8-K
MOVADO GROUP INC (MOV)
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORTPURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 13, 2021
| MOVADO GROUP, INC. | ||
|---|---|---|
| (Exact name of registrant as specified in its charter) | ||
| New York | 1-16497 | 13-2595932 |
| --- | --- | --- |
| (State or other jurisdiction<br><br>of incorporation) | (Commission<br><br>File Number) | (I.R.S. Employer<br><br>Identification No.) |
| 650 FROM ROAD, SUITE 375<br><br> <br>PARAMUS, NJ 07652-3556 | ||
| --- | ||
| (Address of principal executive offices) (Zip Code) | ||
| (201) 267-8000 | ||
| (Registrant’s Telephone Number, Including Area Code) | ||
| NOT APPLICABLE | ||
| (Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange<br><br> <br>on which registered |
|---|---|---|
| Common stock, par value $0.01 per share | MOV | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entryinto a Material Definitive Agreement. |
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On October 13, 2021, Movado Group, Inc. (the “Company”) and Ferrari S.p.A. (“Ferrari”) entered into Amendment # 3 (the “Amendment”) to the January 1, 2018 license agreement between the parties (as previously amended, the “Existing License Agreement”). The Amendment amends the Existing License Agreement by (1) ending the license term on June 30, 2022 rather than December 31, 2022 and eliminating the provisions regarding a possible renewal and (2) revising the royalty and minimum advertising expenditure provisions for the period from January 1, 2021 through the end of the sell-off period on December 31, 2022.
The other material provisions of the Existing License Agreement remain substantially unchanged.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
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(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 10.1* | Amendment # 3 to the License Agreement between Movado Group, Inc. and Ferrari S.p.A. dated October 13, 2021. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Certain portions of this exhibit have been redacted pursuant to<br>Item 601(b)(10)(iv) of Regulation S-K. The Company agrees to furnish supplementally an unredacted copy of the exhibit to the Securities<br>and Exchange Commission upon its request. |
| --- | --- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 19, 2021
| MOVADO GROUP, INC. | |
|---|---|
| By: | /s/ Mitchell Sussis |
| Name: | Mitchell Sussis |
| Title: | Senior Vice President, General Counsel and Secretary |
EXHIBIT 10.1
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
[MOVADO GROUP, INC. LETTERHEAD]
Ferrari S.p.A.
Via Abetone Inferiore, n. 4
P.O. Box 589
41033 Maranello
Italy
FAO:
Nicola Boari, Chief Brand Diversification Officer
Registered post
anticipated via email: [***]
Paramus, October 11, 2021
| Re: | Amendment # 3 to the license agreement entered into by and between Ferrari S.p.A. (“Ferrari”) and MOVADO Group Inc.(“Licensee”) effective as of January 1, 2018 as thereafter amended and modified (hereinafter the “Agreement”). |
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Dear Sirs,
further to our negotiations, please find herein below the proposal of amendment we are submitting to your kind acceptance.
**************
Amendment # 3
Whereas:
| 1. | Ferrari and Licensee entered into a license agreement<br>effective as of January 1, 2018 - as thereafter amended as per Amendment #1 and Amendment #2 - pursuant to which the Licensee has been<br>granted the right to develop, produce/manufacture, distribute, advertise, promote and sell watches using the trademarks licensed by Ferrari. |
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| 2. | Licensee wishes to propose to Ferrari certain<br>modifications to the terms of the Agreement. |
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| 3. | Subject to Ferrari agreeing hereto, this amendment<br>is to be intended as a valid amendment to the Agreement, pursuant to Section 22.3 of the latter. |
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| 4. | Capitalised terms shall have the same meaning<br>as specified in the Agreement. |
| --- | --- |
| 5. | [***] |
| --- | --- |
| 6. | The definition of Promotional Minimum shall be<br>amended as follows: |
| --- | --- |
““Promotional Minimum” shall mean[***]”
| 7. | Section 2.2. of Art. 2 of the Agreement shall<br>be amended as follows: |
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“2.2. Therights granted to Licensee pursuant to Section 2.1 herein are granted on an exclusive basis (within the limits of what set forth belowin this Section 2.2). Notwithstanding the above, Licensee acknowledges and accepts that (i) Ferrari shall be entitled to develop, produce/manufacture,distribute, advertise, promote and sell in the Territory through the Ferrari Points of Sale watches bearing the Trademarks and havinga suggested retail price higher than EUR 2'500 (Euro two thousand five hundred) and (ii) Ferrari shall be entitled to license during theTerm, the right to develop, produce/manufacture, distribute, advertise, promote and sell in the Territory watches bearing the Trademarksand having a suggested retail price higher than EUR 2'500 (Euro two thousand five hundred).
Moreover, Licensee acknowledges and acceptsthat Ferrari has already licensed to Hublot SA the right to develop, produce, manufacture, distribute, advertise, promote and sell worldwidehigh-end watches bearing the Trademarks, to be sold at a suggested retail price higher than EUR 2'500 (Euro two thousand five hundred/00).
Although Ferrari does not grant to Licenseeany right on any trademarks other than the Trademarks, Ferrari agrees that for the duration of this Agreement and the duration of theSell off Period, it shall not, and shall not permit any Ferrari Affiliate to, grant any rights to use the Trademarks, or any other trademarksowned by Ferrari or that relate to the Ferrari brand or any Ferrari brand products, to any other person or entity for use on watches witha suggested retail price of less than EUR 2,500 (Euro two thousand five hundred/00).
It is understood that Ferrari will befree to negotiate during the Term and during the Sell off Period with third parties and to authorize such third parties to develop, produce/manufacture,within the Territory, watches using the Trademarks, and/or the Images, such watches to be, however, announced, shown, promoted, advertised,distributed and sold exclusively after the date of expiry of the Sell off Period.
”
| 8. | Art. 3 of the Agreement shall be amended as follows: |
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“3. Product Plan
| 3.1 | Licensee shall use all reasonable commercialefforts to market the Products throughout the Territory in accordance with the Product Plan in a manner such as to maximize the sales,provided however that it must at all times comply with the characteristics and prestige of Ferrari and of its activities and trademarks. |
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| 3.2 | Licensee shall develop, produce/manufacture,advertise, promote, distribute and sell new collections of Products at least every [***] months. Should Licensee fail to do so, Ferrarishall have the right, by written request to Licensee, to require Licensee to do so and Licensee shall: develop, distribute and sell suchnew collection of Product(s) within [***] months from receipt of the above request. Should the total delay be longer than [***] months,Ferrari, shall have the right to terminate the Agreement according with what provided in Article 19, without prejudice to Ferrari’sright to receive in full the payment of the Guaranteed Minimum Payments for the relevant contractual year, and without entitlement forLicensee to claim for any damages that may possibly be suffered thereby. |
| --- | --- |
| 3.3 | It is understood that the last collection ofProducts that Licensee will be entitled to develop is the SS 2022, as per the Product Plan. |
| --- | --- |
”
| 2 |
| --- | | 3. | Art. 5 of the Agreement shall be amended as follows: | | --- | --- |
“5. Royalties
| 5.1 | In consideration of the rights granted to Licensee hereunder, and without prejudice to the payment of the Guaranteed Minimum Payments,Licensee undertakes to make timely and full payment of the Royalties to Ferrari as provided hereunder. |
|---|---|
| 5.2 | Each amount paid by Licensee to Ferrari asGuaranteed Minimum Payment for each full year of the Term is intended as an advance on the Royalties due, respectively for such year ofthe Term. The amount payable [***] will be the sole amount due during such periods with respect to the Net Turnover generated during suchperiods. |
| --- | --- |
| 5.3 | If the Royalties generated by Licensee duringeach year of the Term or exceed the amount due to Ferrari as Guaranteed Minimum Payment for such year of the Term, Ferrari will invoiceto Licensee the difference. |
| --- | --- |
| 5.4 | Ferrari will invoice to Licensee the amountsdue as Royalties upon receipt of the Royalty Report. Licensee shall pay Ferrari’s invoices, sent to Licensee by mail, within 30(thirty) days from the date of issuance of the invoice. |
| --- | --- |
”
| 4. | Art 11.4 of the Agreement shall be amended as<br>follows: |
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“11.4 Moreover, Licensee undertakes to devote duringeach contractual year of the Term [***], no less than the Promotional Minimum to A&P Activities in the Territory. The PromotionalMinimum shall be calculated by the Licensee on the basis of the Net Turnover that the Licensee expects to generate in each contractualyear.
On or before March 31 of each year of the Term [***], Licenseeshall provide Ferrari with the A&P Activities Report.
Should the above report show that the Licensee has not devoted,during the previous year of the Term, all of the Promotional Minimum to the above mentioned A&P Activities, the balance shall be carriedforward to the following contractual year; provided that such balance shall not be deducted from the Promotional Minimum that the Licenseeshall devote to A&P Activities in the following contractual year [***].
If, at the end of a contractual year, the Licensee has devotedmore than the Promotional Minimum for such year to the above mentioned A&P Activities, the excess amount may not be carried forwardto the Promotional Minimum that the Licensee shall devote to A&P Activities in the following contractual year without the prior writtenconsent of Ferrari.”
| 5. | Art. 20 of the Agreement shall be amended as follows: |
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“20 Rights and Obligations followingExpiry or Termination
| 20.1 | Licenseeshall be granted a Sell off Period, during which Licensee will be entitled to promote and sell existing inventory but not to producethe Products and/or Related Materials provided that (i) all the amounts due by Licensee to Ferrari (including the payment of the Royalties)have been paid by Licensee to Ferrari; (ii) the stock for Sell off Period is within reasonable limits, (i.e. during the last six monthsof duration of the Agreement it does not exceed the level recorded for the corresponding six months of 2019) and (iii) the promotionalactivities and sales channels selected by Licensee are consistent with the ones that Licensee, respectively, implemented /utilized duringthe Term. |
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| 3 |
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| 20.3 | Within 60 (sixty) days from the expiry or the termination of the Agreement for whatever reason, Licensee shall return to Ferrarior destroy, in accordance with the Brand Diversification Department of Ferrari and at Licensee’s expense all Related Materials,advertising, promotional or sales material relating to the Products or any other documentation relating to the business of Ferrari andshall cause, under its direct liability, Producers in possession of said Related Materials to fulfil the same obligation, subject howeverto the obligations regarding retention of documents laid down in Section 8.2; provided, however, that the foregoing shall not apply toany Related Materials that are required by Licensee or its Affiliates for use during the Sell off Period. |
| --- | --- |
| 20.4 | Licenseeshall be fully liable towards Ferrari for the cessation by any third party under Licensee’s control and in any way used by Licenseein relation to the Products, of all and any use whatsoever of the Trademarks and/or Images, for the immediate surrender to Licensee ofany items, documents or materials on which the Trademarks and/or the Images shall in any way appear and in general compliance with theprovisions hereof. Following expiry or termination hereof, Licensee shall either destroy all moulds and/or work and/or instruments usedfor the reproduction of the Trademarks and/or the Images or – upon Ferrari’s request – transfer the same to Ferrarior to any other person or entity designated by Ferrari at a price to be agreed by the Parties, taking into consideration the age of andthe wear and tear on each individual mould and/or instrument, always provided that the price shall not exceed the book value for Licensee. |
| --- | --- |
| 20.5 | Followingtermination of the Agreement, either by expiry or any other cause, Licensee will immediately pay to Ferrari all amounts due under theAgreement relative to the Products and will pay the Minimum Guaranteed Amounts due during or after the termination or expiry of the Agreementand any Royalty exceeding the Minimum Guarantee Amount [***] due for the relevant reference period. Such payments shall be made underthe same conditions specified in Schedule A. Furthermore, Licensee shall provide Ferrari within 30 (thirty) days from the terminationhereof, a report on the situation. |
| --- | --- |
| 20.6 | Following termination of the Agreement, eitherby due expiry of the term or any other cause, neither Party shall be entitled to claim any compensation from the other Party in connectionwith any goodwill created hereunder. |
| --- | --- |
| 20.7 | At the end of the Term or at the expiry ofthe Sell off Period, if granted, Licensee shall propose to Ferrari (and only to Ferrari) the remaining inventory of the Products includingthe Producers’ stock, at cost of goods and Ferrari shall have the right to buy or not to buy said inventory in whole or in partfrom Licensee. Licensee acknowledges that Ferrari shall be entitled to re-sell such Products in the Ferrari Points of Sale. |
| --- | --- |
After the expiry of the Sell off Period, Licensee shall,in alternative, be entitled to sell the remaining stock of Products solely through Licensee’s outlet stores or any of its Affiliates’outlet stores. To such purpose, at the expiry of the Sell off Period, Licensee shall submit to Ferrari a complete report containing allthe remaining stock of Products that may be sold through such outlet stores. In any case, it is expressly understood that the stock forsale in outlet stores must be within reasonable limits.
| 4 |
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Any Products not purchased by Ferrariand/or not contained in the above mentioned stock report shall be destroyed and Licensee shall provide to Ferrari a certified copy ofthe document attesting to due destruction of the Products, and Ferrari reserves the right to verify the authenticity of said documentpursuant to Section 13.1.
| 20.8 | Any obligations and duties that by their nature extend beyond the expiry or termination of this Agreementshall survive the expiry or termination of this Agreement. |
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”
| 6. | Schedule A of the Agreement shall be amended as<br>follows: |
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“SCHEDULE A
Agreement Conditions
| Term: | The Agreement shall be effective as of January 1, 2018 and, if not terminated earlier in accordance with the terms hereof or the applicable law, shall terminate on June 30, 2022. |
|---|---|
| Territory: | Worldwide. |
| Exclusivity: | The rights granted to Licensee pursuant to Section 2.1 herein are granted on an exclusive basis strictly within the limits set forth in Section 2.2. |
| Sell off Period: | Six (6) months. |
| Free of charge Products: | During each calendar year Licensee shall provide to Ferrari, free of charge, within 30 (thirty) days from Ferrari’s written request, a maximum of [***] sales samples of each new Product released during the Term, as referenced in Section 9.4. |
| Royalties: | [***] per cent) of Net Turnover |
| Currency to be used for Guaranteed Minimum Payments and Royalties: | EUR. |
| Default interest: | EURIBOR (3 (three) months) + spread 3 (three) percentage points. |
”
| 7. | Schedule C2 of the Agreement shall be amended<br>as follows: |
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“C2 Product Plan
[***]
| 8. | Schedule D of the Agreement shall be amended as<br>follows: |
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| 5 |
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“SCHEDULE D
Guaranteed Minimum Payments due during the Term
[***]
”
| 9. | All other terms and conditions of the Agreement<br>remain unchanged, valid and fully binding. |
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| 10. | This Amendment # 3 constitutes an integral part<br>of the Agreement and shall be read and construed together with and governed by all the terms and conditions of the Agreement. In the event<br>of any conflict between the terms of the Agreement and the terms of this amendment, the latter controls. |
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| 11. | Licensee acknowledges and agrees (a) that nothing<br>in this Amendment # 3 establishes or acts as precedent for any possible future request of similar amendments to the Agreement and, (b)<br>that the Amendment cannot be interpreted or construed so as to create any legitimate expectation or entitlement of the Licensee with respect<br>to any further amendment to the terms and conditions of the Agreement. |
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| 12. | This Amendment # 3 shall enter into force upon<br>the date of Ferrari’s written acceptance. |
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| 13. | Any dispute arising out of or in connection with<br>this amendment and all matters or issues collateral hereto shall be governed by the laws of Italy, with the exclusion of conflict of law<br>rules. |
| --- | --- |
Any dispute in connection with this Amendment # 3 shall be referred exclusively to the Ordinary Court of Modena (Italy), with the exclusion of any other judicial authority.
| 14. | The Parties expressly acknowledge and declare<br>that all clauses of this Amendment # 3 have been negotiated between them. Therefore, the Parties recognize that articles 1341 and 1342<br>of the Italian Civil Code shall not apply to this amendment. |
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**************
Please confirm your whole acceptance of the present’s proposal content by reproducing its entire text and sending it, duly signed, for acceptance, by your authorized representative.
Kind regards,
Movado Group Inc.
/s/ Mitchell Sussis
Name: Mitchell Sussis
Title: Senior Vice President
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[FERRARI S.P.A. LETTERHEAD]
Movado Group, Inc.
650 From Road – Suite 375
Paramus, N.J. 07652-3556
United States
To the kind attention of:
Mitchell Sussis
Senior Vice President
Maranello, October 13, 2021
Registered Post
anticipated via email: [**]
| Re: | Amendment # 3 to the license agreement entered into by and between Ferrari S.p.A. (“Ferrari”) and MOVADO Group Inc.(“Licensee”) effective as of January 1, 2018 as thereafter amended and modified (hereinafter the “Agreement”). |
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Dear Sirs,
We send you this letter in full acceptance of your proposal dated October 11, 2021.
Kind Regards,
Ferrari S.p.A.
/s/ Nicola Boari
Name: Nicola Boari
Title: Chief Brand Diversification Officer
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