AMENDMENT NUMBER 5 TO LICENSE AGREEMENT
EXHIBIT
10.2 *
AMENDMENT
NUMBER 5
This
amendment dated as of January 1, 2007 (the “Fifth Amendment”) further amends the
License Agreement dated December 9, 1996, as amended by Amendments Number 1
through 4 thereto (referred to herein as “the Agreement”) by and between Coach,
Inc. (“Licensor”) and Movado Group, Inc. (“MGI”) and Swissam Products Limited
(“SPL”) as licensees (collectively, “Licensee”).
WHEREAS,
the parties desire to make certain additional changes to the Agreement as set
forth below:
NOW
THEREFORE in consideration of the mutual covenants and the premises set forth
herein, the Agreement is hereby amended as follows:
1. Licensor
Channels. Section
1.2 shall be amended and restated as follows:
1.2
“Licensor Channels” shall mean retail outlets controlled by Licensor, including,
without limitation, Licensor’s catalog, Licensor’s stand alone retail stores,
Licensor’s factory outlet stores, Licensor Special Accounts (as hereinafter
defined), Licensor’s Internet website or any similar electronic vehicle operated
by or on behalf of Licensor, Licensor’s facilities for sales to employees of
Licensor and its affiliates, and Licensor’s retail stores that are situated in
department stores located outside the United States.
2. Contract
Year. Section
1.5 shall be amended and restated as follows:
1.5
“Contract Year” shall mean each twelve (12) month period commencing July 1 and
ending June 30. Contract Years shall be identified by the year in which they
end; for example, Contract Year 2008 shall refer to the period commencing July
1, 2007 and ending June 30, 2008. Notwithstanding the foregoing, Contract Year
2007 shall mean the six (6) month period ending June 30, 2007.
3. Marketing
Samples. The
following language shall be added as Section 7.4 of the Agreement:
Prior
to
the launch of each Licensed Product, Licensee shall, at its expense, provide
Licensor with at least one (1) fully functioning and at least five (5)
non-functioning samples of such Licensed Product. In addition, as soon as
practicable following such launch, Licensee shall, at its expense, provide
Licensor with at least twenty five (25) fully functioning specimens of such
Licensed Products, to be used by Licensor primarily as “celebrity dressing”
samples.
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CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED FROM PAGES 2,3 AND
5 AND
FROM SCHEDULE I AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED ("1934 ACT").
4. Third-Party
Manufacturers. The
following language shall be added as Section 7.5 of the Agreement:
Licensee
may employ third parties to manufacture Licensed Products, provided that
Licensee shall retain full responsibility under this Agreement for all aspects
of such manufacture; Licensee shall actively supervise the production of
Licensed Products by such third parties and shall ensure that such third parties
employ appropriate quality controls to comply with this Agreement. Licensee
shall ensure compliance by such third parties with all relevant provisions
of
this Agreement (including, but not limited to, Section 20.7) and shall be liable
hereunder for any breach of the terms of this Agreement by such parties, unless
such breaches are remedied within thirty (30) days after Licensee’s receiving
notice of such breach.
5. Transfer
Price to Licensor. The
first
sentence of Section 8.2 shall be amended and restated as follows:
All
Licensed Products for retail sale in Licensor Channels shall be sold to Licensor
at a price *
Licensed
Products.
6. Internet
Sales. The
following language shall be added as Section 8.10 of the Agreement:
8.10
Licensee acknowledges Licensor’s policy prohibiting Licensee or any of its
customers from selling or distributing Licensor’s products via the Internet.
Except as otherwise prohibited by applicable law, Licensee shall comply with
such policy, advise its customers that they must comply with such policy, and,
if directed by Licensor in writing, promptly cease taking additional orders
for
the Licensed Products with any customers who do not comply with such
policy.
7. Modification
of Licensee Account Lists. The
last
sentence of Section 8.8 shall be amended and restated as follows:
Any
such
modifications shall be agreed to by the parties, in a writing signed by both
parties from time to time.
8. Sales
Targets. The
following minimums pertaining to Licensee’s sales of Licensed Products to
Non-Licensor Channels replace those currently contained in Section 10.1 (as
last
restated in the Third Amendment to the Agreement):
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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.
*
The
foregoing minimums are predicated on the assumption that the number of
Non-Licensor channels shall not be significantly reduced.
9. Royalties.
The
following sentence shall be added at the end of Section 11.1:
For
Contract Years 2007 through 2015, the base royalty rate applied to Licensee’s
sales
*
.
10. Reporting
Requirements. The
following sentence shall be added at the end of Section 11.5:
In
addition, Licensee shall provide Licensor with a monthly unaudited sales report
and a monthly latest estimate (LE) report, each in the format provided in
Schedule 1 to the Fifth Amendment to this Agreement.
In
addition, the following language shall be added as paragraph (a) to Section
13.2
of the Agreement, with the existing language to follow as paragraph
(b):
Licensee
must submit to Licensor monthly reports, on or before the dates each month
set
forth in the calendar approved annually by Licensor and Licensee, containing
royalty reports and estimated shipment volumes, as compared to the projections
estimated in the Plan established for the Contract Year, and including
comparisons of royalties and shipment volume information compared to the prior
month. In addition to the above documents, Licensee will also provide Licensor
with the following business reports on or before the end of the first week
of
each month: monthly performance information for * .
11. Annual
Operating Plan. The
first
sentence of Section 12.2 shall be amended and restated as follows:
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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.
No
later
than the end of the first week in January (for high/medium/low estimates) and
the first week in February (for all other information) in each Contract Year
or
by such date as may otherwise be agreed to by Licensee and by Licensor, Licensee
shall prepare and present to Licensor for feedback and input an annual operating
plan setting forth the information described below (the “Plan”).
In
addition, the following language shall be added at the end of Section
12.2:
Licensor
will provide templates that must be used by Licensee in the preparation of
the
Plan, which will among other things require Licensee to provide sales volume
projections for the Licensed Products by design/style type, in units and
dollars, estimating a “High”, “Medium” and “Low” volume of sales. Licensor’s
templates for the Licensee Plan also may include, without limitation: (a) a
description (including timing) of the types and numbers of designs/styles
intended to be developed or manufactured (including any new products); (b)
price
marketing strategies, including wholesale and suggested retail pricing by
design/style type and market; (c) assessment of customer base and customers;
(d)
distribution, including distribution outlets and breakdown by geographic area;
(e) advertising and media plans, including the proposed schedule of any and
all
major advertising campaigns and the format for all advertising not already
approved by Licensor, including breakdown by geographic area; (f) packaging,
point of sale and trade exhibitions; (g) the results of market research relating
to the Licensed Products and similar products, and market trends; (h)
organizational structure; (i) competitive scenarios; (j) industry trends; and
(k) any other information reasonably requested by Licensor.
12. Licensee’s
Staffing/Infrastructure. Section
12.3 shall be amended and restated as follows:
12.3
(a)
At all times during the term hereof, Licensee shall employ a complete sales
and
planning team dedicated to the Licensed Products business. Such team shall
include, among other functions, a Coach-only President or Senior Vice President,
a Coach-only Marketing Director and, by no later than July 1, 2008, a Director
for the Merchandise Coordinator team described in paragraph “b” below. Such
executives shall be hired and employed by Licensee, subject to Licensor’s prior
written approval which shall not be unreasonably withheld, conditioned or
delayed. In connection with Licensee’s annual Plan submission to Licensor,
Licensee shall also present Licensor with an organization chart for the Licensed
Products business, including the names and titles of each executive or manager
dedicated or substantially involved in the Licensed Products
business.
(b)
In
addition, beginning in Contract Year 2008, Licensee shall cause its Merchandise
Coordinator team of executives to clearly communicate Licensor’s brand standards
to Licensee’s associates and train such associates to meet or exceed such brand
standards. The executives on this team shall support and cover
accounts
generating at least 50% of the total point-of-sale volume generated through
all
worldwide Non-Licensor Channels.
13. Required
Advertising Expenditures. In
Section 12.4, the following language shall be added to the table showing
Licensee’s required annual advertising expenditures in connection with the
Licensed Products:
For
the
twelve (12) month period
ended
June 30, 2007 and for *
Contract
Years 2008 and beyond
In
addition, Section 12.7 of the Agreement is hereby omitted.
14. Trade
Shows. The
following language shall be added as Section 12.11 of the Agreement:
12.11
Licensor shall design a booth or similar display area for use at trade shows
and
similar exhibitions in which Licensee, in consultation with Licensor, decides
to
participate. Licensor will consult with Licensee in the design of each such
booth or display area. Licensee shall construct and shall bear all reasonable
costs to construct each such booth or display area in accordance with Licensor’s
design, and Licensor shall reasonably cooperate with Licensee in connection
therewith and furnish Licensee with all necessary information relating to such
design. Licensor shall inspect and give its final approval to the finished
area
prior to Licensee using it at any exhibition; provided that such approval shall
not be unreasonably withheld, conditioned or delayed.
15. Agreement
Term. Section
14.1 shall be amended and restated as follows:
14.1
This
Agreement shall remain in full force and effect from the date this Agreement
is
entered into by the parties until June 30, 2015, unless earlier terminated
as
provided herein.
16. Except
as
set forth in this Fifth Amendment, the Agreement shall remain in full force
and
effect.
17. This
Fifth Amendment may be signed by the parties duly executing counterpart
originals.
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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.
IN
WITNESS WHEREOF, the parties have caused this Amendment to be executed by their
authorized officers and to become effective as of the date first above
written.
COACH,
INC.
By: /s/
X.X.
Xxxxxxxxxx
Name:
Title:
SWISSAM
PRODUCTS LIMITED MOVADO
GROUP, INC.
By:
/s/
Xxxxxxx X. Xxxxxx
By: /s/
Xxxxxxx X. Xxxx
Name:
Xxxxxxx X. Xxxxxx Name:
X X
Xxxx
Title:
Director Title:
Exec. VP/ COO
SCHEDULE
1
Form
of Monthly Report for Unaudited Sales and Latest Estimates
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