SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarter ---- ended April 30, 1996. OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the ----- transition from ________ to _____________.
Commission file number: 1-9494
TIFFANY & CO.
(Exact name of registrant as specified in its charter)
Delaware 13-3228013
(State of incorporation) (I.R.S. Employer Identification No.)
727 Fifth Ave. New York, NY 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 755-8000
Former name, former address and former fiscal year, if changed since last report
___________________________.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock as of the latest practicable
date: Common Stock, $.01 par value, 16,194,778 shares outstanding at the close
of business on April 30, 1996.
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED APRIL 30, 1996
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets - April 30, 1996
(Unaudited), January 31, 1996
and April 30, 1995 (Unaudited) 3
Consolidated Statements of Income - for the
three months ended April 30, 1996
and 1995 (Unaudited) 4
Consolidated Statements of Stockholders' Equity -
for the three months ended
April 30, 1996 (Unaudited) 5
Consolidated Statements of Cash Flows - for
the three months ended April 30, 1996
and 1995 (Unaudited) 6
Notes to Consolidated Financial Statements
(Unaudited) 7-8
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
(a) Exhibits
(b) Reports on Form 8-K
- 2 -
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
April 30, January 31, April 30,
1996 1996 1995*
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 40,168 $ 81,966 $ 16,631
Accounts receivable, less allowances of $5,753, $5,698 and $5,051 68,161 80,084 58,216
Income tax receivable - - 7,925
Inventories 349,017 311,252 295,370
Deferred income taxes 8,438 8,060 5,532
Prepaid expenses 24,067 20,584 16,786
----------- ---------- -----------
Total current assets 489,851 501,946 400,460
Property and equipment, net 118,933 115,214 116,399
Deferred income taxes 8,796 10,033 5,875
Other assets, net 35,837 27,064 32,740
------------ ----------- ----------
$653,417 $654,257 $555,474
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 62,005 $ 78,967 $ 58,122
Accounts payable and accrued liabilities 108,266 108,829 76,673
Income taxes payable 1,940 19,672 4,383
Merchandise and other customer credits 11,253 11,054 8,606
------------ ----------- -----------
Total current liabilities 183,464 218,522 147,784
Long-term trade payable - 25,688 32,659
Reserve for product return 9,537 11,238 13,103
Long-term debt 149,085 101,500 101,500
Postretirement/employment benefit obligation 18,513 18,031 17,015
Other long-term liabilities 14,744 14,900 11,828
Commitments and contingencies
Stockholders' equity:
Common Stock, $.01 par value; authorized
60,000 shares, issued 32,390, 31,976 and 31,474 324 320 314
Additional paid-in capital 91,568 82,460 72,600
Retained earnings 189,769 185,823 152,091
Foreign currency translation adjustments (3,587) (4,225) 6,580
------------ ------------ -----------
Total stockholders' equity 278,074 264,378 231,585
------------ ------------ -----------
$653,417 $654,257 $555,474
======= ======= =======
</TABLE>
Reclassified for comparative purposes
See notes to consolidated financial statements
- 3 -
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the
Three Months Ended
April 30, April 30,
1996 1995
-------- --------
<S> <C> <C>
Net sales $180,741 $150,144
Cost of goods sold 87,375 72,781
-------- --------
Gross profit 93,366 77,363
Selling, general and administrative
expenses 80,740 70,272
Provision for uncollectible accounts 348 334
-------- -------
Income from operations 12,278 6,757
Other expenses, net 3,340 2,961
-------- -------
Income before income taxes 8,938 3,796
Provision for income taxes 3,861 1,636
---------- --------
Net income $ 5,077 $ 2,160
======== ========
Net income per share:
Primary $ 0.15 $ 0.07
======== ========
Fully diluted $ 0.15 $ 0.07
======== ========
Weighted average number of common shares:
Primary 33,400 31,724
Fully diluted 35,396 33,518
</TABLE>
See notes to consolidated financial statements.
- 4 -
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Foreign
Total Additional Currency
Stockholders' Common Stock Paid-In Retained Translation
Equity Shares Amount Capital Earnings Adjustments
------------- ------ ------ ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, January 31, 1996 $264,378 15,988 $160 $82,620 $185,823 $(4,225)
Two-for-one stock split - 16,195 162 (162) - -
Issuance of Common Stock 1,000 18 - 1,000 - -
Exercise of stock options 6,809 189 2 6,807 - -
Tax benefit from exercise of
stock options 1,303 - - 1,303 - -
Cash dividends on Common Stock (1,131) - - - (1,131) -
Foreign currency translation
adjustments 638 - - - - 638
Net income 5,077 - - - 5,077 -
-------- ------ ----- ------- -------- -------
BALANCES, April 30, 1996 $278,074 32,390 $324 $91,568 $189,769 $(3,587)
======== ====== ==== ======= ======== =======
</TABLE>
See notes to consolidated financial statements
- 5 -
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
For the
Three Months Ended
April 30,
1996 1995*
--------- --------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 5,077 $ 2,160
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 4,752 4,167
Provision for uncollectible accounts 348 334
Reduction in reserve for product return (1,701) -
Provision for inventories 1,657 212
Deferred income taxes 861 (711)
Loss on disposal of fixed assets - 357
Provision for postretirement/employment benefits 482 434
(Increase)/decrease in assets and increase/ (decrease) in liabilities:
Accounts receivable 11,738 6,196
Inventories (37,758) (6,176)
Prepaid expenses (3,446) 1,640
Other assets, net (9,223) (627)
Accounts payable 7,441 2,394
Accrued liabilities (7,218) (8,989)
Income taxes payable (17,806) (9,867)
Merchandise and other customer credits 199 77
Other long-term liabilities 135 141
------- -------
Net cash used in operating activities (44,462) (8,258)
------- -------
Cash Flows From Investing Activities:
Capital expenditures (8,077) (7,203)
------- -------
Net cash used in investing activities (8,077) (7,203)
------- -------
Cash Flows From Financing Activities:
Decrease in short-term borrowings (17,411) (11,463)
Prepayment of long-term trade payable (25,876) -
Increase in long-term debt 47,047 -
Proceeds from exercise of stock options 6,809 231
Tax benefit from exercise of stock options 1,303 107
Cash dividends on Common Stock (1,131) (1,101)
------- -------
Net cash provided by/(used in) financing activities 10,741 (12,226)
------- -------
Net decrease in cash and short-term investments (41,798) (27,687)
Cash and short-term investments at beginning of year 81,966 44,318
------- -------
Cash and short-term investments at end of three months $40,168 $16,631
======= =======
Supplemental Disclosure of Cash Flow Information:
Cash paid during the three months for:
Interest expense $ 4,181 $ 3,670
======= =======
Income taxes $19,311 $12,179
======= =======
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Issuance of Common Stock for the Employee Profit
Sharing and Retirement Savings Plan $ 1,000 $ 600
======= =======
</TABLE>
*Reclassified for comparative purposes
See notes to consolidated financial statements
- 6 -
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements include the accounts
of Tiffany & Co. and all majority-owned domestic and foreign
subsidiaries (the "Company"). All material intercompany balances and
transactions have been eliminated. The statements are without audit
and, in the opinion of management, include all adjustments (which
include only normal recurring adjustments except for the adjustment
necessary as a result of the LIFO method of inventory valuation, which
is based on assumptions as to inflation rates and projected fiscal
year-end inventory levels) necessary to present fairly the Company's
financial position as of April 30, 1996 and the results of operations
and cash flows for the interim periods presented. The financial
statements for January 31, 1996 are derived from the audited financial
statements which are included in the Company's Form 10-K filing, but do
not include all disclosures required by generally accepted accounting
principles.
Since the Company's business is seasonal, with a higher proportion of
sales and income generated in the last quarter of the fiscal year, the
results of operations for the three months ended April 30, 1996 and
1995 are not necessarily indicative of the results of the entire fiscal
year.
2. INVENTORIES
Inventories at April 30, 1996, January 31, 1996 and April 30, 1995, are
summarized as follows:
April 30, January 31, April 30,
(in thousands) 1996 1996 1995
---------------------- ---------- ---------- ---------
Finished goods $291,727 $257,344 $248,706
Raw materials 52,296 48,366 43,128
Work in process 8,693 7,217 6,476
---------- ---------- ---------
352,716 312,927 298,310
Reserves (3,699) (1,675) (2,940)
---------- ---------- ---------
$349,017 $311,252 $295,370
========== ======== ========
At April 30, 1996, January 31, 1996 and April 30, 1995, $256,800,000,
$229,300,000 and $198,321,000, respectively, of inventories were valued
using the LIFO method. The excess of such inventories valued at
replacement cost over the value based upon the LIFO method was
$12,935,000, $11,870,000 and $10,670,000 at April 30, 1996, January 31,
1996 and April 30, 1995, respectively. The LIFO valuation method had
the effect of decreasing net income by $0.02 per share in each of the
three month periods ended April 30, 1996 and 1995.
3. EARNINGS PER SHARE
Primary earnings per common share is computed by dividing net income by
the weighted average number of shares outstanding during the period,
including dilutive stock options. Fully diluted earnings per common
share is computed by dividing net income, after giving effect to the
- 7 -
<PAGE>
elimination of interest expense and bond amortization fees, net of
income tax effect, applicable to the convertible subordinated
debentures, by the weighted average number of shares outstanding,
including dilutive stock options and the assumed conversion of the
subordinated debentures using the "if converted" method.
4. LONG TERM DEBT
In the first quarter of 1996, the Company borrowed yen 5,000,000,000
($47,585,000) from a lender in Japan. The loan has a 15-year term at a
rate of 4.50%. The proceeds have been and will be used for working
capital and construction costs associated with the Company's flagship
store in Tokyo which opened in May 1996, as well as to reduce
short-term indebtedness in Japan.
5. FINANCIAL HEDGING INSTRUMENTS
In accordance with the Company's foreign currency hedging program, at
April 30, 1996, the Company had $17,470,000 of outstanding forward
exchange yen contracts, which matured on May 28, 1996, to support
inventory purchases primarily for the Company's flagship store in
Tokyo. There were no material outstanding forward exchange contracts at
April 30, 1995.
6. SUBSEQUENT EVENTS
On May 16, 1996, the shareholders approved an amendment to the
Company's Restated Certificate of Incorporation to increase the number
of common shares authorized from 30,000,000 to 60,000,000.
On May 16, 1996, the Board of Directors declared a two-for-one split of
the Company's Common Stock, to be effected in the form of a share
distribution (stock dividend) payable on July 23, 1996 to stockholders
of record on June 28, 1996. Accordingly, April 30, 1996 balances
reflect the split with an increase in Common Stock and a reduction in
paid-in-capital representing par value of approximately $162,000. Stock
options and per share data have also been retroactively adjusted to
reflect the split.
In addition, the Board of Directors approved a 43 percent increase in
the Company's quarterly cash dividend to $0.10 per share on "pre-split"
shares to be paid on July 23, 1996, to holders of record on June 28,
1996. Future quarterly dividends, subject to declaration by the Board
of Directors, are expected to be paid at the rate of $0.05 per share
following the stock split.
On May 16, 1996, the Board of Directors declared that on June 24, 1996
(the "Redemption Date"), the Company will redeem Tiffany's $50,000,000
principal amount 6-3/8% Convertible Subordinated Debentures Due 2001.
In accordance with their terms, the redemption price for the Debentures
is 101 percent of their principal amount but, at the option of their
holders, may be converted at their principal amount for shares of
Tiffany's Common Stock at a conversion price of $56.00 per share. The
right of conversion will expire at the close of business on the
Redemption Date.
- 8 -
<PAGE>
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company operates three channels of distribution: U.S. Retail includes retail
sales in Company-operated stores in the U.S. and wholesale sales to independent
retailers in the Americas; Direct Marketing includes corporate
(business-to-business) and catalog sales in the U.S.; and International Retail
includes retail sales through Company-operated stores and boutiques, corporate
sales, and wholesale sales to independent retailers and distributors in the
Asia-Pacific region, Europe, Canada and the Middle East.
Net sales in the three months ended April 30, 1996 (first quarter)
increased 20% over 1995's first quarter. Net sales by channel of distribution
were as follows:
Three months ended April 30,
(in thousands) 1996 1995
- -------------- --------- ---------
U.S. Retail $ 80,396 $ 61,769
Direct Marketing 18,918 18,763
International Retail 81,427 69,612
-------- --------
$180,741 $150,144
======== ========
U.S. Retail sales increased 30% in the first quarter of 1996. This included a
20% comparable store sales increase made up of 17% growth in the flagship New
York store's sales and a 21% increase in comparable branch store sales.
Comparable store sales growth was due to a higher number of transactions as well
as an increased average transaction size. While most retail sales in the U.S.
were made to local-resident customers, comparable store sales growth benefited
from increased sales to foreign visitors. Also contributing to U.S. Retail sales
growth were the sales in three new stores opened in 1995 and growth in wholesale
sales.
Direct Marketing sales increased 1% in the first quarter of 1996. Corporate
sales declined 4% due to a decline in the average corporate order size.
Management believes sales have been primarily affected by cautious spending by
the Company's corporate division customers. Catalog sales increased 11%
primarily due to a higher number of orders reflecting an increase in catalog
circulation.
International Retail sales rose 17% in the first quarter of 1996. The Company
achieved sales growth in most international markets in which it operates. In
Japan, the Company's largest international market, comparable store sales
increased 16% in local currency; however, when translated into U.S. dollars, the
yen-denominated sales increase was offset by a weakening of the yen versus the
dollar in comparison to 1995's first quarter. In addition, strong sales growth
was also achieved in other Asia-Pacific markets and comparable store sales in
Europe increased 23% in local currencies.
The Company's reported sales and earnings results benefit from a
strengthening Japanese yen and are adversely affected by a strengthening U.S.
dollar. The Company maintains a foreign currency hedging program for merchandise
purchase
- 9 -
<PAGE>
transactions initiated from Japan in order to reduce the potential negative
impact on the Company's financial results of a significant strengthening of the
U.S. dollar against the yen. At April 30, 1996, the Company had $17,470,000 of
outstanding forward exchange yen contracts, which matured on May 28, 1996, to
support inventory purchases primarily for the Company's flagship store in Tokyo.
There were no material outstanding forward exchange contracts at April 30, 1995.
Gross margin (gross profit as a percentage of net sales) of 51.7% in 1996's
first quarter compared with 51.5% in the prior year. The modest increase
reflected favorable shifts in sales mix toward the Company's retail businesses
that achieve above-average gross margins.
Operating expenses (selling, general and administrative expenses and the
provision for uncollectible accounts) increased 15% in the first quarter. The
increase was largely due to incremental occupancy, staffing and marketing
expenses related to the Company's worldwide expansion program, as well as to
sales-related variable expenses (including fees paid to department stores in
Japan). As a percentage of net sales, operating expenses were 44.9% in 1996's
first quarter compared with 47.0% in the prior year.
As a result of the above factors, the Company's income from operations increased
82% in 1996's first quarter and the operating margin (income from operations as
a percentage of net sales) increased to 6.8% from 4.5% in the prior year. Net
income of $5,077,000 in the first quarter was 135% above the prior year, and the
net margin (net income as a percentage of net sales) increased to 2.8% from 1.4%
in the prior year.
FINANCIAL CONDITION
Management believes that the Company's financial condition at April 30, 1996
provides sufficient liquidity and resources to support current business activity
and planned expansion. Working capital and the corresponding current ratio were
$306,387,000 and 2.7:1 at April 30, 1996 compared with $283,424,000 and 2.3:1 at
January 31, 1996. Accounts receivable of $68,161,000 at April 30, 1996 were 15%
lower than at January 31, 1996 due to strong, as well as seasonal, collection
performance. Inventories (representing the largest component of working capital
and assets) were $349,017,000 at April 30, 1996, or 12% higher than at January
31, 1996. The increase was due to merchandise purchases to support sales growth,
new stores (including the Company's new flagship store in Tokyo, Japan) and
expanded product offerings. Inventory turnover was 1.0 times at April 30, 1996
and January 31, 1996. The Company's objective is to improve inventory
performance through: refinement of worldwide replenishment systems; focus on the
specialized disciplines of product development, assortment planning and
inventory management; improved presentation and management of display
inventories in each store; assortment editing by product category; and a
time-phased program of improvements in warehouse management and supply chain
logistics.
Capital expenditures were $8,077,000 in 1996's first quarter compared with
$7,203,000 in the first quarter of 1995. On the basis of current plans, the
Company expects capital expenditures in fiscal 1996 to be approximately
$41,000,000 compared with $26,455,000 in fiscal 1995. The increase is
- 10 -
<PAGE>
primarily related to the opening of new retail stores (particularly the
Company's flagship store in Tokyo, Japan), expansion of administrative and
office facilities and costs associated with development of the Company's new
customer service distribution center in Parsippany, New Jersey.
The Company incurred a net cash outflow from operating activities of $44,462,000
in 1996's first quarter compared with an outflow of $8,258,000 in 1995's first
quarter. The increased cash outflow was largely due to higher inventory
purchases compared with 1995's first quarter. Net-debt (short-term borrowings
and long-term debt, less cash and short-term investments) and the ratio of
net-debt to total capital (net-debt and stockholders' equity) was $170,922,000
and 38% at April 30, 1996 compared with $98,501,000 and 27% at January 31, 1996.
The increase in net-debt was largely due to completion of a yen-denominated
borrowing in Japan (described below), as well as to support seasonal working
capital increases. It is management's goal, on an annual basis, to generate cash
flow that is sufficient to finance the Company's business activities and planned
expansion.
In the first quarter of 1996, the Company borrowed yen 5,000,000,000
($47,585,000) from a lender in Japan. The loan has a 15-year term at a rate of
4.50%. The proceeds have been and will be used for working capital and
construction costs associated with the Company's flagship store in Tokyo which
opened in May 1996, as well as to reduce short-term indebtedness in Japan. The
Company also prepaid a long-term trade payable of yen 2,750,000,000
($25,807,000) which related to certain merchandise repurchased in 1993 as part
of the Company's realignment of its Japan business and which was due on or
before February 28, 1998.
On May 16, 1996, the Board of Directors declared that on June 24, 1996 (the
"Redemption Date"), the Company will redeem Tiffany's $50,000,000 principal
amount 6-3/8% Convertible Subordinated Debentures Due 2001. In accordance with
their terms, the redemption price for the Debentures is 101 percent of their
principal amount but, at the option of their holders, may be converted at their
principal amount for shares of Tiffany's Common Stock at a conversion price of
$56.00 per share. The right of conversion will expire at the close of business
on the Redemption Date.
The Company's sources of working capital are internally generated cash flows and
funds available under a five-year, $130,000,000 multicurrency revolving credit
facility established in June 1995. This facility replaced a $100,000,000
revolving credit facility and a yen 2,500,000,000 noncollateralized line of
credit, both of which expired in July 1995. Management anticipates that
internally generated cash flows and funds available under the revolving credit
facility will be sufficient to support the Company's planned worldwide business
expansion, as well as seasonal working capital increases typically required
during the third and fourth quarters of each year.
The Company's business is seasonal in nature, with the fourth quarter typically
representing a proportionally greater percentage of annual sales, income from
operations and cash flow. Management expects such seasonality to continue in the
future.
- 11 -
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.122 Agreement dated as of April 3, 1996 among American Family Life
Assurance Company of Columbus, Japan Branch, Tiffany & Co. Japan Inc.,
Japan Branch, and Tiffany & Co., as Guarantor, for yen 5,000,000,000
Loan Due 2011;
11 Statement re Computation of Per Share Earnings.
(b) Reports on form 8-K
Report on Form 8-K dated May 16, 1996 reporting that Registrant's Board
of Directors had resolved: (a) (subsequent to Registrant's
Stockholders' approval of an amendment to Registrant's Restated
Certificate of Incorporation increasing the number of authorized shares
of Registrant's Common Stock from 30,000,000 to 60,000,000) to effect a
two-for-one split of Registrant's Common Stock, such split to be
effected by a share distribution (stock dividend) on July 23, 1996 (the
"Payment Date") to holders of record on June 28, 1996 (the "Record
Date"); (b) to pay an increased cash dividend of $.10 per share on the
Payment Date to holders of record on the Record Date (pre-split shares
only); and (c) to effect a redemption of Registrant's U.S.$50,000,000
6-3/8% Convertible Subordinated Debentures due 2001 (the "Debentures").
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TIFFANY & CO.
(Registrant)
Date: June 13, 1996 By: /s/ James N. Fernandez
------------------------
James N. Fernandez
Senior Vice President - Finance
and Chief Financial Officer
(principal financial officer)
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<PAGE>
EXHIBIT INDEX
Exhibit
Number
10.122 Agreement dated as of April 3, 1996 among American Family Life
Assurance Company of Columbus, Japan Branch, Tiffany & Co.Japan Inc.,
Japan Branch, and Tiffany & Co., as Guarantor, for yen 5,000,000,000
Loan Due 2011
11 Statement re Computation of Per Share Earnings
- 13 -
Item 6. TIFFANY & CO. AND SUBSIDIARIES
EXHIBIT 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS*
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
For The
Three Months Ended
April 30,
1996 1995
-------- --------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE:
Net income on which primary
earnings per share are based $ 5,077 $ 2,160
======= =======
Weighted average number of
common shares 32,256 31,458
Add:
Weighted average effect of the
exercise of stock options 1,144 266
-------- -------
Weighted average number of shares on
which primary earnings are based 33,400 31,724
======== =======
Primary net income per common share $ 0.15 $ 0.07
======== =======
FULLY DILUTED EARNINGS PER SHARE:
Net income on which primary earnings
per share are based $ 5,077 $ 2,160
Add:
Interest and fees on convertible
subordinated debt, net of
applicable income taxes 453 442
-------- -------
Net income on which fully diluted
earnings per share are based $ 5,530 $ 2,602
======== =======
Weighted average number of common
shares used in calculating
fully diluted earnings per share 33,610 31,732
Add:
Shares assumed upon conversion
of convertible debt, using the
"if converted" method 1,786 1,786
--------- -------
Weighted average number of shares
used in calculating fully diluted
earnings per share 35,396 33,518
======== =======
Fully diluted net income per common share $ 0.15 $ 0.07
======== =======
</TABLE>
* Adjusted for the two-for one stock split of the Company's common stock.
<PAGE>
YEN 5,000,000,000
LOAN AGREEMENT
dated as of April 3, 1996
between
TIFFANY & CO. JAPAN INC.,
JAPAN BRANCH
as Borrower
and
AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS,
JAPAN BRANCH
as Lender
Guaranteed by
TIFFANY & CO.
<PAGE>
TABLE OF CONTENTS
SECTION HEADING PAGE
1. DEFINITIONS . . . . . . . . . . . . . . . . . 1
2. THE ADVANCE . . . . . . . . . . . . . . . . . 3
2.01 Agreement to Lend . . . . . . . . . . . 3
2.02 Purpose of the Advance . . . . . . . . 3
2.03 Drawdown . . . . . . . . . . . . . . . 4
2.04 Interest . . . . . . . . . . . . . . . 4
2.05 Default Interest . . . . . . . . . . . 4
2.06 Repayment of the Advance . . . . . . . 4
2.07 Payments and the Advance . . . . . . . 6
2.08 Loan Account . . . . . . . . . . . . . 7
3. YIELD PROTECTION . . . . . . . . . . . . . . 7
3.01 Taxes . . . . . . . . . . . . . . . . . 7
3.02 Increased Costs . . . . . . . . . . . . 8
3.03 Illegality . . . . . . . . . . . . . . 10
3.04 Adversity Prepayment . . . . . . . . . 10
3.05 Currency and Place of Payment . . . . . 11
4. EXPENSES . . . . . . . . . . . . . . . . . . 11
5. REPRESENTATIONS AND WARRANTIES . . . . . . . 12
6. COVENANTS . . . . . . . . . . . . . . . . . . 14
7. CONDITIONS TO DRAWDOWN . . . . . . . . . . . 16
8. EVENTS OF DEFAULT . . . . . . . . . . . . . . 16
8.01 Events of Default . . . . . . . . . . . 16
8.02 Consequence of Default . . . . . . . . 19
9. MISCELLANEOUS . . . . . . . . . . . . . . . . 19
9.01 Term . . . . . . . . . . . . . . . . . 19
9.02 Entire Agreement . . . . . . . . . . . 19
9.03 Waiver; Cumulative Rights . . . . . . . 19
9.04 Assignment . . . . . . . . . . . . . . 20
9.05 Governing Law . . . . . . . . . . . . 20
9.06 Submission to Jurisdiction . . . . . . 20
9.07 Notices . . . . . . . . . . . . . . . . 20
9.08 Severability of Provisions. . . . . . . 21
9.09 Counterparts. . . . . . . . . . . . . . 21
SCHEDULE I FORM OF GUARANTEE BY TIFFANY & CO.
SCHEDULE II CONDITIONS PRECEDENT DOCUMENTS
<PAGE>
THIS LOAN AGREEMENT is made as of the 3rd day of April, 1996 by and
between:
TIFFANY & CO. JAPAN INC., JAPAN BRANCH, a Japan branch of a
Delaware corporation (hereinafter referred to as the
"Borrower"); and
AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS, JAPAN
BRANCH, a Japan branch of a Georgia corporation (hereinafter
referred to as the "Lender").
SECTION 1. DEFINITIONS
1.01 In this Agreement, unless the context or subject matter otherwise
requires, the following terms shall have the following meanings:
"Advance" means the principal amount advanced by the Lender pursuant
to Section 2.01 or, where the context so requires, the amount of such advance
from time to time outstanding.
"Agreement" means this Loan Agreement, as the same may be amended from
time to time.
"Business Day" means a day, other than Saturday or Sunday, on which
banks are open for the transaction of business in Tokyo.
"Capital Lease Obligation" has the meaning ascribed
thereto in Section 8.01(e).
"Charge" means any mortgage, charge, pledge, lien or other security
interest or security arrangement of any kind (including, without limitation, any
conditional sale or other title retention agreement, any assignment or transfer
by way of security, any agreement or arrangement to maintain deposits and any
other financial arrangement having substantially the same economic effect as any
of the foregoing).
"Commitment" means Five Billion Yen (YEN 5,000,000,000) or, where the
context so requires, the obligation of the Lender to advance such amount subject
to the terms of this Agreement.
"Dollar" and the signs "$" and "US$" mean the lawful currency of the
United States of America.
"Drawdown" means a borrowing by the Borrower of the
Commitment pursuant to Section 2.03.
"Drawdown Date" means April 5, 1996 or such other date as the parties
hereto mutually agree.
"Event of Default" means any event specified in Section
8.01.
"Guarantee" means the guarantee of the Guarantor in the form set out
in Schedule I, or such other form as approved by the Lender.
"Guarantor" means TIFFANY & CO., a corporation duly organized and
validly existing under the laws of the State of Delaware, U.S.A.
"Indebtedness" means in regard to any entity (i) all indebtedness or
other obligations of such entity for borrowed money, (ii) all indebtedness or
other obligations of any other Person for borrowed money the payment or
collection of which such entity has guaranteed (except by reason of endorsement
for collection in the ordinary course of business) or in respect of which such
entity is liable contingently or otherwise, including, without limitation,
liable by way of agreement to purchase, to provide funds for payment or
otherwise to assure a creditor against loss, (iii) all indebtedness or other
obligations of any other Person for borrowed money secured by (or for which the
holder of such indebtedness has any existing right, contingent or otherwise, to
be secured by) any encumbrance upon or in respect of property (including,
without limitation, accounts receivable and contract rights) owned by such
entity, whether or not such entity has assumed or become liable for the payment
of such indebtedness or obligations, and (iv) capitalized lease obligations and
any indebtedness or obligations and any other arrangement by which such entity
assures a creditor against loss for borrowed money.
"Interest Payment Date" means April 5 and October 5 of each year, the
first Interest Payment Date being October 5, 1996 and the last Interest Payment
Date being April 5, 2011; provided that if any such day is not a Business Day,
the Interest Payment Date shall be the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case the Interest
Payment Date shall be the immediately preceding Business Day.
"Interest Period" means, with respect to the Advance, the period
commencing on and including the Drawdown Date and ending on but excluding the
first Interest Payment Date, and thereafter each successive period commencing on
and including the last preceding Interest Payment Date and ending on but
excluding the next succeeding Interest Payment Date.
"Lending Office" means the office of the Lender located at the address
specified in Section 9.07 or any other office of the Lender in Japan as it may
from time to time notify to the Borrower.
"Long-Term Prime Lending Rate in Japan" means the rate which is
applied by life insurance companies in Japan to their Yen loans with a term
exceeding one (l) year to their prime customers in Japan as their long-term
prime lending rate and which the Lender confirms and notifies in writing to the
Borrower as such, and in the event no single rate is determinable as the
Long-Term Prime Lending Rate in Japan pursuant to the above, the rate confirmed
and notified by the Lender to the Borrower as the rate currently applied by the
Lender to its loans with a term exceeding one (l) year to its prime customers in
Japan as its long-term prime lending rate.
"Person" means any individual, partnership, corporation
or other legal entity.
"Subsidiary" means, with respect to a Person, any corporation,
association or other business entity of which securities or other ownership
interests representing more than 50% of the ordinary voting power are, at the
time as of which any determination is being made, directly or indirectly, owned
or controlled by such Person or one or more Subsidiaries of such Person or by
such Person and one or more Subsidiaries of such Person.
"Tiffany International" means TIFFANY & CO. INTERNATIONAL, a
corporation duly organized and validly existing under the laws of the State of
Delaware, U.S.A.
"Yen" and the signs "[YEN SYMBOL]" and "JP" mean the lawful
currency of Japan.
1.02 References to Sections and Schedules are to Sections
hereof and Schedules hereto.
Except as otherwise expressly provided herein, all financial and
accounting terms used in this Agreement shall be interpreted in accordance with
generally accepted accounting principles in Japan or the United States or any
State thereof, as the case may require.
SECTION 2. THE ADVANCE
2.01 Agreement to Lend
Subject to the terms and conditions of this Agreement, the Lender
hereby agrees to advance the Commitment to the Borrower through its Lending
Office on the Drawdown Date.
2.02 Purpose of the Advance
The Borrower agrees that the proceeds of the Advance will be used for
(i) the repayment of the loan from Tiffany and Company to the Borrower in the
amount of yen 2.75 billion which was used by the Borrower to liquidate the
trade payable from the Borrower to Mitsukoshi, Ltd. in said amount, (ii) the
opening of the Borrower's Tokyo flagship store, including construction and lease
acquisition costs, and the repayment of intercompany and other loans obtained in
connection therewith, and (iii) general corporate purposes.
2.03 Drawdown
(a) Subject to the terms and conditions of this Agreement, the
Borrower shall borrow the Commitment in the amount of Five Billion Yen
yen 5,000,000,000) in one lump sum on the Drawdown Date. The Lender shall not
have any obligation to lend the Commitment after the close of business in Tokyo
on the Drawdown Date.
(b) Subject to the satisfaction, as reasonably determined by the
Lender and its counsel, of the conditions precedent to the Drawdown set forth in
Section 7, the Lender shall make available to the Borrower the Commitment in
immediately available funds not later than 3:00 p.m. (Japan time) on the
Drawdown Date, by crediting the account of the Borrower (Current Account No.
025114) with Fuji Bank Limited, Aoyama Branch at 3-6-12, Kitaaoyama, Minato-ku,
Tokyo, Japan.
(c) The Borrower shall reimburse the Lender for all reasonable costs,
expenses and any other amounts incurred by the Lender as a result of the
Borrower's failure to fulfill any condition precedent to the Drawdown.
2.04 Interest
The Borrower shall pay interest on the Advance outstanding from time
to time for the period commencing on and including the Drawdown Date of the
Advance and ending on but excluding the date the same shall have become due and
payable hereunder at the rate of four and five tenths percent (4.50%) per annum
of the principal amount of the Advance outstanding from time to time. On each
Interest Payment Date the Borrower shall pay to the Lender interest on the
Advance outstanding from time to time during the relevant Interest Period ending
thereon accruing from and including the first day and to and including the last
day of the Interest Period.
2.05 Default Interest
If the Borrower shall fail to make payment when due of any sum in
respect of the Advance or otherwise payable to the Lender hereunder (whether at
its stated maturity, by acceleration or otherwise), the Borrower shall, on
demand, pay to the Lender interest on the unpaid amount, during the period from
and including the day when such sum fell due to but excluding the date of the
payment of such sum in full (after as well as before judgment) at the rate of
(i) five and five tenths percent (5.50%) per annum or (ii) one percent (1.0%)
per annum above the Long-Term Prime Lending Rate in Japan from time to time
prevailing during such period, whichever is higher.
2.06 Repayment of the Advance
(a) Subject to Section 2.06(b), the Advance shall be repaid to the
Lender in a single lump sum on the Interest Payment Date falling in April, 2011.
The Borrower shall have no right to prepay all or any portion of the Advance
unless otherwise expressly provided in this Agreement.
(b) The Borrower may, at its option, on any Interest Payment Date
occurring after March 31, 2006 selected by the Borrower (the "Prepayment Date")
and upon notice as set forth in Section 2.06(c), prepay all (but not part only)
of the Advance then outstanding by paying an amount equal to the greater of (i)
100% of the principal amount of the Advance then outstanding or (ii) the sum of
the present values of the remaining scheduled payments of principal of and
interest on the Advance discounted to the Prepayment Date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Discount
Rate (as defined in Section 2.06(d)), plus in either case the interest payment
due on such Prepayment Date.
(c) In the case of any prepayment under Section 2.06(b), the Borrower
shall give written notice thereof to the Lender (which shall, once made, be
irrevocable and shall oblige the Borrower to make such prepayment) not less than
thirty (30) nor more than sixty (60) days prior to the Prepayment Date. Within
ten (10) Business Days after its receipt of such notice, the Lender shall
provide the Borrower with a written estimate of the amount due on the Prepayment
Date. On the second (2nd) Business Day preceding the Prepayment Date, the Lender
shall provide the Borrower with written notice of the Lender's determination of
the amount due on the Prepayment Date, setting forth in reasonable detail the
calculation thereof. The Lender's determination of such amount due on the
Prepayment Date shall be conclusive, absent manifest error.
(d) For the purpose of this Section 2.06:
(i) "Discount Rate" shall mean, with respect to the Prepayment
Date, the rate per annum equal to the sum of (a) the semiannual equivalent
yield to maturity of the Comparable Japanese Government Bond, assuming a
price for the Comparable Japanese Government Bond (expressed as a
percentage of its principal amount) equal to the Comparable Japanese
Government Bond Price for such Prepayment Date, plus (b) fifty (50) basis
points.
(ii) "Comparable Japanese Government Bond" shall mean the
Japanese government security selected by the Lender in its reasonable
discretion as having a maturity comparable to the remaining term of the
Advance as of the Prepayment Date, that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing
new issues of corporate debt securities of comparable maturity to the
remaining term of the Advance.
(iii) "Comparable Japanese Government Bond Price" shall mean,
with respect to the Prepayment Date, the average, as determined by the
Lender, of the bid and ask prices for the Comparable Japanese Government
Bond (expressed in each case as a percentage of its principal amount)
quoted in writing to the Lender by four active participants in the Japanese
government bond market, selected by the Lender in its reasonable
discretion, at 3:00 p.m., Japan time, on the third (3rd) Business Day
preceding such Prepayment Date.
2.07 Payments and the Advance
(a) (i) All sums payable by the Borrower to the Lender hereunder,
including, but not limited to, payments of principal of and interest on the
Advance, and any costs or expenses or indemnities in respect of the
Advance, shall be paid in Yen to the Lender at its account, Current Account
No. 0137561, with The Dai-Ichi Kangyo Bank, Limited, Shinjuku-Nishiguchi
Branch at 7-2, Nishi-Shinjuku 1-chome, Shinjuku-ku, Tokyo, Japan, or such
other account in Japan as the Lender shall, upon not less than seven (7)
days' prior notice in writing to the Borrower, designate from time to time
for this purpose, in immediately available funds not later than 3:00 p.m.,
Japan time, on the date on which such sums shall become due.
(ii) If any sum (other than interest and principal) would
otherwise become due on a day which is not a Business Day, such sum shall
become due on the next succeeding Business Day.
(iii) All sums of interest due and to become due hereunder or
other amounts, if any, required to be calculated hereunder by reference to
the passage of time shall be calculated and paid on the basis of a 360-day
year consisting of 12 months of 30 days each and, in the case of an
incomplete month, the actual number of days elapsed.
(b) Any payments made to the Lender shall be applied first against
costs, expenses and indemnities due and payable hereunder; then against default
interest in respect of the Advance and other amounts, if any; then against
interest due on the Advance; and thereafter against the Advance due and payable.
If any payment is insufficient to pay any such category in full, the Lender
shall apply the payment received in the chronological order that each amount in
such category becomes due and with respect to each amount in such category which
becomes due at the same time, pro rata on the amount in such category which
becomes due at the same time.
2.08 Loan Account
The Lender shall open and maintain on its books, a loan account in the
Borrower's name showing the Advance, prepayments, repayment, payments of
interest and other amounts due and payable and sums paid hereunder. Such loan
account shall be deemed to be binding on the Borrower as to the existence and
amount of the obligations of the Borrower therein recorded, subject to any proof
to the contrary.
SECTION 3. YIELD PROTECTION
3.01 Taxes
(a) All sums payable by the Borrower hereunder, whether of principal,
interest, expenses or otherwise, shall be paid in full and without set-off or
counterclaim for any reason whatsoever and, free and clear of and without
deduction or withholding for or on account of any present or future income or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings
of any nature whatsoever imposed, levied or withheld by any taxing authority
(other than income taxes on the overall net income of the Lender) ("Taxes") now
or hereafter imposed, whether by withholding or otherwise, in Japan or any
taxing authority thereof or therein or in any other country through or out of
which the Borrower makes payments hereunder or any taxing authority thereof or
therein. In the event that the Borrower is prohibited by any law, treaty,
ordinance, decree, rule, directive or regulation or judicial or arbitral
decision from making such payments free of such Taxes, then the Borrower shall
pay such additional amount as may be necessary in order that the actual amount
received by the Lender after such Taxes (and after payment of any additional
taxes or other charges due as a consequence of the payment of such additional
amount) shall equal the amount that would have been received by the Lender if
such Taxes were not required. The Borrower shall furnish the Lender with the
receipt by the competent tax authorities of such Taxes or other evidence of
payment of such Taxes reasonably acceptable to the Lender within thirty (30)
days after payment of such Taxes.
(b) Notwithstanding the foregoing, the Borrower shall not be
responsible for, and shall be entitled to deduct and withhold from any amount
payable to the Lender hereunder, any Taxes to the extent such Taxes exceed the
amount of Taxes which would have been applicable immediately prior to a transfer
or other disposition by the Lender of any interest in this Agreement or the
Advance or a change by the Lender (other than pursuant to subsection (c) below
and with the consent of the Borrower) of the Lending Office making or
maintaining the Advance from Japan Branch of the Lender to another Lending
Office or branch of the Lender. If the Lender obtains the benefit of credit
against any income taxes or Taxes now or hereafter imposed by reason of Taxes
paid by the Borrower pursuant to Section 3.01(a) or 3.02(a)(i), the Lender
shall, as soon as practicable after it obtains such benefit thereof, pay to the
Borrower an amount of Yen equivalent (in the estimation of the Lender, which
shall be conclusive absent manifest error) to the amount of benefit to the
Lender attributable to such credit which benefit would not otherwise have been
obtained by the Lender but for the payment made by the Borrower on behalf of the
Lender in accordance with the provisions of Section 3.01(a) or 3.02(a)(i),
provided that (a) the Lender shall not be required to take any action under this
Section 3.01(b) which, in its good faith opinion, is inconsistent with its
overall best Tax interests, and (b) the certificate of the Lender as to whether
or not there is any amount payable pursuant to this Section 3.01(b) and, if
there is, the amount so payable shall, in the absence of manifest error, be
conclusive and binding on the Borrower.
(c) If, at any time, Taxes are or will be imposed on payments by the
Borrower hereunder, and the Borrower is or may be required to make additional
payments to or on behalf of the Lender in respect of such Taxes, the Borrower
and the Lender shall consult in good faith and shall each use its reasonable
efforts to take action to avoid such requirement (which action may, at the
option of the Lender, include the transfer of the Advance to another Lending
Office or branch which is not subject to such requirement to the extent such
action does not cause material disadvantage to the Lender).
(d) If the Borrower is required pursuant to Section 3.01(a) to
increase any sum payable to the Lender hereunder in respect of any Taxes not in
effect at the date hereof the Borrower at any time within six (6) months after
the effectiveness of the requirement of such increase, subject to giving at
least thirty (30) days prior written notice to the Lender of the Borrower's
intention to prepay the Advance (which notice shall be irrevocable), shall be
entitled to prepay the Advance in full without premium in accordance with
Section 3.04.
3.02 Increased Costs
(a) In the event that, as a result of any change in, or the
introduction of, any applicable law, regulation, regulatory requirement or
official directive or in the interpretation thereof by any governmental or other
authority charged with the administration thereof, in each case after the date
of this Agreement or after the date the Lender becomes a party to this Agreement
("Change in Regulation"), (i) the Lender becomes subject to any Taxes on or from
payments due from the Borrower hereunder (other than income tax on the overall
net income of the Lender to be imposed in Japan or the United States or
franchise tax imposed in Japan in lieu of income tax); (ii) the Lender becomes
subject to reserve and/or special deposit requirements against assets held by,
or deposits for the account of, or loans by, the Lender through any of its
offices or to any other condition regarding this Agreement or the Advance or any
part thereof; or (iii) the Lender complies with any request from the Ministry of
Finance of Japan or the Bank of Japan or any other governmental agency
exercising authority over the Lender including those in the United States or any
political subdivision of either Japan or the United States and in consequence of
such Change in Regulation as is mentioned above in this Section 3.02:
(A) the cost to the Lender of making or funding
the Advance is increased, or
(B) the amount of principal, interest or other amount receivable
by the Lender under this Agreement is decreased otherwise than as
contemplated in Section 3.01, or
(C) the Lender is required to make payment on or calculated by
reference to the amount of any sum received by it from the Borrower
hereunder,
the Borrower will on request accompanied by evidence reasonably satisfactory to
the Borrower of such Change in Regulation and such cost, amount or payment
reimburse the Lender in respect of each Interest Period during which such Change
in Regulation has such consequence for (respectively):
(1) the increased cost during such Interest
Period of making or funding the Advance, and
(2) the reduction in principal, interest or other
amount receivable by the Lender on or with respect to the
Advance, and
(3) any payment the Lender is required to make on or calculated
by reference to the amount of any sum received by it of principal of or
interest on or other amount receivable by the Lender with respect to the
Advance.
(b) The Borrower shall, on giving to the Lender not less than thirty
(30) days prior written notice (which notice shall be irrevocable) and so long
as the circumstances giving rise to the notice pursuant to Section 3.02(a) above
still exist, be entitled to cancel the Commitment, prepay to the Lender, without
premium, the Advance in full in accordance with Section 3.04, or require at the
Borrower's expense the Lender to assign at par plus accrued interest and fees
and other sums payable hereunder all of the Lender's right, interest and
obligations hereunder to a bank, financial institution or other entity specified
by the Borrower, upon the Borrower's procuring such proposed assignee's
agreement to such assignment and in accordance with an instrument of assignment
in form and substance reasonably satisfactory to the Lender.
(c) If, at any time, a Change in Regulation occurs or shall occur
which results in such cost, amount or payment as set forth in Section 3.02(a),
each of the Borrower and the Lender shall consult in good faith and shall each
make a good faith effort to take action to avoid such cost, amount or payment.
(d) The Lender represents that it is a branch registered in Japan of a
corporation organized under the laws of the State of Georgia, U.S.A.
3.03 Illegality
(a) In the event that it shall become unlawful for the Lender to honor
the Commitment or to maintain the Advance then outstanding, then upon notice by
the Lender to the Borrower the Commitment shall terminate and on the date thirty
(30) days from the date that notice of such unlawfulness is given by the Lender
or on any earlier date required by law, the Borrower shall prepay the Advance,
without penalty or premium, together with accrued interest thereon and any such
additional amounts due in respect of the period up to the date of prepayment and
any other sums due to the Lender under this Agreement. Upon the occurrence of
any such event, the Lender shall promptly notify the Borrower thereof and shall
furnish the Borrower with evidence reasonably satisfactory to the Borrower
certified by the Lender as to such unlawfulness.
(b) In the event that it shall become unlawful for the Borrower to
borrow the Commitment or to perform or observe any term or condition of this
Agreement or any document or instrument provided for hereunder, the Borrower
shall promptly notify the Lender thereof and shall furnish the Lender with
evidence reasonably satisfactory to the Lender certified by the Borrower as to
such unlawfulness, and upon such notice, the Commitment shall terminate and, in
the event the Commitment has been advanced by the Lender, the Borrower shall
forthwith prepay the Advance, without penalty or premium, together with accrued
interest thereon and any such additional amounts due in respect of the period up
to the date of prepayment and any other sums due to the Lender under this
Agreement.
3.04 Adversity Prepayment
If the Borrower shall exercise its right to prepay the Advance
pursuant to Section 3.01 or 3.02 or shall be required to prepay the Advance
pursuant to Section 3.03, the Borrower shall pay the Advance in full, together
with interest accrued thereon to and including the date of prepayment together
with all other amounts then owed to the Lender hereunder. Any such prepayment
shall not relieve the Borrower from paying all other amounts payable under
Section 3.01 or 3.02.
3.05 Currency and Place of Payment
This is a loan transaction in which the specification of Yen and
payment in Tokyo are of the essence, and Yen shall be the currency of account
and of payment in all events. The payment obligation hereunder shall not be
discharged by an amount paid in another currency or in another place, whether
pursuant to a judgment or otherwise. In the event that any payment, whether
pursuant to a judgment or otherwise, shall be made in a currency other than Yen
or in a place other than in Tokyo, such amount shall be promptly converted to
Yen and transferred to Tokyo under normal banking procedures. In the event that
such payment does not fully satisfy the obligations of the Borrower hereunder,
the Lender shall be entitled to immediate payment of, and shall have a separate
cause of action for, the Yen deficiency in respect of the payments due to the
Lender.
SECTION 4. EXPENSES
(a) The Borrower shall promptly reimburse the Lender for all
reasonable out-of-pocket fees and expenses of the Lender, including, without
limitation, reasonable fees and expenses of counsel incurred by the Lender in
the negotiation and preparation of, or in the enforcement of, or the
preservation of rights with respect to this Agreement and the Guarantee or to
any security hereafter granted by the Borrower or the Guarantor under this
Agreement or the Guarantee from and after the occurrence and during the
continuance of an Event of Default or an event which, with the giving of notice
or the passing of time or both, would constitute an Event of Default. Such fees
and expenses shall be reimbursed whether or not the Lender gives notice of such
Event of Default or event or demands acceleration of the Advance or takes other
action to enforce the provisions of this Agreement.
(b) In addition to the other undertakings contained in Section 3.01
and this Section 4, the Borrower shall pay any stamp or documentary taxes or any
similar duties or levies in connection with the execution, delivery, performance
or enforcement of this Agreement. The Borrower shall indemnify and hold harmless
the Lender from any liability with respect to the delay or failure by the
Borrower to pay any such taxes, duties or levies and shall reimburse the Lender
upon demand for any such taxes, duties or levies paid by it together with any
interest, penalties and expenses incurred in connection therewith.
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.01 The Borrower hereby represents and warrants to the
Lender as follows:
(a) The Borrower is a corporation validly existing and in good
standing under the laws of the State of Delaware, U.S.A., and is duly registered
as a branch thereof under the Commercial Code of Japan. It has full corporate
power and authority to incur the obligations provided for in this Agreement and
to execute and deliver this Agreement and all other documents and instruments
provided for hereunder, and to perform its obligations hereunder.
(b) The Borrower has taken all necessary corporate action, including
obtaining the approval of its Board of Directors as required by applicable law
to authorize the execution and delivery of this Agreement and to authorize the
performance and observance of the terms and conditions hereof.
(c) Neither the execution and delivery of this Agreement by the
Borrower, nor the performance by it of its obligations hereunder, nor the
compliance by it with the terms hereof, will:
(i) violate, conflict with, or result in the breach of any terms,
conditions or provisions of, or constitute a default under any applicable
law or regulation of Japan, the United States of America or the State of
Delaware, or any international treaty or convention by which the Borrower
or any of its property or assets is bound, or any administrative regulation
or order or any court decree, or the Articles of Incorporation or other
constituent documents of the Borrower, or
(ii) violate, conflict with, or result in the breach of any
terms, conditions or provisions of, or constitute a default under any
contract, indenture, mortgage, loan agreement, lease or other agreement or
instrument to which the Borrower is a party or by which the Borrower or any
of its property or assets is bound, which violation, conflict, breach or
default would have a material adverse effect on the ability of the Borrower
to perform its obligations hereunder, or result in the creation or
imposition of any lien, mortgage, pledge or other security of any material
nature on any of its property, assets or revenues.
(d) No governmental or other authorizations, consents, approvals or
registrations are necessary for the execution and delivery of this Agreement by
the Borrower or for the performance by the Borrower of its obligations
hereunder, except as to those authorizations, consents, approvals or
registrations already obtained.
(e) This Agreement constitutes the legal, valid and binding obligation
of the Borrower enforceable against the Borrower in accordance with its terms,
except to the extent that enforcement thereof may be limited by bankruptcy,
insolvency and other laws affecting creditors' rights generally, and will rank
pari passu as to priority of payment and in all other respects, without any
preference one over the other by reason of priority of date of issue, currency
of payment, form of instrument evidencing obligations or otherwise, with all
other unsecured and unsubordinated Indebtedness of the Borrower now outstanding
except with respect to such priorities and privileges as will be created by law.
(f) The Borrower is not in default under any agreement relating to its
Indebtedness which default would have a material adverse effect on the
Borrower's ability to fulfill its obligations hereunder. No Event of Default, or
event which with the passing of time or the giving of notice or both would
constitute an Event of Default, has occurred and is continuing.
(g) As of the date hereof, under current law, there is no withholding
tax or charge (including documentary, registration or stamp duties or filing
fees) of Japan or the United States of America or any political subdivision
thereof or therein, applicable to any payment to be made by the Borrower
pursuant to the terms of this Agreement or to be imposed on or by virtue of the
execution, delivery, performance or enforcement of this Agreement or any other
document or instrument provided for hereunder except for stamp duty to be
imposed in Japan if this Agreement or the Guarantee is executed in Japan and
except for court fees required for enforcement of this Agreement or otherwise;
provided that the Lender has taken requisite procedures with the competent
authorities to qualify for exemption of withholding taxes in Japan pursuant to
Article 42-2 of the Special Taxation Measures Law of Japan and Article 180(1) of
the Income Tax Law of Japan.
(h) The financial statements of the Borrower for the period ended
January 31, 1995 which have heretofore been delivered to the Lender present
fairly the financial position of the Borrower as of the date thereof and the
results of operations of the Borrower for the period covered thereby, and since
the date of such financial statements there has been no material adverse change
in the financial position or the results of operations of the Borrower.
(i) There are no proceedings before any arbitration tribunal, court,
government agency or administrative body pending or, to the best knowledge of
the Borrower, threatened against the Borrower which, if adversely determined,
are likely to materially adversely affect the financial condition or operations
of the Borrower or materially impair the ability of the Borrower to pay, when
due, any amounts due hereunder or is likely to enjoin the execution and
delivery, or to adversely affect in any manner the validity or enforceability of
this Agreement.
(j) As of the date hereof, the Guarantor owns 100% of the capital
stock of Tiffany International, who in turn owns 100% of the capital stock of
the Borrower.
5.02 The Borrower represents and warrants that the representations and
warranties contained in Section 5.01, will be true and accurate in all respects
as though made on the first day of each Interest Period with reference to the
facts and circumstances subsisting on each such day except that with respect to
(h), the financial statements for the period ended January 31, 1995 shall be
read to refer to the latest financial statements or, if available, the latest
consolidated financial statements relative to the Borrower and its then
consolidated Subsidiaries taken as a whole.
SECTION 6. COVENANTS
In addition to the other undertakings set forth herein, the Borrower
hereby covenants to the Lender that during the term of this Agreement the
Borrower shall act as follows and shall perform the following obligations:
(a) (i) As soon as practicable, but not later than one hundred and
twenty (120) days after the end of each of its fiscal years, the Borrower
shall deliver to the Lender its annual financial statements as at and for
the year then ended, certified by a duly authorized financial officer of
the Borrower, or if available, audited by independent accountants. Such
financial statements shall be accompanied by a certificate of a duly
authorized financial officer of the Borrower, who shall certify that at the
date of such certificate a) no Event of Default has occurred and no event
has occurred that, with the giving of notice or the passing of time, or
both, would constitute an Event of Default, or b) such an Event of Default
or event has occurred. If such certificate states that any Event of Default
or any such event has occurred, such certificate shall be accompanied by a
reasonably detailed description thereof and of the action contemplated by
the Borrower to remedy such Event of Default or event.
(ii) As soon as practicable, but not later than sixty (60) days
after the end of each of its fiscal quarters, the Borrower shall deliver to
the Lender unaudited financial statements for such period.
(iii) The Borrower shall as soon as practicable after a request
to that effect by the Lender provide the Lender with such additional
information concerning the financial condition of the Borrower as the
Lender may from time to time reasonably require for the purposes of this
Agreement.
(iv) Any Confidential Information (as hereinafter defined)
furnished to the Lender pursuant to or in connection with this Agreement
shall be held in confidence by the Lender and shall not be disclosed to any
person, provided that the Lender may disclose such Confidential Information
(i) with the Borrower's prior written consent; (ii) to the Lender's
auditors; (iii) when required by law or regulation; (iv) as may be required
or appropriate in any written or oral report, statement, testimony or other
disclosure document submitted to any municipal, state, provincial,
national, federal or other regulatory body having or claiming to have
jurisdiction over the Lender or to any rating agency nationally recognized
in the U.S. or Japan; (v) to the officers, directors, employees, agents,
representatives and professional consultants of the Lender (so long as each
such officer, director, employee, agent, representative and/or professional
consultant shall have agreed to maintain the confidentiality of the
information disclosed on substantially the same terms and conditions as
those set forth in this Section 6(a)(iv)); (vi) as may be required or
appropriate in connection with (a) the enforcement of the obligations of
the Borrower under this Agreement or the Guarantor under the Guarantee or
(b) any contemplated transfer or other disposition by the Lender of any
interest in this Agreement or the Advance (so long as the proposed
transferee agrees to be bound by the terms of this Section 6(a)(iv)); and
(vii) as may be required or appropriate in response to any summons or
subpoena or in connection with any litigation or administrative proceeding,
provided the Borrower is given prompt notice thereof. For the purposes
hereof, the term "Confidential Information" shall mean all non-public
information about the Borrower furnished by the Borrower to the Lender,
except that Confidential Information shall not include any information
which was publicly known or otherwise known to the Lender at the time of
disclosure or subsequently becomes publicly known through no violation of
this Agreement by the Lender.
(b) The Borrower shall, upon becoming aware thereof, promptly give
notice to the Lender of the occurrence of any Event of Default or event that,
with the giving of notice or the passing of time, or both, would constitute an
Event of Default.
(c) The Borrower shall maintain its corporate existence in good
standing under and in compliance with all applicable laws and regulations in all
material respects.
(d) The Borrower undertakes to obtain or effect any governmental
consents, licenses, authorizations, approvals, declarations, filings or
registrations as may become necessary in the future for the performance by the
Borrower of any of the terms and conditions of this Agreement.
(e) The Borrower shall ensure that at all times its obligations
hereunder will rank pari passu as to priority of payment and in all other
respects with all other unsecured and unsubordinated Indebtedness of the
Borrower now or hereafter outstanding, except with respect to such priorities
and privileges as are created by operation of law.
(f) The Borrower shall not sell, transfer, lend or otherwise dispose
of to any Person other than a Subsidiary of the Borrower all or substantially
all of its assets or revenues, whether by a single transaction or by a number of
transactions whether related or not without prior written consent of the Lender,
which shall not be unreasonably withheld by the Lender.
SECTION 7. CONDITIONS TO DRAWDOWN
The Lender's obligation to make the Advance hereunder shall be subject
to the condition precedent that the Lender shall have received, at its Lending
Office in Tokyo or at such other place as the Lender shall direct, the documents
listed in Schedule II, in form and substance satisfactory to the Lender and its
counsel, on or prior to two (2) Business Days before the Drawdown Date. In
addition, the Borrower may not draw down the Advance unless:
(i) as of the Drawdown Date no event has occurred and is continuing
which is or may with the passage of time or the giving of notice or both be an
Event of Default, and
(ii) as of the Drawdown Date the representations and warranties listed
in Section 5 are true and correct in all material respects as if made on and as
of such date.
SECTION 8. EVENTS OF DEFAULT
8.01 Events of Default
Each of the following events and occurrences, if continuing, shall
constitute an Event of Default under this Agreement.
(a) The Borrower fails to pay when due any principal of the Advance;
or the Borrower shall fail to pay, within five (5) days after its receipt of
notice of such nonpayment from the Lender, interest on the Advance, provided,
however, that the Lender shall not be required to give the Borrower more than
two (2) such notices in any twelve (12) month period.
(b) Any representation or warranty made or deemed to be made in
respect of the Borrower in this Agreement or the Guarantor in the Guarantee is
incorrect in any material respect at the time made or deemed to be made and such
incorrectness is not corrected (so that, if such representation or warranty were
then made or deemed to be made as of such date of correction, it would then be
true) within thirty (30) days after written notice of such incorrectness is
given by the Lender to the Borrower or the Guarantor, as the case may be.
(c) The Borrower or the Guarantor fails to perform or comply with any
other provisions of this Agreement or the Guarantee, as the case may be, and
such failure continues for a period of thirty (30) days after written notice of
such failure is given by the Lender to the Borrower or the Guarantor, as the
case may be.
(d) Any governmental approval or other authorization, consent,
approval or registration granted or required in the future which is necessary in
order to permit the Borrower to perform its obligations under this Agreement or
the Guarantor to perform its obligations under the Guarantee is not obtained or
renewed, or is terminated or revoked, provided that the Borrower or the
Guarantor, as the case may be, shall have thirty (30) days to obtain or renew
such approval or other authorization, consent, approval or registration
following its receipt of notice from the Lender that such is required.
(e) Any payment obligation, in the aggregate principal amounts in
excess of $5,000,000, of the Borrower, the Guarantor or any of its Subsidiaries
under any Indebtedness or Capital Lease Obligation has been accelerated and has
become due prior to any stated maturity, due to any event of default under such
Indebtedness or Capital Lease Obligation, unless such acceleration of the
Indebtedness or Capital Lease Obligation thereafter has been annulled or
rescinded.
For the purpose of the foregoing, (i) any Indebtedness which is in a
currency other than Dollars shall be translated into Dollars at the spot rate
(TTB) for the sale of Dollars against the purchase of the relevant currency
quoted by any leading bank selected by the Lender in the country in which the
relevant currency is the official currency on any day when the Lender requests
such a quotation for the purposes aforesaid and (ii) "Capital Lease Obligation"
means any rental obligation under any lease of property which would be
capitalized on the lessee's balance sheet in accordance with generally accepted
accounting principles of the country of incorporation of the relevant entity.
(f) If an application is made to a court: (i) for a decree or order
for relief in respect of the Borrower or the Guarantor in any proceeding under
any applicable Japanese or U.S. Federal or State bankruptcy, insolvency,
reorganization or other similar law; or (ii) for a decree or order adjudging the
Borrower or the Guarantor a bankrupt or insolvent, or seeking approval for
reorganization, arrangement, adjustment, composition or similar proceeding under
any applicable Japanese or U.S. Federal or State law or seeking the appointment
of a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official to the Borrower or the Guarantor or to any substantial part of
its property or seeking an order for the winding up or liquidation of the
Borrower or the Guarantor; and such application is not dismissed or withdrawn
within sixty (60) days of being filed; provided that any application for merger
or consolidation made solely under the applicable corporation statute shall not
be deemed an Event of Default under this Section 8.01(f).
(g) The entry by a court of competent jurisdiction of: (i) a decree or
order for relief in respect of the Borrower or the Guarantor in an involuntary
case or proceeding under any applicable Japanese or U.S. Federal or State
bankruptcy, insolvency, reorganization or other similar law or; (ii) a decree or
order adjudging the Borrower or the Guarantor a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment, composition or similar of or in respect of the Borrower or the
Guarantor under any applicable Japanese or U.S. Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Borrower or the Guarantor or of any substantial
part of its property, or ordering the winding up or liquidation of its affairs;
provided that any merger or consolidation consummated solely under the
applicable corporation statute shall not be deemed an Event of Default under
this Section 8.01(g).
(h) The commencement by the Borrower or the Guarantor of a voluntary
case or proceeding under any applicable Japanese or U.S. Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree or order for relief in respect of it in an involuntary
case or proceeding under any applicable Japanese or U.S. Federal or State
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceedings against it, or
the filing by it of a petition or answer or consent seeking reorganization or
relief under any applicable Japanese or U.S. Federal or State law, or the
consent by it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Borrower or the Guarantor or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due.
(i) The Guarantee ceases to be in full force and
effect for any reason whatsoever.
If an Event of Default shall occur, it may be waived by a notice to
the Borrower from the Lender. No waiver of any Event of Default shall constitute
a waiver of any other or succeeding Event of Default except to the extent
provided in such waiver.
8.02 Consequence of Default
If an Event of Default shall occur and be continuing, the Lender may:
(a) by notice to the Borrower, declare the Advance together with
accrued interest and any other amounts to which the Lender may be entitled under
this Agreement and any other sum in respect of the Advance payable hereunder to
be immediately due and payable and the Advance, interest and other sum shall
thereupon become due and payable without presentment, demand, protest or notice
of any kind, other than the notice specifically required by this Section 8.02,
all of which are expressly waived by the Borrower; and/or
(b) by notice to the Borrower terminate the Commitment, such
termination to be effective upon the giving of such notice.
SECTION 9. MISCELLANEOUS
9.01 Term
The term of this Agreement shall commence on the date first set forth
above and shall end on the date of termination of the Commitment hereunder or,
if later, upon payment or prepayment in full of all principal, interest and
other sums payable by the Borrower hereunder.
9.02 Entire Agreement
This Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof and shall supersede any prior
expressions of intent or understandings with respect to this transaction. This
Agreement may be amended only by agreement of the parties hereto and the
Guarantor evidenced in writing.
9.03 Waiver; Cumulative Rights
The failure or delay of the Lender to require performance by the
Borrower of any provision of this Agreement shall not affect its right to
require performance of such provision unless and until such performance has been
waived by the Lender in writing in accordance with the terms hereof. Each and
every right granted to the Lender hereunder shall be cumulative and may be
exercised in part or in whole from time to time.
9.04 Assignment
(a) This Agreement shall be binding upon and shall be enforceable by
the Borrower and the Lender and their respective successors and assigns except
that the Borrower may not assign its rights or obligations hereunder without the
prior written consent of the Lender. Upon any assignment by the Lender of its
interest hereunder, the term "Lender" as used herein shall be deemed to refer to
such assignee to the extent of its interest thereunder and such "Lender" shall
be entitled, subject to Section 3.01(b), to the benefit of, inter alia, all
indemnities and tax reimbursements of the Lender pursuant to this Agreement as
fully as if originally named as a party hereto.
(b) Subject to Sections 3.01(b) and (c), the Lender may make,
maintain or transfer the Advance at, to or for the account of, any Lending
Office located in Japan upon notice by the Lender to the Borrower.
9.05 Governing Law
This Agreement shall be governed by and interpreted in accordance
with the laws of Japan.
9.06 Submission to Jurisdiction
The Borrower hereby irrevocably consents that any legal action or
proceedings against it or any of its property or assets with respect to this
Agreement may be brought in the Tokyo District Court and by execution and
delivery of this Agreement the Borrower hereby submits to and accepts with
regard to any such action or proceeding for itself and in respect of its
property and assets, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid court.
9.07 Notices
Unless otherwise specifically provided for herein, any notice required
or permitted to be given hereunder shall be in writing and shall be (i)
personally delivered, (ii) transmitted by postage prepaid registered mail
(airmail if international), (iii) transmitted by cable (with postage prepaid
registered mail confirmation, airmail if international), or (iv) transmitted by
facsimile (which shall be confirmed by registered mail, air mail if
international) to the parties as follows (as elected by the party giving such
notice):
To the Borrower:
Tiffany & Co. Japan Inc.
Japan Branch
3-1-31 Minami Aoyama, 10th Floor
Minato-ku, Tokyo 107, Japan
Facsimile No.: 03-3746-0335
Attention: Mr. Makito Hamada
To the Guarantor:
Tiffany & Co.
5 Sylvan Way
Parsippany, New Jersey 07054
U.S.A.
Facsimile No.: 201-971-3603
Attention: Mr. Luis Ulloa
To the Lender:
American Family Life Assurance Company of Columbus
Japan Branch
AFLAC Square
2-33-2, Kojima-cho, Chofu-shi
Tokyo 182-01, Japan
Facsimile No.: 0424-41-3008
Attention: Investment Department
A notice in writing shall include a notice by facsimile or cable.
Except as otherwise specified herein, all notices and other communications shall
be deemed to have been duly given on the date of receipt by the addressee
thereof. The Borrower, the Lender and the Guarantor may change its address for
purposes hereof by notice to the other. Each notice and any other document given
by one party to another hereunder shall be in the English language.
Any notice sent to the Borrower shall also be sent to the Guarantor,
and any notice sent to the Guarantor shall also be sent to the Borrower.
9.08 Severability of Provisions
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
9.09 Counterparts
This Agreement may be signed in any number of counterparts. Any single
counterpart or a set of counterparts signed, in either case, by all the parties
hereto shall constitute a full and original agreement for all purposes.
IN WITNESS WHEREOF, the parties hereto have caused one original of this
Agreement to be executed by their respective duly authorized representatives as
of the day and year first written above. The original of this Agreement shall be
kept by the Lender, and a photocopy of this Agreement shall be kept by the
Borrower.
BORROWER: TIFFANY & CO. JAPAN INC., JAPAN
BRANCH
By__________________________
Name________________________
Title_______________________
LENDER: AMERICAN FAMILY LIFE ASSURANCE
COMPANY OF COLUMBUS, JAPAN BRANCH
By__________________________
Name________________________
Title_______________________
<PAGE>
SCHEDULE I
G U A R A N T E E
BY
TIFFANY & CO.
<PAGE>
April 3, 1996
American Family Life Assurance Company of Columbus
Japan Branch
AFLAC Square
2-33-2, Kojima-cho,
Chofu-shi, Tokyo 182-01
Japan
Gentlemen:
In consideration of your Company (the "Lender") agreeing to make an
advance in the principal amount of Five Billion Yen ((Y)5,000,000,000) to
Tiffany & Co. Japan Inc., Japan Branch (the "Borrower") pursuant to a loan
agreement (the "Agreement") dated as of April 3, 1996 between the Borrower and
the Lender, Tiffany & Co. (the "Guarantor") hereby agrees as follows
(capitalized terms used but not defined herein having the meanings specified in
the Agreement):
1. The Guarantor hereby absolutely and unconditionally, and jointly and
severally with the Borrower, guarantees to the Lender the full and complete
payment when due (by acceleration or otherwise) of any and all sums whether of
principal, interest or other amount payable by the Borrower to the Lender under
or pursuant to the Agreement. The Guarantor hereby represents that, as of the
date hereof, it owns 100% of the capital stock of Tiffany International, who in
turn owns 100% of the capital stock of the Borrower, and hereby agrees to notify
the Lender of any material change in such shareholding.
Notwithstanding the use of the word "Guarantee", the
obligation of the Guarantor hereunder is unconditional irrespective of the
genuineness, legality, validity, regularity or enforceability of the Agreement.
2. Upon receipt by the Guarantor of a notice from the Lender in effect
that the Borrower has defaulted in the payment when due of any or all sums
payable by the Borrower to the Lender under the Agreement, the Guarantor shall
forthwith pay to the Lender at AFLAC Square, 2-33-2, Kojima-cho, Chofu-shi,
Tokyo, Japan, or such other address in Japan as may be notified by the Lender to
the Guarantor for this purpose, such sums in the currency and otherwise in the
manner required of the Borrower by the Agreement. All such payments shall be
made without set-off or counterclaim for any reason whatsoever and free and
clear of and without deduction or withholding for or on account of any present
or future income or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings of any nature whatsoever imposed, levied or withheld
by any taxing authority (other than income tax on the overall net income of the
Lender) ("Taxes") now or hereafter imposed, whether by withholding or otherwise,
in Japan or the United States or any taxing authority thereof or therein or in
any other country through or out of which the Guarantor makes payments hereunder
or any taxing authority of or in such country. In the event that the Guarantor
is prohibited by any law, treaty, ordinance, decree, rule, directive, regulation
or judicial or arbitral decision from making such payments free
<PAGE>
- 2 -
of such Taxes, then the Guarantor shall pay such additional amount as may be
necessary in order that the actual amount received by the Lender after such
Taxes (and after payment of any additional taxes or other charges due as a
consequence of the payment of such additional amount) shall equal the amount
that would have been received by the Lender if such Taxes were not required. The
Guarantor shall furnish the Lender with the receipt issued by the competent tax
authorities in respect of such Taxes or other evidence of payment of such Taxes
reasonably acceptable to the Lender within thirty (30) days after payment of
such Taxes. Notwithstanding the foregoing, the Guarantor shall not be
responsible for, and shall be entitled to deduct and withhold from any amount
payable to the Lender hereunder, any Taxes to the extent such Taxes exceed the
amount of Taxes which would have been applicable immediately prior to a transfer
or other disposition by the Lender of any interest in the Agreement or the
Advance or a change by the Lender (other than pursuant to the last sentence of
this Section 2 and with the consent of the Guarantor) of the Lending Office
making or maintaining the Advance from Japan Branch of the Lender to another
Lending Office or branch of the Lender. If, at any time, Taxes are or will be
imposed on payments by the Guarantor hereunder, and the Guarantor is or may be
required to make additional payments to or on behalf of the Lender in respect of
such Taxes, the Guarantor and the Lender shall consult in good faith and shall
each use its reasonable efforts to take action to avoid such requirement (which
action may, at the option of the Lender, include the transfer of the Advance to
another Lending Office or branch which is not subject to such requirement to the
extent such action does not cause material disadvantage to the Lender).
3. The Guarantor hereby waives notice of the making of
the loan under the Agreement, and notice of the acceptance of
this Guarantee.
4. The Lender may neglect or forbear to enforce payment hereunder, or
under the Agreement or under any other document, instrument or agreement,
without in any way affecting or impairing the liability of the Guarantor
hereunder.
5. The Guarantor hereby waives demand for payment (except as specified
in 2 above), and notice of default or non-payment (except as otherwise provided
herein or in the Agreement).
6. The winding-up or dissolution of the Borrower or any change in the
name, objects, capital, ownership or control of the Borrower or any other
circumstances affecting the Borrower which might otherwise afford a legal or
equitable defence to the Guarantor or a discharge of this Guarantee shall not in
any way affect the liability of the Guarantor under this Guarantee.
7. The obligations of the Guarantor under this
Guarantee shall be principal obligations of the Guarantor and
<PAGE>
- 3 -
the Lender shall not be obliged to exhaust recourse against the Borrower before
being entitled to payment from the Guarantor of all the debts and liabilities
hereby guaranteed.
8. The Guarantor acknowledges that the Guarantor has received and
reviewed a copy of the executed Agreement and that no representation has been
made to it on behalf of the Lender and the Guarantor agrees that this Guarantee
is in addition to and not in substitution for any other guarantees which may
hereafter be held by the Lender and shall not be affected by any release or
discharge granted to any other guarantor.
9. This is an irrevocable and unconditional guarantee of payment and
shall remain in full force and effect until all the obligations of the Borrower
to the Lender as set forth in the Agreement shall have been satisfied and all
sums due thereunder and all indebtedness of the Guarantor to the Lender payable
pursuant to this Guarantee shall have been paid to the Lender in full. The
Guarantor's obligations hereunder shall be reinstated if at any time any payment
received from the Borrower by the Lender is required to be repaid by the Lender
to the Borrower.
The Guarantor shall reimburse the Lender for all reasonable
out-of-pocket fees and expenses of the Lender, including reasonable fees and
expenses of counsel and the payment of any stamp or similar duties, incurred by
the Lender in the enforcement of, or the preservation of rights under, this
Guarantee.
10. Any notice or demand on the Guarantor required or permitted to be
given hereunder shall be in writing and shall be (i) personally delivered, (ii)
transmitted by postage prepaid registered mail (airmail if international), (iii)
transmitted by cable (with postage prepaid registered mail confirmation, airmail
if international), or (iv) transmitted by facsimile (which shall be confirmed by
registered mail, air mail if international) to the Guarantor as follows:
Tiffany & Co.
5 Sylvan Way
Parsippany, New Jersey 07054
U.S.A.
Facsimile No.: 201-971-3603
Attention: Mr. Luis Ulloa
A notice in writing shall include a notice by facsimile or
cable. Except as otherwise specified herein, all notices and demands shall be
deemed to have been duly given on the date of receipt by the addressee thereof.
The Guarantor may change its address for purposes hereof by notice in writing to
the Lender.
11. This Guarantee shall inure to the benefit of the
Lender, its successors and assigns.
<PAGE>
- 4 -
12. The Guarantor hereby represents and warrants to the
Lender as follows:
(a) The Guarantor is a corporation duly organized and validly
existing under the laws of the State of Delaware, U.S.A. and has full corporate
power and authority to incur the obligations provided for in this Guarantee and
to execute and deliver this Guarantee, and to perform its obligations hereunder.
(b) The Guarantor has taken all necessary corporate action,
including obtaining the approval of its Board of Directors or authorized
committee thereof as required by applicable law to authorize the execution and
delivery of this Guarantee and to authorize the performance and observance of
the terms and conditions hereof.
(c) Neither the execution and delivery of this Guarantee by
the Guarantor, nor the performance by it of its obligations hereunder, nor the
compliance by it with the terms hereof, will:
(i) violate, conflict with, or result in the breach
of any terms, conditions or provisions of, or constitute a default
under any applicable law or regulation of the United States of America
or the State of Delaware, or any international treaty or convention by
which the Guarantor or any of its property or assets is bound, or any
administrative regulation or order or any court decree, or the
Certificate of Incorporation or ByLaws of the Guarantor, or
(ii) violate, conflict with, or result in the breach
of any terms, conditions or provisions of, or constitute a default
under any contract, indenture, mortgage, loan agreement, lease or other
agreement or instrument to which the Guarantor is a party or by which
the Guarantor or any of its property or assets is bound, which
violation, conflict, breach or default would have a material adverse
effect on the ability of the Guarantor to perform its obligations
hereunder, or result in the creation or imposition of any lien,
mortgage, pledge or other security of any material nature on any of its
property, assets or revenues.
(d) No governmental or other authorizations, consents,
approvals or registrations are necessary for the execution and delivery of this
Guarantee by the Guarantor or for the performance by the Guarantor of its
obligations hereunder, including, without limitation, foreign exchange and
transfer permits for the Guarantor to purchase or otherwise obtain, and transmit
for payment, the necessary amounts in Yen for payments with respect to this
Guarantee, except those authorizations, consents, approvals or registrations
already obtained.
<PAGE>
- 5 -
(e) This Guarantee constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms and will rank pari passu as to priority of payment and in all other
respects, without any preference one over the other by reason of priority of
date of issue, currency of payment, form of instrument evidencing obligations or
otherwise, with all other unsecured and unsubordinated Indebtedness of the
Guarantor now outstanding except with respect to such priorities and privileges
as will be created by law.
(f) The Guarantor is not in default of any agreement relating
to its Indebtedness which default would have a material adverse effect on the
Guarantor's ability to fulfill its obligations hereunder. No Event of Default,
or event which with the passing of time or the giving of notice or both would
constitute an Event of Default relative to the Guarantor, has occurred and is
continuing.
(g) As of the date hereof, under current law, there is no
withholding tax of the United States applicable to any payment to be made by the
Guarantor pursuant to the terms of this Guarantee.
(h) The consolidated financial statements of the Guarantor for
the period ended January 31, 1995 which have heretofore been delivered to the
Lender present fairly the financial position of the Guarantor and its
consolidated Subsidiaries taken as a whole as of the date thereof and the
results of operations of the Guarantor and its consolidated Subsidiaries taken
as a whole for the period covered thereby, and since the date of such financial
statements there has been no material adverse change in the financial position
or the results of operations of the Guarantor and its consolidated Subsidiaries
taken as a whole.
(i) There are no proceedings before any arbitration tribunal,
court, government agency or administrative body pending or, to the best
knowledge of the Guarantor, threatened in writing against the Guarantor which,
if adversely determined, are likely to materially adversely affect the financial
condition or operations of the Guarantor or materially impair the ability of the
Guarantor to pay, when due, any amounts due hereunder or is likely to enjoin the
execution and delivery, or to adversely affect in any manner the validity or
enforceability, of this Guarantee.
13. Until all obligations of the Guarantor to the Lender
pursuant to this Guarantee shall have been satisfied:
(a) (i) As soon as practicable, but not later than one hundred
and twenty (120) days after the end of each of its fiscal years, the
Guarantor shall deliver to the Lender its annual consolidated financial
statements as at and for the year then ended, audited by independent
accountants and prepared in accordance with applicable
<PAGE>
- 6 -
rules and regulations of the U.S. Securities and Exchange
Commission (the "SEC") including those relating to Form
10-K.
(ii) As soon as practicable, but not later than
sixty (60) days after the end of each of the first three fiscal
quarters occurring within each of its fiscal years, the Guarantor shall
deliver to the Lender unaudited consolidated financial statements for
such quarter prepared in accordance with applicable rules and
regulations of the SEC including those relating to Form 10-Q.
(iii) The Guarantor shall as soon as practicable
after a request to that effect by the Lender provide the Lender with
such additional information concerning the financial condition of the
Guarantor as the Lender may from time to time reasonably require for
the purposes of this Guarantee.
(b) The Guarantor shall, upon becoming aware thereof, promptly
give notice to the Lender of the occurrence of any Event of Default under the
Agreement or event that, with the giving of notice or the passing of time, or
both, would constitute such an Event of Default.
(c) Except as permitted by (g) below, the Guarantor shall
maintain its corporate existence in good standing under and in compliance with
all applicable laws and regulations in all material respects.
(d) The Guarantor undertakes to obtain or effect, at the
appropriate time, any U.S. governmental consents, licenses, authorizations,
approvals, declarations, filings or registrations as may become necessary in the
future for the performance of any of the terms and conditions of this Guarantee.
(e) The Guarantor agrees that it shall continue to hold,
directly or indirectly, at least 80% of the shares of capital stock (having
voting power to vote for election of directors) of the Borrower.
(f) The Guarantor shall ensure that at all times its
obligations hereunder will rank pari passu as to priority of payment and in all
other respects with all other unsecured and unsubordinated Indebtedness of the
Guarantor now or hereafter outstanding, except with respect to such priorities
and privileges as are created by operation of law.
(g) The Guarantor shall not consolidate with or merge into any
other Person or convey or transfer all or substantially all of its properties
and assets to any Person, unless (i) the successor Person shall be organized and
existing under the laws of the United States or any State thereof, and shall
expressly assume in writing the due and punctual
<PAGE>
- 7 -
performance of all the obligations of the Guarantor hereunder and the
performance of every covenant in the Guarantee on the part of the Guarantor to
be performed or observed; (ii) immediately after giving effect to such
transaction, no Event of Default under the Agreement, and no event which, after
notice or lapse of time or both, would become such an Event of Default, shall
have happened and be continuing; and (iii) the Guarantor shall have delivered to
the Lender an officer's certificate and an opinion of counsel, each in form and
substance reasonably satisfactory to the Lender stating that such consolidation,
merger, conveyance or transfer comply with the foregoing provisions. In case of
any such consolidation, merger, conveyance or transfer, such successor Person
will succeed to and be substituted for the Guarantor as obligor on the
obligations of the Guarantor hereunder, with the same effect as if it had been
named in this Guarantee as the Guarantor.
(h) The Guarantor shall not make any substantial alteration in
the nature of its business conducted as at the date of this Guarantee which
would have a materially adverse effect on the Guarantor's ability to perform its
obligations hereunder.
(i) The Guarantor shall ensure that the ratio of
Consolidated Indebtedness to Consolidated Capitalization
never, at any Balance Date, exceeds 0.55:1.00.
(j) The Guarantor shall ensure that the ratio of (i)
Consolidated EBIT for the four consecutive financial quarters ending on each
Balance Date to (ii) Consolidated Interest Expense for the same period is, at
all times, greater than 2.50:1.00.
(k) The Guarantor shall not, and shall not permit any
Subsidiary thereof to issue, assume or guarantee any Debt if such Debt is
secured by any Mortgage upon any Principal Property of the Guarantor or of any
Subsidiary thereof or any shares of stock or Indebtedness of any Subsidiary
thereof, whether owned at the date of this Guarantee or thereafter acquired,
without effectively securing the obligations of the Guarantor hereunder equally
and ratably with such Debt. The foregoing restriction shall not apply to the
following Mortgages:
(i) Mortgages on any Principal Property acquired,
constructed or improved by the Guarantor or any Subsidiary thereof
after April 3, 1996, which are created or assumed within three years
after such acquisition, or completion of such construction or
improvement to secure or provide for the payment of the purchase price
of such Principal Property or cost of such construction or improvement,
or Mortgages existing on any property at the time of its acquisition;
provided that the Mortgage shall not apply to any property theretofore
owned by the Borrower or any Subsidiary thereof other than, in the
<PAGE>
- 8 -
case of any such construction or improvement, any
theretofore unimproved real property on which the
property so constructed, or the improvement, is located;
(ii) Mortgages existing on any property, shares of
stock or indebtedness acquired from a Person merged or consolidated
with or into the Guarantor or a Subsidiary thereof;
(iii) Mortgages on property of any corporation
existing at the time it becomes a Subsidiary of the
Guarantor;
(iv) Mortgages to secure Debt of a Subsidiary
of the Guarantor to the Guarantor;
(v) Mortgages in favor of governmental bodies to
secure partial progress, advance or other payments pursuant to any
contract or statute or to secure indebtedness incurred to finance the
purchase price or cost of constructing or improving the property
subject to such Mortgages; or
(vi) Mortgages for the sole purpose of extending,
renewing or replacing Debt secured by any Mortgage referred to in the
foregoing sub-sections (i) to (v), inclusive, or in this sub-section
(vi) or any Mortgage existing on April 3, 1996; provided, however, that
the principal amount of Debt secured thereby shall not exceed the
principal amount of Debt so secured at the time of such extension,
renewal or replacement, and that such extension, renewal or replacement
shall be limited to the property that secured the Mortgage so extended,
renewed or replaced (plus improvements on such property).
(l) The Guarantor shall not, and shall not permit any
Subsidiary thereof to, enter into Sale and Leaseback Transactions of any
Principal Property unless the net proceeds of such Sale and Leaseback
Transactions are at least equal to the sum of all costs incurred by the
Guarantor or any Subsidiary thereof in connection with the acquisition of, and
construction of any improvement on, the Principal Property to be leased and
either (i) the Guarantor or such Subsidiary would be entitled, pursuant to
sub-section (i) or the second paragraph of (k) above, to incur Debt secured by a
Mortgage on such Principal Property without equally and ratably securing the
obligations of the Guarantor hereunder or (ii) the Value thereof would be an
amount permitted under the last sentence (other than definitions) under (k)
above or (iii) the Guarantor or such Subsidiary thereafter applies an amount
equal to the sum of all costs incurred by the Guarantor or such Subsidiary in
connection with the acquisition of, and the construction of any improvements on,
such property (x) to the payment or other retirement of Debt incurred or assumed
by the Guarantor that ranks senior to or pari passu with the obligations of the
Guarantor hereunder or of Debt incurred or
<PAGE>
- 9 -
assumed by any Subsidiary of the Guarantor (other than, in either case, Debt
owned by the Guarantor or any Subsidiary thereof); or (y) to the purchase of
other Principal Property.
(m) The Guarantor shall not, directly or indirectly, create,
incur, assume or suffer to exist any Indebtedness or permit any of its
consolidated Subsidiaries to do so, except any of the following types of
Indebtedness:
(i) Indebtedness of the Subsidiaries of the
Guarantor in resect of:
(A) Capital Lease Obligations;
(B) Property acquired by a Subsidiary and
secured by liens thereon; and
(C) any purchase money Indebtedness;
up to the maximum aggregate principal amount outstanding
at any one time of US$25,000,000;
(ii) Indebtedness owed:
(A) from a Subsidiary of the Guarantor to
the Guarantor;
(B) from the Guarantor to a Subsidiary of
the Guarantor; and
(C) from one Subsidiary of the Guarantor
to another;
(iii) Any Indebtedness of the Guarantor;
(iv) Indebtedness of the Borrower, which Indebtedness
may be guaranteed by the Guarantor and/or Tiffany International, up to
the maximum aggregate principal amount of JP(Y)10,450,000,000; and
(v) Any other Indebtedness of Subsidiaries of the
Guarantor not otherwise permitted under sub-sections (i) through (iv)
above up to the maximum aggregate principal amount outstanding at any
one time of US$10,000,000.
(n) The Guarantor will not, and will not permit any
consolidated Subsidiary to, enter into any Derivative Transactions other than
arrangements which are complimentary to the business of the Guarantor and its
consolidated Subsidiaries and are for the sole purpose, in the reasonable
opinion of the Lender, of managing and protecting against the Guarantor's, or
the consolidated Subsidiary's (as the case may be) exposure to interest rate
and/or currency fluctuations.
<PAGE>
- 10 -
(o) Subject to Section 13(p), the Guarantor will not declare
or pay any dividend, or authorize or make any other distribution out of other
than (i) net income or if there is none, out of retained earnings, or (ii) the
net cash proceeds received after the date of this Guarantee from the issuance of
additional shares of the Guarantor's capital stock, unless the Consolidated Net
Tangible Assets of the Guarantor and its consolidated Subsidiaries remaining
after such declaration or payment or distribution at least equals the amount of
the capital stock accounts reflecting capital as determined under Articles 154
and 170 of the Delaware General Corporation Law as shown on the consolidated
balance sheet most recently furnished pursuant to Section 13(a).
(p) Except in the case of stock splits, the Guarantor will not
declare or pay any dividend payable in its own stock or authorize or make any
other distribution of any of its own stock, whether now or hereafter
outstanding, in respect of its then issued and outstanding stock, unless the
Consolidated Net Tangible Assets of the Guarantor and its consolidated
Subsidiaries remaining after such declaration or payment or distribution at
least equals the amount of the capital stock accounts reflecting capital as
determined under Articles 154 and 170 of the Delaware General Corporation Law as
shown on the consolidated balance sheet most recently furnished pursuant to
Section 13(a).
For the purpose of sub-sections (i) through (p) above, all accounting
terms not otherwise defined have the meanings assigned to them in accordance
with generally accepted accounting principles, meaning such accounting
principles and practices as are generally accepted in the country of
incorporation of the relevant entity at the date of determination as being
applicable to the type of business in which the Guarantor and its Subsidiaries
are engaged and that are approved by the independent auditors regularly retained
by the Guarantor and the following terms have the following meanings:
"Balance Date" shall mean the final day of each of the
Guarantor's fiscal quarters, currently January 31, April 30, July 31 and October
31 of each year and any other day as of which consolidated financial statements
of the Guarantor and its consolidated Subsidiaries are prepared;
"Consolidated Capitalization" shall mean, as of any date,
total stockholder's equity of the Guarantor and its Subsidiaries on a
consolidated basis on such date (without giving effect to foreign currency
translation adjustments, except to the extent such adjustments are in excess of
$10,000,000, whether positive or negative) plus Consolidated Indebtedness on
such date;
"Consolidated EBIT" shall mean, in respect of any financial
period of the Guarantor and its consolidated Subsidiaries, the total amount of
the operating profits of the
<PAGE>
- 11 -
Guarantor and its consolidated Subsidiaries for such period before taking into
account any interest payable by the Guarantor and its consolidated Subsidiaries
and taxes on income and profits payable by the Guarantor and its consolidated
Subsidiaries;
"Consolidated Indebtedness" shall mean, at any Balance Date,
the total (on a consolidated basis) of the principal amount then outstanding of
Indebtedness of the Guarantor and its consolidated Subsidiaries determined in
accordance with, and by reference to, the relevant financial statements and
generally accepted accounting principles;
"Consolidated Interest Expense" shall mean, in respect of any
financial period of the Guarantor and its consolidated Subsidiaries, the
aggregate (on a consolidated basis) of interest that has been paid, incurred or
accrued during such period determined in accordance with, and by reference to,
the relevant financial statements and generally accepted accounting principles;
"Consolidated Net Tangible Assets", which may be determined as
of a date not more than 60 days prior to the happening of an event for which
such determination is being made, shall mean the total of all the assets
appearing on the consolidated balance sheet of the Guarantor and its
consolidated Subsidiaries less the following: (1) current liabilities; (2)
intangible assets such as goodwill, trademarks, trade names, patents, and
unamortized debt discount and expense; and (3) appropriate adjustments on
account of minority interests of other persons holding stock in any Subsidiary
of the Guarantor;
"Debt" shall mean indebtedness for money borrowed.
"Derivative Transactions" shall mean, (a) any transaction
(including an agreement with respect thereto) by the Guarantor or any of its
consolidated Subsidiaries which is a rate swap transaction, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
these transaction) and (b) any combination of these transactions.
"Mortgage" shall mean any mortgage, pledge, lien, encumbrance,
charge or security interest of any kind; provided, however, that none of the
following shall be deemed to be a Mortgage:
(i) pledges or deposits under workmen's
compensation, unemployment insurance or similar statutes
and mechanics', workmen's, repairmen's, materialmen's,
<PAGE>
- 12 -
carriers' or other similar liens arising in the ordinary course of
business or deposits or pledges to obtain the release of any such
liens;
(ii) liens for taxes or assessments or governmental
charges or levies not yet due or delinquent, or which can thereafter be
paid without penalty, or which are being contested in good faith by
appropriate proceedings, landlord's liens on property held under lease;
and any other liens of a nature similar to those hereinabove described
in this sub-section (ii) which do not, in the reasonable opinion of the
Guarantor, materially impair the use of such property in the operation
of the business of the Guarantor or a Subsidiary thereof or the value
of such property for the purpose of such business; or
(iii) any easement or similar encumbrance, the
existence of which does not impair the use of the property subject
thereto for the purposes for which it is used.
"Principal Property" shall mean any Property with a net book
value exceeding ten percent (10%) of the Consolidated Capitalization.
"Property" shall mean any real and personal property,
including, without limitation, store, warehouse, showroom or any other property
or any permanent improvement thereon owned by the Guarantor or any Subsidiary.
"Sale and Leaseback Transaction" shall mean any arrangement
with any Person providing for the leasing to the Guarantor or any Subsidiary
thereof of any Principal Property (except for temporary leases for a term,
including any renewal thereof, of not more than 36 months and except for leases
between the Guarantor and a Subsidiary thereof or between Subsidiaries thereof),
which Principal Property has been or is to be sold or transferred by the
Guarantor or such Subsidiary to such Person; and
"Value" shall mean, with respect to a Sale and Leaseback
Transaction, as of any particular time, the amount equal to the greater of (1)
the net proceeds from the sale or transfer of the property leased pursuant to
such Sale and Leaseback Transaction or (2) the sum of all costs of the Guarantor
or any Subsidiary thereof incurred in connection with the acquisition of such
property and the construction of any improvements thereon, as determined in good
faith by the Guarantor or such Subsidiary at the time of entering into such Sale
and Leaseback Transaction, in either case multiplied by a fraction, the
numerator of which shall be equal to the number of full years of the term of the
lease remaining at the time of determination and the denominator of which shall
be equal to the number of full years of such term, without regard to any renewal
or extension options contained in the lease.
<PAGE>
- 13 -
14. Until all Indebtedness of the Guarantor to the Lender payable
pursuant to this Guarantee shall have been paid to the Lender in full, the
Guarantor shall have no right of subrogation and waives any right to enforce any
remedy which the Lender now has or may hereafter have against the Borrower, and
waives any benefit of, and any right to participate in any security now or
hereafter held by the Lender.
15. This is a loan transaction in which the specification of Yen and
payment in Tokyo are of the essence, and Yen shall be the currency of account
and of payment in all events. The payment obligation hereunder shall not be
discharged by an amount paid in another currency or in another place, whether
pursuant to a judgment or otherwise. In the event that any payment, whether
pursuant to a judgment or otherwise, shall be made in a currency other than Yen
or in a place other than in Tokyo, such amount shall be promptly converted to
Yen and transferred to Tokyo under normal banking procedures. In the event that
such payment does not satisfy the obligations of the Guarantor hereunder, the
Lender shall be entitled to immediate payment of, and shall have a separate
cause of action for, the Yen deficiency in respect of the payments due to the
Lender.
16. This Guarantee shall be governed by and interpreted
in accordance with the laws of Japan.
(a) The Guarantor hereby irrevocably consents that any legal
action or proceedings against it or any of its property or assets with respect
to this Guarantee may be brought in the Tokyo District Court and by execution
and delivery of this Guarantee the Guarantor hereby submits to and accepts with
regard to any such action or proceeding for itself and in respect of its
property and assets, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid court. For purposes of this Guarantee, the
Guarantor hereby irrevocably appoints the Representative in Japan, from time to
time, of Tiffany & Co. Japan Inc., Japan Branch, as its agent for service of
process in Japan and designates the address, from time to time, of Tiffany & Co.
Japan Inc., Japan Branch, presently at 3-1-31 Minami Aoyama, 10th Floor,
Minato-ku, Tokyo 107, Japan as its address to receive such service of process.
So long as the Commitment or any portion of the Advance or any
other sums payable by the Borrower or the Guarantor under the Agreement or this
Guarantee remains outstanding, the Guarantor (i) will take any and all
reasonable action, including the execution and filing of any and all documents,
as may be necessary to continue the foregoing appointments and designations in
full force and effect and (ii) if any agent for service so designated shall
cease to act for any reason, will immediately designate another such agent in
Tokyo reasonably satisfactory to the Lender and shall furnish the Lender with
the confirmation of acceptance of such agent so appointed.
<PAGE>
- 14 -
(b) The Guarantor hereby irrevocably agrees not to present any
objection which it may now or hereafter have to the laying of the venue of any
suit, action or proceeding arising out of or relating to this Guarantee or any
document or instrument provided for hereunder in Tokyo, Japan and hereby further
irrevocably agrees not to claim that Tokyo, Japan is an inconvenient forum for
any such suit, action or proceeding. Nothing in this Section 16 shall preclude
the Lender from serving legal process upon the Guarantor at the office provided
for in or designated pursuant to Section 10 or instituting legal proceedings
against the Guarantor in the Court of any other country or place which may have
jurisdiction.
IN WITNESS WHEREOF the Guarantor has executed this Guarantee as of the
day and year first above written.
TIFFANY & CO.
By __________________________
Name_________________________
Title________________________
By___________________________
Name_________________________
Title________________________
Signed in ___________________
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<CASH> 40,168
<SECURITIES> 0
<RECEIVABLES> 66,254
<ALLOWANCES> (2,880)
<INVENTORY> 349,017
<CURRENT-ASSETS> 489,851
<PP&E> 184,830
<DEPRECIATION> (65,897)
<TOTAL-ASSETS> 653,417
<CURRENT-LIABILITIES> 183,464
<BONDS> 101,500
0
0
<COMMON> 162
<OTHER-SE> 277,912
<TOTAL-LIABILITY-AND-EQUITY> 653,417
<SALES> 180,741
<TOTAL-REVENUES> 180,741
<CGS> 87,375
<TOTAL-COSTS> 168,463
<OTHER-EXPENSES> 3,340
<LOSS-PROVISION> 348
<INTEREST-EXPENSE> 2,754
<INCOME-PRETAX> 8,938
<INCOME-TAX> 3,861
<INCOME-CONTINUING> 5,077
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,077
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.30
</TABLE>
