Natuzzi has reached a preliminary agreement with Kuka to form a joint venture to expand the Natuzzi retail network in China. Subject to terms and conditions in the preliminary agreement and to obtaining any applicable authorizations, Natuzzi will contribute the exclusive distribution right to use the Natuzzi Italia and Natuzzi Editions trademarks in a Chinese corporate entity, and Kuka will invest $77.6 million to expand of the Natuzzi retail network in Greater China. Of Kuka s investment, $17.9 million is in exchange for Natuzzi s contribution of the right to perpetually use the Natuzzi Italia and Natuzzi Editions trademarks in Greater China, which includes mainland China, Hong Kong and Macao. Natuzzi and Kuka will own 49% and 51%, respectively, of the Chinese corporate entity. Natuzzi will contribute its existing stores and commercial organization in China. As of the end of third-quarter 2017, Natuzzi operated 10 directly owned stores in China, with another 159 locations run by third-party dealers. The joint venture also would utilize Natuzzi s existing retail management team, who will be employed by the joint venture. It is also expected that the joint venture will continue existing distribution agreements related to the Natuzzi network of franchised stores. The agreement also suggests that Natuzzi will retain the right to use the Natuzzi Italia and Natuzzi Editions trademarks for all manufacturing activities, including in Greater China, and distribution in countries other than Greater China. Additionally, it provides for Natuzzi to supply the joint venture with products at a certain discount.