EXHIBIT 10.2*
TERM SHEET
MGI Luxury Group - Hugo Boss
October 11, 2017
Subject to the approval of the Supervisory Board of HUGO BOSS AG this Term Sheet sets out the principal terms for an amended and restated License Agreement between HUGO BOSS Trade Mark Management GmbH & Co. KG, Germany with its branch HUGO BOSS Trade Mark Management GmbH & Co. KG, D-Metzingen, Branch CH-Zug, Switzerland (“Hugo Boss”) and MGI Luxury Group S.A. The License Agreement will continue to remain in full force and effect with the exception of the following points which will become binding with the execution by the parties and approval of the Supervisory Board of HUGO BOSS AG and will subsequently be reflected in the amended and restated license agreement.
Licensor | HUGO BOSS Trade Mark Management GmbH & Co. KG Dieselstrasse 12 D-72555 Metzingen Germany
With its Branch HUGO BOSS Trade Mark Management GmbH & Co KG D- Metzingen Branch Ch-Zug Baarerstr. 131 CH- 6300 Zug
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Licensee | MGI Luxury Group S.A. Bahnhofplatz 2B CH-2502 Bienne Switzerland
With a guarantee of the mother company Movado Group Inc.
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Product(s) | Traditional Watches for Men & Women Technology-Enabled Watches for Men & Women (in particular Smart Watches, Software Enabled Watches and Connected Watches e.g. Display Watches, Analog-Smart Watches, Hybrid Smartwatches, Trackers)
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Term | This Agreement enters into force retroactive on January 1, 2018, and, unless sooner terminated as herein provided, expires on December 31, 2023. Not later than 18 months before the final expiration of the Agreement the contracting parties shall enter into negotiations for the purpose of agreeing on an extension of this Agreement. Such extension (if any) shall be effective only upon the signature and delivery by each of the parties of a definitive written instrument extending the term of this Agreement.
Amendment of clause 17.2: HUGO BOSS may terminate the Agreement if for two successive calendar years (beginning after calendar year 2017) only the minimum license fees are paid. In this case the notice period for termination is two months before the end of the half calendar year following the relevant time periods. For the avoidance of doubt, all payment obligations of Licensee under this Agreement shall continue during such half year period.
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* CONFIDENTIAL PORTIONS OF THIS EXHIBIT IDENTIFIED BY ASTERISK (*) HAVE BEEN OMITTED 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”).
“Net Sales” shall mean Gross Sales of Licensed Products, sold by Licensee or its affiliates, at wholesale basis is arms-length transactions to independent retailers or distributors, Licensee Retail Stores and Licensor Retail Stores, after the deduction of: (a) actual credits for returns that Licensee actually authorizes and receives, not exceeding in any year an amount equal to * of Licensee’s total sales of Licensed Products in such year; and (b) actual, reasonable and normal trade discounts and allowances to independent third parties (including Licensor Retail Stores but not Licensee’s affiliates/Licensee Retails Stores), including but not limited to volume and early payment discounts that are defined as credits to a customer after delivery and that Licensee actually grants in writing to the extend auditable, not exceeding in any year an amount equal to * of Licensee’s total sales of Licensed Products in such year; and (c) expressly excluding Marketing Spend and cooperative advertising.
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Currency | CHF (except USD for additional Marketing Spendings by Movado Group Inc.)
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Guaranteed Minimum Net Sales for initial term | Licensee shall pay to HUGO BOSS a minimum annual license fee each year equal to * of the amount which is * of the target Net Sales for such year under the Business Plan.
Below Guaranteed Minimum Annual Fee (Guaranteed Minimum Royalty (GMR and Guaranteed Minimum Advertising (GMA)) schedule:
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| Year | Net Sales Projection (CHF) | Minimum Net Sales (CHF) | GMR (CHF) | GMA (CHF) | GMR+ GMA (CHF) |
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| 2018 | * | * | * | * | * |
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| 2019 | * | * | * | * | * |
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| 2020 | * | * | * | * | * |
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| 2021 | * | * | * | * | * |
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| 2022 | * | * | * | * | * |
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| 2023 | * | * | * | * | * |
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Product Royalty | All Licensed Products: * of Total Net Sales
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Advertising Royalty: | All Licensed Products: * of Total Net Sales
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Marketing Spend | * Marketing Contribution
New clause: Licensee will propose a detail BTL yearly Investment plan, by investment category and country, to Licensor for approval at the latest by October of previous year, and will provide quarterly spend appraisals. The Marketing Contribution will be auditable by Licensor.
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* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
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| For Boss: | * |
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| * |
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| * |
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| * |
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| For Hugo : | * |
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| * |
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| For the following years, until 2023, Movado Group Inc will continue to invest additional funds at the same value of * yearly and a total additional investment of * to ensure driving sales and brand messaging.
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MGI Luxury Group S.A.
| Place, Date Paramus, NJ 11 October 2017
Printed Name Mitchell Sussis, Attorney-in-Fact
Signature /s/ Mitchell Sussis
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Movado Group Inc.
| Place, Date Paramus, NJ 11 October 2017
Printed Name Efraim Grinberg, Chairman and CEO
Signature /s/ Efraim Grinberg
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HUGO BOSS
| Place, Date Zug 13 October 2017
Printed Name Andrea Giacomelli Paul Daly
Signature /s/ Andrea Giacomelli /s/ Paul Daly
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* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
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Personnel 100% dedicated to HUGO BOSS watches
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* CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO RULE 24b-2 OF THE 1934 ACT.
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