shall arrange to have furnished to it under the
Service Agreement, or otherwise, sufficient accounting, technological and
administrative personnel and infrastructure to satisfy the normal
reporting requirements of the MGI group, as communicated by MGI to the
Board and to the Managing Director from time to time, as well as the
requirements of applicable law. Without limiting the
foregoing, the Company shall, and in particular the Managing Director
shall cause the Company to, provide to the Board (i) unaudited
financial data for the period just ended within 3 weeks after
the end of each fiscal year and within 2 weeks after the end of each
quarter (ii) within 2 months after the end of each fiscal year, the
annual audited financial statements of the Company for such fiscal years,
(iii) within two weeks after the end of each quarter,
quarterly unaudited financial statements of the Company for such quarter,
(iv) within 20 days after the end of each month, a management report
including without limitation key operating metrics (e.g. sales and return
statistics), a comparison of operating results with the relevant operating
budget and an explanation of material differences between
actual results and the budgeted amounts, if any and (v) such other
reports as the Board may determine. The failure of the Managing
Director to comply with the foregoing reporting requirements within one
week after notice of non-delivery of the report shall be deemed to be a
material breach of this Agreement by
Swico.
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|
5.4
|
Budgets and Business
Plans. The Managing Director shall prepare proposed
annual operating and capital budgets and business plans for the Company,
which shall be submitted to the Chairman and to the Board for
approval.
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|
6.
|
RESTRICTIONS
ON TRANSFER OF SHARES
|
|
6.1
|
Limitation on
Transfers. No Shareholder shall sell, give, assign,
pledge, encumber, grant a security interest in or otherwise dispose of any
Shares (each, a "Transfer"),
except as expressly permitted by this Clause 6. Any attempt to Transfer any Shares
in violation of the preceding sentence shall be null and void, and the
Company shall not register any such
Transfer.
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|
6.2
|
Transfers. Notwithstanding
any other provision of this Agreement, no Transfer may be made unless
(a) the transferee has agreed in writing to be bound by the terms and
conditions of this Agreement and (b) the Transfer complies in all
respects with the other applicable provisions of this Agreement and the
governing documents of the Company. The non-transferring
Shareholder shall cooperate with the transferring Shareholder in respect
of all transfers permitted
hereunder.
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|
6.3
|
Transfers to
Affiliates. Any Transfer by a Shareholder to an
Affiliate thereof (a “Permitted
Transferee”) may be made on the condition that the Permitted
Transferee shall be bound by and agrees to all of the provisions of this
Agreement and; provided, that
the transferring Shareholder shall obtain the written consent to such
Transfer from the other Shareholder, which shall not be unreasonably
withheld. Any Transfer made in accordance with the previous
sentence may be made without compliance with the provisions of
Clause 6.4 or 6.5. If a Permitted Transferee after
any such Transfer ceases to be an Affiliate of the transferring
Shareholder, such Permitted Transferee shall transfer such Shares back to
such transferring Shareholder.
|
|
6.4
|
Prohibited
Transfers. Notwithstanding anything in this Agreement to
the contrary, no Transfers, other than Transfers permitted pursuant to
Clause 6.3, shall be made prior to July
1, 2012 (the “Lock-up Expiration
Date”).
|
|
6.5
|
Transfers to Third
Parties.
|
|
6.5.1
|
Transfer
Notice. If a Shareholder (the "Transferring
Shareholder") receives a bona fide offer to acquire Shares and the
Transferring Shareholder proposes to accept such offer, the Transferring
Shareholder shall send written notice (the "Transfer
Notice") to the Company and the other Shareholder (the "Offeree"),
which notice shall state (i) the name of the Transferring
Shareholder, (ii) the name and address of the proposed transferee
(the "Transferee"),
(iii) the number of Shares to be Transferred (the "Offered
Shares"), (iv) the amount and form of the proposed
consideration for the Transfer, (v) the other terms and conditions of
the proposed Transfer and (vi) confirmation that the Transferee is
willing to purchase the Shares held by the Offeree on the same terms and
conditions. In the event that the proposed consideration for
the Transfer includes consideration other than cash, the Transfer Notice
shall include a calculation of the fair market value of such consideration
and an explanation of the basis for such calculation. The total
value of the consideration for the proposed Transfer is referred to herein
as the "Offer
Price", and the “Offer Price Per
Share” shall equal the Offer Price divided by the number of Offered
Shares.
|
|
6.5.2
|
Rights of
Offeree. For a period of 30 days after delivery of a
Transfer Notice (the "Offer Period"),
the Offeree shall have the right by delivering written notice to the
Transferring Shareholder to such effect (the “First Refusal
Right”) to (i) purchase in aggregate all, but not less than
all, of the Offered Shares at a purchase price equal to the Offer Price,
(ii) purchase 100% of the Shares held by the Transferring Shareholder
and any Permitted Transferees to which the Transferring Shareholder shall
have transferred Shares at a price equal to the Buyout Price,
(iii) sell all of the Shares owned by it to the Transferee at a price
equal to the Offer Price Per Share multiplied by the number of shares held
by the Offeree and otherwise pursuant to the terms and conditions set
forth in the Transfer Notice (the “Tag Along
Right”) or (iv) withhold its consent to the sale by the
Transferring Shareholder to the Transferee in its absolute discretion, in
which event the Transferring Shareholder shall not consummate such
Transfer. The notice delivered by the Offeree to the Transferring
Shareholder shall state which of the foregoing alternatives (i-iv) the
Offeree has elected.
|
|
6.5.3
|
Sale to Third-Party
Purchaser. Unless the Offeree shall have elected during
the Offer Period in accordance with Clause 6.5.1 to exercise its First Refusal Right, its
Tag Along Right, to be bought out or to withhold its consent to the sale
by the Transferring Shareholder to the Transferee, the Transferring
Shareholder may Transfer all of the Offered Shares to the Transferee
identified in the Transfer Notice on the terms and conditions set forth in
the Transfer Notice; provided, that
the Transfer shall be completed within three months after the giving of
the Transfer Notice.
|
|
7.
|
SWICO
CHANGE OF CONTROL
|
|
7.1
|
Change of Control of
Swico. Swico shall provide to MGI at least forty five
(45) days prior notice of any Swico Change of Control. MGI
shall have the right to purchase all of the Shares held by Swico and all
Permitted Transferees to which Swico shall have transferred Shares at the
Buyout Price, by sending notice to such effect to Swico within thirty (30)
days after receipt of such notice.
|
|
7.2
|
Definition of Swico
Change of Control. A “Swico Change of
Control” shall be deemed to occur if (i) any competitor of MGI
acquires more than 5% of the shares or voting rights of Swico or any
Affiliate thereof (or, in the event the shares of Swico become publicly
traded on a recognized investment exchange, such competitor acquires more
than 10% of the shares or voting rights of Swico or any Affiliate thereof)
or (ii) Xx. Xxxxx Xxxxxxxx ceases to spend at least 50% of his time
in the active day-to-day management of Swico or its Affiliates for any
reason other than death or permanent disability. For the
purposes of this Clause 7.2, Fossil,
Swatch Group, Xxxxxxxx International, Egana, Binda, Xxxxxx and Advance,
and any of their successors in interest, shall be deemed to be competitors
of MGI, and, whether any other Person shall be considered to be a
competitor of MGI shall be determined using reasonable judgment after
taking into consideration the price, market position and placement at
point of sale of the products of such
Person.
|
|
8.
|
FINANCIAL
PERFORMANCE
|
|
8.1
|
Business
Plan. Attached hereto as Annex D is the agreed business
plan for the Company setting out specific financial performance measures
annually for the period ending January 31, 2012 and containing the
underlying principles and assumptions on the basis of which the
Shareholders agree that the Business will be run for the duration of this
Agreement (such business plan, as expressly duly modified by the
Shareholders in accordance with the terms of this Agreement, the “Business
Plan”).
|
|
8.2
|
Poor Financial
Performance Year 5. In the event that, (i) based on
the audited consolidated financial statements of the Company for the years
ended January 31, 2008 through January 31, 2012, the Company has a
cumulative loss or (ii) based on the audited consolidated financial
statements of the Company for the years ended January 31, 2011 and January
31, 2012, the Company has failed to attain an average annual return on
sales of at least 3%, then either Shareholder may elect by notice to the
other Shareholder on or before April 30, 2012 to dissolve the Company, and
both Shareholders shall vote in favour of such dissolution at the
Shareholder Meeting duly convened for such purpose and shall otherwise
co-operate in respect thereof.
|
|
8.3
|
Poor Financial
Performance Year 10. In the event that, based on the
audited consolidated financial statements of the Company for the years
ended January 31, 2015 to January 31, 2017, the Company has failed to
attain an average annual return on sales of at least 5%, then either
Shareholder may elect by notice to the other Shareholder on or before
April 30, 2017 to dissolve the Company, and both Shareholders shall vote
in favour of such dissolution at the Shareholder Meeting duly convened for
such purpose and shall otherwise co-operate in respect
thereof.
|
|
9.
|
BUY
OUT RIGHT
|
|
9.1
|
Buy-Out
Right. MGI shall have the right to purchase the Shares
of Swico and all Permitted Transferees to which Swico shall have
transferred Shares hereunder on July 1, 2017 and each fifth anniversary
thereof (each such date or, if such date is not a business day, the next
following business day, a “Buy-Out Date”),
by notice to Swico at least eighteen (18) months prior to any Buy-Out
Date, at the Buy-Out Price (as defined below). Upon receipt of
such notice, Swico and any such Permitted Transferees shall be required to
so transfer their Shares to MGI on the Buy-Out
Date.
|
|
9.2
|
Buy-Out
Price. The “Buy-Out Price”
shall equal the product of (i) the percentage of total Shares held by
the transferring party(ies) and (ii) 5 multiplied by the “Cash Flow
Value” (which is hereby defined as the average annual operating
cash flow (EBIT) for the three fiscal years prior to the Buy-Out Date
based on the audited consolidated financial statements of the Company),
plus the net asset value of the Company (on a consolidated basis) on the
Buy-Out Date (or minus the net liability value of Company (on a
consolidated basis) on the Buy-Out Date, as the case may
be).
|
|
10.
|
COVENANTS
|
|
10.1
|
Dividend
Policy. The Parties agree that a dividend equal to 75%
of the distributable profits of the Company on a consolidated basis in any
year shall be declared as a dividend to the Shareholders on or before the
15th
month after the end of such year, to the extent permitted by applicable
law; provided, that
such policy may be modified or waived pursuant to decision of the
Board.
|
|
10.2
|
Non-Competition.
|
|
10.2.1
|
During
the term of this Agreement, neither Swico nor its Affiliates shall without
the prior consent of MGI, within any country where the Company regularly
conducts business and distributes products, directly or indirectly
distribute, sell or market any fashion watch brand that is competitive
with any licensed brand distributed by or on behalf of MGI or any of its
Affiliates in such country. Whether any fashion watch brand is competitive
with any of MGI’s or its Affiliates’ licensed brands will be determined
where applicable by reference to the applicable licence agreement itself;
provided
however that brands marketed by or on behalf of any of the following
companies or their Affiliates shall be deemed to be competitive with the
MGI licensed brands: Fossil, Swatch Group, Xxxxxxxx International, Egana,
Binda, Xxxxxx and Advance. Whether any other fashion brand
shall be considered to be competitive with any MGI licensed brand shall be
determined using reasonable judgment after taking into consideration brand
message, price, market position, final consumer profile and placement at
point of sale. The Shareholders will consider appropriate
exemptions from this provision in the event the Company commences to
distribute products in any country other than the United Kingdom, where
Swico or any of its Affiliates have pre-existing
business.
|
|
10.2.2
|
If
Swico breaches any of the provisions of Clause 10.2.1 (the “Non-Compete
Covenant”), MGI shall be released from its obligation to appoint
the Company as distributor for any new MGI licensed
brands.
|
|
10.2.3
|
Swico
agrees that the Non-Compete Covenant is reasonable in geographical and
temporal scope and in all other respects. If any court
determines that the Non-Compete Covenant, or any part thereof, is invalid
or unenforceable, the remainder thereof shall not thereby be affected and
shall be given full effect without regard to the invalid
portions.
|
|
10.2.4
|
If
any court determines that the Non-Compete Covenant is unenforceable
because of the duration or geographic scope of such provision, such court
shall have the power to reduce the duration or scope of such provision, as
the case may be, and, in its reduced form, such provision shall then be
enforceable.
|
|
10.3
|
Non-Solicitation. During
the term of this Agreement and until the second anniversary of the valid
termination or expiration thereof, neither MGI and its Affiliates, on the
one hand, nor Swico and its Affiliates, on the other hand, shall recruit
any employee, officer or director of the other for employment or as a
consultant.
|
|
11.
|
REPRESENTATIONS
AND WARRANTIES
|
|
11.1
|
Each
Shareholder represents to the other Shareholder
that:
|
|
|
11.1.1
|
such
Shareholder has the full power and authority to enter into, execute and
deliver this Agreement and to perform the transactions contemplated hereby
and, if such Shareholder is not a natural Person, such Shareholder is duly
incorporated or organized and existing under the laws of the jurisdiction
of its incorporation or
organization;
|
|
|
11.1.2
|
the
execution and delivery by such Shareholder of this Agreement and the
performance by such Shareholder of the transactions contemplated hereby
have been duly authorized by all necessary corporate or other action of
such Shareholder;
|
|
|
11.1.3
|
assuming
the due authorization, execution and delivery hereof by the other
Shareholder, this Agreement constitutes the legal, valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally;
and
|
|
|
11.1.4
|
the
execution, delivery and performance of this Agreement by such Shareholder
and the consummation of the transactions contemplated hereby will not
(a) violate any provision of the organizational or governance
documents of such Shareholder; (b) require such Shareholder to obtain
any consent, approval or action of, or make any filing with or give any
notice to, any governmental authority in such Shareholder's country of
organization or any other Shareholder pursuant to any instrument, contract
or other agreement to which such Shareholder is a party or by which such
Shareholder is bound, or (c) conflict with or result in any breach of or
default under any of the terms and conditions of any instrument, contract
or other agreement by which such Shareholder is
bound.
|
|
12.
|
FEES
AND EXPENSES
|
|
12.1
|
Each
Shareholder shall bear its own fees and expenses in connection with the
preparation, execution and performance of this Agreement and the other
documents contemplated hereby.
|
|
13.
|
CONFIDENTIALITY
|
|
13.1
|
General
Obligation. Each Shareholder undertakes that it shall
not reveal, and shall use its reasonable efforts to ensure that its
directors, officers, managers, partners, members, employees, legal,
financial and professional advisors and bankers (collectively, "Representatives")
do not reveal, to any third party any Confidential Information without the
prior written consent of the Company or the Shareholder concerned, as the
case may be. The term "Confidential
Information" as used in this Agreement means (a) any
information concerning the organization, business, technology, finance,
transactions or affairs of the Company and each Shareholder or any of
their respective directors, officers or employees (whether conveyed in
written, oral or in any other form and whether such information is
furnished before, on or after the date of this Agreement) and (b) any
information or materials prepared by a Shareholder or its Representatives
that contains or otherwise reflects, or is generated from, Confidential
Information.
|
|
13.2
|
Exceptions. The
provisions of Clause 13.1 shall not
apply to:
|
|
|
13.2.1
|
disclosure
of Confidential Information that is or becomes generally available to the
public other than as a result of disclosure by or at the direction of a
Shareholder or any of its Representatives in violation of this
Agreement;
|
|
|
13.2.2
|
disclosure
by a Shareholder to its
Representatives;
|
|
|
13.2.3
|
disclosure,
after giving prior notice to the other Parties to the extent practicable
under the circumstances and subject to any practicable arrangements to
protect confidentiality, to the extent required under the rules of any
stock exchange or by applicable laws or governmental regulations or
judicial or regulatory process or in connection with any judicial process
regarding any legal action, suit or proceeding arising out of or relating
to this Agreement; or
|
|
|
13.2.4
|
disclosure
by any Shareholder of Confidential Information concerning the Company that
is reasonably necessary in the ordinary course of business or otherwise in
connection with transactions or proposed transactions of the
Company.
|
|
13.3
|
Disclosure to Third
Parties. Upon any Shareholder entering into negotiations
with any Person with a view to Transferring any Shares to such Person,
information in respect of the Company that is reasonably necessary to
permit such Person to evaluate the business of the Company may be provided
to such Person, provided that
such Person has executed a confidentiality agreement in such form as may
be reasonably required by the Board; and provided further that if
such Person is involved in a business in competition with that of the
Company, the Board may prohibit the disclosure of any such Confidential
Information as the Board may
determine.
|
|
14.
|
PUBLICITY
|
|
14.1
|
Except
as required by law or regulations of any stock exchange or by any
governmental authority, no publicity release or public announcement
concerning the relationship or involvement of the Parties shall be made by
any Shareholder without advance approval thereof by the other Shareholder,
which approval shall not be unreasonably
withheld.
|
|
15.
|
TERMINATION
AND BREACH
|
|
15.1
|
Term. This
Agreement shall become effective upon the execution hereof by the
Shareholders and the Company and shall continue in effect until the
earlier to occur of (a) the date on which the Company goes into
liquidation or dissolution, any property or assets of the Company are
placed in the hands of a receiver, trust custodian or liquidator or a
winding up order in respect of the Company is issued, or (b) the date
on which this Agreement is validly terminated in accordance with
Clause 15.2 or (c) any date agreed
upon in writing by the Shareholders or (e) where all the Shares are held
by one Person.
|
|
15.2
|
Breach.
|
|
|
15.2.1
|
Upon
the material breach of this Agreement by any Shareholder, the
non-breaching Shareholder may provide to the breaching Shareholder
notification of such material breach, setting forth in reasonable detail
therein the nature of such material breach. The breaching
Shareholder and the non-breaching Shareholder shall meet to discuss in
good faith the material breach and the cure thereof. Following such
discussion, formal notification (the “Notification”)
may be given by the non-breaching Shareholder to the breaching Shareholder
of the breach and requesting that the breaching Shareholder cure the
breach.
|
|
|
15.2.2
|
If
the breaching Shareholder shall not have cured such breach within 30 days
after delivery of the Notification, the non-breaching Shareholder may,
without prejudice to any other legal remedies it may have, within 60 days
after expiration of such 30-day period, [(i) elect to terminate this
Agreement and the Distribution Agreements], and dissolve and liquidate the
Company (and the breaching Shareholder shall take all actions to
co-operate in respect of the implementation of such dissolution and
liquidation (including voting in favour thereof at the shareholder meeting
duly convened for such purpose)) or (ii elect to purchase the
interests held by the breaching Shareholder and any Permitted Transferees
thereof in the Company at a price equal to the product of (a) the
percentage of total Shares held by the breaching Shareholder (and any
Permitted Transferees thereof) and (b) 90% of 5 multiplied by the
Cash Flow Value, plus the net asset value of the Company (on a
consolidated basis) on the Buy-Out Date (or minus the net liability value
of the Company (on a consolidated basis) on the Buy-Out Date,
as the case may be). Notwithstanding the foregoing, if the
Breach occurs during the 5 first years of activity (to January 31, 2012),
such price will be equal to the multiple of (a) the percentage of
total Shares held by the breaching Shareholder (and any Permitted
Transferees thereof) and (b) 5 multiplied by the annual operating
cash flow for the last fiscal year prior to the Buy-Out Date based on the
audited consolidated financial statements of the Company, plus the net
asset value of the Company (on a consolidated basis) on the Buy-Out Date
(or minus the net liability value of the Company (on a consolidated basis)
on the Buy-Out Date, as the case may be). Alternatively the
non-breaching Shareholder may offer to purchase the Shares held by the
breaching Shareholder and any Permitted Transferees thereof in the Company
at any other price to be negotiated by the
Parties.
|
|
|
15.2.3
|
A
“material breach” for purposes of this Clause 15.2 shall include the breach by a Shareholder
of the provisions of this Agreement (including without limitation of the
management rules, the decision-making process or the non-compete or
non-solicitation undertakings) or a breach of the provisions of the
Distribution Agreements or the Service Agreement (with any beach thereof
by any Affiliate of MGI being attributed to MGI and any breach thereof by
any Affiliate of Swico being attributed to Swico) resulting, in any of the
foregoing events in damages to the Company in excess of
£35,000. Any material breach of, or actions inconsistent with,
the terms of this Agreement (i) by the Managing Director or any
Director designated by Swico shall be attributed to Swico, and
(ii) by the Chairman or any Director designated by MGI shall be
attributed to MGI.
|
|
15.3
|
Damages. In
no event shall any Shareholder be required to pay indirect or
consequential damages in respect of any breach by such Shareholder of any
provision of this Agreement, except in the event of
fraud.
|
|
16.
|
NOTICES
|
|
16.1
|
Each
notice or other communication hereunder shall be in writing and delivered
or sent to the relevant Shareholder at its address or fax number set out
in Schedule 1 (or such other address or fax number as the addressee may
specify to the other Parties). Any notice or other
communication shall be deemed to have been delivered
(a) if given or made by letter, when actually delivered to the
relevant address; and (b) if given or made by fax, upon dispatch and
the receipt of a transmission report confirming
dispatch.
|
|
17.
|
MISCELLANEOUS
|
|
17.1
|
No
Partnership. The Shareholders expressly do not intend
hereby to form a partnership, either general or limited, under any
jurisdiction's partnership law. The Shareholders do not intend
to be partners one to another, or partners as to any third party, or
create any fiduciary relationship among themselves, solely by virtue of
their status as Shareholders.
|
|
17.2
|
Discrepancies. If
there is any discrepancy between any provision of this Agreement and any
provision of the governing documents of the Company, the provisions of
this Agreement shall prevail, and the Parties shall procure that such
governing documents are promptly amended, to the extent permitted by
applicable law, in order to conform with this
Agreement.
|
|
17.3
|
Amendment. This
Agreement may not be amended, modified or supplemented except by a written
instrument executed by each of the
Parties.
|
|
17.4
|
Waiver. No
waiver of any provision of this Agreement shall be effective unless set
forth in a written instrument signed by the Shareholder waiving such
provision. No failure or delay by a Shareholder in exercising any right,
power or remedy under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of the same preclude any further
exercise thereof or the exercise of any other right, power or
remedy. Without limiting the foregoing, no waiver by a
Shareholder of any breach by the other Shareholder of any provision hereof
shall be deemed to be a waiver of any subsequent breach of that or any
other provision hereof.
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17.5
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Entire
Agreement. This Agreement (together with the agreements
attached as Annexes hereto) constitutes the whole agreement between the
Parties relating to the subject matter hereof and supersedes any prior
agreements or understandings relating to such subject
matter.
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17.6
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Severability. Each
and every obligation under this Agreement shall be treated as a separate
obligation and shall be severally enforceable as such and in the event of
any obligation or obligations being or becoming unenforceable in whole or
in part. To the extent that any provision or provisions of this
Agreement are unenforceable they shall be deemed to be deleted from this
Agreement, and any such deletion shall not affect the enforceability of
this Agreement as remain not so
deleted.
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17.7
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Assignment; Binding on
Transferee. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their
respective successors and Permitted Transferees and transferees under
Clause 6.5 from and after the effective
date hereof. Neither Party may transfer its rights and
obligations under this Agreement without the prior written consent, which
shall not be unreasonably withheld, of the other
Party.
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18.
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GOVERNING
LAW AND JURISDICTION
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18.1
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This
Agreement shall be governed by and construed in accordance with the laws
of England.
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18.2
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Disputes.
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18.2.1
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Any
dispute or claim arising out of or in connection with or relating to this
Agreement, or the breach, termination or invalidity hereof, including any
claim for injunctive relief, shall be finally settled by arbitration under
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce (the "Rules") as are
in force at the time of any such arbitration. For the purpose
of such arbitration, there shall be three arbitrators appointed in
accordance with the Rules. The place of arbitration shall be in
London. All arbitration proceedings shall be conducted in the
English language. Judgment upon any arbitral award
rendered hereunder may be entered in any court having jurisdiction, or
application may be made to such court for a judicial acceptance of the
award and an order of enforcement, as the case may
be.
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18.2.2
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Each
Shareholder shall co-operate in good faith to expedite (to the maximum
extent practicable) the conduct of any arbitral proceedings commenced
under this Agreement.
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18.2.3
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The
costs and expenses of the arbitration, including, without limitation, the
fees of the arbitrators shall be borne equally by each party to the
dispute or claim, and each party shall pay its own fees, disbursements and
other charges of its counsel.
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18.2.4
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Any
award made by the arbitrators shall be final and binding on each of the
Parties that were parties to the dispute. The Shareholders
expressly agree to waive the applicability of any laws and regulations
that would otherwise give the right to appeal the decisions of the
arbitrators or to seek specific performance in another forum so that there
shall be no appeal to any court of law for the award of the arbitrators,
and a Shareholder shall not challenge or resist the enforcement action
taken by any other the other Shareholder in whose favour an award of the
Arbitration Panel was given.
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IN WITNESS WHEREOF, the
undersigned have executed this Agreement on the date first above
written.
SWICO
LIMITED MOVADO
GROUP, INC.
By: /s/
Xxxxx X.
Xxxxxxxx By:
/s/ Xxxxxxx X. Xxxxxx
Name:
X.X.
Xxxxxxxx Name:
X.X. Xxxxxx
Title:
C.E.O. Title:
General Counsel
MGS
DISTRIBUTION LIMITED
By: /s/
Xxxxx X. Xxxxxxxx
Name:
X.X. Xxxxxxxx
Title:
Managing Director
C:\Documents
and Settings\Xxxxx\My DocumentsSmithsons\MGI-Swico JV Agmt (draft
220207).doc
Schedule
1
SHAREHOLDERS
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A.
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Movado
Group, Inc.
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Principle
Office: 000 Xxxx Xxxx, Xxxxxxx, XX
00000
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Address
for notification: same, to the attention of Xxx Step, with a copy
to:General Counsel, Movado Group, Inc., 000 Xxxx Xxxx, Xxxxxxx, XX 00000,
X.X.X.
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B. SWICO
LIMITED
Registered Office: Xxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxxx, Xxxxxx XX00 0XX England
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Address
for Notification: same as Registered
Office ,
to theattention of Xxxxx Xxxxxxxx
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SERVICE
AGREEMENT
BETWEEN
SWICO
LIMITED
MOVADO
GROUP, INC
and
MGS
DISTRIBUTION LIMITED
——————————————————
Dated as
of May 11, 2007
——————————————————
SERVICE
AGREEMENT
SERVICE
AGREEMENT, dated as of May 11, 2007 (this “Agreement”), between
SWICO LIMITED a corporation incorporated under the laws of England, having its
registered office at Xxxxxxx, Xxxxxxxxx, Xxxxxx XX00 0XX, England, registered
number 469666 (“Swico”), MOVADO GROUP, INC., a corporation
incorporated under the laws of New York, having its principle office at 000 Xxxx
Xxxx, Xxxxxxx, XX 00000 (“MGI”) and MGS DISTRIBUTION
LIMITED, a corporation incorporated under the laws of England, having
its registered office at x/x Xxxxx, Xxxxxxx, Xxxxxxxxx, Xxxxxx XX00
0XX, Xxxxxxx, registered number 6183896
(“Company”).
W I T N E
S S E T H:
WHEREAS,
Swico has entered into a Joint Venture Agreement, dated as of May 11, 2007 with
the Company and MGI (the “JV Agreement”), pursuant to which Swico and MGI have
taken, respectively, a 51% and 49% interest in the Company and have established
a joint venture relationship relating to the sale, marketing and distribution of
certain watch brands in the United Kingdom; and
WHEREAS,
it is contemplated in the JV Agreement that Swico will provide certain services
to the Company pursuant to a services agreement to be entered into between Swico
and the Company; and
WHEREAS,
set forth in this Agreement are the terms and conditions of the services to be
provided by Swico to the Company as contemplated by the JV
Agreement.
NOW,
THEREFORE, the parties hereto agree as follows:
19. SERVICES
GENERALLY.
19.1 Services Provided by
Swico
. During
the term of this Agreement, Swico shall provide to the Company the services
described on Annex “A” hereto and otherwise as set forth in this Agreement (the
“Services”), in each case as requested by the Company.
(b) Exclusivity
. The
Company shall obtain the Services exclusively from Swico during the term of this
Agreement.
Section
2. Logistics
Services
(a) Warehouse. Swico
will maintain a warehouse facility and fulfillment center at the address first
set forth above or at such other location as may be reasonably acceptable to the
Company (the “Facility”) and within such Facility will maintain a secure,
contiguous dedicated area in such location as the Company shall reasonably
request exclusively for the storage of watches owned, consigned to and/or to be
sold by the Company (“Merchandise) sufficient for all the Merchandise on hand at
any one time in the Facility to be stored in such area (“Secure
Area”). Swico will employ such measures to ensure that the Secure
Area is reasonably secure and that the Merchandise kept therein is reasonably
protected from loss and damage. Such measures shall include (a)
keeping the Facility protected by alarms at all times; (b) providing full time
(twenty-four (24) hour/seven (7) day) video cameras; (c) utilizing secured
rolling cages for shipping and receiving and (d) using other measures as the
Company shall reasonably request. Swico at all times will keep all
Merchandise on hand in the Facility in the Secure Area except those individual
items in receiving (as provided in section 2(b)) and in shipping (as provided in
section 2(c)).
(b) Receiving. Swico
will receive all Merchandise and all related materials, including, without
limitation, boxes, warranty cards, operating manuals, advertising material and
the like, and all other materials shipped to it, either by MGI, any of its
Affiliates or from retailers or other customers (“Accounts”) returning
Merchandise directly to the Facility, and, upon receipt of such Merchandise,
Swico will verify that the correct quantity, stock keeping unit (“SKU”) and
technical reference numbers are received and will visually check each item
received for defects, damage or other observable non-conforming variances. In
addition to the Merchandise to be received from MGI, its Affiliates and Accounts
as described above, Swico acknowledges that as of the date hereof, it is holding
certain additional Merchandise of the Company consisting of XXXXX XXXXXXXX,
LACOSTE and HUGO BOSS watches which are part of the Merchandise to be used for
the fulfillment of Customer Orders as provided hereunder. Swico shall make
appropriate records of and will store all Merchandise so verified and checked in
the Secure Area. All non-conforming Merchandise will be segregated
from conforming Merchandise and stored in a separate location within the Secure
Area pending disposition in accordance with such instructions as the Company
shall advise, and a record will be made thereof by the employee performing the
check, identifying each non-conforming item by shipment or xxxx of lading
number, order number, date of receipt, SKU and technical reference number, and
such other information as the Company shall require. Swico will send the Company
weekly “Discrepancy and Defective Reports” setting out in detail all
non-conforming Merchandise and all shortages in shipments received in the prior
week.
(c)
Shipping. Swico
will pick, pack and ship all Merchandise ordered by Accounts (“Customer Orders”)
in accordance with such procedures and instructions as the Company shall advise
from time to time. All Merchandise shipped to Accounts will be
packaged with box, operating manual, warranty card, invoices, packing slips and
such other documents, packaging material, if any, as the Company shall instruct;
provided that MGI or its Affiliate shall have furnished such material to Swico
(except the invoices and packing slips which Swico shall print itself). Swico
will ship all Merchandise in fulfillment of Customer Orders by seventy two (72)
hours courier delivery, or otherwise as the Company shall instruct, at the
Company’s expense, within twenty-four (24) hours after Swico’s receipt of each
such order. The Company will obtain insurance coverage for any and all such
Merchandise in transit from the Facility to any Account.
(d)
Records All bills
of lading for all such shipments will be retained by Swico for at least twelve
(12) months after which time, unless sooner requested, such documents shall be
sent to the Company.
(e)
Information
Systems. Swico at all times will maintain an information system with full
functionality, and adequate, as reasonably determined by MGI, for the accurate
and timely reporting of all information pertaining to the Merchandise, including
inventory on hand, Merchandise available to ship, open orders, sales and
shipments made and such other information as required by MGI and the Company
(“Information System”). Swico will perform periodic cycle counts of
the Merchandise and, once yearly, will conduct a physical inventory
of Merchandise on hand and furnish the Company and MGI with a written report
detailing by SKU all such Merchandise and reconciling the inventory of
Merchandise on hand with Customer Orders received and all shipments made in
fulfillment thereof (respectively), each item of Merchandise so shipped
identified by SKU and technical reference number and such other information as
MGI or the Company shall require from time to time . Swico will
notify MGI and the Company in advance of any annual physical inventory and each
of them shall each have the right to have a representative present during such
inventory.
(f) Risk of
Loss. Except for any loss or damage not covered by the
insurance procured pursuant to Section 2(g) hereof and resulting from Swico’s
breach of this Agreement or gross negligence or willful misconduct, the Company
shall at all times bear all risk of loss of or damage to the Merchandise in the
Facility, and, subject to Section 2(h) hereof, until delivery thereof is made to
the appropriate Account in fulfillment of a Customer Order.
(g) Insurance. Swico
shall procure on behalf of the Company and shall maintain in effect at all times
adequate insurance coverage for the Merchandise in the Facility against all
expected risks, including theft and destruction. The Company, on
behalf of itself and all parties claiming by, through or under it, releases and
discharges Swico from all claims and liabilities arising from or caused by any
casualty or hazard covered in whole or in part by such insurance on the
Merchandise and waives any right of subrogation which might otherwise exist in
or accrue to any person on account thereof.
(h) Indemnity. Except
as provided in Sections 2(f) or 2(g), Swico shall be liable for, and shall
indemnify and hold the Company harmless against, any loss or damage arising out
of any act or omission on the part of Swico or its officers, employees, agents,
contractors and representatives in respect of or relating to any of the
Merchandise.
(i) Physical
Inventory. Each of MGI and the Company in its sole discretion,
at its sole expense and upon reasonable notice to Swico, reserves the right to
conduct, from time to time subsequent to the date hereof, physical inventories
of Merchandise held by Swico and to audit Swico's applicable inventory and sales
records and all other books and records pertaining to this
Agreement. Swico agrees to fully cooperate and assist in conducting
any such inventory and/or audit. Swico shall have the right to
observe and participate in the conduct of the inventory by MGI or the
Company. Swico shall be solely responsible for
shrinkage exceeding 0.20% annually (i.e., difference
between book and physical inventory) evidenced by either a physical inventory
conducted by Swico or as a result of a physical inventory conducted by MGI or
the Company. Swico shall prepare and submit to the Company, within
ten (10) days after the completion of any physical inventory performed by or for
Swico, a report reconciling the Company’s outstanding Merchandise to physical
inventory on hand (the "Reconciliation Report"). The Reconciliation
Report shall list each item of Merchandise by SKU and by technical reference
number. In the event of a discrepancy between the Reconciliation
Report prepared by Swico and the results of any inventory conducted by MGI or
the Company, the parties hereto shall attempt in good faith to mutually agree on
the resolution of such discrepancies failing which resolution within thirty (30)
days, the discrepancy will be reconciled by PricewaterhouseCoopers whose
determination shall be binding. The costs for such independent accountants shall
be borne equally by the parties.
(j) Title. Title to the
Merchandise shall remain and be vested at all times solely in the Company, and
Swico will not, and will not permit any other person to, encumber the
Merchandise or assert any interest, claim, lien, or right in or in respect of
the Merchandise. Swico hereby waives any security interest it may
have or that it may be entitled to assert as a matter of law in the Merchandise,
including, without limitation, any warehouseman’s lien. Swico will
not issue any warehouse receipt or any other document or instrument, negotiable
or non-negotiable, in respect of any of the Merchandise to any person or entity
other than the Company.
SECTION 3. REPORTING AND
PLANNING.
(a) SWICO
shall provide to the Company before the 10th day of each month a full written
quality report regarding all Services provided by Swico for the preceding
month. Such report shall include relevant details regarding all such
Services in order to permit the Company to monitor the quality and volume of the
Services provided, including (i) shipment indicators, (ii) repairs indicators,
(iii) returns indicators, (iv) bookkeeping indicators and (v) other information
as reasonably requested by the Company.
(b) At
least once per Quarter, the Managing Director of Swico and/or the Chairman of
Swico, and the Managing Director of the Company and the Chairman of the the
Company shall discuss the scope of the Services provided hereunder, the
expectations of the Company for the following month with respect to Services
anticipated to be required for such following month and generally any issues
related to the Services provided hereunder.
Section
4. Prices
and Billing.
Prices for
Services
. The
prices for the Services shall be as set forth on Annex B and shall consist of
the Base Fee and the Commission (as such terms are defined on Annex
B). Any modification to such prices for any reason whatsoever shall
require the approval in writing of the Chairman and the Managing Director of the
Company, on the one hand, and Swico, on the other hand.
19.2 Procedure
. Swico
shall submit to the Company on or after the 15th day of each month an invoice in
the amount of the monthly Base Fee due for Services rendered hereunder by Swico
during the preceding month. Such invoice shall include all reasonable
detail regarding the Services provided and shall be payable by the Company
within 30 days after the date of delivery thereof to the Company. In addition,
and together with payment of the Base Fee, the Company shall pay Swico the
Commission as set forth on Annex B together with a statement of net sales on the
basis of which the Commission was calculated.
SECTION 5. TERM AND
TERMINATION.
(a) Term
. Unless
otherwise terminated pursuant to Section 5(b), this Agreement will terminate
upon termination of the JV Agreement. Section 7 shall survive any
such termination.
(b) Early
Termination
. (a) In
the event the Company shall have obtained a good-faith written proposal of a
third party to provide all of the Services hereunder for a price equal to 85%
(or less) of the actual amounts invoiced for such Services by Swico (based on
the average of such actual amounts over the preceding six-month period), the
Company may provide notice to Swico (including a copy of such proposal) of the
Company’s intention to terminate this Agreement with respect to all
of the Services; provided, that Swico shall have the right to continue to
provide the Services upon the terms and conditions set forth in such third-party
proposal by notice to such effect to the Company within 60 days following
delivery by the Company of its notification to Swico. Should
Swico fail to so accept to provide the Services upon the terms and conditions
set forth in such third-party proposal within such time period, the Company may
terminate this Agreement by notice to Swico, such termination to be effective on
the tenth business day after such notification of termination.
In the
event of a material breach by Swico of its obligations hereunder, which shall
include without limitation continuing provision of substandard Services, the
Company may provide notice of such material breach of Swico. Such
notification shall include reasonable details regarding the nature of the
material breach, and Swico and the Chairman and Managing Director of the Company
shall meet to discuss the circumstances of such material breach and
possibilities for the cure thereof. If Swico shall not have cured
such material breach within 60 days after such notification, the Company may
terminate this Agreement by delivery of written notice to Swico, such
termination to be effective immediately upon delivery of such
notification.
SECTION 6. FORCE
MAJEURE
. No
party shall be responsible for failure or delay in the performance of any
Services, nor shall any party be responsible for failure or delay in receiving
such Service, if caused by an act of God or public enemy, war, terrorism,
government acts or regulations, fire, flood, embargo, quarantine, epidemic,
labor stoppages beyond its reasonable control, accident, unusually severe
weather or other cause similar to the foregoing beyond their control (herein
called “Force Majeure”); provided, that the party affected by Force Majeure
shall have exercised all reasonable efforts to avoid or minimize the effects of
such event or condition.
SECTION
7. CONFIDENTIALITY.
(a) Confidential
Information
. Each
party recognizes that in the performance of this Agreement confidential and/or
proprietary information belonging to any other party regarding the Services may
be disclosed or become known to any other party or its respective affiliates
(“Confidential Information”). Unless otherwise expressed in writing
to the other party, information that is exchanged between the parties shall be
presumed to be confidential and/or proprietary. Each party agrees to
take, and to cause its affiliates to take, such precautions as such party
normally takes with its confidential and/or proprietary information to hold in
confidence all confidential and/or proprietary information with respect to the
Services that belong to the other party.
(b) Exceptions
. This
Section 7 shall not apply to:
information
which, at the time of disclosure, is in the public domain;
information
which, after its disclosure, becomes part of the public domain by publication or
otherwise, except in breach of this Agreement;
information
which Swico or the Company shall receive from a third party; provided, however, that the
third party has the right to disclose the Confidential Information to Swico or
the Company, as the case may be; or
information
which is required by law, rule or regulation (including the rules of any stock
exchange on which such party’s securities are listed) to be disclosed; provided that the
disclosing party provides prompt notice of such disclosure (and to the extent
practicable, shall provide such notice prior to such disclosure).
SECTION
8. MISCELLANEOUS.
(a) Notices
. All
communications provided for hereunder shall be in writing and shall be deemed to
be given when delivered in person or by overnight courier with receipt, when
telefaxed and received, or 5 days after being deposited with the postal service,
first-class, registered or certified, return receipt requested, with postage
paid and,
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if
to Swico:
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Xxxxxxx,
Xxxxxxxxx, Xxxxxx XX00 0XX, Xxxxxxx
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Attention :
Xxxxx Xxxxxxxx
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Facsimile:
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if
to the Company
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c/o
Swico at the address above:
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Attention: Chairman
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Facsimile:
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And a
copy to MGI by email at: xxxxxxx@xxxxxxxxxxx.xxx
or to
such other address as any such party shall designate by written notice to the
other party hereto.
(b) Standard of
Care Swico shall provide the Services in all
material respects using substantially the same diligence and care as it uses in
performing similar services in respect of its own businesses.
(c) Non-Assignability
. This
Agreement shall inure to the benefit of and be binding on the parties hereto and
their respective successors and permitted assigns. This Agreement
shall not be assigned by any party hereto without the express prior written
consent of the other parties, and any attempted assignment, without such
consent, shall be null and void. This agreement could be assigned by Swico to
any of its Affiliates (as defined in the JV Agreement).
(d) Amendment;
Waiver.
This Agreement may be amended, supplemented or otherwise modified only by a
written instrument executed by each of the parties hereto. No waiver
by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so
waiving. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants, or
agreements contained herein, and in any documents delivered or to be delivered
pursuant to this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
(e) Third
Parties
. This
Agreement does not create any rights, claims or benefits inuring to any Person
that is not a party hereto (except, where specifically so provided, for
affiliates of the parties who are entitled to receive Services) nor create or
establish any third party beneficiary hereto.
(f) Governing
Law
. This
Agreement and the rights and duties of the parties hereunder shall be governed
by, and construed in accordance with, the laws of England.
(g) Dispute
Resolution
. Any
dispute or claim arising out of or in connection with or relating to this
Agreement, or the breach, termination or invalidity hereof, including any claim
for injunctive relief, shall be finally settled by arbitration under the Rules
of Conciliation and Arbitration of the International Chamber of Commerce (the
"Rules") as are in force at the time of any such arbitration. For the
purpose of such arbitration, there shall be three arbitrators appointed in
accordance with the Rules. The place of arbitration shall be in
London. All arbitration proceedings shall be conducted in the English
language. Judgment upon any arbitral award rendered hereunder
may be entered in any court having jurisdiction, or application may be made to
such court for a judicial acceptance of the award and an order of enforcement,
as the case may be. Each of Swico and the Company shall cooperate in good faith
to expedite (to the maximum extent practicable) the conduct of any arbitral
proceedings commenced under this Agreement. The costs and expenses of the
arbitration, including, without limitation, the fees of the arbitrators, shall
be borne equally by each party to the dispute or claim, and each party shall pay
its own fees, disbursements and other charges of its counsel. Any award made by
the arbitrators shall be final and binding on each of the Parties that were
parties to the dispute. The Parties expressly agree to waive the
applicability of any laws and regulations that would otherwise give the right to
appeal the decisions of the arbitrators or to seek specific performance in
another forum so that there shall be no appeal to any court of law for the award
of the arbitrators, and a Shareholder shall not challenge or resist the
enforcement action taken by the other Shareholder in whose favor an award of the
Arbitration Board was given.
(h) Entire
Agreement
. This
Agreement and the Joint Venture Agreement contain the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter; provided that in the event any provision of this Agreement and
the JV Agreement are in conflict in relation to the matters addressed by this
Agreement, the provisions of this Agreement shall prevail. Any
capitalized term used but not defined herein shall have the meaning given such
term in the Joint Venture Agreement. Neither party shall be liable or bound to
any other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein or in
the JV Agreement.
(i) Severability
. If
any provision of this Agreement shall be declared by any court of competent
jurisdiction to be illegal, void or unenforceable, all other provisions of this
Agreement shall not be affected and shall remain in full force and
effect.
(j) Employees Notwithstanding
anything contained in this Agreement, (i) the individuals employed by Swico
who provide Services pursuant to this Agreement shall in no respect be
considered employees of the Company for purposes of this Agreement;
(ii) Swico shall act as the sole employer of the individuals it employs and
shall not delegate any employment functions to the Company; (iii) Swico
shall have the sole responsibility for the day-to-day control and supervision of
the individuals whom it employs in connection with this Agreement and
(iv) Swico retain any and all liability with respect to the actions,
activities and conduct of such individuals in full (including any
employment-related claims, litigation or other assertions of liability or
responsibility).
(k) Scope of
Relationship. The parties acknowledge and agree that the
relationship between them under this Agreement is that of independent
contractors and nothing contained in this Agreement or otherwise shall be
construed to constitute or create a partnership, agency relationship or joint
venture between such parties. No party has the power or authority to
act on behalf of any other party, except as expressly set forth in this
Agreement or as authorized in writing by the other party.
(l) Further
Assurances
. From
time to time after the date hereof, as and when requested by a party hereto and
at such party’s expense, the other party shall, and shall cause its affiliates
to, execute and deliver all documents and instruments and take all other actions
as the requesting party may reasonably deem necessary or desirable to evidence
or effectuate any of the transactions contemplated hereby.
[Signature
page follows]
IN
WITNESS WHEREOF, the parties have executed this Services Agreement as of the
date first written above.
SWICO
LIMITED
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By:
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________________________________
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Name:
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Title:
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MOVADO
GROUP,INC.
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By:
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________________________________
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Name:
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Title:
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MGS
DISTRIBUTION LIMITED.
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By:________________________________
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Name:
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Title:
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ANNEX A
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Finance:
Cost /
Profit centers management,
Processing
sales and purchase invoices into the accounting system;
Matching
of accounting system and bank accounts;
Invoice
check and approval follow-up,
Preparing
bank disbursements for signature and approval;
Preparation
of quarterly management accounts (monthly P&L, quarterly
balance-sheet);
Preparation
of monthly sales analysis;
Preparation
of monthly management reports;
Preparation
of Forecasts,
Preparation
of Treasury reporting,
Preparation
of statutory and US GAAP financial statements
Maintenance
of credit control management, processing of customer payments,
Preparation
of payroll journals for processing by outsourced payroll bureau;
Accounting
closing process;
Maintaining
cashbook records and reconciling to the accounting system and bank
accounts;
Reconciliation
of accounting records to supporting schedules
Preparation
of statutory and US GAAP financial statements
Tax
:
Tax
declaration with external auditors,
Tax
control organization,
Tax
reporting,
Insurance
:
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Arrange
for inclusion of the Company under Swico’s umbrella coverage (except for
marine insurance for goods in
transit)
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Check of
insurance coverage and premium follow-up,
Management
of all insurance claims,
Contact
with corporate insurance and medical care,
IS:
Follow-up
of outsourced IS maintenance provider for network, PC and printers,
Follow-up
of upgrades or purchase for both Soft and Hardware;
Provide
basic service for Helpdesk (include trouble shooting/PC setup);
Support
various inquiries/troubles about core business application;
Maintain
the network
Purchase
:
Negotiation
with suppliers,
Management
of general purchases : phones, cars, office supplies, copiers and faxes,
logistic costs,
Follow-up
of free-lancers contracts,
Savings
plan management,
Human
Resources:
Administration
of outsourced payroll bureau, income taxes and national insurance
declaration;
Follow-up
and update of HR files, contracts update,
Reporting
to authorities regarding HR data,
Trainings
management,
Part-time
agency management,
Sales
Customer Service:
Support
for forecasts, and monthly reporting,
Margin
analysis,
Processing
sales orders provided by Sub.;
Taking
telephone sales orders from retail customer and seeking approval from
Sub;
Dealing
with retail consumer queries regarding product availability and
pricing;
Providing
back order information to Sub on request;
Maintaining
product descriptions and pricing as approved by Sub;
Invoicing
(post shipment) sales
After-sales
Customer Service:
Invoicing
retail customers and end consumers for spare parts, after-sales services and
repairs;
Customer
receivables follow-up,
Support
for forecasts, reporting.
Logistics:
Arrangement
of import and export of the goods and POS materials;
QC
work for imported products and returns from the trade based on the QC
standard;
Physical
stock taking on quarterly basis;
Storage
of goods for resale, i.e. watches, straps and bracelets (incl. branded
packaging);
Storage
of marketing and promotional materials,
Maintenance
of perpetual inventory records for the above;
Shipment
of goods & invoices to retail customers in accordance with sales
orders;
Shipment
of after-sales serviced watches to retail customers and end
consumers;
Shipment
of after-sales spare parts to retail customers and end consumers;
Shipment
of branded displays and visuals to retail customers;
Shipment
of branded catalogues and price list to retail customers and end
consumers;
Participation
to mailing actions,
012200-0075-02839-NY02.2382231.11
- -
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|
ANNEX
B
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Prices for the
Services
Swico’s
total compensation for the duration of this Agreement for all Services rendered
shall consist of an annual base fee, in the amount set forth below (“Base Fee”),
and a commission (“Commission”) equal to * by any distributor (other than the
Company) appointed as the exclusive distributor of such Products in that country
(“Distributor”). For purposes of this Agreement, “Products” means watches sold
under any brand (other than XXXXX XXXXXXXX) which is licensed to MGI or any
Affiliate of MGI; provided such watches are also sold by the Company. The term
“net sales” means the price for the Products invoiced by the Distributor, net of
taxes, freight, duties, insurance and any discounts.
Annual Base Fee
(£)
Year 1
: *
Year 2
: *
Year 3
: *
Year 4
: *
Year 5
: *
Year 6
: *
Each year
after year 6 the annual Base Fee shall be three percent (3.0%) more than the
Base Fee in the immediately preceding year.
*CONFIDENTIAL
PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
RULE 24b-2 OF THE 1934 ACT
JUICY
COUTURE
DISTRIBUTORSHIP
AGREEMENT
THIS
AGREEMENT is made and entered into as of May 11, 2007 (the “Effective Date”) by
and between SWISSAM PRODUCTS LTD. a corporation duly incorporated under the laws
of Hong Kong having its principal office at 1406 World Finance Centre, Xxxxx
Xxxxx, Xxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxx, Xxxx Xxxx (hereinafter referred to as
“Supplier”) and MGS DISTRIBUTION LIMITED, a corporation incorporated under the
laws of England having its principle office at x/x Xxxxx, Xxxxxxx, Xxxxxx XX 00
0XX, Xxxxxxx (hereinafter referred to as the “Distributor”).
RECITALS
WHEREAS,
Swico Limited (“Swico”), Movado Group, Inc. (“MGI”) and
Distributor have entered into a Joint Venture Agreement,
dated May 11, 2007 (the “JV Agreement”), pursuant to which Swico and
MGI have established a joint venture relationship relating to the sale,
marketing and distribution of certain watch brands in the United
Kingdom.
WHEREAS,
this Agreement is one of the Distribution Agreements as defined in the JV
Agreement.
WHEREAS
Supplier is an Affiliate (as defined in the JV Agreement) of MGI and is engaged
in the development, design, manufacture, distribution and sale of the Products
(as hereinafter defined) and Supplier desires to appoint Distributor and
Distributor desires to be appointed, as the exclusive distributor of the
Products in the Territory (as hereinafter defined), in accordance with the terms
and conditions set forth hereinafter;
NOW, THEREFORE, in consideration of the
premises and the mutual covenants herein contained, the parties hereto agree as
follows:
1. DEFINITIONS
|
1.1
|
In
this Agreement, except where the context otherwise requires, the
capitalized terms listed below shall have the respective meanings assigned
to them as follows:
|
|
|
“Affiliate”
|
means
as to either party, a person or entity which controls, is under common
control with, or is controlled by such
party.
|
|
“Corporate
Accounts”
|
means
premium and incentive accounts and other corporate accounts which have
been approved in writing by Licensor under the JC License for the purchase
of Products solely for the use of the employees of such
accounts.
|
|
|
“Products”
|
means
watches manufactured by or for Supplier and bearing one
or more of the
Trademarks
|
|
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“Territory”
|
means
the United Kingdom (excluding Travel Retail
Accounts).
|
|
|
“Licensor”
|
means
the licensor under the JC License, including any successors and
assigns.
|
|
|
“JC”
|
means
Juicy Couture.
|
|
|
“JC
License”
|
means
the license agreement between SWISSAM PRODUCTS LIMITED, MOVADO GROUP, INC.
and L.C. LICENSING, INC., as the same may be amended from time to time,
pursuant to which Supplier has the right to use the Trademarks in
connection with the manufacture, marketing, advertising, sale and
distribution of the Products.
|
|
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“JC
Stores”
|
means
retail and outlet stores, including flagship stores, owned or operated
by Licensor or by any of its
Affiliates.
|
|
|
“Trademarks”
|
means
all trademarks licensed to Supplier by Licensor under the JC License and
used on or in connection with the Products, including, without limitation,
JUICY, JUICY COUTURE or any other product that contains the name
JUICY.
|
|
|
“Travel
Retail Accounts” means any
account whose retail business consists of in-flight duty free
retail sales operations.
|
|
1.2
|
Unless
otherwise defined herein, each capitalized term used herein shall have the
meaning as set forth in the JC
License.
|
|
2.
|
APPOINTMENT
|
|
2.1
|
Subject
to the terms and conditions contained herein, for the term of this
Agreement, Supplier hereby appoints Distributor as the exclusive wholesale
distributor for marketing, distribution and sales of the Products in the
Territory (with the exception of sales to Corporate Accounts), and
Distributor hereby accepts such appointment. Notwithstanding
anything to the contrary contained herein, Supplier may permit Distributor
to sell Products to certain Corporate Accounts located within
the Territory on a case by case basis subject to the approval by Licensor
as provided in theJC License and as Supplier may, in its sole and absolute
discretion designate in writing from time to
time.
|
|
|
2.2 Distributor
shall purchase all Products directly from Supplier, or from one or more
other sources nominated in writing by Supplier, subject to Distributor’s
right to purchase Products (a) from other distributors with which Supplier
has contracted for the distribution of the Products (“Approved
Distributors”) that are located in Switzerland, the European Union, the
European Economic Area or any other country with which the European Union
has concluded a free trade agreement (in the aggregate, the “European
Area”) and (b) from approved retailers that satisfy the conditions set
forth in Section 8.2 hereof (“Approved Retailers”) located in the European
Area (provided that prior to exercising such right Distributor receives
written confirmation from Supplier that each such other distributor is an
Approved Distributor and that each such retailer is an Approved Retailer).
Such Approved Distributors and Approved Retailers, only, are included
within and comprise the JC selective distribution
network.
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|
|
2.3 Distributor
shall sell the Products only to Approved Retailers in the Territory and,
within the European Area, only within the JC selective distribution
network. Distributor shall refrain, outside the Territory and
in relation to the Products, from actively soliciting orders, establishing
any branch or maintaining any distribution depots. In no event
will Distributor sell or continue selling Products to any retailer that
does not satisfy the conditions in Section 8.2 of this
Agreement.
|
|
2.4
|
Distributor
shall use reasonable commercial efforts to advertise, promote, market,
distribute and sell the Products in the Territory. Without
limiting the generality of the foregoing, Distributor shall at all times
maintain adequate stocks of Products to meet demand for the Products in
the Territory by those retailers, if any, not being direct shipped by
Supplier and Distributor will use reasonable efforts to avoid accumulating
excess inventory not in line with its forecasts. Distributor shall
maintain an adequate sales force for the effective distribution and sale
of the Products in the Territory including at least one (1) full time
watch division manager to supervise/manage a dedicated sales manager and
sales executive for the Products, experienced in managing a watch
distribution business and one (1) full time marketing manager working on
the advertising and promotion of the
Products.
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|
2.5
|
During
the term of this Agreement Distributor shall not directly or indirectly
distribute any other watch brands which, in the determination of Supplier,
compete with the Products in the Territory. No other brand
licensed to MGI or any Affiliate of MGI shall be deemed to compete with
the Products.
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|
2.6
|
The
parties acknowledge that under the Joint Venture Agreement each of Swico
and MGI, as the only shareholders of Distributor, has the right under
section 15.2 of the JV Agreement, to dissolve, or to purchase the other’s
interest in, Distributor. Accordingly, if either Swico or MGI (the
“Non-breaching Party”) elects under the foregoing provision of the JV
Agreement to purchase the other party’s interest in,
Distributor and (a) written notice from Swico and MGI confirming such
election has been provided to Supplier and Distributor and (b) the
Non-breaching Party also notifies Supplier that it wishes this Agreement
to be assigned, then effective upon the date specified in such notice from
the Non-breaching Party (or, absent the specification of any date, then as
soon as reasonably practicable) Supplier shall assign all of Distributor’s
right, title and interest in and under this Agreement to such
Non-breaching Party or to any Affiliate of such Non-Breaching Party as
specified in such notice. Distributor hereby grants Supplier a power of
attorney for purposes of Supplier executing and delivering on behalf of
Distributor any and all documents or other instruments necessary to effect
such assignment.
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|
3.
|
ORDERING,
SHIPMENT AND PRICES
|
|
3.1
|
From
time to time Distributor shall submit purchase orders for the Products to
Supplier. All purchase orders shall be subject to acceptance by
Supplier, which acceptance may, at Supplier’s option, be evidenced by the
issuance of written confirmations or acknowledgments. Supplier hereby
reserves the absolute right to reject the whole or any part of any
purchase order for any commercially valid reason, including, without
limitation, Distributor’s credit condition or its accumulation of excess
or non-current inventory or its failure otherwise to adhere to the terms
and conditions of this Agreement, notwithstanding that any such rejection
may prevent Distributor from achieving its Minimum Purchase Requirements.
Subject to Sections 3.2 and 11.1, all purchase orders shall be irrevocable
after acceptance by Supplier; provided, however, that Distributor may
reschedule or cancel that portion of any purchase order pertaining to
Products which Supplier fails to deliver as confirmed within thirty (30)
days after the later of the advised delivery date or shipping date.
Distributor will provide Supplier with a four (4) month rolling forecast
of its anticipated order volume monthly by SKU, for the four (4) month
period. Supplier will use reasonable efforts to deliver the
Products ordered in accordance with the forecast within three (3) months
after acceptance of the purchase order by Supplier and to deliver all
other Product orders within three (3) to five (5) months after acceptance
of the purchase order. As soon as is reasonably practicable
after acceptance of each purchase order, Supplier shall advise Distributor
of the shipping dates applicable to such order. All shipping
dates so advised are estimates only and Supplier shall not have any
liability for failure to actually ship by such dates or to deliver by
Distributor’s requested delivery dates. Supplier shall notify
Distributor in the event of any anticipated delay in shipping dates of
thirty (30) days or more. Each order submitted by Distributor will specify
a “ship to” address which shall be Distributor’s address or the address
for one of Distributor’s customers.
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|
3.2
|
The
purchase prices for all Products purchased by Distributor shall be in
Euros and based on Supplier’s suggested retail price in effect in the
European Union as of the date of shipment. Such prices shall be calculated
based on the discount structure as set forth on Schedule A annexed hereto.
Supplier will provide current price lists for the Products to Distributor
from time to time and shall have the right to modify such prices at any
time; provided, however, that no price increase shall become effective
sooner than sixty (60) days after written notice thereof to
Distributor. Supplier will give Distributor prior notice of all
such price changes. For all orders shipped before the effective date of
any price increase, the applicable price shall be the price in effect on
the date of shipment. With respect to orders for the Products
that have been accepted by Supplier but which have not been shipped as of
the effective date of a price increase, the applicable price shall be the
price in effect on the date of shipment; provided that if the price
increase is more than ten percent (10%) of the last applicable price,
Distributor shall have the right within ten (10) days from the effective
date of the price increase to cancel all or any part of the order for the
Products subject to such price increase upon notice to Supplier. All
prices are ex-works Supplier’s distribution
facility.
|
3.3 Unless
otherwise agreed in writing by Distributor and Supplier, all Products shall be
deemed delivered to Distributor when delivered by Supplier or Supplier’s freight
forwarder or distribution center into the possession of a carrier designated by
Supplier. Distributor shall bear all risk of loss, damage or shortage
pertaining to the Products after delivery to carrier for shipment to the
designated “ship to” address on the corresponding purchase order. All
costs of delivery, including, without limitation, all costs for freight, import
licenses, customs duties or other duties or imposts, insurance and special
handling shall be paid by Distributor. All payments are to be made in Euros in
accordance with Supplier’s standard terms of sale which are incorporated herein
by reference (except to the extent inconsistent with any of the express terms
contained herein) net ninety (90) days after invoice date. A discount
of two percent (2%) is granted for cash payment in advance.
3.4 No
provisions contained in Distributor’s orders which are different from or
additional to the terms and conditions of this Agreement shall be binding on the
parties hereto or applicable to the sale of the Products unless signed by a duly
authorized representative of each of the parties as provided by Section 13.9
hereof. Distributor shall have sole responsibility for
invoicing its customers and for the collection of all amounts due from them for
Product shipped to them either by Distributor or by Supplier in accordance with
the “ship to” designation made on the applicable purchase orders. In no event
shall non-payment by any such customer or any claim or allegation any customer
may have against Distributor constitute grounds for any off set, deduction,
claim or defense on the part of Distributor against Supplier or in respect of
any obligation due to Supplier and Distributor shall pay Supplier all amounts
due to Supplier in accordance with the terms of this Agreement without off set
or deduction for any amounts claimed to be due to Distributor by
Supplier.
|
4.
|
MINIMUM
TURNOVER REQUIREMENTS
|
|
4.1
|
Each
contract year for the duration of this Agreement, Distributor will make
minimum sales of Products in the Territory (“Minimum Turnover
Requirement”) equal to at least sixty percent (60%) of the amount of
Product sales as budgeted in the Business Plan annexed to the JV
Agreement. Notwithstanding the foregoing there shall be no
Minimum Turnover Requirement for the first contract
year.
|
|
4.2
|
Sales
in excess of the Minimum Turnover Requirement in any contract year shall
be neither carried over nor credited toward the Minimum Turnover
Requirement of a subsequent contract
year.
|
|
5.
|
ADVERTISING
AND PROMOTION
|
|
5.1
|
As
used herein “advertising” means only the publication in print or broadcast
media of advertisements approved by Supplier and “promotion” means all
other forms of Product promotion, other than advertising, approved by
Supplier including, without limitation, point of sale material, co-op
advertising, marketing, public relations, special events and the
like. All advertising and promotions (including, without
limitation, the methods, media selection, layouts, venue and timing
thereof) shall be subject to the prior written approval of
Supplier. Distributor shall submit all proposed and promotion
materials for approval at least four (4) weeks prior to the first
anticipated use thereof and shall not engage in any advertising or
promotion or use any such materials without Supplier’s prior written
approval. Unless otherwise expressly approved in writing by Supplier,
Distributor will use only such materials including, without limitation,
point of sale material, packaging, advertising and ancillary material
furnished by Supplier.
|
|
|
5.2 Distributor
shall conduct all advertising and promotion of the Products in the
Territory at its own expense, subject to matching a portion of such
expenditures by Supplier as hereinafter provided. At a minimum,
Distributor shall expend each contract year for approved advertising and
promotion an amount equal to * of Distributor’s
budgeted sales of Products for such contract year. Distributor’s budgeted
sales of Products for the first through the fifth contract years are set
forth in Annex D to the JV Agreement and Distributor’s budgeted sales each
contract year thereafter shall be as contained in the annual business plan
and budget as adopted in accordance with the provisions of the JV
Agreement at or before the beginning of each contract year, or, at such
time, if any, that the JV Agreement is no longer in effect, then as
approved by Distributor in good faith consultation with Supplier, and may
be adjusted in the same manner quarterly. So long as Distributor satisfies
its advertising and promotion commitment as set forth in this Section
5.2,
|
*CONFIDENTIAL
PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
RULE 24b-2 OF THE 1934 ACT
|
|
then
Supplier will match such expenditures each contract year by spending an
amount on advertising and/or promotion equal to * of
the Net Invoiced Cost of Distributor’s Product purchases in such year
(“Supplier’s Advertising Amount”). “Net Invoiced Cost” means the invoiced
price actually paid by Distributor to Supplier net of all discounts, all
costs referred to in Section 3.3 hereof, all credits for returns and all
uncollected amounts. There shall be deemed included as part of Supplier’s
Advertising Amount each year an amount equal to up to * of the
Net Invoiced Cost of Distributor’s Product purchases in such year that is
spent by Supplier in connection with JC’s advertising and promotion
campaign (“Image Program”), which final amount shall be determined in
accordance with the requirements of the JC License. Distributor
acknowledges that the way the funds allocated to the Image Fund will be
spent by Supplier is that Supplier will pay such amount directly to
Licensor or its Affiliates under the JC License. Supplier’s obligation
hereunder to spend Supplier’s Advertising Amount in any contract year is
contingent on Supplier receiving from Distributor within thirty (30) days
after the end of each quarter in such contract year, a
statement setting out and showing Distributor’s advertising
expenditures and promotion expenditures incurred during such prior
quarterly period (supported by invoices and other documents reasonably
acceptable to Supplier, substantiating the expenditures for Distributor’s
approved advertising and promotion); and provided further that such costs
are no less, on a proportionate basis, than the minimum required
expenditures set forth in this Section 5.2. In the event
Distributor’s actual Product sales for any contract year (other than the
final contract year of this Agreement) exceed the total budged sales for
such year on which its advertising and promotion expenditures for the year
were based, then Distributor shall spend an amount equal to
* of such excess in the following contract
year.
|
5.3 Distributor
will use only such materials for fixturing at the point of sale as are approved
by Supplier in writing.
|
6.
|
REPORTING
|
|
6.1
|
Quarterly
(beginning with the quarter ending July 31, 2007 and from time to time at
the reasonable request of Supplier, Distributor shall furnish Supplier
with a comprehensive written report in reasonable detail regarding (i) the
advertising, promotions, distribution and sales of the Products for the
immediately proceeding quarter or such other relevant period as Supplier
may reasonably request; (ii) Distributor’s market analysis; and (iii) such
other matters as Supplier shall
request.
|
|
6.2
|
Distributor
will consult with Supplier, as Supplier shall reasonably request for
purposes of determining a marketing plan for distribution of the Products
in the Territory each year. Such plan shall be followed by
Distributor.
|
*CONFIDENTIAL
PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
RULE 24b-2 OF THE 1934 ACT
|
6.3
|
Distributor
shall promptly notify Supplier of any significant changes in Distributor’s
sales forecasts and shall furnish Supplier such information related to
sales, sales forecasts, warranty claims and inventories of Products as may
be reasonably requested from time to time by
Supplier.
|
|
7.
|
SERVICE
AND REPAIR
|
|
7.1
|
Distributor
shall establish and maintain, at its expense, such number of authorized
service facilities for the service and repair of the Products in the
Territory (the “Service Center(s)”) as Supplier may reasonably request, it
being understood that initially there shall be one (1) such Service
Center. Distributor shall accept all Products for service,
returned by any consumer or retailer in the Territory for service whether
covered by the applicable consumer warranty (“warranty repairs”) or not
covered by said warranty (“out-of-warranty repairs”). All costs
related to out-of-warranty service, including, without limitation, costs
of all Products and Product parts used in the performance thereof, shall
be borne by Distributor. Distributor shall purchase such
Products and parts from Supplier or from one or more parts distributors
designated in writing by Supplier and maintain an adequate stock of
Products, parts and materials as necessary to perform such service in a
timely manner.
|
|
7.2
|
Within
thirty (30) days after the Effective Date, Distributor will furnish
Supplier with Distributor’s initial price list for all out of warranty
repairs. Distributor will give Supplier no less than ninety
(90) days prior written notice of any change to any such prices.
Distributor shall submit to Supplier each month, a statement summarizing
all out of warranty repairs performed in the immediately preceding month
indicating for each watch repaired the corresponding style number and the
work performed. Distributor will use only those parts
(excluding batteries) for out of warranty service on the Products which
are supplied directly by or otherwise approved in writing by Supplier as
original equipment for the
Products.
|
7.3 On
or before the fifteenth day of each month, Distributor shall send to the
Supplier (Attn.: Service Department) a cumulative statement for all
warranty repairs completed by Distributor in the immediately preceding calendar
month. This statement must be accompanied by a copy of each repair
receipt complete with:
(a) Correct
watch style
|
|
(b)
|
Dates
repair received, completed and returned to customer.
and
|
|
|
(c)
|
Complete
description of work performed
|
|
7.4
|
Supplier
shall offer a range of parts that it determines appropriate in its sole
discretion. Supplier shall also establish the cost of such
parts in its sole discretion. In no event shall Distributor use
any parts for warranty repairs except parts furnished by
Supplier. Supplier shall supply Distributor at no charge with
an initial inventory of such parts to be used solely for performing
warranty repairs as Supplier determines reasonable and necessary and
thereafter with replenishment parts equivalent to up to one percent (1%)
of the Net Invoiced Cost of the Products purchased by Distributor in the
prior contract year. This allotment of such parts to be used
for warranty repairs must be used in the year provided. No
portion of any such allotment may be carried forward into a subsequent
contract year. All shipping charges, including any duty, or
Customs brokerage fees, for parts shall be paid by
Supplier. Supplier shall have the right to furnish such parts
to Distributor in the form of finished watches in its sole
discretion.
|
7.5 Distributor
will issue estimates for repair work within five (5) working days after receipt
of a Product for repair on ninety percent (90%) of the Products submitted to
Distributor for repair. Working days are defined as all days of the
year except Saturdays and Sundays and legal holidays. Warranty
repairs will be completed within fifteen (15) working days after receipt of a
Product for repair on ninety percent (90%) of the in-warranty work performed by
Distributor, unless detained because of delays in receiving necessary parts from
the Supplier. Out of warranty repairs will be completed within twenty
(20) working days after receipt of the customer's written authorization to
proceed with repair of a Product on ninety percent (90%) of the out of warranty
work performed by Distributor. On the same day any repairs are
completed, the Product repaired or serviced will be returned to the customer via
express mail or such other method as Supplier may reasonably request. Increases
in the postage or other ground delivery rates may require requisite increases in
charges to the customer by the Distributor for shipping.
|
8.
|
TRADE
PRACTICES
|
|
8.1
|
Distributor
shall sell the Products at competitive levels, at wholesale in accordance
with generally accepted customs in the trade and shall refrain from using
selling methods or practices which shall be harmful to the reputation of
the Products, Supplier or the Trademarks. Distributor’s right
to determine the prices of reselling and to employ conditions of trade at
its exclusive discretion remains unaffected, provided however that
Distributor shall sell the Products to JC Stores at a price which is not
greater than eighty percent (80%) of the prevailing wholesale price for
the same Products in the Territory.
|
|
8.2
|
Distributor
may sell Products only to those specialty shops, department stores and
retail outlets (including those that sell directly to the consumer) that
satisfy Supplier’s objective criteria for approved retailer status as set
forth in Schedule B annexed. The satisfaction of such requirements shall
be evidenced by written approval to Distributor from Supplier as provided
in this Section 8.2. Upon execution of this Agreement, and prior to the
opening of each selling season (and whenever Distributor wishes to sell
Products to retail customers not previously approved by Supplier),
Distributor must submit a list of such proposed retail customers (not
including previously approved retail customers) for Supplier’s written
approval. Supplier has the right to withdraw any such approval
on written notice to Distributor, provided, however, that Supplier will
not withdraw approval of a retail customer that is then authorized to
carry and is carrying JC products, unless Supplier is reasonably
dissatisfied with the display, delivery or inventory model of Products of
such retail customer. After such notice, Distributor may not
accept additional orders for Products from such retail customer, but may
fill any existing order. Once each quarter, Distributor shall
provide Supplier with a list of the retailers in the Territory
that purchased Products in the immediately preceding quarter containing
the addresses of their sales outlets, it being understood that such list
is of a confidential nature and shall be for the sole use of Supplier and,
if requested, Licensor, and shall be kept confidential by Supplier and
shall not be disclosed by Supplier to any person whatsoever, other than
employees of Supplier and Licensor whose performance of their duties
require the disclosure of such list to
them.
|
|
8.3
|
Except
as expressly permitted by Supplier in writing, Distributor may not (a)
sell Products directly to the public in retail stores; (b) use Products as
giveaways, prizes or premiums, except for promotional programs which have
received the prior written approval of Supplier; or (c) sell Products to
any Affiliate of Distributor or any of its directors, officers, employees
or any person having an equity participation in or any other affiliation
to Distributor, other than to Distributor’s employees or other
representatives for their personal use, without the prior written approval
of Supplier. Supplier may, at Distributor’s expense, purchase any Products
found in the marketplace that Distributor has sold to unapproved customers
in violation of this Section 8.3 or Section 2.3. Distributor shall include
and enforce the following on all invoices to its retail customers:
“Limitations on Sale by Buyer: Seller expressly reserves the right to
limit the amount of merchandise delivered to only such quantities as are
necessary to meet the reasonably expected demand at Buyer’s store
locations. This Merchandise is sold to Buyer for resale to the ultimate
consumer and/or within the JC selective distribution network and only and
only from such store locations as have been approved in writing by Seller.
Buyer shall be expressly prohibited from selling the merchandise purchased
hereunder to a retailer or other dealer in like merchandise, or to any
party who Buyer knows, or has reason to know, intends to resell the
merchandise and is not a member of the JC selective distribution network.
The merchandise purchased hereunder may not be sold by Buyer from any
store locations which Seller has advised Buyer do not qualify as an
acceptable location”.
|
|
9.
|
PROTECTION
OF INTERESTS; TRADEMARKS
|
|
9.1
|
Distributor
shall protect and at all times seek to promote Supplier’s best interests
in the Territory and shall immediately notify Supplier of any fact or
situation which may be or may be reasonably presumed to become detrimental
to Supplier or to its good will, copyrights, patents, or to the Trademarks
or other intellectual property rights of Supplier or
Licensor. Distributor shall have the exclusive right to use the
Trademarks in connection with distribution of the Products in the
Territory for the term hereof and solely for the limited purpose of and
only to the extent necessary for performing its obligations hereunder and
for no other purpose. Distributor agrees that it shall have no
rights with respect to the Trademarks in connection with the Products
except only as expressly and specifically set forth herein and that its
every use shall inure exclusively to the benefit of Licensor and that
Distributor shall not, at any time, acquire any rights therein or
challenge the validity thereof. Distributor further agrees at
no time to use any of the Trademarks or other intellectual property rights
owned by or licensed to Supplier in a manner not authorized by Supplier.
Distributor shall not apply to register, nor shall Distributor use or
permit the use of, any name, logo, xxxx or tradedress which is confusingly
similar to any of the Trademarks or do any act or thing, or permit any act
or thing to be done, which may in any way impair, dilute, reduce the value
of the Trademarks or damage the goodwill relating to the
Trademarks
|
|
9.2
|
If
requested by Supplier, in writing, the Distributor shall assist and
cooperate with Supplier, its counsel and agents as so requested, in
connection with any matters involving any of Supplier’s intellectual
property rights in the Territory including without limitation, in any
legal proceedings and any out-of-pocket expenses incurred by the
Distributor in connection with litigation in which the Distributor
participates at the request of Supplier shall be reimbursable to the
Distributor and any recoveries form any such litigation or the settlement
thereof shall belong exclusively to Supplier; provided, however, that
Supplier shall have the exclusive right (but not the obligation) to take
such action against third parties in the respect of the Trademarks and all
other intellectual property rights of
Supplier.
|
|
9.3
|
In
the event that Distributor sells any Products outside the Territory in
violation of Section 2.3 hereof, then Supplier may, in addition to all
other rights and remedies available to it, repurchase all or any portion
of such Products. Within ten (10) days after receipt of a
statement from the Supplier listing all such Products purchased, together
with a list of the model numbers, and setting forth Supplier’s
out-of-pocket costs incurred in connection with such purchase, Distributor
shall reimburse Supplier such out-of-pocket
costs. Distributor acknowledges that such payment is not
a penalty but fair compensation to Supplier’s for breach of this Agreement
and damage to Supplier goodwill and
tradename.
|
|
10.
|
TERM
AND TERMINATION
|
|
10.1
|
This
Agreement shall take effect upon the Effective Date and shall, unless
otherwise earlier terminated as provided herein continue for the duration
of the JV Agreement. It
shall be automatically terminated upon the termination or expiration of
the JV Agreement.
|
|
10.2
|
In
the event (a) this Agreement is assigned to Swico, MGI or to an Affiliate
of Swico or MGI in accordance with Section 2.6 hereof, or (b) either Swico
or MGI purchases all of the other’s interest in Distributor under Section
15.2.2 of the JV Agreement or (c) Swico, its Affiliates or Permitted
Transferees (as such term is defined in the JV Agreement) otherwise
acquire control of Distributor, then this Agreement shall continue from
the date of such assignment, purchase and/or acquisition, as the case may
be, until the third anniversary of such date at which time this Agreement
shall expire and neither party shall have any further obligation to the
other hereunder except as to those obligations which by their express
terms survive beyond the expiration or termination of this Agreement.
Following any assignment, purchase or acquisition referred to in Section
10.1, this Agreement may be terminated by either party hereto upon prior
written notice to the other party:
|
|
|
(i)
|
in
the event such other party shall have breached any of the terms and
conditions hereof and, if remediable shall have failed to remedy such
breach within sixty (60 ) days after the notification of the
breach by the non-breaching party;
or
|
(ii) in
the event that such other party becomes insolvent, has an
insolvency proceeding of any
kind filed by or against it, including bankruptcy or reorganization, liquidates its business
or is liquidated, has a receiver appointed for its assets, or makes
an assignment for the benefit of its creditors.
|
10.3
|
In
addition to any other rights of termination provided hereunder, Supplier
may terminate this Agreement immediately by notice to Distributor if
Distributor (i) fails to satisfy the Minimum Turnover Requirement for any
contract year; or (ii) fails to satisfy the minimum advertising
expenditures in Section 5.2 in any contract year or (iii) fails to comply
with the payment terms in Section 3.3 or (iv) breaches any of the
covenants contained in Article 8 or Article 9 hereof; or (v) transfers or
attempts to transfer a substantial part of its business to a third party
or attempts to assign this Agreement to a third party (or relinquishes
control of any previously approved assignee under Section 13.5) or has its
business merged or consolidated with a third party without the prior
written consent of Supplier.
|
10.4 Notwithstanding
anything to the contrary contained herein, this Agreement will automatically
expire and be of no further effect in the event the JC License expires or is
terminated for any reason. Upon such expiration or termination, neither party
will have any further obligation hereunder to the other except any obligation or
liability which accrued prior to the date of such expiration or
termination.
|
|
11.
|
EFFECTS
OF TERMINATION
|
|
|
11.1
|
Upon
the expiration of this Agreement or its termination by Supplier, Supplier
may, at its sole discretion, reject all or part of any outstanding orders
received or accepted by Supplier.
|
|
|
11.2
|
Upon
expiration or termination of this Agreement for any
reason:
|
|
|
(i)
|
Any
sums due and owing by either party to the other shall become immediately
due and payable, and such sums shall be paid
forthwith.
|
|
|
(ii)
|
Supplier
may immediately appoint a successor to Distributor in the Territory and
announce the change of its distributorship to the
public.
|
|
|
(iii)
|
Distributor
shall take a physical inventory of all Products in stock and submit a
report of such inventory to Supplier. Supplier shall have the
right to have a representative present to verify such
inventory. Supplier shall be entitled but not obliged to take
over any portion of the Products remaining in stock from Distributor at
the price in currency originally paid by Distributor to Supplier, plus the
cost of shipping and insurance. Upon notice to Distributor of
Supplier’s election to buy back any or all such inventory, Distributor
shall cooperate as requested by Supplier for the packing and shipping of
such inventory. Distributor may sell any Products not taken
over by Supplier for six (6) months after the termination of this
Agreement or such shorter period as notified by Supplier subject to all
the provisions hereof, including, without limitation, Article
8.
|
|
|
(iv)
|
Distributor
shall immediately cease all use of the Trademarks; provided, however, that
Distributor may continue to use the Trademarks solely in connection with
the sale of the Products pursuant to Section 11.2 (iii) above and in such
a way as not to impair, dilute, reduce the value of or damage the goodwill
relating to the Trademarks.
|
|
|
(v)
|
Any
advertising must be at the discretion of Supplier and must be approved by
Supplier.
|
|
(vi)
|
Distributor,
at its expense, will return to Supplier all materials belonging to
Supplier and all proprietary data or confidential information furnished to
Distributor by Supplier during the term
hereof.
|
11.3 The
rights of termination granted herein are absolute and each party acknowledges
that it has considered and assumed as its own exclusive risk the possibility of
making expenditures of money and time in preparing for the performance of this
Agreement and possible loss or damage on account of the loss of prospective
profits or anticipated sales or on account of expenditures, investments, leases,
property improvements or commitments in connection with the good will or
business of the parties or otherwise resulting from the proper termination
hereof and that it is the express intent and agreement of the parties that
neither party properly terminating this Agreement in accordance with the terms
hereof (the “Terminating Party”) shall be liable to the other for any claim,
cost or damages solely by reason of such termination. In the event of
such termination or expiration of this Agreement in accordance with the terms
hereof, the Terminating Party shall have no obligation or liability to pay to
the other, and such other party hereby expressly waives, any statutory
termination fee, any other right to compensation provided by law arising solely
as a consequence of such termination, and consequential damages and lost profits
arising solely on account of such termination or expiration.
|
12.
|
INDEMNIFICATION
|
|
|
Distributor
hereby agrees to indemnify and hold the Supplier, and its Affiliates
and/or agents and each of their officers, directors and employees harmless
from and against any and all liabilities, damages, costs and expenses
(including reasonable attorneys’ fees) which arise out of or in connection
with any act or omission related to this Agreement by Distributor, its
successors, assigns, parents, subsidiaries, Affiliates, agents, and
contractors, or the officers, directors or employees of any of them.
Supplier reserves the right, without being required to do so, at its own
expense and without waiver of any indemnity hereunder, to defend any
claim, action or lawsuit coming within the purview of this Section
12. This section shall survive the termination or expiration of
this Agreement.
|
|
|
13.
|
GENERAL
TERMS AND CONDITIONS
|
|
|
13.1
|
Supplier
reserves the right to designate in writing from time to time any other
Affiliate of Supplier to exercise any of the rights or perform
any of the obligations of Supplier
hereunder
|
|
|
13.2
|
Neither
party shall have the power to represent the other party. For
purposes of this Agreement, Distributor is an independent contractor and
neither the agent nor the representative of Supplier or any of its
affiliated companies. Distributor, its employees, contractors
and Affiliates shall not act or represent themselves as agents or
representatives of, or as having the right, power or authority, express or
implied to assume or create any obligation or liability on behalf of
Supplier or any of its affiliated
companies.
|
|
|
13.3
|
Neither
party hereto shall be liable for any delay or failure in fulfilling the
obligations hereunder (except for the payment of money) when such delay or
failure is caused by riots, war (declared or not), or hostilities between
any nations; acts of God, fire, storm, flood or earthquake; strikes, labor
disputes, shortage or delay of carriers, or shortage of raw materials,
labor power or other utility services; any governmental restrictions; or
any other unforeseeable contingencies beyond the control of the
party.
|
|
13.4
|
Any
notice to be given pursuant to this Agreement shall be written in English
and shall be deemed duly given when sent by reputable overnight
international courier including FedEx, UPS or DHL to the respective
address first set forth above or by facsimile to the respective facsimile
number set forth below confirmed by letter as aforesaid, or to such other
address and/or facsimile number as a party hereto may designate by like
notice.
|
|
|
To
Supplier:
|
|
Copy
to:
|
|
|
To
Distributor:
|
|
|
Copy
to:
|
|
|
Supplier’s
designated Affiliate under Section 13.1 shall be designated by notice to
Distributor, which notice shall include the address and facsimile number
of such Affiliate for purposes of giving notice
hereunder. Notice to Supplier’s designated Affiliate shall be
made and deemed duly given in the same manner as for notice to
Supplier.
|
|
13.5
|
In
view of the fact that this Agreement has been entered into because of the
confidence that Supplier has in Distributor, it is understood that the
terms and conditions hereof shall be performed by Distributor only and
that, except as expressly permitted in Section 2.6 hereof, this Agreement
may not be assigned, whether by operation of law or otherwise, without the
prior written approval of Supplier which Supplier may withhold or grant in
its sole and absolute discretion and any such purported assignment by
Distributor without such approval by Supplier shall be void and of no
effect. Following any such assignment, Distributor shall remain obligated
as a guarantor for all the payment obligations of the approved assignee
hereunder and any change in control of the approved assignee without the
approval of Supplier shall constitute a breach of this Section 13.5 and
shall entitle Supplier to terminate this Agreement as provided under
Section 10.3
|
|
13.6
|
The
captions of this Agreement are inserted solely for ease of reference and
are not deemed to form a part of or to modify the terms and conditions of
this Agreement.
|
|
13.7
|
This
Agreement shall be governed exclusively by the law of Hong Kong without
reference to its conflict of laws rules. Any dispute,
controversy or difference which may arise out of, in relation to, or in
connection with this Agreement shall be finally settled by arbitration in
Hong Kong in accordance with the under the Rules of Arbitration of the
International Chamber of Commerce by three (3) Arbitrators appointed in
accordance with said rules. Each party hereto shall be bound by
any arbitration award so rendered and any judgment upon such award may be
entered as a non-appealable final, foreign judgment in any court having
jurisdiction thereon. The language of the proceedings shall be
English.
|
|
|
13.8
|
When
interpreting the terms and conditions of this Agreement, the English
language shall be applied
exclusively.
|
|
13.9
|
This
Agreement, including the terms and conditions incorporated by reference in
Section 3.3 hereof, constitutes the entire agreement of the parties with
respect to the subject matter hereof and prevails over and supersedes all
prior agreements, whether written or oral, relating to the subject matter
hereof and may not be altered, waived, modified, or discharged except by
an express writing referring to this Agreement signed on behalf of the
parties hereto by their duly authorized representatives. In the event of
any conflict or inconsistency between this Agreement and the JV Agreement,
the latter shall control.
|
|
13.10
|
The
failure of either party hereto to enforce at any time any of the
provisions or terms of this Agreement, or any rights in respect thereof,
or the exercise of or failure to exercise by either party any rights or
any of its elections herein provided, shall in no way be considered to be
a waiver of such provisions, terms, rights or elections or in any way to
affect the validity of this
Agreement.
|
|
13.11
|
In
connection with this Agreement, the parties may from time to time exchange
proprietary data or confidential information. The parties agree
to keep in confidence all such proprietary data or confidential
information received in accordance with this Agreement and to use the same
only in connection with the performance of this Agreement. This
provision shall survive the termination or expiration of this
Agreement.
|
|
13.12
|
Should
any provision of this contract held invalid, incomplete or unenforceable,
this will not affect the validity of the remaining
provisions. Supplier and Distributor undertake to replace the
invalid incomplete or unenforceable provision by provision which comes
closest to the commercial goal that the parties intended to achieve on the
conclusion of this agreement by the invalid, uncompleted and unenforceable
provision. Notwithstanding anything to the contrary contained herein, in
the event of any conflict or inconsistency between any term or provision
of this Agreement and the JC License, the latter shall
control.
|
|
13.13
|
Supplier
shall have the right to injunctive relief to enforce the covenants,
agreements and obligations of Distributor hereunder in addition to any
other relief to which Supplier may be entitled at law or in
equity.
|
|
13.14
|
Each
order deliverable under this Agreement shall be deemed sold under a
separate contract. Non-delivery or default by Supplier as to
any order shall not be deemed a breach of the
entire
|
Agreement
and shall not relieve Distributor of its obligation to accept and pay for any
prior or subsequent delivery, even though such non-delivery or default
substantially impairs the value of this Agreement to Distributor.
|
13.15
|
Distributor
shall comply with all applicable laws, rules and regulations in the
Territory, including, without limitation, the provisions of Directive
2002/96/EC,
which governs waste electrical and electronic equipment, including all
related amendments and all laws, rules and regulations in the Territory
related thereto Distributor shall provide Supplier with
evidence of any such compliance upon
request.
|
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in
multiple duplicates by their authorized representatives as of the day and year
first above written.
MGS
DISTRIBUTION
LIMITED SWISSAM
PRODUCTS LIMTED
By: ________________________ By: ____________________________
|
|
Title: _______________________ Title: ___________________________
|
|
|
Name:
_______________________ Name: ___________________________
|
- -
|
|
SCHEDULE
A
|
|
|
DISTRIBUTOR
DISCOUNT SCHEDULE
|
Distributor
pricing shall be * of Supplier’s recommended Euro retail price (inclusive of
VAT); provided, however, that if this Agreement is assigned as provided under
Section 2.6, then the pricing to the assignee shall be based on the same
discount off of Supplier’s recommended Euro retail price as generally offered by
Supplier to its other independent distributors of the Products in the European
Union.
*CONFIDENTIAL
PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
RULE 24b-2 OF THE 1934 ACT
- -
|
|
SCHEDULE B
|
|
|
OBJECTIVE
CRITERIA FOR APPROVED RETAILER
STATUS
|
|
1.
|
EXTERNAL
ELEMENTS
|
|
A.
|
Location/Street
|
(i) Animated
and attractive environment
(ii) Centrally
located neighborhood
(iii) Shopping
district with fashion and prestige branded shops
|
B.
|
Appearance
|
(i) Attractive,
well-maintained, high-quality façade
(ii) Clean,
visible and prominent shop sign
(iii) Visible
and easily accessed entrance
|
C.
|
Shop
Windows
|
(i) Well
lit, clean and made from good quality materials
(ii) Suitable
number and size show windows
|
(iii)
|
Windows
provide sufficient space to display a representative selection of JC brand
products
|
|
(iv)
|
Professionally
maintained and attractive window
decoration
|
|
2.
|
INTERNAL
ELEMENTS
|
|
A.
|
General
Outfitting
|
(i) Clean
and well-maintained walls, floors, ceilings and furnishings
(ii) Sufficient
and sophisticated lighting
(iii) Equipped
with adequate security devices
|
B.
|
Presentation
Showcases
|
(i) Made
of high-quality materials with adequate lighting
(ii) JC
products displayed on official brand POS materials
(iii) Clearly
visible and strong brand identification
|
|
(iv)
|
JC
products are grouped together and displayed separately from other
brands
|
|
3.
|
OTHER
PRODUCTS
|
|
A.
|
Premises
used solely for the retail sale of quality watches, jewelry, fashion
accessories and/or fashion apparel.
|
|
B.
|
products
displayed to prevent confusion with any other brands
products.
|
|
C.
|
Retailer
also sells at least two (2) Swiss watch brands or any three (3) of the
following fashion/designer/prestige watch brands: Emporio
Armani, Diesel, DKNY, Xxxxxxx Cole, Versace, Puma, D&G, CK, Sector,
Xxxxx, Guess, Lacoste
|
|
4.
|
PRESENTATION/PROMOTION
|
|
A.
|
Visual/Collateral
|
|
(i)
|
Brand
visuals properly presented and changed out seasonally or whenever
requested by brand
|
|
B.
|
Advertising
|
|
(i)
|
Dealer’s
advertising is consistent with the quality requirements of the
brand
|
|
(ii)
|
Dealer
agrees to conduct co-op advertising on the basis of an agreed and shared
budget and media plan
|
|
C.
|
Personnel/Customer
Service
|
|
(i)
|
Sales
staff with good knowledge of JC brand and
products
|
|
(ii)
|
Available
for regular training on brand and new
products
|
|
(iii)
|
Well
dressed, groomed and polite
|
|
(iv)
|
Capacity
to advise customer on how to operate products
correctly
|
|
(v)
|
Able
to carry out simple adjustments (e.g. sizing metal
bracelets)
|
|
5.
|
REPORTING
|
|
A.
|
Provides
clear and comprehensive information
|
|
B.
|
Provides
information on sales and stock
situation
|
|
C.
|
Provides
monthly sales reports by SKU
|
|
D.
|
Provides
immediate information on problems with
products
|
|
6.
|
FINANCES
|
|
A.
|
Good
payment record
|
|
B.
|
Creditworthy
|
|
C.
|
Sound
finances
|
XXXXX
XXXXXXXX
DISTRIBUTORSHIP
AGREEMENT
THIS
AGREEMENT is made and entered into as of May 11, 2007 (the “Effective
Date”) by and between MOVADO WATCH COMPANY, S.A. a corporation duly incorporated
under the laws of Switzerland having its principal office at Xxxxxxxxxxxxxxx 0,
XX-0000, Xxxxxxxx, Xxxxxxxxxxx (hereinafter referred to as “Supplier”) and MGS
DISTRIBUTION LIMITED a corporation incorporated under the laws of England having
its principle office at x/x Xxxxx, Xxxxxxx, Xxxxxxxxx, Xxxxxx XX00
0XX, Xxxxxxx (hereinafter referred to as the “Distributor”).
RECITALS
WHEREAS,
Swico Limited (“Swico”), Movado Group, Inc. (“MGI”) and
Distributor have entered into a Joint Venture Agreement, dated May
11, 2007 (the “JV Agreement”), pursuant to which Swico and MGI have established
a joint venture relationship relating to the sale, marketing and distribution of
certain watch brands in the United Kingdom.
WHEREAS,
this Agreement is one of the Distribution Agreements as defined in the JV
Agreement.
WHEREAS
Supplier is an Affiliate (as defined in the JV Agreement) of MGI and is engaged
in the development, design, manufacture, distribution and sale of the Products
(as hereinafter defined) and Supplier desires to appoint Distributor and
Distributor desires to be appointed, as the exclusive distributor of the
Products in the Territory (as hereinafter defined), in accordance with the terms
and conditions set forth hereinafter;
NOW, THEREFORE, in consideration of the
premises and the mutual covenants herein contained, the parties hereto agree as
follows:
1. DEFINITIONS
|
1.1
|
In
this Agreement, except where the context otherwise requires, the
capitalized terms listed below shall have the respective meanings assigned
to them as follows:
|
|
|
“Affiliate”
|
means
as to either party, a person or entity which controls, is under common
control with, or is controlled by such
party.
|
|
“Corporate
Accounts”
|
means
premium and incentive accounts and other corporate accounts which have
been approved in writing by THLI under the THLI License for the purchase
of Products solely for the use of the employees of such
accounts.
|
|
|
“Products”
|
means
watches manufactured by or for Supplier and bearing one
or more of the
Trademarks
|
|
|
“Territory”
|
means
the United Kingdom.
|
|
|
“THLI”
|
means
Xxxxx Xxxxxxxx Licensing, Inc., a Delaware corporation, including any
successors and assigns.
|
|
|
“THLI
License”
|
means
the license agreement between Supplier and THLI, as the same may be
amended from time to time, pursuant to which Supplier has the right to use
the Trademarks in connection with the manufacture, marketing, advertising,
sale and distribution of the
Products.
|
|
“Xxxxx
Xxxxxxxx Stores”
|
means
retail and outlet stores, including flagship stores, owned by or
affiliated with THLI that bear the name “Xxxxx Xxxxxxxx” or
“Hilfiger”.
|
|
|
“Trademarks”
|
means
all trademarks licensed to Supplier by THLI under the THLI License and
used on or in connection with the Products, including, without limitation,
XXXXX, XXXXXXXX, XXXXX XXXXXXXX, Flag Design and Crest
Design.
|
|
|
“Travel
Retail Accounts” means any
account whose retail business consists of in-flight duty free
retail sales operations.
|
|
1.3
|
Unless
otherwise defined herein, each capitalized term used herein shall have the
meaning as set
|
|
|
forth
in the THLI License.
|
|
2.
|
APPOINTMENT
|
|
2.2
|
Subject
to the terms and conditions contained herein, for the term of this
Agreement, Supplier hereby appoints Distributor as the exclusive wholesale
distributor for marketing, distribution and sales of the Products in the
Territory (with the exception of sales to Xxxxx Xxxxxxxx Stores, Corporate
Accounts and Travel Retail Accounts), and Distributor hereby accepts such
appointment. Notwithstanding anything to the contrary contained
herein, Supplier may permit Distributor to sell to certain Xxxxx Xxxxxxxx
Stores and Corporate Accounts on a case by case basis as Supplier may, in
its sole and absolute discretion, designate in writing from time to
time.
|
|
2.2
|
Distributor
shall purchase all Products directly from Supplier, or from one or more
other sources nominated in writing by Supplier, subject to Distributor’s
right to purchase Products (a) from other distributors with which Supplier
has contracted for the distribution of the Products (“Approved
Distributors”) that are located in Switzerland, the European Union, the
European Economic Area or any other country with which the European Union
has concluded a free trade agreement (in the aggregate, the “European
Area”) and (b) from approved retailers that satisfy the conditions set
forth in Section 8.2 hereof (“Approved Retailers”) located in the European
Area (provided that prior to exercising such right Distributor receives
written confirmation from Supplier that each such other distributor is an
Approved Distributor and that each such retailer is an Approved Retailer).
Such Approved Distributors and Approved Retailers, only, are included
within and comprise the Xxxxx Xxxxxxxx selective distribution
network.
|
|
|
2.3 Distributor
shall sell the Products only to Approved Retailers in the Territory and,
within the European Area, only within the Xxxxx Xxxxxxxx selective
distribution network. Distributor shall refrain, outside the
Territory and in relation to the Products, from actively soliciting
orders, establishing any branch or maintaining any distribution depots. In
no event will Distributor sell or continue selling Products to any
retailer that does not satisfy the conditions in Section 8.2 of this
Agreement.
|
|
2.4
|
Distributor
shall use its best efforts to advertise, promote, market, distribute and
sell the Products in the Territory. Without limiting the
generality of the foregoing, Distributor shall at all times maintain
adequate stocks of Products to meet demand for the Products in the
Territory by those retailers, if any, not being direct shipped by Supplier
and Distributor will use reasonable efforts to avoid accumulating excess
inventory not in line with its forecasts. Distributor shall
maintain an adequate sales force for the effective distribution and sale
of the Products in the Territory, including at least one (1) full time,
dedicated brand manager for the Products, experienced in managing a watch
distribution business.
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2.7
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During
the term of this Agreement, Distributor shall not directly or indirectly
manufacture or distribute any goods, including other watch brands, which,
in the determination of Supplier, compete with the Products in the
Territory. No other brand licensed to MGI or any Affiliate of
MGI shall be deemed to compete with the
Products.
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2.6
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The
parties acknowledge that under the Joint Venture Agreement each of Swico
and MGI, as the only shareholders of Distributor, has the right under
section 15.2 of the JV Agreement, to dissolve, or to purchase the other’s
interest in, Distributor. Accordingly, if either Swico or MGI (the
“Non-breaching Party”) elects under the foregoing provision of the JV
Agreement to purchase the other party’s interest in,
Distributor and (a) written notice from Swico and MGI confirming such
election has been provided to Supplier and Distributor and (b) the
Non-breaching Party also notifies Supplier that it wishes this Agreement
to be assigned, then effective upon the date specified in such notice from
the Non-breaching Party (or, absent the specification of any date, then as
soon as reasonably practicable) Supplier shall assign all of Distributor’s
right, title and interest in and under this Agreement to such
Non-breaching Party or to any Affiliate of such Non-Breaching Party as
specified in such notice. Distributor hereby grants Supplier a power of
attorney for purposes of Supplier executing and delivering on behalf of
Distributor any and all documents or other instruments necessary to effect
such assignment.
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3.
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ORDERING,
SHIPMENT AND PRICES
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3.2
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From
time to time Distributor shall submit purchase orders for the Products to
Supplier. All purchase orders shall be subject to acceptance by
Supplier, which acceptance may, at Supplier’s option, be evidenced by the
issuance of written confirmations or acknowledgments. Supplier
hereby reserves the absolute right to reject the whole or any part of any
purchase order for any commercially valid reason, including, without
limitation, Distributor’s credit condition or its accumulation of excess
or non-current inventory or its failure otherwise to adhere to the terms
and conditions of this Agreement, notwithstanding that any such rejection
may prevent Distributor from achieving its Minimum Purchase
Requirements. Subject to Sections 3.2 and 11.1, all
purchase orders shall be irrevocable after acceptance by Supplier;
provided, however, that Distributor may reschedule or cancel that portion
of any purchase order pertaining to Products which Supplier fails to
deliver as confirmed within thirty (30) days after the later of the
advised delivery date or shipping date.. Distributor will
provide Supplier with a four (4) month rolling forecast of its anticipated
order volume monthly by SKU, for the four (4) month
period. Supplier will use reasonable efforts to deliver the
Products ordered in accordance with the forecast within three (3) months
after acceptance of the purchase order by Supplier and to deliver all
other Product orders within three (3) to five (5) months after acceptance
of the purchase order. As soon as is reasonably practicable
after acceptance of each purchase order, Supplier shall advise Distributor
of the shipping dates applicable to such order. All shipping
dates so advised are estimates only and Supplier shall not have any
liability for failure to actually ship by such dates or to deliver by
Distributor’s requested delivery dates. Supplier shall notify
Distributor in the event of any anticipated delay in shipping dates of
thirty (30) days or more. Each order submitted by Distributor will specify
a “ship to” address which shall be the address of Distributor’s
warehouseman or the address for one of Distributor’s
customers
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3.3
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The
prices for all Products purchased by Distributor shall be in Euros and
based on Supplier’s recommended Euro retail price in effect in the
European Union as of the date of shipment. Such prices are ex-works and
shall be calculated based on the discount structure as set forth on
Schedule A annexed hereto. Supplier will provide current price lists for
the Products to Distributor from time to time and shall have the right to
modify such prices at any time; provided, however, that no price increase
shall become effective sooner than sixty (60) days after written notice
thereof to Distributor. Supplier will give Distributor prior
notice of all such price changes. For all orders shipped before
the effective date of any price increase, the applicable price shall be
the price in effect on the date of shipment. With respect to
orders for the Products that have been accepted by Supplier but which have
not been shipped as of the effective date of a price increase, the
applicable price shall be the price in effect on the date of shipment;
provided that if the price increase is more than ten percent (10%) of the
last applicable price, Distributor shall have the right within ten (10)
days from the effective date of the price increase to cancel all or any
part of the order for the Products subject to such price increase upon
notice to Supplier. All prices are ex-works Supplier’s distribution
facility in Hong Kong.
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3.3 Unless
otherwise agreed in writing by Distributor and Supplier, all Products shall be
deemed delivered to Distributor when delivered by Supplier or Supplier’s freight
forwarder or distribution center into the possession of a carrier designated by
Supplier. Distributor shall bear all risk of loss, damage or shortage
pertaining to the Products after delivery to carrier for shipment to the
designated “ship to” address on the corresponding purchase order. All
costs of delivery, including, without limitation, all costs for freight, import
licenses, customs duties or other duties or imposts, insurance and special
handling shall be paid by Distributor. All payments are to be made in
Euros in accordance with Supplier’s standard terms of sale, which are
incorporated herein by reference (except to the extent inconsistent with the
terms contained herein) net ninety (90) days after the invoice date. A discount
of two percent (2%) is granted for cash payment in
advance. .
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3.4
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No
provisions contained in Distributor’s orders which are different from or
additional to the terms and conditions of this Agreement shall be binding
on the parties hereto or applicable to the sale of the Products unless
signed by a duly authorized representative of each of the parties as
provided by Section 13.9 hereof. Distributor shall have sole
responsibility for invoicing its customers and for the collection of all
amounts due from them for Product shipped to them either by Distributor or
by Supplier in accordance with the “ship to” designation made on the
applicable purchase orders. In no event shall non-payment by any such
customer or any claim or allegation any customer may have against
Distributor constitute grounds for any off set, deduction, claim or
defense on the part of Distributor against Supplier or in respect of any
obligation due to Supplier and Distributor shall pay Supplier all amounts
due to Supplier in accordance with the terms of this Agreement without off
set or deduction for any amounts claimed to be due to Distributor by
Supplier.
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5.
|
MINIMUM
TURNOVER REQUIREMENTS
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4.1
|
Each
contract year for the duration of this Agreement, Distributor will make
minimum sales of Products in the Territory (“Minimum Turnover
Requirement”) equal to at least sixty percent (60%) of the amount of
Product sales as budgeted in the Business Plan annexed to the JV
Agreement. Sales in excess of the Minimum Turnover Requirement in any
contract year shall be neither carried over nor credited toward the
Minimum Turnover Requirement of a subsequent contract year.
Notwithstanding the foregoing there shall be no Minimum Turnover
Requirement for the first contract
year.
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5.
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ADVERTISING
AND PROMOTION
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5.1
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As
used herein “advertising” means only the publication in print or broadcast
media of advertisements approved by Supplier and “promotion” means all
other forms of Product promotion, other than advertising, approved by
Supplier including, without limitation, point of sale material, co-op
advertising, marketing, public relations, special events and the
like. All promotions (including, without limitation, the
methods, media selection, layouts and timing thereof) shall be subject to
the prior written approval of Supplier. Distributor shall
submit all proposed promotion materials for approval at least four (4)
weeks prior to the first anticipated use thereof and shall not engage in
any promotion or use any such materials without Supplier’s prior written
approval. Unless otherwise expressly approved in writing by Supplier,
Distributor will use only such materials including, without limitation,
point of sale material, packaging, advertising and ancillary material
furnished by Supplier.
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5.2
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Distributor
shall conduct all advertising and promotion of the Products in the
Territory at its own expense, subject to matching of a portion of such
expenditures by Supplier as hereinafter provided. At a minimum,
Distributor shall expend each contract year for approved advertising and
promotion an amount equal to * of Distributor’s budgeted sales of Products
for such contract year. Distributor’s budgeted sales of
Products for the first through the fifth contract years are set forth in
Annex D to the JV Agreement and Distributor’s budgeted sales each contract
year thereafter shall be as contained in the annual business plan and
budget as adopted in accordance with the provisions of the JV Agreement at
or before the beginning of each contract year, or, at such time, if any,
that the JV Agreement is no longer in effect, then as approved by
Distributor in good faith consultation with Supplier, and may be adjusted
in the same manner quarterly. So long as Distributor satisfies its
advertising and promotion commitment as set forth in this Section 5.2,
then Supplier will match such expenditures each contract year by an amount
equal to * of the Net Invoiced Cost of Distributor’s Product purchases in
such year.
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*CONFIDENTIAL
PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
RULE 24b-2 OF THE 1934 ACT
(“Supplier’s
Advertising Amount”). For purposes of this Agreement, “Net Invoiced Cost” means
the invoiced price actually paid by Distributor to Supplier net of all
discounts, all costs referred to in Section 3.3 hereof, all credits for returns
and all uncollected amounts. Supplier’s obligation in respect thereof shall be
to spend Supplier’s Advertising Amount on advertising and promotion for the
Products in such contract year provided that within thirty (30) days after the
end of each quarter in such contract year, Distributor shall submit a statement
to Supplier setting out and showing Distributor’s advertising expenditures and
promotion expenditures incurred during such prior quarterly period (supported by
invoices and other documents reasonably acceptable to Supplier, substantiating
the expenditures for Distributor’s approved advertising and promotion); and
provided further that such costs are no less, on a proportionate basis, than the
minimum required expenditures set forth in this Section 5.2.
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5.3
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Distributor
will use only such materials for fixturing at the point of sale as are
approved by Supplier in writing. Distributor will fixture or cause to be
re-fixtured at its sole cost and expense each in-store shop or area
dedicated to the sale of the Products within sixty (60) days after notice
from Supplier to do so, subject to Section 5.2 hereof, which notice may be
given by Supplier from time to time as Supplier shall determine in its
sole and absolute discretion but not more frequently than once every six
(6) months as to any particular in-store shop or retail location unless
Supplier is otherwise so required by
THLI.
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6.
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REPORTING
|
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6.1
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Quarterly
(beginning July 31, 2007) and from time to time at the reasonable request
of Supplier, Distributor shall furnish Supplier with a comprehensive
written report in reasonable detail regarding (i) the advertising,
promotions, distribution and sales of the Products for the immediately
proceeding quarter or such other relevant period as Supplier may
reasonably request; (ii) Distributor’s market analysis; and (iii) such
other matters as Supplier shall
request.
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6.2
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Distributor
will consult with Supplier, as Supplier shall reasonably request for
purposes of determining a marketing plan for distribution of the Products
in the Territory each year. Such plan shall be followed by
Distributor.
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6.3
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Distributor
shall promptly notify Supplier of any significant changes in Distributor’s
sales forecasts and shall furnish Supplier such information related to
sales, sales forecasts, warranty claims and inventories of Products as may
be reasonably requested from time to time by
Supplier.
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7.
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SERVICE
AND REPAIR
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7.1
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Distributor
shall establish and maintain, at its expense, such number of authorized
service facilities for the service and repair of the Products in the
Territory (the “Service Center(s)”) as Supplier may reasonably request, it
being understood that initially there shall be one (1) such Service
Center. Distributor shall accept all Products for service,
returned by any consumer or retailer in the Territory for service whether
covered by the applicable consumer warranty (“warranty repairs”) or not
covered by said warranty (“out-of-warranty repairs”). All costs
related to out-of-warranty service, including, without limitation, costs
of all Products and Product parts used in the performance thereof, shall
be borne by Distributor. Distributor shall purchase such
Products and parts from Supplier or from one or more parts distributors
designated in writing by Supplier and maintain an adequate stock of
Products, parts and materials as necessary to perform such service in a
timely manner.
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7.2
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Within
thirty (30) days after the Effective Date, Distributor will furnish
Supplier with Distributor’s initial price list for all out of warranty
repairs. Distributor will give Supplier no less than ninety
(90) days prior written notice of any change to any such prices.
Distributor shall submit to Supplier each month, a statement summarizing
all out of warranty repairs performed in the immediately preceding month
indicating for each watch repaired the corresponding style number and the
work performed. Distributor will use only those parts
(excluding batteries) for out of warranty service on the Products which
are supplied directly by or otherwise approved in writing by Supplier as
original equipment for the
Products.
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7.3 On
or before the fifteenth day of each month, Distributor shall send to the
Supplier (Attn.: Service Department) a cumulative statement for all
warranty repairs completed by Distributor in the immediately preceding calendar
month. This statement must be accompanied by a copy of each repair
receipt complete with:
(a) Correct
watch style
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(b)
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Dates
repair received, completed and returned to
customer.and
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(c)
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Complete
description of work performed
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7.4
|
Supplier
shall offer a range of parts that it determines appropriate in its sole
discretion. Supplier shall also establish the cost of such
parts in its sole discretion. In no event shall Distributor use
any parts for warranty repairs except parts furnished by
Supplier. Supplier shall supply Distributor at no charge with
an initial inventory of such parts to be used solely for performing
warranty repairs as Supplier determines to be reasonable and necessary and
thereafter with replenishment parts equivalent to up to one percent (1%)
of the Net Invoiced Cost of the Products purchased by Distributor in the
prior contract year. This allotment of parts to be used for
warranty repairs must be used in the year provided. No portion
of any such allotment may be carried forward into a subsequent contract
year. All shipping charges, including any duty, or Customs
brokerage fees, for parts shall be paid by Supplier. Supplier
shall have the right to furnish such parts to Distributor in the form of
finished watches in its sole
discretion.
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7.5 Distributor
will issue estimates for repair work within five (5) working days after receipt
of a Product for repair on ninety percent (90%) of the Products submitted to
Distributor for repair. Working days are defined as all days of the
year except Saturdays and Sundays and legal holidays. Warranty
repairs will be completed within fifteen (15) working days after receipt of a
Product for repair on ninety percent (90%) of the in-warranty work performed by
Distributor, unless detained because of delays in receiving necessary parts from
the Supplier. Out of warranty repairs will be completed within twenty
(20) working days after receipt of the customer's written authorization to
proceed with repair of a Product on ninety percent (90%) of the out of warranty
work performed by Distributor. On the same day any repairs are
completed, the Product repaired or serviced will be returned to the customer via
express mail or such other method as Supplier may reasonably request. Increases
in the postage or other ground delivery rates may require requisite increases in
charges to the customer by the Distributor for shipping.
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8.
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TRADE
PRACTICES
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8.1
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Distributor
shall sell the Products at competitive levels, at wholesale in accordance
with generally accepted customs in the trade and shall refrain from using
selling methods or practices which shall be harmful to the reputation of
the Products, Supplier or the Trademarks. Distributor’s right
to determine the prices of reselling and to employ conditions of trade at
its exclusive discretion remains
unaffected.
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8.3
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Distributor
may sell Products only to those specialty shops, department stores and
retail outlets (including those that sell directly to the consumer) that
satisfy Supplier’s objective criteria for approved retailer status as set
forth in Schedule B annexed hereto, such satisfaction to be evidenced by
written approval to Distributor from Supplier as provided in this Section
8.2. Upon execution of this Agreement, and prior to the opening of each
selling season (and whenever Distributor wishes to sell Products to retail
customers not previously approved by Supplier), Distributor must submit a
list of such proposed retail customers (not including previously approved
retail customers) for Supplier’s written approval. Supplier has
the right to withdraw any such approval on written notice to Distributor,
provided, however, that Supplier will not withdraw approval of a retail
customer that is then carrying any products of THLI’s men’s sportswear
licensee unless Supplier is reasonably dissatisfied with the display,
delivery or inventory model of Products of such retail
customer. After such notice, Distributor may not accept
additional orders for Products from such retail customer, but may fill any
existing order. Once each quarter, Distributor shall provide
Supplier with a list of the retailers in the Territory that
purchased Products in the immediately preceding quarter containing the
addresses of their sales outlets, it being understood that such list is of
a confidential nature and shall be for the sole use of Supplier and, if
requested, THLI, and shall be kept confidential by Supplier and shall not
be disclosed by Supplier to any person whatsoever, other than employees of
Supplier and THLI whose performance of their duties require the disclosure
of such list to them.
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8.3
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Except
as expressly permitted by Supplier in writing, Distributor may not (a)
sell Products directly to the public in retail stores; (b) use Products as
giveaways, prizes or premiums, except for promotional programs which have
received the prior written approval of Supplier; or (c) sell Products to
any Affiliate of Distributor or any of its directors, officers, employees
or any person having an equity participation in or any other affiliation
to Distributor, other than to Distributor’s employees or other
representatives for their personal use, without the prior written approval
of Supplier. Supplier may, at Distributor’s expense, purchase any Products
found in the marketplace that Distributor has sold to unapproved customers
in violation of this Section 8.3 or Section 2.3. Distributor shall include
and enforce the following on all invoices to its retail customers:
“Limitations on Sale by Buyer: Seller expressly reserves the right to
limit the amount of merchandise delivered to only such quantities as are
necessary to meet the reasonably expected demand at Buyer’s store
locations. This Merchandise is sold to Buyer for resale to the ultimate
consumer and/or within the Xxxxx Xxxxxxxx selective distribution network
and only from such store locations as have been approved in writing by
Seller. Buyer shall be expressly prohibited from selling the merchandise
purchased hereunder to a retailer or other dealer in like merchandise,
or to any party who Buyer knows, or has reason to know, intends
to resell the merchandise and is not a member of the Xxxxx Xxxxxxxx
selective distribution network. The merchandise purchased hereunder may
not be sold by Buyer from any store locations which Seller has advised
Buyer do not qualify as an acceptable
location”.
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9.
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PROTECTION
OF INTERESTS; TRADEMARKS
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9.3
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Distributor
shall protect and at all times seek to promote Supplier’s best interests
in the Territory and shall immediately notify Supplier of any fact or
situation which may be or may be reasonably presumed to become detrimental
to Supplier or to its good will, copyrights, patents, or to the Trademarks
or other intellectual property rights of Supplier or
THLI. Distributor shall have the exclusive right to use the
Trademarks in connection with distribution of the Products in the
Territory for the term hereof and solely for the limited purpose of and
only to the extent necessary for performing its obligations hereunder and
for no other purpose. Distributor agrees that it shall have no
rights with respect to the Trademarks in connection with the Products
except only as expressly and specifically set forth herein and that its
every use shall inure exclusively to the benefit of THLI and that
Distributor shall not, at any time, acquire any rights therein or
challenge the validity thereof. Distributor further agrees at
no time to use any of the Trademarks or other intellectual property rights
owned by or licensed to Supplier in a manner not authorized by Supplier.
Distributor shall not apply to register, nor shall Distributor use or
permit the use of, any name, logo, xxxx or tradedress which is confusingly
similar to any of the Trademarks or do any act or thing, or permit any act
or thing to be done, which may in any way impair, dilute, reduce the value
of the Trademarks or damage the goodwill relating to the
Trademarks
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9.4
|
If
requested by Supplier, in writing, the Distributor shall assist and
cooperate with Supplier, its counsel and agents as so requested, in
connection with any matters involving any of Supplier’s intellectual
property rights in the Territory including without limitation, in any
legal proceedings and any out-of-pocket expenses incurred by the
Distributor in connection with litigation in which the Distributor
participates at the request of Supplier shall be reimbursable to the
Distributor and any recoveries form any such litigation or the settlement
thereof shall belong exclusively to Supplier; provided, however, that
Supplier shall have the exclusive right (but not the obligation) to take
such action against third parties in the respect of the Trademarks and all
other intellectual property rights of
Supplier.
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9.3
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In
the event that Distributor sells any Products outside the Territory in
violation of Section 2.3 hereof, then Supplier may, in addition to all
other rights and remedies available to it, repurchase all or any portion
of such Products. Within ten (10) days after receipt of a
statement from the Supplier listing all such Products purchased, together
with a list of the model numbers, and setting forth Supplier’s
out-of-pocket costs incurred in connection with such purchase, Distributor
shall reimburse Supplier such out-of-pocket
costs. Distributor acknowledges that such payment is not
a penalty but fair compensation to Supplier’s for breach of this Agreement
and damage to Supplier goodwill and
tradename.
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10.
|
TERM
AND TERMINATION
|
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10.3
|
This
Agreement shall take effect upon the Effective Date and shall, unless
otherwise earlier terminated as provided herein, continue for the duration
of the JV Agreement . It
shall be automatically terminated upon the termination or expiration of
the JV Agreement.
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10.4
|
In
the event (a) this Agreement is assigned to Swico, MGI or to an Affiliate
of Swico or MGI in accordance with Section 2.6 hereof, or (b) either Swico
or MGI purchases all of the other’s interest in Distributor under Section
15.2.2 of the JV Agreement or (c) Swico, its Affiliates or Permitted
Transferees (as such term is defined in the JV Agreement) otherwise
acquire control of Distributor, then this Agreement shall continue from
the date of such assignment, purchase and/or acquisition, as the case may
be, until the third anniversary of such date at which time this Agreement
shall expire and neither party shall have any further obligation to the
other hereunder except as to those obligations which by their express
terms survive beyond the expiration or termination of this Agreement.
Following any assignment, purchase or acquisition referred to in Section
10.1, this Agreement may be terminated by either party hereto upon prior
written notice to the other party:
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(i)
|
in
the event such other party shall have breached any of the terms and
conditions hereof and, if remediable shall have failed to remedy such
breach within sixty (60 ) days after the notification of the
breach by the non-breaching party;
or
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(ii) in
the event that such other party becomes insolvent, has an
insolvency proceeding of any
kind filed by or against it, including bankruptcy or reorganization, liquidates its business
or is liquidated, has a receiver appointed for its assets, or makes
an assignment for the benefit of its creditors.
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10.4
|
In
addition to any other rights of termination provided hereunder, Supplier
may terminate this Agreement immediately by notice to Distributor if
Distributor (i) fails to satisfy the Minimum Turnover Requirement for any
contract year; or (ii) fails to satisfy the minimum advertising
expenditures in Section 5.2 in any contract year or (iii) fails to comply
with the payment terms in Section 3.3 or (iv) breaches any of the
covenants contained in Article 8 or Article 9 hereof; or (v) transfers or
attempts to transfer a substantial part of its business to a third party
or attempts to assign this Agreement to a third party (or relinquishes
control of any previously approved assignee under Section 13.5) or has its
business merged or consolidated with a third party without the prior
written consent of Supplier.
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10.4 Notwithstanding
anything to the contrary contained herein, this Agreement will automatically
expire and be of no further effect in the event the THLI License expires or is
terminated for any reason. Upon such expiration or termination, neither party
will have any further obligation hereunder to the other except any obligation or
liability which accrued prior to the date of such expiration or
termination.
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11.
|
EFFECTS
OF TERMINATION
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|
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11.1
|
Upon
the expiration of this Agreement or its termination by Supplier, Supplier
may, at its sole discretion, reject all or part of any outstanding orders
received or accepted by Supplier.
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11.2
|
Upon
expiration or termination of this Agreement for any
reason:
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(i)
|
Any
sums due and owing by either party to the other shall become immediately
due and payable, and such sums shall be paid
forthwith.
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(ii)
|
Supplier
may immediately appoint a successor to Distributor in the Territory and
announce the change of its distributorship to the
public.
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(iii)
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Distributor
shall take a physical inventory of all Products in stock and submit a
report of such inventory to Supplier. Supplier shall have the
right to have a representative present to verify such
inventory. Supplier shall be entitled but not obliged to take
over any portion of the Products remaining in stock from Distributor at
the price in currency originally paid by Distributor to Supplier, plus the
cost of shipping and insurance. Upon notice to Distributor of
Supplier’s election to buy back any or all such inventory, Distributor
shall cooperate as requested by Supplier for the packing and shipping of
such inventory. Distributor may sell any Products not taken
over by Supplier for six (6) months after the termination of this
Agreement or such shorter period as notified by Supplier subject to all
the provisions hereof, including, without limitation, Article
8.
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(iv)
|
Distributor
shall immediately cease all use of the Trademarks; provided, however, that
Distributor may continue to use the Trademarks solely in connection with
the sale of the Products pursuant to Section 11.2(iii) above and in such a
way as not to impair, dilute, reduce the value of or damage the goodwill
relating to the Trademarks.
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(v)
|
Any
advertising must be at the discretion of Supplier and must be approved by
Supplier.
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(vii)
|
Distributor,
at its expense, will return to Supplier all materials belonging to
Supplier and all proprietary data or confidential information furnished to
Distributor by Supplier during the term
hereof.
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11.3 The
rights of termination granted herein are absolute and each party acknowledges
that it has considered and assumed as its own exclusive risk the possibility of
making expenditures of money and time in preparing for the performance of this
Agreement and possible loss or damage on account of the loss of prospective
profits or anticipated sales or on account of expenditures, investments, leases,
property improvements or commitments in connection with the good will or
business of the parties or otherwise resulting from the proper termination
hereof and that it is the express intent and agreement of the parties that
neither party properly terminating this Agreement in accordance with the terms
hereof (the “Terminating Party”) shall be liable to the other for any claim,
cost or damages solely by reason of such termination. In the event of
such termination or expiration of this Agreement in accordance with the terms
hereof, the Terminating Party shall have no obligation or liability to pay to
the other, and such other party hereby expressly waives, any statutory
termination fee, any other right to compensation provided by law arising solely
as a consequence of such termination, and consequential damages and lost profits
arising solely on account of such termination or expiration.
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13.
|
INDEMNIFICATION
|
|
|
Distributor
hereby agrees to indemnify and hold the Supplier, and its Affiliates
and/or agents and each of their officers, directors and employees harmless
from and against any and all liabilities, damages, costs and expenses
(including reasonable attorneys’ fees) which arise out of or in connection
with any act or omission related to this Agreement by Distributor, its
successors, assigns, parents, subsidiaries, Affiliates, agents, and
contractors, or the officers, directors or employees of any of them.
Supplier reserves the right, without being required to do so, at its own
expense and without waiver of any indemnity hereunder, to defend any
claim, action or lawsuit coming within the purview of this Section
12. This section shall survive the termination or expiration of
this Agreement.
|
|
|
13.
|
GENERAL
TERMS AND CONDITIONS
|
|
|
13.1
|
Supplier
may, from time to time, designate in writing an Affiliate of Supplier to
exercise any of the rights or perform any of the obligations of Supplier
hereunder.
|
|
|
13.2
|
Neither
party shall have the power to represent the other party. For
purposes of this Agreement, Distributor is an independent contractor and
neither the agent nor the representative of Supplier or any of its
affiliated companies. Distributor, its employees, contractors
and Affiliates shall not act or represent themselves as agents or
representatives of, or as having the right, power or authority, express or
implied to assume or create any obligation or liability on behalf of
Supplier or any of its affiliated
companies.
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|
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13.3
|
Neither
party hereto shall be liable for any delay or failure in fulfilling the
obligations hereunder (except for the payment of money) when such delay or
failure is caused by riots, war (declared or not), or hostilities between
any nations; acts of God, fire, storm, flood or earthquake; strikes, labor
disputes, shortage or delay of carriers, or shortage of raw materials,
labor power or other utility services; any governmental restrictions; or
any other unforeseeable contingencies beyond the control of the
party.
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13.5
|
Any
notice to be given pursuant to this Agreement shall be written in English
and shall be deemed duly given when sent by reputable overnight
international courier including FedEx, UPS or DHL to the respective
address first set forth above or by facsimile to the respective facsimile
number set forth below confirmed by letter as aforesaid, or to such other
address and/or facsimile number as a party hereto may designate by like
notice.
|
|
To
Supplier:
|
Fax: +
00 00 000 00 00
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|
|
Attn:
General Manager – Xxxxx Xxxxxxxx
|
|
Copy
to:
|
Fax: +
0 000 000 0000
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|
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Attn: Brand
Manager – Xxxxx Xxxxxxxx
|
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To
Distributor:
|
Fax:
_________________
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|
|
Supplier’s
designated Affiliate under Section 13.1 shall be designated by notice to
Distributor, which notice shall include the address and facsimile number
of such Affiliate for purposes of giving notice
hereunder. Notice to Supplier’s designated Affiliate shall be
made and deemed duly given in the same manner as for notice to
Supplier.
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13.6
|
In
view of the fact that this Agreement has been entered into because of the
confidence that Supplier has in Distributor, it is understood that the
terms and conditions hereof shall be performed by Distributor only and
that, except as expressly permitted in Section 2.6 hereof, this
Agreement may not be assigned, whether by operation of law or otherwise,
without the prior written approval of Supplier which Supplier may withhold
or grant in its sole and absolute discretion and any such purported
assignment by Distributor without such approval by Supplier shall be void
and of no effect. Following any such assignment, Distributor shall remain
obligated as a guarantor for all the payment obligations of the approved
assignee hereunder and any change in control of the approved assignee
without the approval of Supplier shall constitute a breach of this Section
13.5 and shall entitle Supplier to terminate this Agreement as provided
under Section 10.3
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|
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13.6
|
The
captions of this Agreement are inserted solely for ease of reference and
are not deemed to form a part of or to modify the terms and conditions of
this Agreement.
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13.7
|
This
Agreement shall be governed exclusively by the law of Switzerland without
reference to its conflict of laws rules and to the exclusion of the United
Nations Convention on Contracts for the International Sale of
Goods. Any dispute, controversy or difference which may arise
out of, in relation to, or in connection with this Agreement shall be
finally settled by arbitration in Geneva, Switzerland under the Rules of
Arbitration of the International Chamber of Commerce, Paris by three (3)
Arbitrators appointed in accordance with said rules. Each party
hereto shall be bound by any arbitration award so rendered and any
judgment upon such award may be entered as a non-appealable final, foreign
judgment in any court having jurisdiction thereon. The language
of the proceedings shall be
English.
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|
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13.8
|
When
interpreting the terms and conditions of this Agreement, the English
language shall be applied
exclusively.
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13.10
|
This
Agreement, including the terms and conditions incorporated by reference in
Section 3.3 hereof, constitutes the entire agreement of the parties with
respect to the subject matter hereof and prevails over and supersedes all
prior agreements, whether written or oral, relating to the subject matter
hereof and may not be altered, waived, modified, or discharged except by
an express writing referring to this Agreement signed on behalf of the
parties hereto by their duly authorized representatives. In the event of
any conflict or inconsistency between this Agreement and the JV Agreement,
the latter shall control.
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13.10
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The
failure of either party hereto to enforce at any time any of the
provisions or terms of this Agreement, or any rights in respect thereof,
or the exercise of or failure to exercise by either party any rights or
any of its elections herein provided, shall in no way be considered to be
a waiver of such provisions, terms, rights or elections or in any way to
affect the validity of this
Agreement.
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13.11
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In
connection with this Agreement, the parties may from time to time exchange
proprietary data or confidential information. The parties agree
to keep in confidence all such proprietary data or confidential
information received in accordance with this Agreement and to use the same
only in connection with the performance of this Agreement. This
provision shall survive the termination or expiration of this
Agreement.
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13.12
|
Should
any provision of this contract held invalid, incomplete or unenforceable,
this will not affect the validity of the remaining
provisions. Supplier and Distributor undertake to replace the
invalid incomplete or unenforceable provision by provision which comes
closest to the commercial goal that the parties intended to achieve on the
conclusion of this agreement by the invalid, uncompleted and unenforceable
provision. Notwithstanding anything to the contrary contained herein, in
the event of any conflict or inconsistency between any term or provision
of this Agreement and the THLI License, the latter shall
control.
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|
13.13
|
Supplier
shall have the right to injunctive relief to enforce the covenants,
agreements and obligations of Distributor hereunder in addition to any
other relief to which Supplier may be entitled at law or in
equity.
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13.15
|
Each
order deliverable under this Agreement shall be deemed sold under a
separate contract. Non-delivery or default by Supplier as to
any order shall not be deemed a breach of the
entire
|
Agreement
and shall not relieve Distributor of its obligation to accept and pay for any
prior or subsequent delivery, even though such non-delivery or default
substantially impairs the value of this Agreement to Distributor.
|
13.15
|
Distributor
shall comply with all applicable laws, rules and regulations in the
Territory, including, without limitation, the provisions of Directive
2002/96/EC,
which governs waste electrical and electronic equipment, including all
related amendments and all laws, rules and regulations in the Territory
related thereto. Distributor shall provide Supplier with evidence of any
such compliance upon request.
|
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be executed in multiple duplicates by their
authorized representatives at Bienne, Switzerland as of the day and year first
above written.
MGS
DISTRIBUTION
LIMITED MOVADO
WATCH COMPANY, S.A.
By: ________________________ By: ____________________________
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|
Title: _______________________ Title: ___________________________
|
|
|
Name:
_______________________ Name: ___________________________
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|
|
SCHEDULE
A
|
|
|
DISTRIBUTOR
DISCOUNT SCHEDULE
|
Distributor
pricing shall be * of Supplier’s recommended Euro retail price (inclusive of
VAT); provided, however, that if this Agreement is assigned as provided under
Section 2.6, then the pricing to the assignee shall be based on the same
discount off of Supplier’s recommended Euro retail price as generally offered by
Supplier to its other independent distributors of the Products in the European
Union.
*
CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
- -
|
|
SCHEDULE B
|
|
|
OBJECTIVE
CRITERIA FOR APPROVED RETAILER
STATUS
|
|
7.
|
EXTERNAL
ELEMENTS
|
|
A.
|
Location/Street
|
(i) Animated
and attractive environment
(ii) Centrally
located neighborhood
(iii) Shopping
district with fashion and prestige branded shops
|
B.
|
Appearance
|
(i) Attractive,
well-maintained, high-quality façade
(ii) Clean,
visible and prominent shop sign
(iii) Visible
and easily accessed entrance
|
C.
|
Shop
Windows
|
(i) Well
lit, clean and made from good quality materials
(ii) Suitable
number and size show windows
|
(v)
|
Windows
provide sufficient space to display a representative selection of TH brand
products
|
|
(vi)
|
Professionally
maintained and attractive window
decoration
|
|
8.
|
INTERNAL
ELEMENTS
|
|
A.
|
General
Outfitting
|
(i) Clean
and well-maintained walls, floors, ceilings and furnishings
(ii) Sufficient
and sophisticated lighting
(iii) Equipped
with adequate security devices
|
B.
|
Presentation
Showcases
|
(i) Made
of high-quality materials with adequate lighting
(ii) TH
products displayed on official brand POS materials
(iii) Clearly
visible and strong brand identification
|
|
(iv)
|
TH
products are grouped together and displayed separately from other
brands
|
|
9.
|
OTHER
PRODUCTS
|
|
A.
|
Premises
used solely for the retail sale of quality watches, jewelry, fashion
accessories and/or fashion apparel.
|
|
B.
|
TH
products displayed to prevent confusion with any other brands
products.
|
|
C.
|
Retailer
also sells at least two (2) Swiss watch brands or any three (3) of the
following fashion/designer/prestige watch brands: Emporio
Armani, Diesel, DKNY, Xxxxxxx Cole, Versace, Puma, D&G, CK, Sector,
Xxxxx, Guess, Lacoste
|
|
10.
|
PRESENTATION/PROMOTION
|
|
A.
|
Visual/Collateral
|
|
(i)
|
Brand
visuals properly presented and changed out seasonally or whenever
requested by brand
|
|
B.
|
Advertising
|
|
(i)
|
Dealer’s
advertising is consistent with the quality requirements of the
brand
|
|
(ii)
|
Dealer
agrees to conduct co-op advertising on the basis of an agreed and shared
budget and media plan
|
|
C.
|
Personnel/Customer
Service
|
|
(i)
|
Sales
staff with good knowledge of TH brand and
products
|
|
(ii)
|
Available
for regular training on brand and new
products
|
|
(iii)
|
Well
dressed, groomed and polite
|
|
(iv)
|
Capacity
to advise customer on how to operate products
correctly
|
|
(v)
|
Able
to carry out simple adjustments (e.g. sizing metal
bracelets)
|
|
11.
|
REPORTING
|
|
A.
|
Provides
clear and comprehensive information
|
|
B.
|
Provides
information on sales and stock
situation
|
|
C.
|
Provides
monthly sales reports by sku
|
|
D.
|
Provides
immediate information on problems with
products
|
|
12.
|
FINANCES
|
|
A.
|
Good
payment record
|
|
B.
|
Creditworthy
|
|
C.
|
Sound
finances
|
LACOSTE WATCHES EXCLUSIVE
DISTRIBUTION AGREEMENT
Made and
entered into as of May 1, 2007 (the “Effective Date”)
By and
between:
MGI Luxury Group S.A., a Swiss
corporation organized and existing under the laws of Switzerland whose
registered office is located at 00 xxx xx Xxxxx, XX-0000, Xxxxxx
(Xxxxxxxxxxx)
hereinafter
referred to as the "Master
Licensee",
and:
MGS DISTRIBUTION LIMITED an
English corporation
organized and existing under the laws of England whose registered office and
principal place of business is located at x/x Xxxxx, Xxxxxxx,
Xxxxxxxxx, Xxxxxx XX00 0XX, Xxxxxxx
hereinafter
referred to as the "Distributor".
WITNESSETH:
WHEREAS,
the Master Licensee
entered into a license agreement dated March 27, 2006 (the "Master Agreement") with Lacoste S.A., Sporloisirs S.A., and
Lacoste
Alligator S.A. (hereinafter together referred to as the "Licensor"); and
WHEREAS,
pursuant to the terms of the Master Agreement, the Master Licensee has been
granted the exclusive right and license to use the Licensed Trademarks (as
hereinafter defined) world-wide in relation with the creation, development,
manufacture, distribution, marketing, merchandising, advertising, promotion and
sale of Lacoste Watches
(as hereinafter defined); and
WHEREAS,
the Master Licensee has
also been granted the exclusive right to use the Licensor’s marketing,
merchandising, promotion and advertising Know-How (as hereinafter
defined) for the distribution and advertising of the Lacoste Watches, in the Territory (as hereinafter
defined); and
WHEREAS, the Master Licensee is entitled
to sub-license its distribution rights to distributors, provided that
(i) a written distribution agreement is signed with the selected distributor
approved by the Licensor
which agreement shall include, in addition to the rights and obligations which
the Master Licensee
wishes to sub-license, all obligations it would otherwise have had to fulfill
with respect to the rights sub-licensed to the selected distributor and (ii) a
Supplemental Agreement
is entered into between the Licensor, the Master Licensee and the said
distributor defining the Licensed Trademarks such
distributor is authorized to use in the concerned country as well as all its
duties and obligations regarding the protection of the said Licensed Trademarks;
and
WHEREAS,
SWICO LIMIED, an English
corporation (“SWICO”),
MOVADO GROUP, INC., a
New York corporation (“MGI”) and Distributor have entered into
a Joint Venture Agreement, dated May 1, 2007 (the “JV Agreement”) pursuant to
which SWICO and MGI have established a joint venture
relationship relating to the sale, marketing and distribution of certain watch
brands in the United Kingdom; and
WHEREAS, this
Agreement is one of the Distribution Agreements as defined in the JV Agreement;
and
WHEREAS,
the Master Licensee is
an Affiliate (as defined in the JV Agreement) of MGI and has decided to appoint
Distributor as its
distributor for the
distribution, sale, marketing, merchandising, advertising and promotion of the
Lacoste Watches in the
Territory upon the terms
and conditions hereinafter contained; and
WHEREAS,
the Licensor has created
and developed over a period of many years a well known and distinctive line of
articles of sports and leisure apparel for men, women, and children (hereinafter
referred to as the "Lacoste
Apparel Products") as well as other lines of products such as toiletries,
sunglasses and frames for optical glasses, leisure and sports bags, leathergoods
products, shoes, xxxxx towels, bath towels, bath robes, household linen,
umbrellas, belts and other products Licensor may develop in the future
(hereinafter referred to as the "Other Lacoste Products"), it
being specified that Other
Lacoste Products do not include either Lacoste Apparel Products or
Lacoste Watches;
and
WHEREAS,
the Licensor has also
contributed to the creation and the development of a line of watches and
time-keeping devices (the "Lacoste Watches", as such term
is hereinafter defined). And whereas the Licensor is actively
researching and developing other new products; and
WHEREAS,
the Lacoste Apparel
Products, the Other
Lacoste Products, as well as the Lacoste Watches, which are
characterized by an emblem consisting of the pictorial representation of an
alligator or a crocodile (the "Crocodile" as such term is
hereinafter defined), are renowned and sold world-wide under the trade names of
"La Chemise Lacoste", "Chemise Lacoste" or "Lacoste", the word "Lacoste"
recalling the name of Xxxx Xxxxxxx the famous tennis champion who invented the
original shirt, and the Crocodile recalling his
nickname on the tennis courts; and
WHEREAS,
in order to protect its rights the Licensor has registered
numerous trademarks among which the Licensed Trademarks throughout
the world and more specifically in the Territory; and
WHEREAS,
through the development of the different lines of the Lacoste Apparel Products,
Other Lacoste Products
and Lacoste Watches, the
Licensor has acquired
significant "Marketing and
Merchandising Know-How" and "Advertising and Promotion
Know-How" (as such terms are hereinafter defined); and
WHEREAS,
in order to guarantee the authenticity of its creations and to ensure the
homogeneity of their distribution at an international level, the Licensor has implemented
selective distribution systems wherever and whenever practicable, so as to allow
all its licensees and distributors to select and approve their retailers on the
basis of objective criteria both with respect to quality and sales techniques;
and
WHEREAS,
the selective distribution systems implemented by the Licensor in connection with
the Lacoste Apparel Products
consist of the "Approved
Apparel Retailers"
Selective Distribution System (as such term is hereinafter defined) and
of the "Lacoste Boutiques and
Lacoste Corners"
Selective Distribution System (as such term is hereinafter defined);
and
WHEREAS,
the selective distribution systems implemented by the Licensor in connection with
each of the Other Lacoste
Products incorporate, in addition to approved retailers, and for certain
categories of Other Lacoste
Products, a certain number of shops and special locations in shops
dedicated to the sale of such Other Lacoste Products;
and
WHEREAS,
the selective distribution system implemented by the Licensor in connection with
the Lacoste Watches
incorporates, Approved
Watches Retailers (as such term is hereinafter defined); and
WHEREAS,
the Distributor warrants
and represents that it operates in the Territory a sales organisation
with a network set up to deal with the distribution of the Lacoste Watches;
and
WHEREAS,
the Distributor is
prepared to fulfil all obligations and make the necessary investments in order
to carry out such Lacoste
Watches Selective Distribution System (as such term is hereinafter
defined) policy as specified by the Master Licensee and the Licensor; and
WHEREAS
the Distributor thus
desires to be granted the right to distribute and sell in the Territory under the Licensed Trademarks, the Lacoste Watches and to use the
Know-How in connection
with such distribution; and
WHEREAS,
contemporaneously with the execution hereof the Licensor and the Distributor and the Master Licensee, as provided
for by the Master
Agreement, are entering into a Supplemental Agreement;
and
NOW, THEREFORE, IN CONSIDERATION OF
THE MUTUAL COVENANTS HEREIN CONTAINED, THE PARTIES AGREE AS
FOLLOWS:
ARTICLE 1 -
DEFINITIONS
|
1.1
|
"Agreement" shall mean
the present distribution agreement including all the schedules attached
hereto, as well as its future amendments and
restatements.
|
|
1.2
|
"Devanlay" shall mean the
worldwide exclusive licensee of the Licensor for Lacoste Apparel
Products.
|
|
1.3
|
"Lacoste Apparel Products
Distributor" shall mean those parties in certain countries to which
the distribution of the Lacoste Apparel Products
in such countries has been granted by Devanlay.
|
|
1.4
|
"Crocodile" shall mean
the pictorial representation of an alligator or crocodile depicted in
Schedule I.
|
|
1.5
|
"Lacoste Trademarks
Image" shall mean the presently existing identification in the
principal markets where the Lacoste Apparel
Products, the Other Lacoste Products
and the Lacoste
Watches are distributed, between the Lacoste Trademarks and
good taste, authenticity, quality, functionality, modernity, elegance,
high end sports and leisure, however at competitive quality/price ratios.
The Lacoste Trademarks
Image shall be judged in relation to all of the elements making up
the perception by the consumer of the Lacoste Watches as to
their style, quality, price, marketing and merchandising, advertising and
promotion.
|
|
1.6
|
"Licensed Trademarks"
shall mean those trademarks listed in Schedule II.
|
|
1.7
|
"Lacoste Watches" shall
mean watches for men, women and children as listed in Schedule IV bearing any Licensed Trademark
manufactured and marketed by the Master Licensee itself
and/or under its control and responsibility and distributed by the Master
Licensee.
|
|
1.8
|
|
1.9
|
"Territory" shall mean
the United Kingdom.
|
|
1.10
|
"Supplemental Agreement"
shall mean the agreement entered into by and between the Licensor, the Master License and the
Distributor in
execution of the terms of Article 2 of the Master
Agreement.
|
|
1.11
|
"Models" shall mean any
and all creations specific to the Lacoste Watches, or part
thereof, each of which shall be assigned a specific stock keeping unit
(“SKU”) number or other identifier by Master Licensee.
|
|
1.12
|
"Know-How" shall mean the
Watches Know-How,
Licensor’s Marketing and Merchandising
Know-How and Promotion and Advertising
Know-How for the distribution and advertising of the Lacoste Watches and the
Licensed
Trademarks.
|
|
1.13
|
"Marketing and Merchandising
Know-how" shall mean all accumulated expertise, which is
implemented world-wide by the Licensor, concerning the
distribution of the Lacoste Apparel
Products, the Other Lacoste Products
and the Lacoste
Watches according to the Lacoste Trademarks Image
including the level of quality and the techniques of such distribution
(i.e., the
selection, training, supervision, etc. of the retailers), all of which
know-how is regularly updated and improved as a result of the Licensor's research, and
which know-how is owned by or originated from the Licensor and is made
available to the Master
Licensee and to other Licensor's licensees
through the Licensor and which the
Licensor is not
otherwise obliged to hold in
confidence.
|
|
1.14
|
"Promotion and Advertising
Know-how" shall mean all accumulated expertise which is implemented
world-wide by the Licensor in maintaining
a high quality promotion and advertising policy for the Lacoste Trademarks
Image, the Lacoste
Apparel Products, the Other Lacoste Products
and the Lacoste
Watches through selected and controlled channels, all of which
know-how is regularly updated and improved as a result of the Licensor's research, and
which know-how is owned by or originated from the Licensor and is made
available to the Master
Licensee and to other Licensor's licensees
through the Licensor and which the
Licensor is not
otherwise obliged to hold in
confidence.
|
|
1.15
|
"Watches Know-how" shall
mean all accumulated world-wide expertise of the Master Licensee
concerning the creation, development, manufacture, distribution,
marketing, merchandising, advertising, promotion and sale of watches and
time-keeping devices at a high quality level and according to selected and
controlled techniques and fixtures designed to facilitate the distribution
of watches (including, but not limited to, the design of display materials
and showcases), which know-how is regularly updated and improved by the
Master Licensee
and is owned by or originated from the Master Licensee and is
made available to the Licensor and to other Licensor's licensees
through the Licensor and which
the Master
Licensee is not otherwise obliged to hold in
confidence.
|
|
1.16
|
"Approved Watches
Retailers" shall mean selected retailers (the categories of which
are listed in Schedule V.a) which have
entered with the Distributor, whenever possible, into the Lacoste Watches
Approved Retailer Contract, annexed hereto as Schedule VIII, as the form of the same may be modified by
Master Licensee
from time to time, defining the conditions to be fulfilled and applied for
the sale of the Lacoste
Watches through the Lacoste Watches Selective
Distribution System.
|
|
1.17
|
"Lacoste Corners" shall
mean the locations in certain shops of high standing which are devoted
exclusively to the sale of the Lacoste Apparel Products
and, subject to the provisions of Article 11.2 hereinafter, of certain Lacoste Watches and/or
Other Lacoste
Products, using various fittings, displays, appliances, original
furniture and equipment specially designed or approved by the Licensor and are
authorized to use the name "Lacoste" and the Crocodile as signboards
and as service marks for retail
services.
|
|
1.18
|
"Lacoste Boutiques" shall
mean the stand alone shops belonging to independent retailers or to Devanlay or to the Lacoste Apparel Products
Distributor and devoted exclusively to the sale of the Lacoste Apparel Products
and, subject to the provisions of Article 11.2 hereinafter, of
certain Lacoste
Watches and/or Other Lacoste Products,
using various fittings, displays, appliances, original furniture and
equipment specially designed or approved by the Licensor, and are
authorized to use the name "Lacoste" and the Crocodile as signboards
and as service marks for retail services. Among the Lacoste Boutiques shall
be included, if the economic conditions of the markets in question so
permit, certain Lacoste
Boutiques known as "global stores", of a
sufficient size to be organized for the sale on a large scale not only of
the Lacoste Apparel
Products but also, subject to the provisions of Article 11.2 hereinafter, of certain Lacoste Watches and/or
Other Lacoste
Products.
|
|
1.19
|
"Commercial Surface"
shall mean the total surface of a Lacoste Boutique or a
Lacoste Corner,
excluding the stock premises.
|
|
1.20
|
"Sales Surface" shall
mean, within the Commercial Surface of
each Lacoste
Boutique or Lacoste Corner, that
surface of the floor used for the presentation and the sale of products on
the furniture (fixed to the walls or free-standing) or displays, excluding
any area used for customers traffic in the point of sale and excluding the
shop-windows.
|
|
1.21
|
"Presentation Surface"
shall mean, within the Sales Surface of each
Lacoste Boutique
or Lacoste Corner,
the total surface actually dedicated to the presentation and the sale of
products on the furniture (fixed to the walls or free-standing) or
displays, determined according to the rules specified in Schedule VI.
|
|
1.22
|
"Lacoste Watches Selective
Distribution System" shall mean the group of Approved Watches
Retailers organized by the Master Licensee in
accordance with the specific guidelines of the Licensor to sell the
Lacoste Watches
while respecting the specific criteria in the area of client service,
merchandising, presentation, advertising, promotion and respect of the
Lacoste Trademarks
Image.
|
|
1.23
|
""Lacoste Boutiques and Lacoste
Corners" Selective Distribution System" shall mean the group of
Lacoste Boutiques
and Lacoste
Corners organized by Devanlay in accordance
with the specific guidelines of the Licensor and which
comply with specific criteria with respect to client service,
merchandising, presentation, advertising, promotion and respect of the
Lacoste Trademarks
Image. The "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System is distinct from the Lacoste Watches Selective
Distribution System and from the "Approved Apparel Retailers"
Selective Distribution System (as hereinafter defined) as well as
from each of the selective distribution systems existing for each of the
Other Lacoste
Products.
|
|
1.24
|
"Approved Apparel Retailers"
Selective Distribution System" shall mean the group of approved
retailers which has been organised by Devanlay in accordance
with the specific guidelines of the Licensor with the
purpose of selling the Lacoste Apparel Products
and which comply with specific criteria with respect to client service,
merchandising, presentation, advertising, promotion and respect of the
Lacoste Trademarks
Image.
|
|
1.25
|
"Net Sales" shall mean
the actual invoiced price for sales in the Territory of all Lacoste Watches (whether
sold at regular prices or at reduced prices, such as end-of-season prices)
by the Distributor
to Approved Watches
Retailers and to members of the "Lacoste Boutiques and Lacoste Corners" Selective
Distribution System, less returns, rebates, bad debts, trade
discounts, shipping charges, insurance, and such sales taxes as are
imposed on the Distributor by any
governmental authority.
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With
regard to direct sales by the Distributor to consumers
through its own retail outlets (should it operate any), Net Sales, for each reference
of the Lacoste Watches
shall be calculated on the basis of the unit volume of such reference of
the Lacoste Watches sold
through such outlets multiplied by the appropriate arms length, average
wholesale prices of such products charged by the Distributor to its Approved Watches Retailers,
or to the members of the
"Lacoste Boutiques and Lacoste Corners" Selective Distribution System,
less returns, rebates, bad debts, trade discounts,
shipping charges, shipping insurance and such sales taxes as are imposed on the
Distributor by any
governmental authority.
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1.26
|
"Sales to Distributor"
shall mean the actual invoiced price in the Territory of all Lacoste Watches (whether
made at regular prices or at reduced prices, such as end-of-season prices)
sold by the Master
Licensee to Distributor to be resold
to Approved Watches
Retailers and members of the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System, less returns, rebates, bad
debts, trade discounts, shipping charges, shipping insurance and such
sales taxes as are imposed on the Master Licensee by any
governmental authority.
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|
1.27
|
"Points of Sale" shall
mean the points of sales of the retailers listed in Schedule V.
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|
1.28
|
"Seconds" shall mean
damaged and/or defective Lacoste
Watches.
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ARTICLE 2 - RIGHTS
GRANTED
|
2.1
|
Subject
to the terms and conditions contained herein, the Master Licensee hereby
grants to the Distributor and the
Distributor hereby
accepts the right to use, within the limits of the Supplemental Agreement, the Licensed Trademarks, the Models
and the Know-How
in connection with the distribution, marketing, merchandising,
advertising, promotion and sale of the Lacoste Watches listed
in Schedule IV in the Territory under the
conditions provided for hereunder.
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|
2.2
|
No
other rights or licenses are granted by the Master Licensee to the
Distributor,
expressly or by implication, except as herein
provided.
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2.3
|
For
the duration of this Agreement, the Master Licensee shall
not appoint any other distributor for the Lacoste Watches in the
Territory nor
shall it directly supply the Lacoste Watches to
customers within the Territory.
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2.4
|
The
Distributor shall
not sub-license any of the rights granted to it hereunder or contract with
any third party for the performance of any of Distributor’s obligations
hereunder, without the prior written agreement of the Master Licensee,
which Master
Licensee shall have the right to withhold in its sole and absolute
discretion.
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|
2.5
|
The
Master Licensee
makes no express or implied warranties to Distributor except as
explicitly set forth in this Agreement.
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ARTICLE 3 -
DURATION
|
3.1
|
This
Agreement shall
come into effect as of the Effective Date and shall, unless otherwise
earlier terminated as provided herein, continue for the duration of the JV
Agreement and automatically expire upon the expiration or termination of
the JV
Agreement.
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|
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3.2 In
the event (a) this Agreement is assigned to SWICO, MGI or to an Affiliate
of Swico or MGI in accordance with
Article 18.2 hereof, or (b) either Swico or MGI purchases all of the
other’s interest in Distributor under Section 15.2.2 of the JV Agreement or (c)
Swico, its
Affiliates or Permitted Transferees (as such term is defined in the JV Agreement) otherwise
acquire control of Distributor, then this
Agreement shall continue from the date of such assignment, purchase and/or
acquisition, as the case may be, until the third anniversary of such date
at which time this Agreement shall expire and neither party shall have any
further obligation to the other hereunder except as to those obligations
which by their express terms survive beyond the expiration or termination
of this Agreement.
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3.3
|
In
any event when either the Master Agreement or the
JV Agreement
expires or terminates this Agreement shall
automatically terminate with no compensation payable to the Distributor.
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ARTICLE 4 -
TERRITORY
The
rights hereby granted shall be strictly limited to the Territory.
ARTICLE 5 - GENERAL BUSINESS
POLICY
|
5.1
|
The
Distributor shall
use its best efforts to establish a well managed and successful long term
business as distributor of the Lacoste Watches and, to
the extent possible given the market and legal conditions prevailing in
the Territory,
shall use the Know-How in order to
promote the image, sales and distribution of the Lacoste Watches in the
Territory, in
conformity with such policies as are prescribed and co-ordinated
world-wide by the Licensor for the Licensed Trademarks and
the Lacoste Trademark
Image.
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|
5.2
|
The
Distributor shall
co-operate closely with the Master Licensee and with
the Licensor’s
other licensees or distributors for the Lacoste Apparel Products
and Other Lacoste
Products, so as to give an uniform and homogeneous image of the
Licensed
Trademarks and of all the families of products bearing the Licensed Trademarks both
in the Territory
and worldwide and shall keep the Master Licensee informed
of its direct contacts with said licensees or
distributors.
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ARTICLE 6 - SALES AND UNFAIR
COMPETITION
|
6.1
|
The
Distributor shall
not advertise and/or create branches or warehouses outside the Territory nor shall it
sell actively the Lacoste
Watches for delivery outside the Territory or to third
parties whom it is aware may subsequently resell Lacoste Watches outside
the Territory and
undertakes to take all reasonable steps to prevent any third party to whom
it has sold the Lacoste
Watches from so doing; provided, however, that, considering the
specific regulation prevailing in the European Union (EU) the Distributor may resell
the Lacoste
Watches to other Lacoste Watches
distributors that are under contract with Master Licensee or to
members of the Lacoste
Watches Selective Distribution System located in any member country
of the EU, whether or not within the Territory (other than
Lacoste Boutiques
and/or to Lacoste
Corners as the Lacoste Boutiques and
the Lacoste
Corners constitute a selective distribution system which is
distinct from the Lacoste
Watches Selective Distribution System) but only in accordance with
the following terms and conditions:
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|
-
|
it
shall take all necessary measures to ensure that the Lacoste Watches thus
delivered remain in the Lacoste Watches Selective
Distribution System within the
EU,
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|
-
|
it
shall in particular ensure and see to it that, in the event its Approved Watches
Retailers sell to other retailers,
such retailers are members of the Lacoste Watches Selective
Distribution System in the
EU.
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The Master Licensee shall be
entitled, in any year, to request from the Distributor or its Approved Watches Retailers
copies of the invoices related to such re-sales in order to ascertain that such
have been made to a member of the Lacoste Watches Selective
Distribution System in the EU.
As far as
is permitted by law the Master
Licensee shall use all reasonable endeavours to ensure that its other
distributors comply with the same restrictions.
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6.2
|
The
Distributor shall
not either directly or indirectly distribute or sell on its own account or
on the account of any third party any products having any characteristics
unique to the Lacoste
Watches or likely to create confusion with Lacoste Watches in the
mind of the public such undertaking to remain in full force and effect for
one year after the termination or non renewal of this Agreement.
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|
6.3
|
The
Distributor shall
never manufacture, distribute or sell directly or indirectly any product
bearing a name, trademark or emblem similar to the Licensed Trademarks, or
likely to be confused with the Licensed Trademarks.
This prohibition is permanent.
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|
6.4
|
During
the term of this Agreement Distributor shall notify
Master Licensee in
advance in the event it intends to become, directly or indirectly, a
distributor, agent or sales representative in the Territory of or for
(“represent”) any other watch brand with products priced at retail within
a range of Euro 150 to Euro 800. Within thirty (30) days after receipt of
any such notice, if there is reasonable basis for Master Licensee to
conclude that Distributor’s
representation of such other brand will be inconsistent or incompatible
with any of Distributor’s
obligations hereunder, then Master Licensee shall
have the right to terminate this Agreement upon one hundred eighty (180)
days prior notice to Distributor.
Notwithstanding the foregoing, Distributor shall have
the right to nullify such termination notice from Master Licensee if,
within thirty (30) days after such notice, Distributor notifies
Master Licensee
that it will not, and so long as it does not, at any time thereafter for
the duration of this Agreement represent such
brand in the Territory.
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|
6.5
|
In
order to preserve the identity and the specific characteristics of each of
the selective distribution systems described in the Agreement, the Distributor shall
respect the integrity of the Lacoste Watches Selective
Distribution System and the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System and "Approved Apparel Retailers" Selective
Distribution System not only with regard to third parties but also
between these systems so that:
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|
|
6.5.1
|
sales
of Lacoste Watches
to final consumers be made in proportions commensurate with private use by
such consumers;
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|
|
6.5.2
|
until
they are sold to final consumers, through the Lacoste Watches Selective
Distribution System or the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System Lacoste Watches remain
at all times within the custody of a member of either of these
systems.
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|
|
6.6
|
The
Distributor shall
take all appropriate measures so that all members of the Lacoste Watches Selective
Distribution System with whom Distributor has any
dealings, similarly adhere to the commitments
mentioned in Article 6.5
above.
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ARTICLE 7 - ORDERS AND
SHIPMENTS
|
7.1
|
From
time to time, Distributor shall submit
purchase orders for Lacoste Watches to Master
Licensee. All purchase orders shall be subject to
acceptance by Master
Licensee, which acceptance may, at Master Licensee’s
option, be evidenced by the issuance of written confirmations or
acknowledgments. Master
Licensee hereby reserves the absolute right to reject the whole or
any part of any purchase order for any commercially valid reason,
including, without limitation, Distributor’s credit
condition or its accumulation of excess or non-current inventory or its
failure otherwise to adhere to the terms and conditions of this Agreement,
notwithstanding that any such rejection may prevent Distributor from
achieving its Minimum
Turnover Requirements. All purchase orders shall be irrevocable
after acceptance by Master Licensee;
provided, however, that Distributor may
reschedule or cancel that portion of any purchase order pertaining to
Lacoste Watches
which Master
Licensee fails to deliver within thirty (30) days after the later
of the advised delivery date or shipping date. Distributor will provide
Master Licensee
with a four (4) month rolling forecast of its anticipated order volume
monthly by SKU, for the four (4) month period. Master Licensee will use
reasonable efforts to deliver Lacoste Watches ordered
in accordance with the forecast within three (3) months after acceptance
of the purchase order by Master Licensee and to
deliver all other Lacoste
Watch orders within three (3) to five (5) months after acceptance
of the purchase order. As soon as is reasonably practicable after
acceptance of each purchase order, Master Licensee shall
advise Distributor
of the shipping dates applicable to such order. All shipping
dates so advised are estimates only and Master Licensee shall
not have any liability for failure to actually ship by such dates or to
deliver by Distributor’s requested
delivery dates. Master
Licensee shall notify Distributor in event of
any anticipated delay in shipping dates of thirty (30) days or more. Each
order submitted by Distributor will specify
a “ship to” address which shall be the address of Distributor’s
warehouseman or the address for one of Distributor’s
customers.
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|
7.2
|
The Distributor shall place
all orders for Lacoste
Watches with the Master Licensee
exclusively; provided that notwithstanding the foregoing, the Distributor may order
the Lacoste
Watches from another member of the Lacoste Watches Selective
Distribution System resident in the
EU.
|
All
orders shall be subject to acceptance by the Master Licensee. They shall
be governed exclusively by the terms and conditions of this Agreement and the Master Licensee's General
Conditions of Distribution attached hereto as Schedule VII.
|
7.3
|
Unless
otherwise agreed in writing by Distributor and Master Licensee, Lacoste Watches shall be
deemed delivered to Distributor when
delivered by Master
Licensee or Master
Licensee’s freight forwarder or distribution center into the
possession of a carrier designated by Master
Licensee. Distributor shall bear
all risk of loss, damage or shortage pertaining to Lacoste Watches after
delivery to carrier for shipment to the designated “ship to” address on
the corresponding purchase order. All costs of delivery, including,
without limitation, all costs for freight, import licenses, customs duties
or other duties or imposts, insurance and special handling shall be paid
by Distributor.
|
ARTICLE 8 -
PAYMENT
|
8.1
|
The
purchase prices for all Lacoste Watches
purchased by Distributor shall be in
Euros and based on Master
Licensee’s suggested retail price in effect in the Territory as of the date
of shipment. Such prices shall be calculated based on the discount
structure as set forth on Schedule VIII
attached hereto. Master
Licensee will provide current price lists for the Watches to Distributor from time to
time and shall have the right to modify such prices at any time; provided,
however, that no price increase shall become effective sooner than sixty
(60) days after written notice thereof to Distributor. Master Licensee will
give Distributor
prior notice of all such price changes. For all orders shipped
before the effective date of any price increase, the applicable price
shall be the price in effect on the date of shipment. With respect to
orders for Lacoste
Watches that have been accepted by Master Licensee but
which have not been shipped as of the effective date of a price increase,
the applicable price shall be the price in effect on the date of shipment;
provided that if the price increase is more than ten percent (10%) of the
last applicable price, Distributor shall have
the right within ten (10) days from the effective date of the price
increase to cancel all or any part of the order for Lacoste Watches subject
to such price increase upon notice to Master Licensee. All
prices are ex-works Master Licensee’s
affiliate’s Hong Kong distribution facility or such other distribution
facility as Master
Licensee shall designate.
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|
|
8.2The
invoices shall be sent directly by the Master Licensee to
the Distributor.
All payments shall be made in Euros in accordance with Master Licensee’s
standard terms of sale (to the extent not inconsistent with the terms
contained herein) net ninety (90) days after the invoice date. A discount
of two percent (2%) is granted for cash payment in
advance.
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|
8.3
|
Distributor shall have
sole responsibility for invoicing its customers and for the collection of
all amounts due from them for Lacoste Watches sold to
them by Distributor. In no event
shall non-payment by any such customer or any claim or allegation any
customer may have against Distributor constitute
grounds for any off set, deduction, claim or defence on the part of Distributor against
Master Licensee or
in respect of any obligation due to Master Licensee and
Distributor shall
pay Master
Licensee all amounts due to Master Licensee in
accordance with the terms of this Agreement without off
set or deduction for any amounts claimed to be due to Distributor by Master
Licensee.
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|
|
ARTICLE 9 - QUALITY, WARRANTY AND
AFTER SALE
SERVICE
|
9.1
|
The
Master Licensee
shall take all reasonable steps to ensure that the Lacoste Watches
delivered pursuant to this Agreement satisfy all
applicable quality requirements.
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|
9.2
|
Lacoste Watches
delivered by the Master
Licensee to the Distributor shall be
covered by the Master
Licensee's International Warranty as the same may be modified by
Master Licensee
from time to time.
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|
9.3
|
The Distributor shall establish and
maintain at its own cost such number of authorized service
facilities for the service and repair of Lacoste Watches in the
Territory (the
“Service center(s)”) as Master Licensee may
reasonably request, it being understood that initially there shall be one
(1) such Service Center. Distributor shall accept
all Lacoste Watches
for service returned by any consumer or retailer whether covered by
the applicable consumer warranty (“warranty repairs”) or not covered by
said warranty (“out-of-warranty repairs”). Distributor shall
purchase from Master
Licensee and maintain an adequate stock of Lacoste Watches and
component parts and materials and employ at each Service Center such
number of qualified service technicians necessary to perform such service
in a timely manner. All shipping charges, including any duty,
or Customs brokerage fees, for such parts shall be paid by Distributor. Master Licensee shall
have the right to furnish parts to Distributor in the form
of finished watches. Within sixty (60) days after the end of
each contract year, provided Distributor has complied
with all its obligations hereunder, Master Licensee will
issue a credit to Distributor equal to one
percent (1%) of the Sales
to Distributor in such prior contract year; provided that Master Licensee will
review this amount annually in light of the actual average incidence of
warranty repairs.
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|
9.4
|
Within
thirty (30) days after the Effective Date, Distributor will furnish
Master Licensee
with Distributor’s
initial price list for all out of warranty repairs. All such prices will
be competitive as compared to prices charged for similar services
performed for other watch brands that compete with Lacoste Watches in the
Territory. Distributor will give
Master Licensee no
less than ninety (90) days prior written notice of any change to any such
prices. Distributor shall submit
to Master Licensee
quarterly, a statement summarizing all out of warranty repairs and all
warranty repairs performed in the immediately preceding quarter indicating
for each watch repaired: the corresponding style number, the work
performed and customer's name and address. Distributor will use
only those parts (excluding batteries) for service on Lacoste Watches which
are supplied directly by or otherwise approved in writing by Master Licensee as
original equipment for Lacoste Watches.
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|
9.5
|
Distributor will issue
estimates for repair work within five (5) working days after receipt of a
Lacoste Watch for
repair on ninety percent (90%) of Lacoste Watches
submitted to Distributor for repair.
Working days are defined as all days of the year except Saturdays and
Sundays and legal holidays. Warranty repairs will be completed within
fifteen (15) working days after receipt of a Lacoste Watch for repair
on ninety percent (90%) of the in-warranty work performed by Distributor, unless
detained because of delays in receiving necessary parts from the Master Licensee. Out of
warranty repairs will be completed within twenty (20) working days after
receipt of the customer's written authorization to proceed with repair of
a Lacoste Watch on
ninety percent (90%) of the out of warranty work performed by Distributor. On the same
day any repairs are completed, the Lacoste Watch repaired
or serviced will be returned to the customer via express mail or such
other method as Master
Licensee may reasonably request. Increases in the postage or other
ground delivery rates may require requisite increases in charges to the
customer by the Distributor for
shipping
|
ARTICLE 10 - MARKETING AND
MERCHANDISING
|
10.1
|
Obligations
of the Master
Licensee
|
|
|
The Master Licensee shall
share appropriate Know
How pertaining to the Lacoste Watches with
Distributor and
maintain regular contacts among their respective personnel. To this
effect, the Master
Licensee shall from time to
time:
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|
|
10.1.1
|
give
the Distributor
access to certain market surveys, statistics, reports and information it
may have (which it is not obliged to third parties to hold in confidence)
regarding the market position of the Lacoste Watches in the
Territory among
competitors, retail customers and consumers;
and
|
|
|
10.1.2
|
at
the Distributor’s
request, provide reasonable assistance to the Distributor in training
a reasonable number of the Distributor’s staff in
the marketing, merchandising, promotion and advertising of the Lacoste Watches;
and
|
|
|
10.1.3
|
advise
the Distributor of
its requirements with regard to marketing and merchandising, including for
example specifications concerning the presentation of the Lacoste Watches in the
shop-windows or inside shops and the point-of-sale materials, that the
Distributor shall
implement within the Territory;
and
|
|
10.2
|
Obligations
of the Distributor
|
The Distributor shall take all
necessary measures to promote the distribution and sale of the Lacoste Watches within the
Territory by conforming
to such policies as are prescribed and co-ordinated world-wide by the Licensor for the Licensed Trademarks and by
using the Know-How
provided through the Master
Licensee together with its own resources. To this effect, the Distributor
shall:
|
|
10.2.1
|
make
such investments as are reasonably required to create and/or maintain the
organisation necessary for the distribution, marketing and merchandising,
promotion and advertising of the Lacoste Watches. This
organization shall operate in a manner so as to avoid any risk of
confusion to the retail trade or consumers with other brands offered by
the Master Licensee or by Distributor. Such organisation shall include at
least one (1) full time watch division manager to supervise and
manage a dedicated sales manager and sales executive for Lacoste Watches,
experienced in managing a watch distribution business and one (1) full
time marketing manager working on the advertising and promotion of Lacoste Watches;
and
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|
|
10.2.2
|
consult
with the Master
Licensee at least three (3) months before the beginning of the sale
of each season’s collection with respect to the Distributor’s marketing
and merchandising policy. At Master Licensee’s
request, the Distributor shall
participate in the coordination meetings organised by the Licensor and/or Master Licensee. This
consultation shall be done with the purpose of reaching an agreement on
the objectives and the means to achieve the best possible sales results
within the Territory as well as the
best possible co-ordination with the marketing and merchandising policy of
the Lacoste Apparel
Products and Other
Lacoste Products; and
|
|
|
10.2.3
|
provide
the Master
Licensee three (3) months after the start of the sales of each
collection of Lacoste
Watches a collection report which shall include the
comments of the Distributor detailed by
Model (SKU) within each such collection. The Distributor shall in
particular comment on the market receptivity to the collection. Such
report shall also include any requests for future
collections.
|
|
|
10.2.4
|
provide
the Master
Licensee once a year, at the beginning of the month of October,
with its estimated Net
Sales figures in the Territory in units and
in turnover for the following three (3) calendar years, for each of the
lines of Lacoste
Watches, by category of products (as defined in Schedule IV attached hereto); and shall update these
estimates for the first year of this three year period, a first time six
(6) months later (in April), and a second time twelve (12) months later
(in October); and
|
|
|
10.2.5
|
provide
the Master
Licensee quarterly, beginning with the second quarter after the
Effective Date with a report listing each Approved Watches
Retailer and each Lacoste Boutique and
Lacoste Corner to
which Distributor
sold any Lacoste Watches
in the previous quarter and detailing for each by SKU the
quantities and the Net
Sales, of the Lacoste Watches sold
during the preceding quarterly period);
and
|
|
|
10.2.6
|
in
general :
|
|
|
a)
|
give
the Master
Licensee complete access to any and all market surveys, reports and
information it may have (which it is not obliged to third parties to hold
in confidence) regarding the market position of the Lacoste Watches among
competitors, retail customers and consumers in the Territory;
and
|
|
|
b)
|
use
reasonable efforts to reply to any request from the Master Licensee
concerning additional details or statistics based on sales including,
without limitation, monthly sell-through data for certain accounts;
and
|
|
|
c)
|
in
the interests of both parties, enable the Master Licensee’s
personnel to carry out their role of assistance to and consultation with
the Distributor
and supply them with such help and information as may be reasonably
available for the completion of their role and, in particular, provide all
available information and necessary surveys for the analysis of the retail
outlets sales activity so as to permit the Master Licensee to
better define the conditions and the trends of the market;
and
|
|
|
d)
|
shall
ensure that the Approved
Watches Retailers implement and conform to the marketing and
merchandising policy defined by the Licensor according to
the provisions of Article 10.2.2 above;
and
|
|
|
e)
|
shall
ensure that the Approved
Watches Retailers conform to the specifications concerning the
fittings, the decoration and architecture of the points-of-sale and use
the furniture and other elements, developed by the Licensor, in connection
with the sale of the Lacoste
Watches.
|
ARTICLE 11 - DISTRIBUTION AND
SALE
The Distributor shall carry out
the distribution of the Lacoste
Watches in the Territory exclusively
through :
|
a)
|
the
members of the Lacoste
Watches Selective Distribution System, through Approved Watches
Retailers selected in the Territory and to which,
whenever possible, it shall be contractually linked;
and
|
|
b)
|
the
members of the "Lacoste
Boutiques and Lacoste Corners" Selective Distribution System,
subject to the terms and conditions set forth in Article 11.2
hereinafter.
|
|
11.1
|
Approved
Watches Retailers
|
So as to
provide the consumer with the best service, to ensure the homogeneity of the
high quality of the distribution of the Lacoste Watches throughout the
Territory and to
guarantee their authenticity, the Distributor shall select Approved Watches Retailers on
the basis of the following objective criteria as regards both quality and
techniques, and shall use reasonable commercial efforts to enter into with them,
whenever possible, an agreement in the form of Lacoste Watches Approved Retailer
Contract as the same may be modified from time to time, the current
version of which is annexed hereto as Schedule IX.
|
|
11.1.1
|
Conditions of
Approval
|
The Distributor shall select as
Approved Watches
Retailers exclusively those which meet the standards of performance as
set forth in the Lacoste Watches General Conditions of Distribution, as the same
may be modified from time to time, the current version of which is annexed
hereto as Schedule VII for the following
criteria :
|
|
a)
|
the
location and environment of the point-of-sale (type and category of the
building, location in the town in question, type of shops in the
neighborhood, sales area of the shop, quality of the frontage, length of
the shop window); and
|
|
|
b)
|
its
fittings (quality of the shop sign, window-dressing, quality of the
furnishings and lighting); and
|
|
|
c)
|
the
type, brand and nature of the products sold in the outlet;
and
|
|
|
d)
|
the
qualification of the personnel; and
|
|
|
e)
|
the
financial capabilities and solvency
guarantees.
|
|
|
11.1.2
|
Approval of the
Approved
Watches Retailers
|
|
|
The
Master Licensee
reserves the right to verify that every point of sale selected by the
Distributor as an
Approved Watches
Retailer conforms to the objective criteria set forth in
Article 11.1.1 hereinabove. Distributor shall submit
or cause to be submitted to the Master Licensee a copy
of the completed application for every potential point of sale for
approval and will follow the application procedures for each such proposed
point of sale as set forth in the Lacoste Watches General Conditions of
Distribution. The Master
Licensee shall have one-hundred-twenty (120) days to approve in
writing a potential point of sale based upon the objective criteria set
forth under Article 11.1.1 hereinabove
and the Master
Licensee shall not unreasonably withhold, delay or condition its
approval, and shall be deemed to have given its approval if Master Licensee does not
notify Distributor
that it disapproves of such proposed point of sale with one-hundred-twenty
(120) days of receipt of the completed
application.
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11.1.3
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Duties of the
Approved
Watches Retailers
|
Whether
or not the Distributor
succeeds in entering into the Lacoste Watches Approved Retailer
Contract with each Approved Watches Retailer, the
Distributor shall ensure
that each Approved Watches
Retailer adheres to the following at all times :
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|
a)
|
the
standing of the point-of-sale and its environment remain at all times
compatible with the Lacoste Trademarks
Image, as established and coordinated by the Licensor;
and
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|
|
b)
|
the
sales area in the store is always sufficient to permit the presentation of
the Lacoste
Watches in a sufficient shopping space without disproportion with
the other brands offered for sale and allowing to distinguish them;
and
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c)
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each
point-of-sale always contains an adequate range of the Lacoste Watches;
and
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d)
|
the
sales personnel of each point-of-sale is always well qualified and trained
in presenting and selling the Lacoste Watches;
and
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e)
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INTENTIONALLY
DELETED
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f)
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no
misleading advertising is made; and
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g)
|
the
counters, posters, demonstration and other advertising material are
displayed in a prominent position in each store and set up with the Distributor's approval;
and
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h)
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a
notice stating "Approved
Watches Lacoste Retailer" is displayed in a prominent position in
the window or near the
Lacoste Watches display
area.
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11.1.4
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The
Distributor shall
ensure that all elements bearing or representing the Licensed Trademarks
(such as awnings, pennants, etc.) used by the Approved Watches
Retailers on the façade, in the window or inside their shops are
exclusively those supplied by the Distributor or,
exceptionally those which have received the prior and express written
approval of the Distributor.
|
In this
respect, a specific provision shall be included in the written confirmations
issued to the Approved Watches
Retailers.
The Distributor shall inform the
Master Licensee of any
new kind of material that the Approved Watches Retailers
would like to use.
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11.2
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Special
provisions applicable to the members of the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution
System
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Nothing
contained in the Agreement and in particular
this Article 11.2 and Articles 1.17 and 1.18 shall be
construed as meaning that Lacoste Watches shall be
offered for sale in each and every Lacoste Boutiques and Lacoste Corner fulfilling the
requirements of Article 11.2.1
hereunder.
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11.2.1
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Presentation Surface of
the Lacoste Watches
and/or of the Other Lacoste Products
in the Lacoste
Boutiques and Lacoste
Corners
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a)
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So
as to make sure that at the same time the Lacoste Boutiques and
Lacoste Corners
remain principally devoted to the sale of Lacoste Apparel Products
and only on a subordinate basis of the Lacoste Watches and/or
of the Other Lacoste
Products and to allow the development of the Lacoste Watches together
with the Other Lacoste
Products, the Lacoste Boutiques with a
Commercial Surface
exceeding 50m² and the Lacoste Corners with a
Commercial Surface
exceeding 40m² shall be authorised to sell the Lacoste Watches and all
the categories of the Other Lacoste Products
that they wish to sell. Devanlay shall reserve
for the Lacoste
Watches together with the Other Lacoste Products
in each of these Lacoste
Boutiques and in each of these Lacoste Corners at least
ten percent (10%) and at most twenty percent (20%) of the Presentation Surface of
such Lacoste
Boutique or Lacoste
Corner.
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For the
Lacoste Boutiques with a
Commercial Surface
exceeding 150m², the Presentation Surface reserved
for the Lacoste Watches
together with the Other Lacoste
Products shall be at least fifteen percent (15%) but at most twenty
percent (20%) of the Presentation Surface of such
Lacoste
Boutique.
Devanlay or the relevant Lacoste Apparel Products Distributor shall decide with
the owner of each Lacoste
Boutique and of each Lacoste Corner, within the
limits fixed above, the percentage of the Presentation Surface reserved
for the Lacoste Watches
and for the Other Lacoste
Products.
Devanlay, or the relevant
Lacoste Apparel Products
Distributor, shall decide with the owner of each Lacoste Boutique and of each
Lacoste Corner the
manner in which the space reserved for the Lacoste Watches and for the
Other Lacoste Products
shall be allocated.
The owner
of each Lacoste Boutique
and of each Lacoste
Corner shall comply scrupulously and in all respects with the
instructions of Devanlay, or of the relevant
Lacoste Apparel Products
Distributor, concerning the merchandising of the
Lacoste Watches and of
the Other Lacoste Products
in the Lacoste Boutiques and in
the Lacoste
Corners.
Within
this framework, the owners of the Lacoste Boutiques and of the
Lacoste Corners are free
to decide if they want to present Lacoste Watches in their
points of sale and
to choose the categories of Other Lacoste Products which
they wish to present in their points of sale.
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b)
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Provided
that they have been authorised beforehand and in writing by Devanlay, the Lacoste Boutiques with a
Commercial Surface
smaller than or equal to 50m² and the Lacoste Corners with a Commercial Surface
smaller than or equal to 40m² may sell certain Lacoste Watches and/or
Other Lacoste
Products in the same conditions. Given the size of these points of
sale, the parties agree that no reservation of a minimum Presentation Surface
shall apply to them.
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11.2.2
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Selection
of the collections of the Lacoste Watches for the
"Lacoste Boutiques and
Lacoste Corners" Selective Distribution
System
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The
presence of the Lacoste
Watches together with the Other Lacoste Products
alongside the Lacoste
Apparel Products in the Lacoste Boutiques and in the
Lacoste Corners is
desirable in the interest of the Lacoste Trademarks Image and
of the development of the "lifestyle" image of the Lacoste brand. The purpose is
to define for each Lacoste Boutique and for each Lacoste Corner a well-balanced
solution, preserving both the Lacoste Trademarks Image and
the interests of the Lacoste
Apparel Products,
the Other Lacoste
Products and the Lacoste
Watches.
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a)
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The
collections of the Lacoste Watches for the
"Lacoste Boutiques and
Lacoste Corners" Selective Distribution System shall be selected in
the Territory
among the collections approved by the Licensor, by mutual
agreement between the Distributor and the
Lacoste Apparel Products
Distributor in such country.
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The
selection of the collections of the Lacoste Watches means the
determination, for the Territory, on the one hand, of
the product ranges (choice of models among those existing) of the Lacoste Watches collections,
among which the owner of the point of sale shall be free to choose when placing
his orders and, on the other hand, of the total number of references/color of
Lacoste Watches and of
Other Lacoste Products
which may be commercialised during a season in each category of point of sale
according to its size and its lay-out. The determination of the product ranges
shall be such as to offer the owners of the points of sale the opportunity to
exercise their choice among collections having, for the Lacoste Watches and for each
category of Other Lacoste
Products, a reasonable representativeness.
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b)
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Subject
to the terms of paragraph (a) hereinabove, such selection shall be made
taking into account:
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-
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the
availability of the collections of the Lacoste Watches in such
country, and
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-
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the
commercial interest that the Lacoste Watches may
offer to the Lacoste
Boutiques and the Lacoste Corners,
and
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-
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the
purchasing behaviour and habits of such country,
and
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-
|
the
periodicity appropriate to the Lacoste
Watches.
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c)
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d)
|
In
the event of a disagreement between the Distributor and a Lacoste Apparel Products
Distributor about the selection of collections of Lacoste Watches for the
"Lacoste Boutiques and
Lacoste Corners" Selective Distribution System in the Territory, the Distributor shall notify
the Master
Licensee who will then notify the Licensor. The Licensor and Devanlay shall make
their best efforts to find together a well-balanced solution which
preserves together the Lacoste Trademarks
Image, the development of the "lifestyle" image of the Lacoste
brand and the interests of the Lacoste Apparel Products
and of the Lacoste
Watches. The final decision shall rest with Devanlay.
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e)
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Once
the ranges of the Lacoste
Watches and of the Other Lacoste Products
and the total number of references/color of the Lacoste Watches and/or
of the Other Lacoste
Products have been selected, the owners of the Lacoste Boutiques and of
the Lacoste
Corners will be free to decide, within this framework, the
quantities of Lacoste
Watches and/or of Other Lacoste Products to be
ordered.
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11.2.3
|
Supply
of the "Lacoste Boutiques
and Lacoste Corners" Selective Distribution System by the Distributors of the
Lacoste
Watches
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|
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a)
|
The
Distributor shall
present the collections directly to the Lacoste Boutiques and to
the Lacoste
Corners, which shall place their orders and repeat orders directly
with them according to their specificities (size, location, customers).
The Distributor
shall transmit electronically to the Lacoste Apparel Products
Distributor a copy of each order placed by the Lacoste Boutiques and
the Lacoste Corners located in the
Territory. These
orders shall be sent to the Lacoste Apparel Products Distributor
upon receipt by the Distributor, and shall
specify the anticipated delivery dates. Upon receipt of the copies of the
orders and within 10 days at most, the Lacoste Apparel Products Distributor may
contact the Distributor if, after
examining the orders, it appears that the selection of the collection for
a specific point of sale does not comply with the terms of Article 11.2.2 hereinabove. In such an event, the Lacoste Apparel Products
Distributor shall
have the right to request the Distributor not to
accept these orders insofar as they do not conform with the pre-agreed
terms relating to the selection of ranges of Lacoste Watches set
forth in Article 11.2.2 hereinabove. The
Distributor
undertakes to act in accordance with the request of the Lacoste Apparel Products
Distributor. In the absence of reaction from the Lacoste Apparel Products
Distributor within 10 days following the receipt of the copies of
the orders for the beginning of the season, such orders may be implemented
as such. Notwithstanding the foregoing, repeat orders may be delivered by
the Distributor as
soon as they are received.
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b)
|
The
Lacoste Boutiques
and the Lacoste
Corners shall be supplied and invoiced directly by the Distributor.
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c)
|
The
Distributor shall
send each six months to the Lacoste Apparel Products
Distributor a detailed recapitulative statement of the invoices of
Lacoste Watches
sent to each Lacoste
Boutiques and Lacoste Corner. Copies
of these statements shall be sent simultaneously to the Licensor, to Devanlay and to the
Master
Licensee.
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d)
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In
the event of a violation by a Lacoste Boutique or a
Lacoste Corner of
the limits of the Presentation Surface
established for the Lacoste Watches together
with the Other Lacoste
Products in the point of sale or of the selection of the
collections of the Lacoste Watches and of
the Other Lacoste
Products intended to be commercialised in this point of sale, or of
the maximum number of references/colour of Lacoste Watches and/or
of Other Lacoste
Products which may be commercialised in such Lacoste Boutique or
Lacoste Corner, or
in the event that the purchasing turnover of Lacoste Apparel Products
during six months is less than eighty percent (80%) of the total
purchasing turnover of the relevant Lacoste Boutique or
Lacoste Corner
during the same period, Devanlay, or the Lacoste Apparel Products
Distributor concerned, shall be entitled on a first instance to
issue a warning to the relevant Lacoste Boutique or
Lacoste Corner
and, if any of these occurrences should be repeated, to forbid such point
of sale to commercialize Lacoste Watches and
Other Lacoste
Products during at least one
season.
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The Licensor and the Master Licensee shall be
informed of such measures taken by Devanlay. The Master License will inform
the Distributor of any
such measures taken by Devanlay. The Distributor undertakes to
comply with these measures by suspending all orders and deliveries to such point
of sale.
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11.2.4
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Selective
Distribution Systems
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a)
|
The
Distributor
acknowledges that the Lacoste Boutiques and
the Lacoste
Corners are Points
of Sale with specific characteristics resulting inter alia from the
fact that all the products sold in these premises bear the Lacoste Trademarks, as
well as from the fact that these points of sale are principally devoted to
the sale of Lacoste
Apparel Products and only on a subordinate basis of Lacoste Watches together
with Other Lacoste
Products, contrary to the members of the "Approved Apparel Retailers"
Selective Distribution System who can sell products of different
brands and who are devoted to the sale of the Lacoste Apparel
Products, unless they are selected as approved retailers for Lacoste Watches and/or
Other Lacoste
Products.
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Therefore,
the Lacoste Boutiques
and the Lacoste Corners
constitute together the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System organized by Devanlay which is distinct
from the "Approved Apparel
Retailers" Selective Distribution System comprising the approved
retailers for the Lacoste
Apparel Products.
The "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System is also distinct from the Lacoste Watches Selective
Distribution System organised by the Master Licensee.
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b)
|
The
Distributor
therefore undertakes to take all appropriate measures to ensure the
integrity of the Lacoste
Watches Selective Distribution System, the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System and the "Approved Apparel Retailers"
Selective Distribution System in its Territory.
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11.2.5
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Assistance
of Devanlay and/or
of the Lacoste Apparel
Products Distributor to the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System in connection with the Lacoste Watches and/or
the Other Lacoste
Products
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In
connection with the Lacoste
Watches and/or the Other
Lacoste Products that will be offered in the "Lacoste Boutiques and Lacoste Corners" Selective
Distribution System under the terms of this Article 11.2, Devanlay and/or the Lacoste Apparel Products
Distributor have agreed that:
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a)
|
in
the field of merchandising, they
shall :
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-
|
ensure
the coherence of the merchandising for the Lacoste Apparel
Products, the Lacoste Watches and/or
the Other Lacoste
Products, and
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-
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present
in a suitable fashion the Lacoste Watches
following the rules contained in the merchandising guide (called the
"Green Book") and its seasonal editions developed by Devanlay, which shall be
updated by the Licensor and Devanlay and approved by
the Licensor,
and
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-
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present
completely, in particular in the shop-windows, the lines of Lacoste Apparel
Products, Lacoste
Watches together with Other Lacoste Products,
so as to express fully the Lacoste "way-of-life",
and
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-
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use
their best efforts to include the Lacoste Watches together
with the Other Lacoste
Products in their local or national advertising and promotion
campaigns.
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b)
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in
the field of reporting, they
shall :
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-
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do
their best efforts to ensure that the Lacoste Boutiques
progressively put in place IT systems allowing a detailed reporting of
their sales of Lacoste
Apparel Products, Lacoste Watches and
Other Lacoste
Products, and
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-
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for
those Lacoste
Boutiques who have not yet put in place, and as long as they have
not done so, continue providing the Licensor and the Master Licensee with
reports similar to those available as of March 1st,
2004, and
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-
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supply
the Lacoste
Boutiques with such elements as may be necessary for the IT
treatment and the reporting of their sales of Lacoste Watches, subject
to having received the basic data about the Lacoste Watches
necessary to the operation of such a system from the Licensor, who shall have
obtained it himself from the Master Licensee, and
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-
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prepare
and submit to the Licensor and to the
Master Licensee,
for the Lacoste
Boutiques which have put in place the necessary IT systems and have
received the necessary basic data about the Lacoste
Watches:
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(i)
|
on
a monthly basis and under the same conditions and terms as for the sales
of the Lacoste Apparel
Products by the Lacoste Boutiques, the
information relating to the sales of the Lacoste Watches in each
Lacoste Boutique.
This information shall include for each Lacoste Boutique the
detail of the sales to the consumer of the Lacoste Watches,
and
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(ii)
|
on
a semi-annual basis the information relating to the sales by reference of
the Lacoste
Watches in each of the Lacoste
Boutiques.
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11.2.6
|
Contribution
of the Distributor
|
|
|
a)
|
In
consideration of the merchandising and reporting services and of the
reservation of the Presentation Surfaces
made for the Lacoste
Watches by the Lacoste Apparel Products
Distributors, the Distributor shall
pay, each six
months, to the Lacoste
Apparel Products Distributor, a contribution representing a fixed
percentage of five percent (5%) of the purchases of the Lacoste Watches made by
the "Lacoste Boutiques
and Lacoste Corners" Selective Distribution System in the Territory during such
six (6) month period.
|
In view
of the importance of the Lacoste Boutiques having a
Commercial Surface
larger than 400m² due to their role as showcases on prime locations and due to
their high operations cost, the Distributor shall pay to Devanlay, or, if the
distribution of the Lacoste
Apparel Products in the Territory has been granted to
a Lacoste Apparel Products
Distributor, to such Lacoste Apparel Products
Distributor, a contribution representing a fixed percentage of ten
percent (10%), instead of the five percent (5%) mentioned hereinabove, of the
purchases of the Lacoste
Watches by the Lacoste
Boutiques in the Territory having a Commercial Surface larger than 400m²
during such six (6) month period.
|
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b)
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|
c)
|
These
amounts shall be calculated on 30 June and 31 December of each year and
the corresponding contribution shall be paid no later than 31 August and
28 February of each year, by the Distributor.
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|
d)
|
If
the contribution due by the Distributor has not been
fully paid at the dates specified in Article 11.2.6c)
hereinabove to the Lacoste Apparel Products
Distributors, the Licensor and the Master Licensee shall
have the right, thirty (30) days after a notice given by registered mail
with certified receipt which will not have been followed by complete
payment of all and any due and unpaid contributions, to instruct forthwith
the Distributor to
stop any further deliveries of the Lacoste Watches to the
members of the "Lacoste
Boutiques and Lacoste Corners" Selective Distribution System and
the Distributor
agrees to forthwith comply with such
instructions.
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11.2.7
|
Furniture
and sales equipment used for the Lacoste
Watches
|
The
furniture and other sales equipment used for the Lacoste Watches in the "Lacoste Boutiques and Lacoste Corners" Selective
Distribution System shall exclusively be those developed by the Licensor in cooperation with
Devanlay and/or the Master Licensee.
Devanlay and the Lacoste Apparel Products
Distributor shall be the sole entities responsible for the lay-out of the
Lacoste Boutiques and
the Lacoste Corners,
subject to the terms of this Article 11.2.
|
|
11.2.8
|
End-of-season
goods
|
The rules
applied by the Lacoste
Boutiques and the Lacoste Corners for the sale
of end-of-season goods shall be those applicable to the Lacoste Apparel Products, but,
to the extent possible, shall also have to follow those applicable to the Lacoste Watches.
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|
11.2.9
|
Specific
agreements:
|
In the
event that specific agreements, departing from the provisions set forth
hereinabove in paragraphs 11.2.1 to 11.2.8 are concluded either
between Devanlay and the
Master Licensee, or
between the Distributor
and the Lacoste Apparel
Products Distributor in the Territory, the terms of such
specific agreements shall prevail over the provisions set forth hereinabove in
paragraphs 11.2.1 to 11.2.8. The Distributor shall promptly
inform the Master
Licensee of any such specific agreement.
|
11.2.10
|
The Distributor acknowledges that
in the event of a breach in the Territory by the Distributor of its obligations
under the provisions set forth hereinabove in paragraphs 11.2.1 to 11.2.9, the
Licensor has undertaken
towards Devanlay and the
Lacoste Apparel Products
Distributor to use its best efforts to obtain from the Distributor that it remedies
such breach. The Distributor further
acknowledges that in the event such efforts remain unsuccessful, the Licensor has agreed that Devanlay and the Lacoste Apparel Products
Distributors shall no longer be bound by any of their commitments
concerning the presence or the sale of the Lacoste Watches in the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System within the Territory, which the Distributor
accepts.
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11.3
|
Mail
Order – Internet
|
The Licensor is desirous to
protect in the Territory
the Lacoste Trademarks
Image, the Models, the Lacoste Watches as well as the
Lacoste Apparel Products
and the Other Lacoste
Products sold under the Licensed Trademarks. The Licensor also desires to
protect the consumer from the counterfeiting of the above and desires to offer
the consumer an appropriate environment and a high quality service. For all
these reasons, the Lacoste
Watches must be exclusively sold through the Lacoste Watches Selective
Distribution System and the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System.
In
consequence, the advertising and/or the sale of the Lacoste Watches on the
Internet and by Mail Order are authorized provided that the following conditions
are met :
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|
11.3.1
|
the
advertising and/or the sale of the Lacoste Watches on the
Internet or by Mail Order may only be made by Approved Watches
Retailers and members of the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System;
and
|
|
|
11.3.2
|
the
web site or the Mail Order catalogues on which the Lacoste Watches shall be
advertised and/or sold shall be submitted to Master Licensee for
Master Licensee's
written approval. Such approval shall be granted if the following
conditions are met :
|
|
|
a)
|
the
name, the environment, the presentation and the general standing of the
web site or the Mail Order catalogues as well as (for any such web site)
the way it functions shall be compatible with the Lacoste Trademarks
Image; and
|
|
|
b)
|
the
web site or the Mail Order catalogues shall offer to consumers a high
quality service for the Lacoste Watches;
and
|
|
|
c)
|
the
manner in which the Models and the Licensed Trademarks are
presented on the web site or in the Mail Order catalogues in connection
with the advertising and/or the sale of the Lacoste Watches shall be
submitted to Master
Licensee for Master Licensee 's
written approval. The Approved Watches
Retailers and the members of the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System may not include or use any
of the Licensed
Trademarks in the workings (as they exist as of this day or in the
future) of the web, and in particular no Licensed Trademark may
be included or used in a domain name, an URL address or an e-mail
address.
|
|
11.4
|
The
Distributor shall
be free to fix its wholesale price to the members of the Lacoste Watches Selective
Distribution System and the "Lacoste Boutiques and Lacoste
Corners" Selective Distribution System so as to facilitate the
diffusion of the Lacoste
Watches and the development of sales within the Territory. The Distributor shall keep
the Master
Licensee informed on a regular basis of its pricing policy. More
specifically, the
Distributor shall inform the Master Licensee of any
modification in its price structure as soon as practicable after such
modification.
|
Reduction
of price points by the Distributor for the Lacoste Watches if not justified by
normal business reasons, such as technical ones or currency exchange
fluctuations, may not be implemented if such a move risks to have significant
negative consequences on the Lacoste Trademarks Image.
ARTICLE 12 - END-OF-SEASON
GOODS
|
12.1
|
Seconds and end-of
season close-outs of Lacoste Watches (Lacoste Watches no
longer included in the collection of the Lacoste Watches) may be
sold with the Licensed
Trademarks by the Distributor exclusively
through the normal channels of distribution for the Lacoste
Watches.
|
|
12.2
|
Damaged
or defective Lacoste
Watches may in no circumstances be sold in any manner whatsoever,
and shall be destroyed at their expense by the Distributor.
|
ARTICLE 13 - PROMOTION AND
ADVERTISING
The Distributor shall implement
within the Territory an
advertising and promotion policy for the sale of the Lacoste Watches in a manner
compatible with the prestige of the Licensed Trademarks, of the
Lacoste Trademarks Image
and of the name "Lacoste" so as to achieve a satisfactory development of sales;
such policy shall follow as closely as possible the Licensor’s Promotion and Advertising
Know-How provided to the
Distributor by the Master Licensee including the
advertising policy defined by the Licensor at an international
level.
|
13.1
|
As used herein “advertising”
means only the publication in print or broadcast media of advertisements
approved by Master Licensee and “promotion” means all other forms of
promotion, other than advertising, for Lacoste
Watches approved by Master Licensee
including, without limitation, point of sale material, co-op advertising,
marketing, public relations, special events and the like. All advertising
and promotions (including, without limitation, the methods, selection,
layouts, venue and timing thereof) shall be subject to the prior written
approval of Master
Licensee. Distributor shall submit
all proposed advertising and promotion materials for approval at least
four (4) weeks prior to the first anticipated use thereof and shall not
engage in any advertising or promotion or use any such materials without
Master Licensee’s
prior written approval. Unless otherwise expressly approved in writing by
Master Licensee,
Distributor will
use only such materials including, without limitation, point of sale
material, packaging, advertising and ancillary material furnished or
approved by Master
Licensee.
|
13.2 Distributor shall conduct all
advertising and promotion of Lacoste Watches in the Territory at its own expense
and Master Licensee will
contribute towards the advertising and/or the promotion of such watches in the
Territory as hereinafter
provided. At a minimum, Distributor shall expend each
contract year for approved advertising and promotion an amount equal to (a) * of
Distributor’s budgeted
Net Sales of Lacoste Watches for such
contract year plus (b) * of Master Licensee’s sales to
Distributor in such
year. So long as Distributor satisfies its
obligation in respect of advertising and promotion set forth in this
Article 13.2 each contract year, then Master Licensee will reimburse
Distributor an amount
equal to * of Master
Licensee’s Sales to
Distributor in such year, such reimbursement amount hereinafter referred
to as Master Licensee’s “A/P
Amount”. Distributor’s budgeted Net Sales of Lacoste Watches for the first
through the fifth contract years are set forth in Annex D to the JV Agreement and Distributor’s budgeted Net Sales each contract year
thereafter shall be as contained in the annual business plan and budget as
adopted in accordance with the provisions of the JV Agreement at or before the
beginning of each contract year, or, at such time, if any, that the JV Agreement is no longer in
effect, then as approved by Distributor in good faith
consultation with Master
Licensee, and may be adjusted in the same manner quarterly. Within thirty
(30) days after the end of each such period, Distributor shall submit a
statement
*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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to
Master Licensee
setting out and showing Distributor’s
advertising and promotion expenditures incurred during such period
(supported by invoices and other documents reasonably acceptable to Master Licensee,
substantiating the expenditures for Distributor’s approved
advertising and promotion)and, within thirty (30) days after its receipt
of such statement accompanied by such substantiation, Master Licensee shall
pay the appropriate A/P
Amount to Distributor. Such
statement shall be itemized as set forth in Schedule X. Distributor acknowledges
that Master Licensee’s
A/P Amount represents only a portion of Master Licensee’s total
spending each year in respect of advertising and promotion of Lacoste Watches in the
Territory in as
much as Master
Licensee also contributes directly to Licensor under the terms
of the Master
Agreement to support Licensor’s spending on
advertising and promotion. In the event Distributor’s actual
Net Sales for
Lacoste Watches in
any contract year (other than the final contract year of this Agreement) exceed the
total budgeted sales for such year on which its promotion expenditures for
such year were based, then Distributor shall spend
an amount equal to * of such excess in the following contract
year.
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13.3
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In
addition to its other obligations under this Article 13, Distributor
shall:
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13.3.1
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ensure
that not only the Lacoste
Trademarks Image but also the personal reputation of
Mr Xxxx XXXXXXX and his family are
safeguarded.
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13.3.2
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keep
the Master
Licensee informed, as soon as executed, of all its advertisements
and promotions and provide the Master Licensee with
copies of the same.
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13.3.3take all necessary
steps to ensure that the Approved Watches
Retailers, should they themselves elect to advertise and promote
the sale of Lacoste
Watches use only advertising and promotional material that has been
approved by Master
Licensee for use by Distributor.
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13.3.4only use in its
advertising and promotional campaigns for Lacoste Watches,
products or accessories bearing the Licensed Trademarks in
so far as such products or accessories exist and are
available.
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*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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13.3.5
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permit
the Master
Licensee’s other distributors and the Licensor’s other
licensees and distributors to use free of charge and subject to copyright
laws to the corresponding artistic property rights, such advertising
material.
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13.4
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Distributor shall ensure
that the advertising and promotional programmes that are to be executed
locally by the Approved
Watches Retailers are submitted to the Distributor for its
prior written approval. The Distributor undertakes
to give notice to the Master Licensee of their
contents (with the exception of the price) should the Master Licensee so
request or in the event that there exists a doubt about their conformity
with the applicable requirements set forth
herein.
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13.5
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The
Master Licensee
shall supply the Distributor from time to
time, at cost price, with whatever advertising material used by the Licensor or the Master Licensee that
the Distributor
may wish to purchase (which is permitted for use) within the Territory.
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ARTICLE 14 - MINIMUM NET SALES
REQUIREMENTS
The Distributor is committed to
develop the sales of Lacoste
Watches within the Territory.
The Distributor undertakes to make
minimum Net Sales of
Lacoste Watches in the
Territory each contract
year for the duration of this Agreement(“Minimum Sales Requirements”)
equal to at least sixty percent (60%) of the amount of sales of Lacoste Watches as budgeted in
the Business Plan annexed to the JV Agreement. Sales in excess
of the Minimum Sales
Requirement in any contract year shall be neither carried over nor
credited toward the Minimum
Sales Requirement of a subsequent contract year. For purposes
of this Agreement, the
first contract year shall be from the Effective Date until January
31, 2008 and each contract year thereafter shall be the 12 month period ending
each subsequent January 31. Notwithstanding the foregoing, there shall be no
Minimum Sales Requirement for the first contract year.
ARTICLE 15 -
TERMINATION
The Agreement may be terminated at
any time:
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15.1
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By
either of the parties:
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15.1.1
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in
the event that the other party fails to fulfil any of its obligations,
upon sixty (60) days prior notice to the defaulting party if, before the
end of such notice period, such failure has not been remedied, or the
defaulting party has refused to remedy the said failure, if it can be
remedied, or has failed or refused to pay reasonable compensation should
it not be possible to remedy the failure and this without prejudice of any
compensation or damages whatsoever;
or
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15.1.2
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This
Agreement may be
terminated at any time by either of the parties, immediately upon notice,
in the event that the other shall be in violation of any substantial
agreement with any material creditor, or (1) be dissolved; (2) apply for
or consent to the appointment of a receiver, trustee or liquidator for its
properties or assets; (3) admit in writing its inability to pay its debts
as they are or become due; (4) make a general assignment for the benefit
of creditors; (5) file a voluntary petition or be the subject of an
involuntary petition in bankruptcy or an answer seeking re-organization in
arrangement with creditors, or take advantage of any bankruptcy,
reorganization, insolvency or re-adjustment of debt law or statute, or
file an answer admitting the material allegations of a petition filed
against it in any proceedings under such a law or statute, or take any
action for the purposes of effecting any of the foregoing; or (6) have any
order, judgment or decree entered against it without the application,
approval or consent of the party concerned, by any court of competent
jurisdiction approving a petition seeking reorganization of its properties
or assets or the appointment of a receiver, trustee or liquidator for
it.
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15.2
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By
the Master
Licensee
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15.2.1
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Within
fifteen (15) days of the sending of a registered letter, with notification
of receipt, without giving rise to any damages or compensation whatsoever,
in the event of a change in control of the Distributor, except as
expressly permitted under Article 18.2 hereof, or if an individual or
company directly or indirectly in competition with the activities of the
Licensor or the
Master Licensee,
including a licensee, a sub-licensee, a distributor, a sub-distributor, an
agent or a customer of the Licensor or the Master Licensee should
become a shareholder, even a minority shareholder of the Distributor. The Distributor then
undertakes to inform of the occurrence of any of the events hereabove
described within eight (8) days
thereof.
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15.2.2
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The
Master Licensee
nevertheless, shall be entitled to postpone its right to terminate this
Agreement to
assess the compatibility of such change with the Licensor and its own
commercial conceptions and
interests.
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15.2.3
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If
within three months following the receipt of the Distributor’s notice of
the occurrence of such events, the Master Licensee has not
implemented its right to terminate this Agreement, it shall
continue in force until its normal expiry date subject to the execution of
the other provisions contained in this Article 15.
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15.2.4
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Within thirty
(30) days following formal notice in the event of the Distributor’s failure to
settle the invoices from the Master Licensee within
the period of time stipulated, without prejudice to any proceedings for
forced collection which could be initiated by the Master Licensee and
notwithstanding the provisions of Article 15.1.1
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15.2.5
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Immediately
and without advance notice and without prejudice to damages, in the event
that any Minimum Sales
Requirement set forth in Article 14 above should not be
reached.
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15.2.6
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Immediately
and without notice in the event that the Distributor fails to
fulfil its obligations with regard to the Lacoste Watches Selective
Distribution System, notwithstanding Article 15.1.1
above.
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15.2.7
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Immediately
and without notice in the event of expiry, termination or non-renewal of
the Master
Agreement and/or of the Supplemental Agreement.
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ARTICLE 16 - PROVISIONS AT THE EXPIRY
OF THIS AGREEMENT
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16.1
|
Upon
expiry or termination of this Agreement for whatever
reason:
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16.1.1
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all
rights and licenses granted to the Distributor pursuant to
this Agreement
shall terminate and revert to the Master Licensee;
and
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16.1.2
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subject
to the provisions of Article 16.1.6
hereunder, the Distributor shall
immediately cease to trade as a Lacoste distributor, shall cease to use
the Know-how, the
Licensed
Trademarks, and the Models and shall not
assist any third party to do so, and any outlet store owned by the Distributor shall
terminate its sales and activities in connection with the Lacoste Watches
within ninety (90) days of the date of termination or expiry;
and
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16.1.3
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the
Distributor shall
immediately cease using all documents and items bearing or representing
the Licensed
Trademarks (catalogues, technical documents, etc.);
and
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16.1.4
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the
Distributor shall
cancel at its own expense all government clearances it may have obtained
with the appropriate governmental authorities;
and
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16.1.5
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the
Distributor shall
deliver immediately, at its cost, to the Master Licensee or to
any third party designated by the Master Licensee, all
remaining advertising and promotional and display material, and in general
all documents and items bearing or representing the Licensed Trademarks
(catalogues, technical documents, etc);
and
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16.1.6
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the Master Licensee shall
have the right, at its sole discretion,
to:
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a)
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repurchase
or have any third party it may wish to appoint repurchase, all or part of
the stock of Lacoste
Watches which the Distributor may have on
hand at the date of termination or expiry or non renewal at the price
invoiced by the Master
Licensee to the Distributor minus
rebates taking into consideration their age, state and
condition.
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b)
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If
the Master
Licensee does not exercise its purchase option as aforesaid, the
Distributor shall
be free to sell on a non exclusive basis the products remaining in
inventory within the Territory during a
period of six (6) months after the expiry or termination date hereof. This
Agreement shall
govern the said sales during said period. Such sales will be exclusively
made to the Approved
Watches Retailers or to Lacoste Boutiques and
Lacoste Corners in
quantities not exceeding those normally sold to said Approved Watches
Retailers or to Lacoste Boutiques or
Lacoste Corners
during the previous year.
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In this
case the Distributor
shall strictly comply with all of its obligations hereunder during such six
month period, in particular those obligations relating to the compliance with
the image and reputation of the Lacoste Watches, the Lacoste Trademarks and the
Lacoste name. The Distributor shall refrain from
any action that could harm such image and reputation.
In such
an event, the price invoiced to Approved Watches Retailers or
to Lacoste Boutiques and
Lacoste Corners during
such period shall not be more than fifteen percent (15%) lower than those in
force on the date of the sending of the letter advising the other party of the
termination or non-renewal of this Agreement.
At the
end of such six-month period, the Distributor may only continue
to sell for an additional six (6) months period any remaining stock after having
removed all markings or references to the Licensed Trademarks or to the
name of the Licensor and
after having eliminated and destroyed all packaging and labels bearing the name
of the Licensor or the
Licensed
Trademarks.
At the
end of this additional period the remaining stock shall have to be
destroyed.
The
provisions of Article 16.1.6 shall not apply
to display materials which shall instead be governed by Article 16.1.5.
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16.2
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Furthermore
it is hereby agreed that the termination, expiry or non-renewal shall
automatically entail at the Licensor's sole
option choice
either:
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16.2.1
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the
immediate termination of the commercial agreements which may have been
entered into between the Distributor and the
Approved Watches
Retailers,
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16.2.2
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or
the assignment of such commercial agreements to a new Lacoste distributor
designated by the Master
Licensee.
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The Master Licensee shall not be
liable to the Distributor for any claim said
Approved Watches
Retailers might raise against the Distributor due to such
termination and/or assignment.
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16.3
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The
Distributor, given
the specific conditions prevailing in the profession, shall not object in
any way whatsoever, during the period of notice preceding the termination
or non-renewal of this Agreement, to any visits
to its clients and taking of orders for the following season that may be
carried out by the new distributor for Lacoste Watches chosen
by the Master
Licensee.
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16.4
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The
Distributor
acknowledges and agrees that it is entering into this Agreement on the express
understanding that its receipt from sales of Lacoste Watches under
this Agreement are
intended to be sufficient to compensate it fully for all risks, costs and
expenses incurred in connection with this Agreement, including,
i.e., all costs and expenses incurred by the Distributor for its
sales, marketing, merchandising, advertising and promotion efforts with
respect to the Lacoste
Watches.
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16.5
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Accordingly,
upon the end, the termination or the non-renewal in whole or in part of
this Agreement and
regardless of its duration, for whatever reason, the Distributor shall have
no right to any further payment, indemnity or compensation for loss of
goodwill or for any risks, costs or expenses incurred or developed by the
Distributor during
the term of this Agreement.
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ARTICLE 17 - FORCE
MAJEURE
No party
shall be liable to the other for any delay in or failure to render any
performance when such delay or failure is caused by governmental regulations,
fire, strike, lockout, war, riot, flood, accident, epidemic, delays in
manufacture or transportation or any other cause, whether of like or different
nature, beyond the reasonably control of such a party, provided that the
foregoing shall not excuse or delay any party's payment obligations or affect a
party's right to terminate.
In the
event that a cause beyond the reasonable control of the parties (including but
not limited to Acts of God, casualty, war whether formally declared or not,
civil disturbances, strikes, labour disputes, delays in transportation or
supplies, interruption of facilities or requirements of Governments or
agencies thereof, or any other reason of force majeure) should prevent the
performance of an obligation of this Agreement, such obligation
shall be suspended during the existence of said event.
However,
should such event continue to exist for more than three months, both or either
of the parties may demand the termination of the Agreement which shall then
occur 15 days after the sending of a notice hereunder requesting the termination
without giving right to damages or compensation of any nature
whatsoever.
ARTICLE 18 -
ASSIGNMENT
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18.1
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This
Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
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18.2
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It is expressly
understood and agreed that this Agreement
or any
interest therein shall not be in part or as a whole directly or indirectly
sold, assigned, pledged or otherwise encumbered by the Distributor without the written
consent of the Master
Licensee and any such
purported assignment, sale, pledge or encumbrance shall be void ab initio
and of no effect. Notwithstanding the foregoing, the parties
acknowledge that under the JV Agreement each of
SWICO and MGI, as the only
shareholders of Distributor, has the
right under section 15.2 of the JV Agreement, to
dissolve, or to purchase the other’s interest in, Distributor.
Accordingly, if either SWICO or MGI (the “Non-breaching
Party”) elects under the foregoing provision of the JV Agreement
to purchase the other party’s interest in, Distributor and (a)
written notice from SWICO and MGI confirming such
election has been provided to Master Licensee and
Distributor and
(b) the Non-breaching Party also notifies Master Licenseee that it
wishes this Agreement to be assigned, then effective upon the date
specified in such notice from the Non-breaching Party (or, absent the
specification of any date, then as soon as reasonably practicable) Master Licensee shall
assign all of Distributor’s right,
title and interest in and under this Agreement to such Non-breaching Party
or to any Affiliate of such Non-Breaching Party as specified in such
notice. Distributor hereby grants Master Licensee a power
of attorney for purposes of Master Licensee
executing and delivering on behalf of Distributor any and all
documents or other instruments necessary to effect such
assignment.
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18.3
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The
Distributor shall
not delegate or sub-contract, whether in whole or in part, any of its
duties arising out of or under this Agreement without the
prior written consent of the Master Licensee which
Master Licensee
has the right to withhold in its sole and absolute
discretion.
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ARTICLE 19 -
INSURANCE
|
19.1
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The
Distributor shall
indemnify the Master
Licensee and the Licensor and hold the
Master Licensee
and the Licensor
harmless from any liability, loss or expense, including reasonable
attorney's fees, with respect to the Distributor's breach of
this Agreement or
any claim asserted by any other person or entity against the Distributor, the Master Licensee, and/or
the Licensor that
arises out of the performance or non-performance by Distributor of its
obligations under this Agreement.
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19.2
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The
Distributor shall
defend the Master
Licensee and the Licensor against all
claims, actions, suits or proceedings and shall indemnify and hold
the Master
Licensee and the
Licensor harmless from any and all resulting losses, liabilities,
costs (including any and all related legal fees and expenses incurred by
the Master
Licensee and the Licensor) and damages
(including punitive damages) arising out of or in any way connected with
its Lacoste
Watches retail activity. Such indemnification shall include, but
not be limited to, losses, liabilities, costs and/or
damages
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ARTICLE 20 - CAPACITY OF THE
PARTIES
|
20.1
|
It
is expressly agreed that, within the scope of this Agreement, the Distributor shall
purchase and resell the merchandise for its own account and shall act as
an independent trader both with respect to the Master Licensee and to
the customers. Consequently, under no circumstances shall the Distributor make the
Master Licensee
liable vis a vis third parties and it shall take all the necessary steps
to guarantee the Master
Licensee against the financial consequences of any claims that
could be made against the
Master Licensee by such third parties as a result of commercial
operations carried out by the Distributor.
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20.2
|
Nothing
in this Agreement
shall be construed to render either party liable for any debts or
obligations of the other party and the parties shall in no way be
considered agents or representatives of each other. Neither party shall
have the authority to act for or bind the
other.
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ARTICLE 21 -
CONFIDENTIALITY
|
21.1
|
the Master Licensee and the
Distributor
recognise that all information or proprietary information (including all
Know-How) so far
received or to be received in the future from the other, which is related,
directly or indirectly, to the conduct of affairs governed by this Agreement (a) shall
remain the exclusive property of the party from which it will have
originated, (b) shall be kept and maintained as confidential, (c) shall
not be used for any purpose outside the scope of this Agreement, (d) shall be
disclosed only to those employees or agents as may be reasonably deemed
necessary to carry out the purpose of this Agreement, and (e) shall
not be disclosed to third parties without prior written approval of the
other. Information which is in its entirety already in the public realm or
was received from third parties who are not under any obligation to limit
disclosure of such information or which is required to be disclosed by law
or any regulation body shall not be governed by this Article 21.1.
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21.2
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However,
the Master
Licensee may disclose to its other distributors anywhere in the
world any confidential or proprietary information it may have received
from the Distributor, and use
such information in connection with the agreements it has with such other
distributors.
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21.3
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The
Distributor
undertakes to obtain from all third parties which it may hire such as
advertising agencies, and market research firms, a commitment to keep
strictly confidential any technical, commercial, financial or marketing
information they may have obtained from the Distributor or from the
Master Licensee,
either in connection with the services to be performed by them or
otherwise, and a commitment not to re-use the creations or studies
commissioned by the Distributor for the
benefit of third parties without the prior written approval of the Master
Licensee.
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21.4
|
The
prohibitions contained in this Article 21
shall permanently remain in full force and
effect.
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ARTICLE 22 - LEGAL AND ETHICAL
REQUIREMENT
|
22.1
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The
Distributor shall
at its own expense ensure that all local and national laws, rules,
regulations and other requirements and codes of practice applicable in the
Territory and all
policies and ethical and other standards from time to time specified by
the Master
Licensee in respect of the treatment of any persons involved in the
sale of any Lacoste
Watches or otherwise in respect of any human rights or other issues
are complied with in relation to all activities of the Distributor and/or its
authorised Suppliers under this
Agreement.
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22.2
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The
Distributor shall
observe at all times (a) all local and national laws, rules, regulations
and other requirements and codes of conduct applicable in the Territory; (b) the
relevant provisions of any applicable and enforceable treaty, law or
regulation in relation to the protection of human rights and in particular
childhood, salaries, duration and condition of workmanship, (c) the
relevant provisions of any applicable and enforceable treaty, law or
regulation in relation to the protection of the environment, and shall
take all necessary measures to immediately bring to an end any violation
of such provisions.”
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22.3
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The
Distributor shall
indemnify the Master
Licensee and its assignees and successors for any claims, known or
unknown, liabilities, demands, damages, cases of action, costs expenses,
dues, covenants, suits, indemnities and judgements which any third party
shall make.
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ARTICLE 23 - AMENDMENT AND
CANCELLATION OF THE AGREEMENT
This
Agreement cannot be
amended or cancelled either orally or tacitly.
No
amendment, change or modification of this Agreement shall be deemed as
valid, unless it is based on a written document mentioning the intention of the
parties to amend it, duly signed and empowered by an authorised representative
of each party.
ARTICLE 24 -
MISCELLANEOUS
|
24.1
|
The
Distributor shall,
at its own expense, in the Territory and the Master Licensee shall,
at its own expense, in Switzerland, execute any documents required to
comply with the laws and requirements of the respective countries with
respect to declaring, recording or otherwise rendering this Agreement
effective.
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24.2
|
Any
notice served by one party upon the other shall be in writing in the
English language and shall be delivered personally (including by courier)
or be sent by facsimile. Such notice or document shall be deemed to have
been received in the case of personal delivery when delivered or, if sent
by facsimile, on the day following that on which the facsimile was sent,
provided that the party serving such notice shall send a copy by
registered airmail within two (2) days after sending the facsimile
notice.
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Such
notice shall be addressed as follows (or at such other place designated in
writing by the relevant party);
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|
24.2.1
|
If
to the Master
Licensee:
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Tel: (41)
(00) 000-0000
Fax: (41)
(00) 000-0000
Attn:
Lacoste Watches Brand Manager
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Copy
to:
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Attn:
Legal Department
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|
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Movado
Group, Inc.
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000
Xxxx Xxxx
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|
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Xxxxxxx,
Xxx Xxxxxx 00000
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XXX
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Tel: (000)
000-0000
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Fax: (000)
000-0000
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24.2.2
|
If
to the Distributor
|
MGS
Distribution Limited
Tel:
Fax:
Attn:
Any
change of address must be notified in writing to the other party.
|
24.3
|
No
rights of either party arising out of this Agreement, or any
provision hereof, shall be waived except in writing. Failure by either
party to exercise or enforce, in any one or more instances, any of the
terms or conditions of this Agreement shall not
constitute or be deemed a waiver of that party’s right thereafter to
enforce the terms and conditions of this Agreement.
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24.4
|
This
Agreement and the
Schedules hereto constitute the entire understanding of the parties with
respect to the subject matter hereof, and the rights, obligations, and
interests of any party as they may pertain herein may not otherwise be
changed, modified or amended except by the written Agreement of the party
to be charged.
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24.5
|
If
at any time any party hereto shall deem or be advised that any further
assignments, licenses, assurances in law or other acts or instruments,
including lawful oaths, are necessary or desirable to vest in it the
rights provided for herein, the parties hereto agree to do all acts and
execute all documents as may reasonably be necessary or proper for that
purpose or otherwise to carry out the intent of this Agreement.
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24.6
|
The
rights and obligations of the parties hereto under this Agreement shall be
subject to all applicable laws, orders, regulations, directions,
restrictions and limitations of competent authorities having jurisdiction
on the parties hereto.
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|
24.7
|
In
the event, however, that any such law, order, regulation, direction,
restriction or limitation, or construction thereof, shall substantially
alter the relationship between the parties under this Agreement or the
advantages derived from such relationship, or shall prevent the
performance of any provision of this Agreement, either party
may request the other party hereto to modify this Agreement, and if within
ninety (90) days subsequent to the making of such request, the parties
hereto are unable to agree upon a mutually satisfactory modification
hereof, such party may terminate this Agreement by giving
thirty (30) days notice not later than thirty (30) days following the end
of such ninety (90) days period.
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24.8
|
Notwithstanding,
anything contained herein to the contrary no third party other than a
party hereto and the Licensor is intended to
or shall have any legal or equitable right remedy or claim under this
Agreement or any
part thereof, as against any party to this Agreement, it being
understood that the provisions of this Agreement are for the
sole benefit of the parties hereto and Licensor and no other
party shall be or be deemed a third party beneficiary of this Agreement (the foregoing
is without prejudice to the rights of any nominee of the Master Licensee in
respect of orders placed on it by the Distributor in
accordance with the terms hereof).
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24.9
|
This
Agreement may be
executed in one or more counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
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24.10
|
Paragraphs
headings of this Agreement are for
convenience only and shall not be construed as a part of this Agreement or as a
limitation on the scope of any terms or provisions of this Agreement.
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|
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24.11When
interpreting the terms and conditions of this Agreement, the English
language shall be applied
exclusively.
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ARTICLE 25 - GOVERNING LAW –
JURISDICTION
|
25.1
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This
Agreement is
governed and construed in accordance with Swiss Law without reference to
its conflict of law principles. The Vienna Convention on the
International Sales of Goods of April 11, 1980 shall not apply to this
Agreement.
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25.2
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All
disputes arising out or in connection with this Agreement which cannot
be amicably settled by consultation, shall be finally settled by
arbitration in Geneva, Switzerland under the rules of the International
Chamber of Commerce by one arbitrator appointed in accordance with said
rules. Each party hereto shall be bound by any arbitration award so
rendered and any judgment upon such award may be entered as a
non-appealable, final foreign judgment in any court having jurisdiction
thereon.
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The
proceedings and shall be carried out in the English language.
IN
WITNESS WHEREOF, the parties hereto have caused this Distribution Agreement to be
executed by their duly authorised officers as of the Effective
Date.
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MGI
LUXURY GROUP S.A.
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MGS
DISTRIBUTION LIMITED
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_______________________ ___________________________
Name: Name:
Title Title:
S/agreement/distrib/Lacoste_STANDARD(011207).doc
SCHEDULE I
The
Crocodile
[Missing Graphic Reference]
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20.
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SCHEDULE
II
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21.
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22.
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23.
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THE
LICENSED TRADEMARKS
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[Missing Graphic Reference]
[Missing Graphic Reference]
SCHEDULE III
The
Lacoste
Trademarks
[Missing Graphic Reference]
[Missing Graphic Reference]
[Missing Graphic Reference]
SCHEDULE IV
The
Lacoste Watches
Watches
for men, women, children
Time-keeping
devices
Cases for
watches and time-keeping devices
Bracelets,
straps and components for watches
SCHEDULE V
Points-of-sale
V.a - Approved Watches
Retailers
Specialized
Watch Shops
Specialized
Watch Corners of Department Stores
Sport
Shops
Sport
Corners of Department Stores
Duty-free
Shops
Other
retailers fulfilling the requirements of the Lacoste Watches Selective
Distribution System
V.b - Members of the "Lacoste Boutiques and
Lacoste
Corners"
Selective Distribution System
Schedule VI
Rules
for the calculation of the Presentation surfaces
METHODOLOGY
The Presentation surface
represents, within the Sales
surface, the total surface effectively used for the presentation and the
sale of products on the furniture (fixed to the walls or free-standing) or
displays, excluding the cash counter, the shop windows, the fitting rooms, the
areas used for customers traffic, the security issues.
The Presentation surface is
calculated by adding the surfaces of each part of the furniture (as an example:
surface of a shelf of a piece of furniture fixed to the walls, free-standing
furniture in whole or in part, etc.) divided by the set number of elements
("ratio") that can be placed atop of one another allowing the presentation or
the sale of the Lacoste products within the Lacoste Boutique or the Lacoste Corner.
The
attached schedules list the main pieces of furniture, according to the different
generations of the Lacoste furniture (1999, 2000 and 2002), including the
furniture specific to the Other
Lacoste Products and the Lacoste Watches. This schedule
gives the values in sq. m. of each piece of furniture and therefore allows the
calculation of the total Presentation
surface.
Any new
piece of furniture, or any new generation of furniture, shall be included in a
supplementary schedule established under the same principles.
Therefore,
in a Lacoste Boutique or
in a Lacoste Corner, a
simple counting of the elements according to this schedule shall allow all
interested persons to calculate:
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the
total Presentation
surface
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the
Presentation
surface of the Lacoste Apparel
Products
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the
Presentation
surface of the Lacoste Watches and of
the Other Lacoste
Products
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the
percentage of the Presentation surface of
the Lacoste
Watches and of the Other Lacoste Products /
the total Presentation surface.
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[Missing Graphic Reference]
[Missing Graphic Reference]
Schedule VII
Lacoste
Watches General Conditions of Distribution
I/ The Lacoste Group (designating jointly
Lacoste S.A., Sporloisirs S.A., Lacoste Alligator S.A.),
wants to: (i) preserve the image of Lacoste trademarks worldwide, the models and
Lacoste products sold under Lacoste trademarks (hereinafter referred to as the
"Lacoste Trademarks");
(ii) prevent counterfeiting of the Lacoste Trademarks in the
interest of consumers; and (iii)offer to its consumers an adequate setting and
good quality service for Lacoste watches (hereinafter referred to as the "Lacoste Watches") (together
with all other goods sold under the Lacoste Trademarks,
hereinafter to as "Lacoste
Products"). For these reasons, the Lacoste Group has decided that Lacoste Watches, as with the
Lacoste products, shall
be sold worldwide through a selective distribution system. The Lacoste Group has
also appointed MGI Luxury Group S.A. as its exclusive worldwide licensee
for the creation, development, manufacture, distribution, marketing,
merchandising, advertising, promotion and sale of Lacoste Watches (hereinafter
referred to as the "Licensee"). The Lacoste Group
and Licensee require
that Lacoste Watches be
distributed only through selected retailers. In order to become an approved
Lacoste Watches retailer (hereinafter referred to as the "Approved Retailer") within the
Lacoste selective distribution network set up for the Lacoste Watches, a retailer
shall meet the standards of performance as detailed below for Lacoste watches
selection criteria (hereinafter referred to as the "Selection
Criteria").
The trade
name of the point of sale or of the department store, or of the space in which
the point of sale or the watches department or the point of sale is located,
must always reflect the prestige of the Lacoste brand. Consequently, the shop
sign must be compatible with the principles which govern the distribution of the
Lacoste Watches, which
are luxury and high quality products. Thus, the Lacoste brand shall not be sold
by retail outlets under trade names whose image is associated with an absence of
or limited customer service, prestige or sophisticated in-store design. No
signage at the point of sale may include terms or logos which reasonably might
depreciate the image of the Lacoste brand or the Lacoste Watches.
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a)
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The
location and environment of the point of sale (type and category of the
building, location in the town in question, type of shops in the
neighbourhood) shall remain at all times compatible with Lacoste brand
image. The sale area shall be sufficient to permit the presentation of the
Lacoste Watches in
a sufficient shopping space without disproportion with the other brands
offered for sale and allowing to distinguish them. The frontage shall be
made of materials of good quality, well maintained and
attractive.
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b)
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The
shop sign shall be well maintained and attractive. The window dressing
shall be of good quality and sophisticated. The lighting shall be
sufficient and sophisticated.
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c)
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The
type, brand and nature of the products sold in the outlet shall be
compatible with Lacoste brand
image.
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d)
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The
sale personnel shall be well
qualified.
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e)
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The
financial capabilities and solvency guarantees shall be
good.
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II/
Application procedure to open an
account
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a)
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Any application
(hereinafter referred to as the "Application") to open an
account to become an approved retailer for the sale of Lacoste
Watches shall be made in writing to the authorized
wholesale distributor of Lacoste Watches in the
country where the prospective point of sale is located (hereinafter
referred to as the "Distributor"). The Distributor shall
promptly send the completed Application to Licensee.
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b)
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Within
a maximum delay of four months as from the receipt of the Application, the Licensee shall evaluate
the point of sale in order to determine if the point of sale, subject to
the Application,
and its sales personnel satisfy the Selection
Criteria.
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c)
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Following
this evaluation :
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(i)
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if
the point of sale and staff do not satisfy the Selection Criteria, the
Licensee shall
notify the Distributor
which shall so inform the applicant in writing and shall list in
writing the elements which do not satisfy the Selection Criteria.
Consequently, the Distributor shall turn
down the Application;
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(ii)
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if
the point of sale and staff satisfy the Selection Criteria, the
Licensee shall
notify the Distributor
which shall so inform the applicant in writing and provide the
applicant (which shall then be deemed an Approved Retailer) with
a Lacoste Watches Approved Retailer
contract.
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III/
Satisfaction of Selection Criteria
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The Distributor shall check,
through an evaluation, that the Approved Retailer and its
sales personnel continue to satisfy the Selection Criteria. If as a
result of such evaluation the Approved Retailer and its sale
personnel continue to satisfy the Selection Criteria, the Distributor shall inform the
Approved Retailer and
Licensee in
writing.
If as a
result of such evaluation, the Approved Retailer or its sales
personnel no longer appear to satisfy the Selection Criteria, the Distributor shall notify Licensee in writing which
shall review such evaluation and, after consultation with Distributor, determine whether
the Approved Retailer
continues to satisfy the Selection Criteria. If, after
such review, Licensee
determines that the Approved
Retailer no longer satisfies the Selection Criteria, it shall
so notify Distributor
which:
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shall
inform the Approved
Retailer in writing and shall list the elements which do not
satisfy the Selection
Criteria;
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shall
also ask the Approved
Retailer to take the appropriate measures so that the Selection Criteria be
satisfied, within a delay of six (6) months as from the date of receipt of
the above mentioned letter.
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At the
end of the of six month delay, a new evaluation shall be carried out by the
Distributor and
forwarded to Licensee
for review, and after this new evaluation and review:
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(i)
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either
Licensee shall
determine that the Selection Criteria are
satisfied and so inform the Distributor which shall inform the
Approved Retailer
in writing accordingly;
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(ii)
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or
Licensee shall
determine that the Selection Criteria are
still not satisfied and so inform the Distributor which shall inform the
Approved Retailer
in writing and shall list the elements which still do not satisfy the
Selection
Criteria. In such a case the Distributor shall, upon
instruction from Licensee, terminate the
Lacoste watches approved retailer contract signed with the Approved Retailer
(hereinafter referred to as the "Contract") within the
conditions set out in article 6.1.1 of the Lacoste watches approved
retailer contract. Nevertheless, if the Approved Retailer has
started repairs or demonstrates that it decided to do so, the Distributor may then
grant another delay of six (6) months. At the end of this delay, a new
evaluation shall be carried out within the same conditions as the one
described above in (i) and in the first two sentences of
(ii).
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Schedule VIII
Distributor Discount
Schedule
Distributor
pricing shall be * of Supplier’s recommended Euro retail price (inclusive of
VAT); provided, however, that if this Agreement is assigned as provided under
Article 18.2, then the pricing to the assignee shall be based on the same
discount off of Supplier’s recommended Euro retail price as generally offered by
Supplier to its other independent distributors of the Products in the European
Union.
*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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SCHEDULE IX
Lacoste
Watches Approved Retailer Contract
Between:
(name of the company) having
its registered office at _______________________,
duly represented by Mr ______________________,
which is the exclusive distributor of Lacoste Watches (hereinafter referred to
as the "Lacoste
Watches") in (country concerned) (hereinafter referred to as the "Territory"),
hereinafter
referred to as the "Distributor",
And:
(name of the company) having
its registered office at _______________________,
duly represented by Mr ______________________,
which runs a point of sale situated at (full address) under the trade name _______________________
(hereinafter referred to as "the Point of Sale"),
hereinafter
referred to as the "Approved
Retailer".
WITNESSETH:
WHEREAS,
MGI Luxury Group SA (hereinafter referred to as the "Licensee") is the exclusive
worldwide licensee of the Lacoste Group for the Lacoste Watches and Licensee has appointed Distributor as the exclusive
distributor of the Lacoste
Watches in the Territory under the terms of a
distributorship agreement between Licensee and Distributor (hereinafter
referred to as the "Distribution
Agreement").
WHEREAS,
for the reasons stated in the general conditions of distribution of the Distributor (hereinafter
referred to as the "General
Conditions of Distribution") annexed to the present contract (Schedule
.....) the Lacoste
Watches are distributed through a selective distribution system, that is
the Lacoste Watches are
distributed at the points of sale which satisfy the selection criteria
(hereinafter referred to as the "Selection Criteria") defined
by the companies Lacoste S.A., Lacoste Alligator S.A. and
Sporloisirs S.A. (hereinafter collectively referred to as the "Lacoste Group"), which are
detailed in the General
Conditions of Distribution.
WHEREAS,
the Distributor has
visited and evaluated the Point
of Sale.
WHEREAS,
further to such evaluation it appears that the Point of Sale and the sales
staff employed by the Approved Retailer at the Point of Sale satisfy the Selection
Criteria.
WHEREAS,
consequently, the Distributor may enter into
this contract with the Approved
Retailer for the distribution of the Lacoste Watches at the
aforementioned Point of
Sale.
THE
PARTIES HEREBY AGREE AS FOLLOWS:
ARTICLE 1 - RIGHTS
GRANTED
The Distributor hereby grants, and
the Approved Retailer
hereby accepts for the duration of the present contract (hereinafter referred to
as the "Contract"), the
non exclusive right to sell the Lacoste Watches at the Point of Sale in accordance
with the terms and conditions set forth herein.
The Contract, its Annexes and the
General Conditions of
Distribution in force determine the rights and obligations of the two
parties.
ARTICLE 2 - MATERIAL
CONDITIONS OF CONTRACT
The
execution and existence of the Contract are subject to the
Distributor certifying
that the Point of Sale
of the Approved Retailer
and the sales staff of the Point of Sale satisfy the
Selection Criteria.
ARTICLE 3 – OBLIGATIONS OF
THE APPROVED RETAILER
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3.1The
Approved Retailer
undertakes, for the duration of the Contract, that the Point of Sale and the
sales staff of the Point
of Sale satisfy the Selection
Criteria.
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3.2Fittings
and Management of the Point of
Sale
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3.2.1The
sales area of the Point
of Sale shall always permit the presentation of the Lacoste Watches in a
sufficient area.
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The Approved Retailer shall
display the Lacoste
Watches separately from other brands sold at the Point of Sale. The counters,
posters and other POS material, which shall be supplied to it by the Distributor, shall be well
positioned.
The Approved Retailer shall affix
prominently on the window of the Point of Sale or display
inside the Point of
Sale, a sign or sticker which shall be furnished by the Distributor confirming its
quality as Approved
Retailer for Lacoste
Watches.
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3.2.2All
items bearing any trademark owned by the Lacoste Group (“Lacoste Trademarks”)
used by the Approved
Retailer on its shop front (such as awning, sign, etc…) in the shop
window or inside the Point of Sale shall be
exclusively those supplied by the Distributor or
exceptionally those which have received the prior and express written
approval of the Distributor.
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3.3Supplies
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The Approved Retailer shall
purchase the Lacoste
Watches from the
Distributor in
accordance with the terms and conditions contained herein and in the General Conditions of
Distribution. Nevertheless, within the European Economic Area (i.e.
European Union + Iceland, Liechtenstein, and Norway) the Approved Retailer is also
entitled to buy the Lacoste
Watches from and sell the Lacoste Watches to (i) any
authorized exclusive distributor appointed by and under contract with Licensee
for the distribution of the Lacoste Watches and (ii) any other
approved retailer approved by and under contract with Licensee or a Lacoste watch distributor for the retail sale of
the Lacoste Watches located in any of the
countries which are part of the European Economic Area, except to or from
Lacoste boutiques ("Lacoste
Boutiques") and Lacoste corners ("Lacoste Corners") which are
principally devoted to the sale of Lacoste apparel products and only on a
subordinate basis other Lacoste products including Lacoste Watches. Because of
their strong specificity, the Lacoste Boutiques and the
Lacoste Corners
constitute a selective distribution system which is distinct from the selective
distribution system organised for the Lacoste Watches. The Approved Retailer shall ensure
before any resale that the buyer is an approved retailer of Lacoste Watches. The Approved Retailer shall keep
for a minimum period of twelve (12) months as from the date of purchase and/or
sale of the Lacoste
Watches, a copy of the invoices corresponding to these purchases and
sales permitted under this Article 3.3. The Distributor shall be entitled
to inspect and copy these invoices if it reasonably determines that the Approved Retailer may have
purchased or sold Lacoste
Watches outside the selective distribution system set up for the Lacoste Watches within the
European Economic Area.
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3.4Sales
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3.4.1The
price at which the Lacoste Watches will be
sold by the Distributor to the Approved Retailer and
other sales conditions applicable to the Lacoste Watches will be the one
applicable in the Territory at the date
the order is received.
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3.4.2The
Approved Retailer
shall continuously offer for sale an appropriate assortment of the Lacoste
Watches.
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3.4.3In
addition, the Approved
Retailer shall ensure that the Lacoste Watches are only
sold in their original presentation and shall respect the recommendations
made by the Distributor concerning
the merchandising of the Lacoste
Watches.
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3.4.4The
Approved Retailer
shall not sell at its Point of Sale other
products in immediate proximity to the Lacoste Watches likely
to damage or devalue the image of the Lacoste Trademarks
and/or the Lacoste
Watches.
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3.4.5Subject
to Article 3.3, the Approved Retailer
undertakes not to sell the Lacoste Watches other
than at the Point of
Sale at the address stated at the very beginning of this Contract exclusively to
the ultimate consumer.
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3.4.6The
Approved Retailer
shall not sell Lacoste
Watches by mail order or by internet, unless the Approved Retailer has
received a prior written authorisation from the Distributor confirming
that the selection objective criteria set up for these kind of sale are
satisfied.
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3.4.7The
Approved Retailer
shall be free to fix its resale prices according to the laws and
regulations in force. The breakdown of the recommended prices that may be
communicated to the Approved Retailer by the
Distributor are
only indicative.
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3.5Advertising
and promotional activities of the Approved
Retailer
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Should
the Approved Retailer
wish to carry out advertising and promotional activities of any sort itself, it
shall obtain the prior written approval of the Distributor on the content and
means of such activities with the exception of price.
In any
event, the Approved
Retailer shall in such advertising and promotional
activities:
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use
exclusively the visual designs, lettering, emblems and logos approved by
the Distributor;
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ensure
that the standing and image of the Lacoste trademarks but also personal
reputation of Mr. Xxxx Xxxxxxx and his family are
protected.
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ARTICLE 4 - PROTECTION OF
LACOSTE INTELLECTUAL PROPERTY RIGHTS
The Approved Retailer acknowledges
that the Lacoste
Trademarks and models of the Lacoste Watches are the
exclusive property of the Lacoste Group and undertakes
to strictly respect the intellectual property rights of the latter.
Consequently,
it expressly undertakes not to use the Lacoste Trademarks other than
solely for purposes of performing its obligations under this Contract. Under no
circumstances shall the Approved Retailer use the
Lacoste trademarks as a business name, company name, shop sign or any other use
or print them on the commercial documents of its business.
In
addition, the Approved
Retailer undertakes to immediately notify the Distributor of any act by a
third party of which it may have knowledge and which is likely to constitute a
counterfeit or an imitation of the Lacoste trademarks or models of the Lacoste Watches.
ARTICLE 5 -
DURATION
The Contract shall came into force
on ________________ and
shall end on (one year after)_______________ ,
unless sooner terminated in accordance with the conditions set out in the
present Contract or by
mutual consent of parties. It shall be automatically renewed for successive
renewal periods of one (1) year each unless either party notifies the other at
the latest three (3) months before the expiration of the initial period or of
any subsequent renewal period(s).
ARTICLE 6 -
TERMINATION
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6.1Without
prejudice of what is elsewhere provided in the Contract, the Distributor shall be
entitled to terminate the Contract at any time
without having to pay indemnity of any nature to the Approved
Retailer:
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6.1.1If
the Point of Sale
no longer satisfies the Selection Criteria, in
which event the Contract shall end six
(6) months after notice thereof by the Distributor to the Approved
Retailer.
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6.1.2In
the event that the Approved Retailer fails
to comply with any of its other obligations thirty (30) days after notice
thereof by Distributor and no remedy of the breach having been effected.
This delay of thirty (30) days is reduced to fifteen (15) in case of
payment default.
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6.1.3Without
notice, in case of termination or non-renewal of (a) the master licence
agreement between Licensee and Lacoste Group, or (b) of
the Distribution
Agreement, regardless of
cause.
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6.1.4Without
having to give prior notice should (a) the legal form of the Approved Retailer be
modified, (b) the business or part of the business be sold, (c) the
business be leaded, hired, purchased, contributed to another business or
Approved Retailer,
pledged or subject to a management contract, (d) the Approved Retailer be
dissolved, (e) the business be discontinued or the Point of Sale of the
Approved Retailer
be closed during a period greater than two (2) months;
or
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6.1.5Without
prior notice, in the event of the Approved Retailer’s
voluntary or compulsory liquidation, bankruptcy, legal settlement or
placement of a receiving order or in any equivalent
situation.
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The Approved Retailer shall inform
the Distributor if one
of the events covered by Articles 6.1.4 and 6.1.5 occur as soon as the event
occurs, the Distributor
being the sole party to decide on its continuance of the Contract.
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6.1.6Notwithstanding
anything to the contrary contained herein, with full and immediate
effect:
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in
the event the Approved
Retailer fails to comply with Articles 3.2.2 or 3.4.5 of the Contract;
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within
the European economic Area (i.e. European Union + Iceland, Liechtenstein,
and Norway), if the Approved Retailer either
purchases or resells Lacoste Watches outside
from the selective distribution set up for Lacoste
Watches;
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if
the Approved
Retailer is involved in the manufacturing and/or sale of
counterfeits.
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6.2In
the case of termination or non-renewal, for whatever reason, of the Distribution Agreement
this Contract
shall likewise terminate within the same time limits, and the Approved Retailer shall
be informed within a reasonable period. The Lacoste Group may
nevertheless decide at its sole option to assign the Contract to the new
Lacoste exclusive distributor in charge of the distribution of Lacoste Watches in the
Territory.
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ARTICLE 7 - SITUATION OF THE
PARTIES IN THE EVENT OF TERMINATION OR NON-RENEWAL OF THE CONTRACT
In the
event of non-renewal or termination of this Contract, the Distributor shall have the
right, at its own discretion:
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to
repurchase or to have a third party it may appoint repurchase immediately,
all or part of the stock of Lacoste Watches of the
Approved Retailer
at the price paid by the Approved Retailer after
deduction of depreciation of the Lacoste Watches,
and/or,
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to
grant the Approved
Retailer a period of up to three (3) months to sell such stock. At
the end of the said period of three months the Approved Retailer shall
not be entitled to resell the stock, except with the approval of the Distributor.
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The Approved Retailer shall return
to the Distributor all
elements bearing the Lacoste trademarks, if need be, furniture and the sticker
"Approved Lacoste Watches Retailer" including, without limitation, all POS
material. Nevertheless, it may retain the furniture provided that all references
to Lacoste and to Lacoste trademarks are removed.
In
addition, the termination or the non-renewal of the Contract shall entail the
immediate cancellation of all pending orders.
It is
expressly agreed between the parties that under no circumstances whatsoever will
the end, termination or non-renewal of the Contract provide the Approved Retailer with the
benefit of any right of indemnity of whatever nature, regardless of the cause of
or reason for the end, non-renewal or termination, the revenue that the Approved Retailer derived from
the sales of the Lacoste
Watches during the application of the Contract having fully defrayed
all risks, costs and expenses incurred by the Approved Retailer during its
performance throughout the duration of the Contract.
ARTICLE 8 -
LIABILITY
Approved Retailer shall, at
its own cost and expense, keep and maintain in full force and effect for the
duration of this Contract, a policy of
commercial general liability insurance insuring Approved Retailer’s activities
with respect to the Point of
Sale against loss, damage or liability for personal injury or death or
loss or damage to property with limits not less than those customarily
maintained by similar retail operations in the Territory. Approved Retailer shall inform
Distributor of the terms
of said insurance upon request from time to time. Approved Retailer hereby
releases Distributor,
Licensee, the Lacoste Group and each of
their respective affiliates from liability, and waives all right of recovery
against each of them, for any injury, loss or damage, whether due to negligence
or any other cause, if such injury, loss or damage is caused by any of the
perils which are covered by the foregoing insurance policy or are required to be
covered by such insurance pursuant to this Contract.
ARTICLE 9 - APPLICABLE LAW /
JURISDICTION
The Contract is governed by the
law of the Territory.
The Court
of (to be completed) shall have the exclusive jurisdiction on any litigation
resulting from the interpretation or execution of this Contract.
ARTICLE 10 –
NOTICES
Any
notices required in accordance with any of the provisions hereof shall be in
writing and delivered or mailed by registered mail, or by an internationally
recognized overnight courier service (e.g., Federal Express), to the address of
the parties set forth on the first page hereof.
ARTICLE 11 – GENERAL TERMS
AND CONDITIONS
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11.1Neither
party hereto shall be liable for any delay or failure in fulfilling the
obligations hereunder (except for the payment of money) when such delay or
failure is caused by riots, war (declared or not), or hostilities between
any nations; acts of God, fire, storm, flood or earthquake; strikes, labor
disputes, shortage or delay of carriers, or shortage of raw materials,
labor power or other utility services; any governmental restrictions; or
any other unforeseeable contingencies beyond the control of the
party.
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11.2In
view of the fact that this Contract has been
entered into because of the confidence that Distributor has in Approved Retailer, it is
understood that the terms and conditions hereof shall be performed by
Approved Retailer
from the Point of
Sale only and that this Agreement may not be assigned, whether by
operation of law or otherwise, without the prior written approval of Distributor which Distributor may withhold
or grant in its sole and absolute discretion and any such purported
assignment by Approved
Retailer without such approval by Distributor shall be
void and of no effect.
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11.3When
interpreting the terms and conditions of this Contract, the English
language shall be applied
exclusively.
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11.4This
Contract,
including the terms and conditions incorporated by reference, constitutes
the entire agreement of the parties with respect to the subject matter
hereof and prevails over and supersedes all prior agreements, whether
written or oral, relating to the subject matter hereof and may not be
altered, waived, modified, or discharged except by an express writing
referring to this Contract signed on
behalf of the parties hereto by their duly authorized
representatives.
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11.5The
failure of either party hereto to enforce at any time any of the
provisions or terms of this Contract, or any rights
in respect thereof, or the exercise of or failure to exercise by either
party any rights or any of its elections herein provided, shall in no way
be considered to be a waiver of such provisions, terms, rights or
elections or in any way to affect the validity of this Contract.
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11.6Should
any provision of this Contract held invalid,
incomplete or unenforceable, this will not affect the validity of the
remaining provisions. The parties shall replace the invalid incomplete or
unenforceable provision by provision which comes closest to the commercial
goal that the parties intended to achieve on the conclusion of this
agreement by the invalid, uncompleted and unenforceable provision.
Notwithstanding anything to the contrary contained herein, in the event of
any conflict or inconsistency between any term or provision of this Contract and the Distribution Agreement,
the latter shall control.
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Executed
in two original copies at _________________ on
_________________
DISTRIBUTORAPPROVED
RETAILER
______________________ ______________________
Name: Name:
Title: Title:
SCHEDULE
X
Promotion
and advertising
X.a - Promotion
Gift of
products to and financial agreements with champions
Event
sponsorship
X.b - Advertising
Press
Television
Cinema
Billboards
Miscellaneous
(internet, radio, direct marketing, cooperative advertising, etc.)
Rights
purchases and agency fees
Advertising
material (PLV, catalogues, etc.)
X.c - Press & public
relations
Gift of
products to VIP's
Press
relations
Public
relations
Product
placement
012200-0075-02839-NY02.2382231.11
SCHEDULE XI
Approved
Watches Retailers as of the date hereof
(For each
of these Approved Watches
Retailers the approved points of sale should be listed)
012200-0075-02839-NY02.2382231.11
INDEX
OF CONTENTS
ARTICLE
1 -
DEFINITIONS
ARTICLE
2 - RIGHTS
GRANTED
ARTICLE
3 -
DURATION
ARTICLE
4 -
TERRITORY
ARTICLE
5 - GENERAL BUSINESS
POLICY
ARTICLE
6 - SALES AND UNFAIR
COMPETITION
ARTICLE
7 - ORDERS AND
SHIPMENTS
ARTICLE
8 -
PAYMENT
ARTICLE
9 - QUALITY, WARRANTY AND AFTER SALE
SERVICE
ARTICLE
10 - MARKETING AND
MERCHANDISING
ARTICLE
11 - DISTRIBUTION AND
SALE
ARTICLE
12 - END-OF-SEASON
GOODS
ARTICLE
13 - PROMOTION AND
ADVERTISING
ARTICLE
14 - MINIMUM PURCHASE
REQUIREMENTS
ARTICLE
15 -
TERMINATION
ARTICLE
16 - PROVISIONS AT THE EXPIRY OF THIS
AGREEMENT
ARTICLE
17 - FORCE
MAJEURE
ARTICLE
18 -
ASSIGNMENT
ARTICLE
19 -
INSURANCE
ARTICLE
20 - CAPACITY OF THE
PARTIES
ARTICLE
21 -
CONFIDENTIALITY
ARTICLE
22 - LEGAL AND ETHICAL
REQUIREMENT
ARTICLE
23 - AMENDMENT AND CANCELLATION OF THE AGREEMENT
ARTICLE
24 -
MISCELLANEOUS
ARTICLE
25 - GOVERNING LAW –
JURISDICTION
HUGO
BOSS
DISTRIBUTORSHIP
AGREEMENT
THIS
AGREEMENT is made and entered into as of May 11, 2007 (the “Effective Date”) by
and between MGI LUXURY GROUP S.A. a corporation duly incorporated under the laws
of Switzerland having its principal office at 00 Xxx xx Xxxxx, Xxxxxx, XX-0000
Xxxxxxxxxxx (hereinafter referred to as “Supplier”) and MGS DISTRIBUTION LIMITED
a corporation incorporated under the laws of England having its principle office
at x/x Xxxxx, Xxxxxxx, Xxxxxxxxx, Xxxxxx XX00 0XX, Xxxxxxx (hereinafter referred
to as the “Distributor”).
RECITALS
WHEREAS,
Swico Limited (“Swico”), Movado Group, Inc. (“MGI”) and
Distributor have entered into a Joint Venture Agreement, dated May 1,
2007 (the “JV Agreement”), pursuant to which Swico and MGI have established a
joint venture relationship relating to the sale, marketing and distribution of
certain watch brands in the United Kingdom.
WHEREAS,
this Agreement is one of the Distribution Agreements as defined in the JV
Agreement.
WHEREAS
Supplier is an Affiliate (as defined in the JV Agreement) of MGI and is engaged
in the development, design, manufacture, distribution and sale of the Products
(as hereinafter defined) and Supplier desires to appoint Distributor and
Distributor desires to be appointed, as the exclusive distributor of the
Products in the Territory (as hereinafter defined), in accordance with the terms
and conditions set forth hereinafter;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:
1. DEFINITIONS
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1.1
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In
this Agreement, except where the context otherwise requires, the
capitalized terms listed below shall have the respective meanings assigned
to them as follows:
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“Affiliate”
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means
as to either party, a person or entity which controls, is under common
control with, or is controlled by such
party.
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“HB”
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means Hugo
Boss Trademark Management GmbH & Co.,
a
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German
corporation, including any successors and
assigns.
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“HB
License”
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means
the license agreement between Supplier and HB, as the same may be amended
from time to time, pursuant to which Supplier has the right to use the
Trademarks in connection with the manufacture, marketing, advertising,
sale and distribution of the
Products.
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“Products”
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means
watches manufactured by or for Supplier and bearing
one
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or
more of the Trademarks.
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“Territory”
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means
the United Kingdom.
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“Trademarks”
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means
all trademarks licensed to Supplier by HB under the
HB
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License
and used on or in connection with the Products, including, without limitation,
HUGO, BOSS, HUGO BOSS and derivatives and combinations thereof.
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“Travel
Retail Accounts”
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means
accounts whose retail business consists of in-flight duty free
retail sales operations.
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1.2
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Unless
otherwise defined herein, each capitalized term used herein shall have the
meaning as set forth in the HB
License.
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2.
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APPOINTMENT
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2.3
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Subject
to the terms and conditions contained herein, for the term of this
Agreement Supplier hereby appoints Distributor as the exclusive wholesale
distributor for marketing, distribution and sales of the Products in the
Territory (with the exception of sales to Travel Retail Accounts which
shall be serviced exclusively by Supplier), and Distributor hereby accepts
such appointment. Notwithstanding the foregoing, Supplier may
permit Distributor to sell to certain Travel Retail Accounts on a case by
case basis as Supplier may, in its sole and absolute discretion, designate
in writing from time to time.
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2.2
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Distributor
shall purchase all Products directly from Supplier, or from one or more
other sources nominated in writing by Supplier, subject to Distributor’s
right to purchase Products (a) from other distributors with which Supplier
has contracted for the distribution of the Products (“Approved
Distributors”) that are located in Switzerland, the European Union, the
European Economic Area or any other country with which the European Union
has concluded a free trade agreement (in the aggregate, the “European
Area”) and (b) from approved retailers that satisfy the conditions set
forth in Section 8.2 hereof (“Approved Retailers”) located in the European
Area (provided that prior to exercising such right Distributor receives
written confirmation from Supplier that each such other distributor is an
Approved Distributor and that each such retailer is an Approved Retailer).
Such Approved Distributors and Approved Retailers, only, are included
within and comprise the HB selective distribution
network.
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2.3 Distributor
shall sell the Products only to Approved Retailers in the Territory and,
within the European Area, only within the HB selective distribution
network. Distributor shall refrain, outside the Territory and
in relation to the Products, from actively soliciting orders, establishing
any branch or maintaining any distribution depots. In no event
will Distributor sell or continue selling Products to any retailer that
does not satisfy the conditions in Section 8.2 of this
Agreement.
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2.4
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Distributor
shall use reasonable commercial efforts to advertise, promote, market,
distribute and sell the Products in the Territory. Without
limiting the generality of the foregoing, Distributor shall at all times
maintain adequate stocks of Products to meet demand for the Products in
the Territory by those retailers, if any, not being direct shipped by
Supplier and Distributor will use reasonable efforts to avoid accumulating
excess inventory not in line with its forecasts. Distributor shall
maintain an adequate sales force for the effective distribution and sale
of the Products in the Territory including at least one (1) full time
watch division manager to supervise/manage a dedicated sales manager and
sales executive for the Products, experienced in managing a watch
distribution business and one (1) full time marketing manager working on
the advertising and promotion of the
Products.
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2.8
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During
the term of this Agreement Distributor shall not directly or indirectly
distribute any other watch brands which, in the determination of Supplier,
compete with the Products in the Territory. No other brand
licensed to MGI or any Affiliate of MGI shall be deemed to compete with
the Products.
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2.9
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The
parties acknowledge that under the Joint Venture Agreement each of Swico
and MGI, as the only shareholders of Distributor, has the right under
section 15.2 of the JV Agreement, to dissolve, or to purchase the other’s
interest in, Distributor. Accordingly, if either Swico or MGI (the
“Non-breaching Party”) elects under the foregoing provision of the JV
Agreement to purchase the other party’s interest in,
Distributor and (a) written notice from Swico and MGI confirming such
election has been provided to Supplier and Distributor and (b) the
Non-breaching Party also notifies Supplier that it wishes this Agreement
to be assigned, then effective upon the date specified in such notice from
the Non-breaching Party (or, absent the specification of any date, then as
soon as reasonably practicable) Supplier shall assign all of Distributor’s
right, title and interest in and under this Agreement to such
Non-breaching Party or to any Affiliate of such Non-Breaching Party as
specified in such notice. Distributor hereby grants Supplier a power of
attorney for purposes of Supplier executing and delivering on behalf of
Distributor any and all documents or other instruments necessary to effect
such assignment.
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3. ORDERING,
SHIPMENT AND PRICES
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3.3
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From
time to time Distributor shall submit purchase orders for the Products to
Supplier. All purchase orders shall be subject to acceptance by
Supplier, which acceptance may, at Supplier’s option, be evidenced by the
issuance of written confirmations or acknowledgments. Supplier hereby
reserves the absolute right to reject the whole or any part of any
purchase order for any commercially valid reason, including, without
limitation, Distributor’s credit condition or its accumulation of excess
or non-current inventory or its failure otherwise to adhere to the terms
and conditions of this Agreement, notwithstanding that any such rejection
may prevent Distributor from achieving its Minimum Purchase Requirements.
Subject to Sections 3.2 and 11.1, all purchase orders shall be irrevocable
after acceptance by Supplier; provided, however, that Distributor may
reschedule or cancel that portion of any purchase order pertaining to
Products which Supplier fails to deliver as confirmed within thirty (30)
days after the later of the advised delivery date or shipping date.
Distributor will provide Supplier with a four (4) month rolling forecast
of its anticipated order volume monthly by SKU, for the four (4) month
period. Supplier will use reasonable efforts to deliver the
Products ordered in accordance with the forecast within three (3) months
after acceptance of the purchase order by Supplier and to deliver all
other Product orders within three (3) to five (5) months after acceptance
of the purchase order. As soon as is reasonably practicable
after acceptance of each purchase order, Supplier shall advise Distributor
of the shipping dates applicable to such order. All shipping
dates so advised are estimates only and Supplier shall not have any
liability for failure to actually ship by such dates or to deliver by
Distributor’s requested delivery dates. Supplier shall notify
Distributor in the event of any anticipated delay in shipping dates of
thirty (30) days or more. Each order submitted by Distributor will specify
a “ship to” address which shall be Distributor’s address or the address
for one of Distributor’s customers.
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3.4
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The
purchase prices for all Products purchased by Distributor shall be in
Euros and based on Supplier’s recommended retail price in effect in the
European Union as of the date of shipment. Such prices shall be calculated
based on the discount structure as set forth on Schedule A annexed hereto.
Supplier will provide current price lists for the Products to Distributor
from time to time and shall have the right to modify such prices at any
time; provided, however, that no price increase shall become effective
sooner than sixty (60) days after written notice thereof to
Distributor. Supplier will give Distributor prior notice of all
such price changes. For all orders shipped before the effective date of
any price increase, the applicable price shall be the price in effect on
the date of shipment. With respect to orders for the Products
that have been accepted by Supplier but which have not been shipped as of
the effective date of a price increase, the applicable price shall be the
price in effect on the date of shipment; provided that if the price
increase is more than ten percent (10%) of the last applicable price,
Distributor shall have the right within ten (10) days from the effective
date of the price increase to cancel all or any part of the order for the
Products subject to such price increase upon notice to Supplier. All
prices are ex-works Supplier’s distribution
facility.
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3.3 Unless
otherwise agreed in writing by Distributor and Supplier, all Products shall be
deemed delivered to Distributor when delivered by Supplier or Supplier’s freight
forwarder or distribution center into the possession of a carrier designated by
Supplier. Distributor shall bear all risk of loss, damage or shortage
pertaining to the Products after delivery to carrier for shipment to the
designated “ship to” address on the corresponding purchase order. All
costs of delivery, including, without limitation, all costs for freight, import
licenses, customs duties or other duties or imposts, insurance and special
handling shall be paid by Distributor. All payments are to be made in Euros in
accordance with Supplier’s standard terms of sale which are incorporated herein
by reference (except to the extent inconsistent with any of the express terms
contained herein) net ninety (90) days after invoice date. A discount
of two percent (2%) is granted for cash payment in advance.
3.4 No
provisions contained in Distributor’s orders which are different from or
additional to the terms and conditions of this Agreement shall be binding on the
parties hereto or applicable to the sale of the Products unless signed by a duly
authorized representative of each of the parties as provided by Section 13.9
hereof. Distributor shall have sole responsibility for
invoicing its customers and for the collection of all amounts due from them for
Product shipped to them either by Distributor or by Supplier in accordance with
the “ship to” designation made on the applicable purchase orders. In no event
shall non-payment by any such customer or any claim or allegation any customer
may have against Distributor constitute grounds for any off set, deduction,
claim or defense on the part of Distributor against Supplier or in respect of
any obligation due to Supplier and Distributor shall pay Supplier all amounts
due to Supplier in accordance with the terms of this Agreement without off set
or deduction for any amounts claimed to be due to Distributor by
Supplier.
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6.
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MINIMUM
TURNOVER REQUIREMENTS
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4.1
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Each
contract year for the duration of this Agreement, Distributor will make
minimum sales of Products in the Territory (“Minimum Turnover
Requirement”) equal to at least sixty percent (60%) of the amount of
Product sales as budgeted in the Business Plan annexed to the JV
Agreement.
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4.2 Sales
in excess of the Minimum Turnover Requirement in any contract year shall
be neither carried over nor credited toward the Minimum Turnover
Requirement of a subsequent contract
year.
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5.
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ADVERTISING
AND PROMOTION
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|
5.1
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As
used herein “advertising” means only the publication in print or broadcast
media of advertisements approved by Supplier and “promotion” means all
other forms of Product promotion, other than advertising, approved by
Supplier including, without limitation, point of sale material, co-op
advertising, marketing, public relations, special events and the like. In
no event may Distributor create, place, or in any manner whatsoever
conduct any advertising for the Products, for which, as between the
parties hereto, Supplier has sole responsibility. All promotions
(including, without limitation, the methods, selection, layouts, venue and
timing thereof) shall be subject to the prior written approval of
Supplier. Distributor shall submit all proposed promotion
materials for approval at least four (4) weeks prior to the first
anticipated use thereof and shall not engage in any promotion or use any
such materials without Supplier’s prior written approval. Unless otherwise
expressly approved in writing by Supplier, Distributor will use only such
materials including, without limitation, point of sale material,
packaging, advertising and ancillary material furnished or approved by
Supplier.
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5.2 Distributor
shall conduct all promotion of the Products in the Territory at its own
expense, and Supplier will contribute towards the advertising and the
promotion of the Products in the Territory as hereinafter provided. At a
minimum, Distributor shall expend, for approved promotion, an amount equal
to (a) * of Distributor’s budgeted sales of Products
for such contract year; plus (b) that portion of Supplier’s A/P Amount
(defined below) allocated by Supplier to promotion. Distributor’s budgeted
sales of Products for the first through the fifth contract years are set
forth in Annex D to the JV Agreement and Distributor’s budgeted sales each
contract year thereafter shall be as contained in the annual business plan
and budget as adopted in accordance with the provisions of the JV
Agreement at or before the beginning of each contract year, or, at such
time, if any, that the JV Agreement is no longer in effect, then as
approved by Distributor in good faith consultation with Supplier, and may
be adjusted in the same manner quarterly. So long as Distributor satisfies
its obligation in respect of promotion set forth in this section 5.2 each
contract year, then Supplier will spend - on advertising and/or
promotion for the Products - an amount equal to * of the Net
Invoiced Cost of Distributor’s Product purchases in such year (“Supplier’s
A/P Amount”), of which, an amount equal to at
least * of the Net Invoiced Cost of Distributor’s
Product purchases in
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*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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such
year will be spent by Supplier for media advertising of the Products in
the Territory (“Media Component of Supplier’s A/P Amount”). Distributor
acknowledges that the way the Media Component of Supplier’s A/P Amount,
will be spent by Supplier is that Supplier will pay such amount directly
to HB or its Affiliates under the HB License; Supplier will not pay such
amount as a reimbursement to Distributor. For purposes of this Agreement,
“Net Invoiced Cost” means the invoiced price actually paid by Distributor
to Supplier net of all discounts, all costs referred to in Section 3.3
hereof, all credits for returns and all uncollected amounts. Any portion
of Supplier’s A/P Amount allocated by Supplier to promotion shall be
credited to Distributor’s account semi-annually, provided that within
thirty (30) days after the end of each such period, Distributor submits a
statement to Supplier setting out and showing Distributor’s promotion
expenditures incurred during such period (supported by invoices and other
documents reasonably acceptable to Supplier, substantiating the
expenditures for Distributor’s approved promotion); and provided further
that such costs are no less, on a proportionate basis, than the minimum
required expenditures set forth in this Section 5.2. In the event
Distributor’s actual Product sales for any contract year (other than the
final contract year of this Agreement) exceed the total budgeted sales for
such year on which its promotion expenditures for such year were based,
then Distributor shall spend an amount equal to six percent (6.0%) of such
excess in each contract year
thereafter.
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5.3 Distributor
will use only such materials for fixturing at the point of sale as are approved
by Supplier in writing.
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6.
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MARKETING
|
|
6.1
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Quarterly
(beginning with the quarter ending July 31, 2007 and from time to time at
the reasonable request of Supplier, Distributor shall furnish Supplier
with a comprehensive written report in reasonable detail regarding (i) the
advertising, promotions, distribution and sales of the Products for the
immediately proceeding quarter or such other relevant period as Supplier
may reasonably request; (ii) Distributor’s market analysis; and (iii) such
other matters as Supplier shall
request.
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6.2
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Distributor
will consult with Supplier, as Supplier shall reasonably request for
purposes of determining a marketing plan for distribution of the Products
in the Territory each year. Such plan shall be followed by
Distributor.
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6.3
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Distributor
shall promptly notify Supplier of any significant changes in Distributor’s
sales forecasts and shall furnish Supplier such information related to
sales, sales forecasts, warranty claims and inventories of Products as may
be reasonably requested from time to time by
Supplier.
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7. SERVICE
AND REPAIR
|
7.1
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Distributor
shall establish and maintain, at its expense, such number of authorized
service facilities for the service and repair of the Products in the
Territory (the “Service Center(s)”) as Supplier may reasonably request, it
being understood that initially there shall be one (1) such Service
Center. Distributor shall accept all Products for service,
returned by any consumer or retailer in the Territory for service whether
covered by the applicable consumer warranty (“warranty repairs”) or not
covered by said warranty (“out-of-warranty repairs”). Distributor shall
purchase from Supplier, or from one or more parts distributors designated
in writing by Supplier, and maintain an adequate stock of component parts
and materials and employ at each Service Center such number of qualified
service technicians necessary to perform such service in a timely manner.
All shipping charges, including any duty, or Customs brokerage fees, for
such parts shall be paid by Distributor. Supplier shall have
the right to furnish parts to Distributor in the form of finished watches.
Within sixty (60) days after the end of each contract year, provided
Distributor has complied with all its obligations hereunder, Supplier will
issue a credit to Distributor equal to one percent (1%) of the Net
Invoiced Cost of the Products purchased by Distributor in such prior
contract year; provided that Supplier will review this amount annually in
light of the actual average incidence of warranty
repairs.
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7.2
|
Within
thirty (30) days after the Effective Date, Distributor will furnish
Supplier with Distributor’s initial price list for all out of warranty
repairs. Distributor will give Supplier no less than ninety (90) days
prior written notice of any change to any such
prices. Distributor shall submit to Supplier quarterly, a
statement summarizing all out of warranty repairs and all warranty repairs
performed in the immediately preceding quarter indicating for each watch
repaired the:
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(b)
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Correct
style number;
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(c)
|
Complete
description of work performed; and
|
(c) Dates
repair received, completed and returned to customer.
|
7.3
|
Distributor
will use only those parts (excluding batteries) for service on the
Products which are supplied directly by or otherwise approved in writing
by Supplier as original equipment for the
Products.
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7.4 Distributor
will issue estimates for repair work within five (5) working days after receipt
of a Product for repair on ninety percent (90%) of the Products submitted to
Distributor for repair. Working days are defined as all days of the
year except Saturdays and Sundays and legal holidays. Warranty
repairs will be completed within fifteen (15) working days after receipt of a
Product for repair on ninety percent (90%) of the in-warranty work performed by
Distributor, unless detained because of delays in receiving necessary parts from
the Supplier. Out of warranty repairs will be completed within twenty
(20) working days after receipt of the customer's written authorization to
proceed with repair of a Product on ninety percent (90%) of the out of warranty
work performed by Distributor. On the same day any repairs are
completed, the Product repaired or serviced will be returned to the customer via
express mail or such other method as Supplier may reasonably request. Increases
in the postage or other ground delivery rates may require requisite increases in
charges to the customer by the Distributor for shipping.
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8.
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TRADE
PRACTICES
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|
8.1
|
Distributor
shall sell the Products at competitive levels, at wholesale in accordance
with generally accepted customs in the trade and shall refrain from using
selling methods or practices which shall be harmful to the reputation of
the Products, Supplier or the Trademarks. Distributor’s right
to determine the prices of reselling and to employ conditions of trade at
its exclusive discretion remains
unaffected.
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8.4
|
Distributor
may sell Products only to those specialty shops, department stores and
retail
outlets (including
those that sell directly to the consumer) that satisfy Supplier’s
objective criteria for approved retailer status as set forth on Schedule B
annexed hereto, such satisfaction to be evidenced by written approval to
Distributor from Supplier as provided in this Section 8.2. Upon execution
of this Agreement, and prior to the opening of each selling season (and
whenever Distributor wishes to sell Products to retail customers not
previously approved by Supplier), Distributor must submit a list of such
proposed retail customers (not including previously approved retail
customers) for Supplier’s written approval. Supplier has the right to
withdraw any such approval on written notice to Distributor, provided,
however, that Supplier will not withdraw approval of a retail customer
that is then authorized to carry and carrying any HB products unless
Supplier is reasonably dissatisfied with the display, delivery or
inventory model of Products of such retail customer. After such notice,
Distributor may not accept additional orders for Products from such retail
customer, but may fill any existing order. Once each quarter, Distributor
shall provide Supplier with a list of the retailers in the Territory that
purchased Products in the immediately preceding quarter containing the
addresses of their sales outlets, it being understood that such list is of
a confidential nature and shall be for the sole use of Supplier and, if
requested, HB and shall be kept confidential by Supplier and shall not be
disclosed by Supplier to any person whatsoever, other than employees of
Supplier and HB whose performance of their duties require the disclosure
of such list to them.
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8.5
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Except
as expressly permitted by Supplier in writing, Distributor may not (a)
sell Products directly to the public in retail stores; (b) use Products as
giveaways, prizes or premiums, except for promotional programs which have
received the prior written approval of Supplier; or (c) sell Products to
any Affiliate of Distributor or any of its directors, officers, employees
or any person having an equity participation in or any other affiliation
to Distributor, other than to Distributor’s employees or other
representatives for their personal use, without the prior written approval
of Supplier. Supplier may, at Distributor’s expense, purchase any Products
found in the marketplace that Distributor has sold to unapproved customers
in violation of this Section 8.3 or Section 2.3. Distributor
shall include and enforce the following on all invoices to its retail
customers: “Limitations on Sale by Buyer: Seller expressly reserves the
right to limit the amount of merchandise delivered to only such quantities
as are necessary to meet the reasonably expected demand at Buyer’s store
locations. This Merchandise is sold to Buyer for resale to the ultimate
consumer and/or within the HB selective distribution network and only from
such store locations as have been approved in writing by
Seller. Buyer shall be expressly prohibited from selling the
merchandise purchased hereunder to a retailer or other dealer in like
merchandise, or to any party who Buyer knows, or has reason to know,
intends to resell the merchandise and is not a member of the HB selective
distribution network . The merchandise purchased hereunder may not be sold
by Buyer from any store locations which Seller has advised Buyer do not
qualify as an acceptable location”.
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9.
|
PROTECTION
OF INTERESTS; TRADEMARKS
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|
9.5
|
Distributor
shall protect and at all times seek to promote Supplier’s best interests
in the Territory and shall immediately notify Supplier of any fact or
situation which may be or may be reasonably presumed to become detrimental
to Supplier or to its good will, copyrights, patents, or to the Trademarks
or other intellectual property rights of Supplier or
HB. Distributor shall have the exclusive right to use the
Trademarks in connection with distribution of the Products in the
Territory for the term hereof and solely for the limited purpose of and
only to the extent necessary for performing its obligations hereunder and
for no other purpose. Distributor agrees that it shall have no
rights with respect to the Trademarks in connection with the Products
except only as expressly and specifically set forth herein and that its
every use shall inure exclusively to the benefit of HB and that
Distributor shall not, at any time, acquire any rights therein or
challenge the validity thereof. Distributor further agrees at
no time to use any of the Trademarks or other intellectual property rights
owned by or licensed to Supplier in a manner not authorized by Supplier.
Distributor shall not apply to register, nor shall Distributor use or
permit the use of, any name, logo, xxxx or tradedress which is confusingly
similar to any of the Trademarks or do any act or thing, or permit any act
or thing to be done, which may in any way impair, dilute, reduce the value
of the Trademarks or damage the goodwill relating to the
Trademarks
|
|
9.6
|
If
requested by Supplier, in writing, the Distributor shall assist and
cooperate with Supplier, its counsel and agents as so requested, in
connection with any matters involving any of Supplier’s intellectual
property rights in the Territory including without limitation, in any
legal proceedings and any out-of-pocket expenses incurred by the
Distributor in connection with litigation in which the Distributor
participates at the request of Supplier shall be reimbursable to the
Distributor and any recoveries from any such litigation or the settlement
thereof shall belong exclusively to Supplier; provided, however, that
Supplier shall have the exclusive right (but not the obligation) to take
such action against third parties in the respect of the Trademarks and all
other intellectual property rights of
Supplier.
|
|
9.3
|
In
the event that Distributor sells any Products outside the Territory in
violation of Section 2.3 hereof, then Supplier may, at its sole option, in
addition to all other rights and remedies available to it, repurchase all
or any portion of such Products. Within ten (10) days after
receipt of a statement from the Supplier listing all such Products
purchased, together with a list of the model numbers, and setting forth
Supplier’s out-of-pocket costs incurred in connection with such purchase,
Distributor shall reimburse Supplier such out-of-pocket
costs Distributor acknowledges that such payment is not a
penalty but fair compensation to Supplier’s for breach of this Agreement
and damage to Supplier goodwill and
tradename.
|
|
10.
|
TERM
AND TERMINATION
|
10.1This
Agreement shall take effect upon the Effective Date and shall, unless otherwise
earlier terminated as provided herein, continue for the duration of the JV Agreement . It shall be
automatically terminated upon the termination or expiration of the JV
Agreement.
|
|
10.2In
the event (a) this Agreement is assigned to Swico, MGI or to an Affiliate
of Swico or MGI in accordance with Section 2.6 hereof, or (b) either Swico
or MGI purchases all of the other’s interest in Distributor under Section
15.2.2 of the JV Agreement or (c) Swico, its Affiliates or Permitted
Transferees (as such term is defined in the JV Agreement) otherwise
acquire control of Distributor, then this Agreement shall continue from
the date of such assignment, purchase and/or acquisition, as the case may
be, until the third anniversary of such date at which time this Agreement
shall expire and neither party shall have any further obligation to the
other hereunder except as to those obligations which by their express
terms survive beyond the expiration or termination of this Agreement.
Following any assignment, purchase or acquisition referred to in Section
10.1, this Agreement may be terminated by either party hereto upon prior
written notice to the other party:
|
|
|
(i)
|
in
the event such other party shall have breached any of the terms and
conditions hereof and, if remediable shall have failed to remedy such
breach within sixty (60 ) days after the notification of the
breach by the non-breaching party;
or
|
(ii) in
the event that such other party becomes insolvent, has an
insolvency proceeding of any
kind filed by or against it, including bankruptcy or reorganization, liquidates its business
or is liquidated, has a receiver appointed for its assets, or makes
an assignment for the benefit of its creditors.
|
10.5
|
In
addition to any other rights of termination provided hereunder, Supplier
may terminate this Agreement immediately by notice to Distributor if
Distributor (i) fails to satisfy the Minimum Turnover Requirement for any
contract year; (ii) fails to satisfy its minimum promotion expenditures in
Section 5.2 in any contract year; (iii) fails to comply with the payment
terms in Section 3.3; (iv) breaches any of the covenants contained in
Article 8 or Article 9 hereof or (v) transfers or attempts to transfer a
substantial part of its business to a third party or attempts to assign
this Agreement to a third party (or relinquishes control of any previously
approved assignee under Section 13.5) or has its business merged or
consolidated with a third party without the prior written consent of
Supplier.
|
10.4 Notwithstanding
anything to the contrary contained herein, this Agreement will automatically
expire and be of no further effect in the event the HB License expires or is
terminated for any reason. Upon such expiration or termination, neither party
will have any further obligation hereunder to the other except any obligation or
liability which accrued prior to the date of such expiration or
termination.
|
|
11.
|
EFFECTS
OF TERMINATION
|
|
|
11.1
|
Upon
the expiration of this Agreement or its termination by Supplier, Supplier
may, at its sole discretion, reject all or part of any outstanding orders
received or accepted by Supplier.
|
|
|
11.2
|
Upon
expiration or termination of this Agreement for any
reason:
|
|
|
(i)
|
Any
sums due and owing by either party to the other shall become immediately
due and payable, and such sums shall be paid
forthwith.
|
|
|
(ii)
|
Supplier
may immediately appoint a successor to Distributor in the Territory and
announce the change of its distributorship to the
public.
|
|
|
(iii)
|
Distributor
shall take a physical inventory of all Products in stock and submit a
report of such inventory to Supplier. Supplier shall have the
right to have a representative present to verify such
inventory. Supplier shall be entitled but not obligated to take
over any portion or all Products remaining in stock from Distributor at
the price in currency originally paid by Distributor to Supplier, plus the
cost of shipping and insurance. Upon notice to Distributor of Supplier’s
election to buy back any or all such inventory, Distributor shall
cooperate as requested by Supplier for the packing and shipping of such
inventory. Distributor may sell any Products not taken over by
Supplier for six (6) months after the termination of this Agreement or
such shorter period as notified by Supplier subject to all the provisions
hereof, including, without limitation, Article
8.
|
|
|
(iv)
|
Distributor
shall immediately cease all use of the Trademarks; provided, however, that
Distributor may continue to use the Trademarks solely in connection with
the sale of the Products pursuant to Section 11.2(iii) above and in such a
way as not to impair, dilute, reduce the value of or damage the goodwill
relating to the Trademarks.
|
|
|
(v)
|
Any
advertising or promotion must be at the discretion of Supplier and must be
approved by Supplier.
|
|
(viii)
|
Distributor,
at its expense, will return to Supplier all materials belonging to
Supplier and all proprietary data or confidential information furnished to
Distributor by Supplier during the term
hereof.
|
|
11.3
|
The
rights of termination granted herein are absolute and each party
acknowledges that it has considered and assumed as its own exclusive risk
the possibility of making expenditures of money and time in preparing for
the performance of this Agreement and possible loss or damage on account
of the loss of prospective profits or anticipated sales or on account of
expenditures, investments, leases, property improvements or commitments in
connection with the good will or business of the parties or otherwise
resulting from the proper termination hereof and that it is the express
intent and agreement of the parties that neither party properly
terminating this Agreement in accordance with the terms hereof (the
“terminating party”) shall be liable to the other for any claim, cost or
damages solely by reason of such termination. In the event of
such termination or expiration of this Agreement in accordance with the
terms hereof, the terminating party shall have no obligation or liability
to pay to the other, and such other party hereby expressly waives, any
statutory termination fee, any other right to compensation provided by law
arising solely as a consequence of such termination, and consequential
damages and lost profits arising solely on account of such termination or
expiration.
|
|
14.
|
INDEMNIFICATION
|
Distributor
hereby agrees to indemnify, defend and hold the Supplier, and its Affiliates
and/or agents and each of their officers, directors and employees harmless from
and against any and all liabilities, damages, costs and expenses (including
reasonable attorneys’ fees) which arise out of or in connection with any act or
omission by Distributor, its Affiliates, successors, assigns, parents,
subsidiaries, agents, and contractors, or the officers, directors or employees
of any of them. Supplier reserves the right, without being required to do so, at
its own expense and without waiver of any indemnity hereunder, to defend any
claim, action or lawsuit coming within the purview of this Section
12. This section shall survive the termination or expiration of this
Agreement.
|
|
13.
|
GENERAL
TERMS AND CONDITIONS
|
|
|
13.1
|
Supplier
may, from time to time, designate in writing an Affiliate of Supplier to
exercise any of the rights or perform any of the obligations of Supplier
hereunder.
|
|
|
13.2
|
Neither
party shall have the power to represent the other party. For
purposes of this Agreement, Distributor is an independent contractor and
neither the agent nor the representative of Supplier or any of its
affiliated companies. Distributor, its employees, contractors
and Affiliates shall not act or represent themselves as agents or
representatives of, or as having the right, power or authority, express or
implied to assume or create any obligation or liability on behalf of
Supplier or any of its affiliated
companies.
|
|
|
13.3
|
Neither
party hereto shall be liable for any delay or failure in fulfilling the
obligations hereunder (except for the payment of money) when such delay or
failure is caused by riots, war (declared or not), or hostilities between
any nations; acts of God, fire, storm, flood or earthquake; strikes, labor
disputes, shortage or delay of carriers, or shortage of raw materials,
labor power or other utility services; any governmental restrictions; or
any other unforeseeable contingencies beyond the control of the
party.
|
|
13.6
|
Any
notice to be given pursuant to this Agreement shall be written in English
and shall be deemed duly given when sent by reputable overnight
international courier including FedEx, UPS or DHL to the respective
address first set forth above or by facsimile to the respective facsimile
number set forth below confirmed by letter as aforesaid, or to such other
address and/or facsimile number as a party hereto may designate by like
notice.
|
|
To
Supplier:
|
Fax: (
00 ) 00 0 000 000
|
|
|
Attn:
Xx. Xxxxxx Gauderlot, General Manager – Hugo Boss
Watches
|
|
To
Distributor:
|
Fax:
|
|
|
Attn.:
|
|
|
Supplier’s
designated Affiliate under Section 13.1 shall be designated by notice to
Distributor, which notice shall include the address and facsimile number
of such Affiliate for purposes of giving notice
hereunder. Notice to Supplier’s designated Affiliate shall be
made and deemed duly given in the same manner as for notice to
Supplier.
|
|
13.7
|
In
view of the fact that this Agreement has been entered into because of the
confidence that Supplier has in Distributor, it is understood that the
terms and conditions hereof shall be performed by Distributor only and
that, except as expressly permitted in Section 2.6 hereof, this
Agreement may not be assigned, whether by operation of law or otherwise,
without the prior written approval of Supplier which Supplier may withhold
or grant in its sole and absolute discretion and any such purported
assignment by Distributor without such approval by Supplier shall be void
and of no effect. Following any such assignment, Distributor shall remain
obligated as a guarantor for all the payment obligations of the approved
assignee hereunder and any change in control of the approved assignee
without the approval of Supplier shall constitute a breach of this Section
13.5 and shall entitle Supplier to terminate the Agreement as provided
under Section 10.3.
|
|
|
13.6
|
The
captions of this Agreement are inserted solely for ease of reference and
are not deemed to form a part of or to modify the terms and conditions of
this Agreement.
|
|
|
13.7
|
This
Agreement shall be governed exclusively by the law of Switzerland without
reference to its conflict of laws rules and to the exclusion of the United
Nations Convention on Contracts for the International Sale of
Goods. Any dispute, controversy or difference which may arise
out of, in relation to, or in connection with this Agreement shall be
finally settled by arbitration in Geneva, Switzerland under the Rules of
Arbitration of the International Chamber of Commerce by three (3)
Arbitrators appointed in accordance with said rules. Each party
hereto shall be bound by any arbitration award so rendered and any
judgment upon such award may be entered as a non-appealable final, foreign
judgment in any court having jurisdiction thereon. The language
of the proceedings shall be
English.
|
|
|
13.8
|
When
interpreting the terms and conditions of this Agreement, the English
language shall be applied
exclusively.
|
|
13.11
|
This
Agreement, including the terms and conditions incorporated by reference in
Section 3.3 hereof, constitutes the entire agreement of the parties with
respect to the subject matter hereof and prevails over and supersedes all
prior agreements, whether written or oral, relating to the subject matter
hereof and may not be altered, waived, modified, or discharged except by
an express writing referring to this Agreement signed on behalf of the
parties hereto by their duly authorized representatives. In the event of
any conflict or inconsistency between this Agreement and the JV Agreement,
the latter shall control.
|
|
13.10
|
The
failure of either party hereto to enforce at any time any of the
provisions or terms of this Agreement, or any rights in respect thereof,
or the exercise of or failure to exercise by either party any rights or
any of its elections herein provided, shall in no way be considered to be
a waiver of such provisions, terms, rights or elections or in any way to
affect the validity of this
Agreement.
|
|
13.11
|
In
connection with this Agreement, the parties may from time to time exchange
proprietary data or confidential information. The parties agree
to keep in confidence all such proprietary data or confidential
information received in accordance with this Agreement and to use the same
only in connection with the performance of this Agreement. This
provision shall survive the termination or expiration of this
Agreement.
|
|
13.12
|
Should
any provision of this contract held invalid, incomplete or unenforceable,
this will not affect the validity of the remaining
provisions. Supplier and Distributor undertake to replace the
invalid incomplete or unenforceable provision by provision which comes
closest to the commercial goal that the parties intended to achieve on the
conclusion of this agreement by the invalid, uncompleted and unenforceable
provision. Notwithstanding anything to the contrary contained herein, in
the event of any conflict or inconsistency between any term or provision
of this Agreement and the HB License, the latter shall
control.
|
|
13.13
|
Supplier
shall have the right to injunctive relief to enforce the covenants,
agreements and obligations of Distributor hereunder in addition to any
other relief to which Supplier may be entitled at law or in
equity.
|
|
13.16
|
Each
order deliverable under this Agreement shall be deemed sold under a
separate contract. Non-delivery or default by Supplier as to
any order shall not be deemed a breach of the
entire
|
Agreement
and shall not relieve Distributor of its obligation to accept and pay for any
prior or
subsequent
delivery, even though such non-delivery or default substantially impairs the
value of this Agreement to Distributor.
|
13.15
|
Distributor
shall comply with all applicable laws, rules and regulations in the
Territory, including, without limitation, the provisions of Directive
2002/96/EC,
which governs waste electrical and electronic equipment, including all
related amendments and all laws, rules and regulations in the Territory
related thereto. Distributor shall provide Supplier with
evidence of any such compliance upon
request.
|
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in
multiple duplicates by their authorized representatives at Bienne, Switzerland
as of the day and year first above written.
MGS
DISTRIBUTION
LIMITED MGI
LUXURY GROUP S.A.
By____________________________ By:
______________________________
|
Title:
__________________________
|
Title:
_____________________________
|
|
Name:
_________________________
|
Name:
____________________________
|
|
|
SCHEDULE
A
|
|
|
DISTRIBUTOR
DISCOUNT SCHEDULE
|
Distributor
pricing shall be * of Supplier’s recommended Euro retail price
(inclusive of VAT); provided, however, that if this Agreement is assigned as
provided under Section 2.6, then the pricing to the assignee shall be based on
the same discount off of Supplier’s recommended Euro retail price as generally
offered by Supplier to its other independent distributors of the Products in the
European Union.
*CONFIDENTIAL
PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
RULE 24b-2 OF THE 1934 ACT
|
|
SCHEDULE
B
|
|
|
OBJECTIVE
CRITERIA FOR APPROVED RETAILER
STATUS
|
|
13.
|
EXTERNAL
ELEMENTS
|
|
A.
|
Location/Street
|
(i) Animated
and attractive environment
(ii) Centrally
located neighborhood
(iii) Shopping
district with fashion and prestige branded shops
|
B.
|
Appearance
|
(i) Attractive,
well-maintained, high-quality façade
(ii) Clean,
visible and prominent shop sign
(iii) Visible
and easily accessed entrance
|
C.
|
Shop
Windows
|
(i) Well
lit, clean and made from good quality materials
(ii) Suitable
number and size show windows
|
(iii)
|
Windows
provide sufficient space to display a representative selection of HB brand
products
|
|
(iv)
|
Professionally
maintained and attractive window
decoration
|
|
14.
|
INTERNAL
ELEMENTS
|
|
A.
|
General
Outfitting
|
(i) Clean
and well-maintained walls, floors, ceilings and furnishings
(ii) Sufficient
and sophisticated lighting
(iii) Equipped
with adequate security devices
|
B.
|
Presentation
Showcases
|
(i) Made
of high-quality materials with adequate lighting
(ii) HB
products displayed on official brand POS materials
(iii) Clearly
visible and strong brand identification
|
|
(iv)
|
HB
products are grouped together and displayed separately from other
brands
|
|
15.
|
OTHER
PRODUCTS
|
|
A.
|
Premises
used solely for the retail sale of quality watches, jewelry, fashion
accessories and/or fashion apparel.
|
|
B.
|
HB
products displayed to prevent confusion with any other brands
products.
|
|
C.
|
Retailer
also sells at least two (2) Swiss watch brands or any three (3) of the
following fashion/designer/prestige watch brands: Emporio
Armani, Diesel, DKNY, Xxxxxxx Cole, Versace, Puma, D&G, CK, Sector,
Xxxxx, Guess, Lacoste
|
|
16.
|
PRESENTATION/PROMOTION
|
|
A.
|
Visual/Collateral
|
|
(i)
|
Brand
visuals properly presented and changed out seasonally or whenever
requested by brand
|
|
B.
|
Advertising
|
|
(i)
|
Dealer’s
advertising is consistent with the quality requirements of the
brand
|
|
(ii)
|
Dealer
agrees to conduct co-op advertising on the basis of an agreed and shared
budget and media plan
|
|
C.
|
Personnel/Customer
Service
|
|
(i)
|
Sales
staff with good knowledge of HB brand and
products
|
|
(ii)
|
Available
for regular training on brand and new
products
|
|
(iii)
|
Well
dressed, groomed and polite
|
|
(iv)
|
Capacity
to advise customer on how to operate products
correctly
|
|
(v)
|
Able
to carry out simple adjustments (e.g. sizing metal
bracelets)
|
|
17.
|
REPORTING
|
|
A.
|
Provides
clear and comprehensive information
|
|
B.
|
Provides
information on sales and stock
situation
|
|
C.
|
Provides
monthly sales reports by sku
|
|
D.
|
Provides
immediate information on problems with
products
|
|
18.
|
FINANCES
|
|
A.
|
Good
payment record
|
|
B.
|
Creditworthy
|
|
C.
|
Sound
finances
|
ANNEX
A
[ SEAL
]
CERTIFICATE
OF INCORPORATION
ON
CHANGE OF NAME
Company
No. 6183896
The
Registrar of Companies for England and Wales hereby certifies that
COVERMAT
LIMITED
having by
special resolution changed its name, is now incorporated under the name
of
MGS
DISTRIBUTION LIMITED
Given at
Companies House, Cardiff, the 9th May
2007
[
Official Seal of the Registrar of Companies ]
[ Seal –
Companies House for the record ]
THE
COMPANIES ACTS 1985 TO 1989
PRIVATE
COMPANY LIMITED BY SHARES
MEMORANDUM
OF ASSOCIATION
- OF
–
COVERMAT
LIMITED
1. The
name of the Company is COVERMAT LIMITED.
2. The
registered office of the Company will be situated in England and
Wales.
3. The
objects for which the Company is established are:-
(A) To
carry on business as a general commercial company.
(B) To
carry on any other business which may in the opinion of the Board of Directors
be advantageously carried on by the Company.
(C) To
purchase, sell, exchange, improve, mortgage, charge, rent, let on lease, hire,
surrender, license, accept surrender of, and otherwise acquire and deal with any
freehold, leasehold or other property, chattels and effects; and to erect, pull
down, repair, alter, develop, or otherwise deal with any building or buildings
and adapt the same for the purposes of the Company’s business.
(D) To
purchase of otherwise acquire all or any part of the business or assets of any
person, firm or company, carrying on or formed to carry on any business which
this Company is authorized to carry on or possessed of property suitable to the
purposes of this Company, and to pay cash or to issue any chares, stocks,
debentures, or debenture stock of this Company as the consideration for such
purchase or acquisition and to undertake any liabilities or obligations relating
to the business or property so purchased or acquired.
(E) To
apply for, purchase, or otherwise acquire any patents, licenses or concessions
which may be capable of being dealt with by the Company, or be deemed to
benefits the Company and to grant rights thereout.
(F) To
sell, let, license, develop or otherwise deal with the undertaking, or all or
any part of the property or assets of the Company, upon such terms as the
Company may approve, with power to accept shares, debentures or securities of,
or interests in, any other company.
(G) To
invest and deal with the moneys of the Company not immediately required for the
purposes of the Company in or upon such securities and subject to such
conditions as may seem expedient.
(H) To
lend money to such persons, upon such terms and with or without security and
subject to such conditions as may seem desirable.
(I) To
give any form of financial assistance that may lawfully be given in connection
with the acquisition of shares in the Company of any other company.
(J) To
guarantee the payment of any debentures, debenture stock, bonds, mortgages,
charges, obligations, interest, dividends, securities, moneys or shares or the
performance of contracts or engagements of any other company or person
(including but without prejudice to the generality of the foregoing) the holding
company of the Company or any company which is a subsidiary of such holding
company within, in each case, the meaning of Section 736 and Section 736(a) of
the Companies Xxx 0000 (the “Act”) as amended by the Companies Xxx 0000, and to
give indemnities and guarantees of all kinds and to enter into partnership or
any joint purse arrangement with any person, persons, firm or
company.
(K) To
borrow or raise money in such manner as the Company shall think fit, and in
particular by the issue of debentures or debenture stock, charged upon all or
any of the Company’s property, both present and future, including its uncalled
capital, and to re-issue any debentures at any time paid off.
(L) To
draw, make, accept, endorse, discount, execute, and issue promissory notes,
bills of exchange, debentures, warrants and other negotiable
documents.
(M) To
purchase, subscribe for, or otherwise acquire and hold shares, stocks or other
interests in, or obligations of, any other company or corporation.
(N) To
remunerate any person or company for services rendered or to be rendered in
placing or assisting to place any of the shares in the Company’s capital or any
debentures, debenture stock or other securities of the Company or in or about
the formation or promotion of the Company or the conduct of its
business.
(O) To
pay out of the funds of the Company all costs and expenses of or incidental to
the formation and registration of the Company and the issue of its capital and
debentures including brokerage and commission.
(P) To
promote, or aid in the promotion of, any company or companies for the purpose of
acquiring all or any of the property, rights, and liabilities of this Company,
or for any other purpose which may seem directly or indirectly calculated to
advance the interests of this Company.
(Q) To
establish and support and aid in the establishment and support of funds or
trusts calculated to benefit employees or ex-employees of the Company (including
any Director holding a salaried office or employment in the Company) or the
dependants or connections of such persons and to grant pensions and allowances
to any such persons.
(R) To
establish and implement any employee shares scheme within the meaning of section
743 of the Companies Act 1985and any share option scheme. To grant
share options and rights to Directors Employees and Members and others in
connection with any share option scheme which shall entitle the holders of any
such option and rights to acquire and subscribe for shares and securities of the
Company in accordance with the terms of any such grant.
(S) To
remunerate the Directors of the Company in any manner the Company may think fit
and to pay or provide pensions for, or make payments to, or for the benefit of,
Directors and ex-Directors of the Company or their dependants or
connections.
(T) To
distribute any property of the Company in specie among the Members.
(U) To
do all such other things as are incidental or conducive to the attainment of the
above objects or any of them.
It is
declared that the foregoing sub-clauses shall be construed independently of each
other and none of the objects therein mentioned shall be deemed to be merely
subsidiary to the objects contained in any other sub-clause.
4. The
liability of the Members is limited.
5. The
Share Capital of the Company is £1,000 divided into 1,000 shares of £1 each with
power to increase or to divide the shares in the capital for the time being,
into different classes having such rights, privileges and advantages as to
voting and otherwise as the Articles of Association may from time to time
prescribe.
The
subscriber to this Memorandum of Association wishes to be formed into a Company
pursuant to this Memorandum; and agrees to take the number of Shares shown
opposite the subscriber’s name
NAME AND
ADDRESS OF SUBSCRIBER
Number of
shares taken by the subscriber
7Side
Nominees Limited ONE
00/00
Xxxx Xxxx
Xxxxxxx
XX00
0XX
DATED 26
March 2007
THE
COMPANIES ACTS 1985 TO 1989
PRIVATE
COMPANY LIMITED BY SHARES
MEMORANDUM
OF ASSOCIATION
- OF
–
COVERMAT
LIMITED
PRELIMINARY
1. (a)
The Regulations contained in Table A in the Schedule to the Companies (Tables A
to F) Regulations 1985 as amended by the Companies (Tables A to F) (Amendment)
Regulations 1985 and The Companies Xxx 0000 (Electronic Communications) Order
2000 (such Table being hereinafter called “Table A”) shall apply to the Company
save in so far as they are excluded or varied hereby and such Regulations (save
as so excluded or varied) and the Articles hereinafter contained shall be the
regulations of the Company.
(b) Any
reference in these Articles to “the Act” shall mean the Companies Xxx 0000 as
amended or extended by any other enactment or any statutory re-enactment
thereof.
PRIVATE
COMPANY
2. The
Company is a private company within the meaning of the Companies Xxx
0000.
ALLOTMENT OF
SHARES
3. The
Directors of the Company are generally authorized for the purposes of Section 80
of the Act to allot, grant options over or otherwise deal with or dispose of the
original shares in the capital of the Company at the date of the incorporation
to such persons at such times and on such conditions as they think fit, subject
to the provisions of that Section and Article 4 hereof and provided that no
shares shall be issued at a discount. In accordance with Section 91
of the Act Sections 89(1) and 90(1) to 90(6) of the Act shall not apply to the
Company. The Directors are generally authorized to exercise the power
of the Company to allot shares of the Company which shall be created under any
employee shares or share option scheme or arrangement.
4. The
general authority conferred on the Directors by regulation 3 of these Articles
shall extent to all relevant securities (as defined by Section 80 of the Act) in
the capital of the Company at the date of its incorporation during the period of
five years from the date upon which the Company was incorporated but the
Directors may, after the authority has expired, allot any shares in pursuance of
an offer or agreement so to do made by the Company before the authority
expired. The authority may be renewed varied or revoked by the
Company in General Meeting.
SHARES
5. The
Company shall have a first and paramount lien on all shares, whether fully paid
or not, standing registered in the name of any person indebted or under
liability to the Company, whether he shall be the sole registered holder thereof
or shall be one of two or more joint holders, for all moneys presently payable
by him or his estate to the Company. Regulation 8 in Table A shall be
modified accordingly.
6. The
liability of any Member in default in respect of a call shall be increased by
the addition at the end of the first sentence of Regulation 18 in Table A of the
words “and all expense that may have incurred by the Company by reason of such
non-payment.”
7. Regulation
3 in Table A shall not apply to the Company and subject to the provisions of
chapter VII of Part V of the Act the Company may:-
(a) with
the sanction of an Ordinary Resolution issue shares which are to be redeemed or
are liable to be redeemed at the option of the Company or the
shareholder.
(b)
purchase its own shares (including any redeemable shares).
(c) make
a payment in respect of the redemption or purchase, under Sections 159, 160, or
162 of the Act and the relevant power (a) or (b) above, of any of its own shares
otherwise than out of distributable profits of the Company or the proceeds of a
fresh issue of shares to the extent permitted by Sections 170, 171, and 172 of
the Act.
TRANSFER OF
SHARES
8. (a)
Subject to clause 8(b) below the Directors may, in their absolute discretion and
without assigning reason therefore, decline to register the transfer of a share,
whether or not it is a fully paid share, and Regulation 24 in Table A shall not
apply to the Company.
(b)
Regulation 8(a) of these Articles shall not apply to any transfer to a person
who is already a Member of the Company.
9. In
these Articles of Association the reference to the transfer of or transferring
shares shall include any transfer, assignment, disposition or proposed or
purported transfer, assignment or disposition:
of any
share or shares of the Company; or
of any
interest of any kind in any share or shares of the Company; or
of any
right to receive or subscribe for any share or shares of the
Company.
Members
shall not transfer nor create nor dispose of any interest in or over any of the
shares being transferred except by a transfer of the entire legal and beneficial
interest in the shares. Any transfer shall be to a transferee as
permitted by the Articles and not otherwise.
Subject
to Regulation 8 of these Articles, a Subscriber to the Memorandum of Association
of the Company my freely transfer his share to any person firm or
company.
10. A
Member ( other than a Subscriber to the Memorandum of Association of the
Company) who desires to transfer shares to a person who is not ready a Member of
the Company shall give notice of such intention to the Directors of the company
giving particulars of the shares in question. Any such notice shall
be irrevocable except with the approval of the Directors. The
Directors as agents for the member giving such notice may dispose of such shares
or any of them to Members of the Company at a price to be agreed between the
transferor and the Directors, or failing agreement, at a price fixed by the
Auditors of the Company as the fair value thereof. The costs of any
valuation of the transfer shares shall be shared equally by the transferor and
the Company unless the Company in general meeting shall decide
otherwise. The Directors shall offer the shares in question to all
the members (other than the member who wishes to transfer the
shares). The shares offered to the individual members shall be in
proportion or (at the discretion of the Directors) as nearly as may be in
proportion to the numbers of shares then held by the members. Subject
to clause 8 (a) above and the following exception if within twenty-eight days
from the date of the said notice the Directors are unable to find a Member of
Members willing to purchase all such shares, the transferor may dispose of so
many of such shares shall remain undisposed of in any manner he may think fit
within three months from the date of the said notice. But any such
disposal shall be at the same price or more than the price for the shares which
shall have been offered in accordance with this clause to the existing
members. The exception referred to above is that if all the offered
shares shall not be agreed to be acquired the said Member shall not be under any
obligation to complete a transfer of any of the shares.
11. The
instrument of transfer of any share shall be executed by or on behalf of the
transferor who shall be deemed to remain a holder of the share until the name of
the transferee is entered in the register of members in respect
thereof.
GENERAL MEETINGS AND
RESOLUTIONS
12. Every
notice convening a General Meeting shall comply with the provisions of Section
372 of the Act as to giving information to Members in regard to their right to
appoint proxies; and notices of and other communications relating to any General
Meeting which any Member is entitled to receive shall be sent to the Directors
and to the Auditor for the time being of the Company.
13. Regulation
40 in Table A shall be read and construed as if the words, “unless the Company
has only one Member in which case one Member present in person or by proxy shall
be a quorum” were added at the end.
14. Regulation
41 in Table A shall be read and construed as if the words, “ and if at the
adjourned Meeting a quorum is not present within half an hour from the time
appointed for the Meeting, the Meeting shall be dissolved” were added at the
end.
15. In
addition to the requirements of Regulation 100 of Table A, the Directors shall
also insert in the minute book of the Company a memorandum of all decisions
taken by a sole Member when the Company has only one Member which may have been
taken by the Company in General Meeting and which have effect as if agreed in
General Meeting.
DIRECTORS
16. (a)
The first Director or Directors of the Company shall be the person or persons
named as the first Director of Directors of the Company in the statement
delivered under Section 10 of the Act.
(b) The number of the directors shall
be determined by Ordinary Resolution of the Company but unless and until so
fixed there shall be no maximum number of Directors and the minimum number of
Directors shall be one. In the event of the minimum number of
Directors fixed by or pursuant to these Articles or Table A being one, a sole
Director shall have the authority to exercise all the powers and discretions
conferred by Table A or these Articles and expressed to be vested in the
Directors generally and Regulation 89 in Table A shall be modified
accordingly.
(c) A Director shall not require any
share qualification but shall nevertheless be entitled to attend and speak at
any General Meeting of the Company or at any separate class meeting of the
holders of any class of shares of the Company.
(d) Regulation 64 in Table A shall not
apply to the Company.
ALTERNATE
DIRECTORS
17. (a)
An alternate Director shall not be entitled as such to receive any remuneration
from the Company except only such part (if any) of the remuneration otherwise
payable to his appointor as such appointor may by notice to the Company from
time to time direct, but shall otherwise be subject to the provisions of these
Articles with respect to Directors. An alternate Director shall
during his appointment be an Officer of the Company and shall not be deemed to
be an agent of his appointor. Regulation 66 in Table A shall be
modified accordingly.
(b) A Director or any other person may
act as an alternate Director to represent more than one Director and an
alternate Director shall be entitled at meetings of the Directors, or any
committee of the Directors, to one vote for every Director whom he represents in
addition to his own vote (if any) as a Director.
BORROWING
POWERS
18. The
Directors may exercise all the powers of the Company to borrow money without
limit as to the amount and upon such terms and in such manner as they think fit,
and to grant any mortgage, charge or standard security over its undertaking,
property and uncalled capital, or any part thereof, and, subject (in the case of
any security convertible into shares) to Sections 80 and 380 of the Act to issue
debentures, debenture stock, and other securities whether outright or as
security for any debt, liability or obligation of the Company or of any third
party.
PROCEEDINGS OF
DIRECTORS
19. Subject
to the provisions of Section 317 of the Act, Regulation 94 in Table A shall not
apply to the Company and a Director may vote as a Director in regard to any
contract or arrangement in which he is interested or upon any matter arising
thereout, and if he shall so vote his vote shall be counted and he shall be
reckoned in estimating a quorum present at any meeting when any such contract or
arrangement is under consideration.
20. It
shall not be necessary for Directors to sign their names in any book which may
be kept for the purpose of recording attendance at meeting.
21. (a)
Subject to the following proviso the power of the Directors to regulate their
proceedings shall include (if duly approved by the Directors) participation in
meetings by conference telephone or any kind of communication or electronic
communication (as defined in the Electronic Communications Act 2000) – Provided
:-
|
1)
|
that
proper and reasonable notice of the meeting and of the proposal to
conduct it in accordance with this Clause shall have been given
to all persons who are entitled to attend meetings of Directors;
and
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2)
|
that
written minutes of and the transcripts of all resolutions of the Directors
at all meetings of Directors which shall be conducted in accordance with
this Clause shall be certified in writing by all the participating
Directors by electronic communication or otherwise to be
correct. The reference to “resolutions” in this sub-clause b)
means any proposed resolution which to be valid requires proper
certification in accordance with this
Clause.
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(b) The
date of any resolution passed at any meeting which may be held in accordance
with the preceding Clause shall be when the transcript of the resolution shall
be certified by the last Director to do so.
DISQUALIFICATION OF
DIRECTORS
22. The
office of a Director shall be vacated if he becomes incapable by reason of
illness or injury of managing and administering his property and affairs and
Regulation 81 of Table A shall be modified accordingly.
ROTATION OF
DIRECTORS
23. The
Directors shall not be required to retire by rotation nor shall the Directors or
any of them be required to retire from office at the first annual general
meeting and Table A shall be modified accordingly.
THE SEAL
24. If
the Company has a seal it shall be used only with the authority of the Directors
or of a committee of the Directors. The Directors may determine who
shall sign any instrument to which the seal is affixed and unless otherwise so
determined it shall be signed by a Director and by the Secretary or by a second
Director. The obligation under Regulation 6 of Table A relating to
the sealing of share certificates shall apply only if the Company has a
seal. Regulation 101 in Table A shall not apply to the
Company.
INDEMNITY
25. (a)
Regulation 118 in Table A shall not apply to the Company. Every
Director and other officer of the Company shall be indemnified out of the assets
of the Company against all losses or liabilities which he may sustain or incur
in or about the execution and discharge of the duties of his office or otherwise
in relation thereto, including any liability incurred by him in defending any
proceedings, whether civil or criminal, in which judgment is given in his favour
or in which he is acquitted or in connection with any application under Sections
144 or 727 of the Act in which relief is granted to him by the court, and no
Director or other officer shall be liable for any loss, damage or misfortune
which may happen to or be incurred by the Company in the execution of the duties
of his office or in relation thereto. But this Article shall only
have effect in so far as its provisions are not avoided by Sections 309A and
309B of the Act.
(b) The Directors shall have power to
purchase and maintain at the expense of the Company an insurance policy for any
Director (including an alternate Director), Officer or Auditor of the Company
against any such liability as is referred to in Section 309A(5) of the
Act.
ANNEX
B
ANNEX
C
ANNEX
D
MGS
DISTRIBUTION LIMITED
BUDGET
FOR YEAR 2007 TO 2011
VERSION
6 (revised May 07)
** THE
REMAINING, CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY
WITH THE SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT
