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Exhibit 10.123
Xxxxxxx & Co.
Report on Form 10-K
Fiscal Year 1996
AGREEMENT
THIS AGREEMENT is made effective the first day of February, 1997 by and between
XXXXXXX AND COMPANY, a New York corporation with its principal office at 000
Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 ("Tiffany") and XXXX XXXXXXX of 0 Xxxxxx xx
Xxxxxxxxxxx, Xxxxx Xxxxx, Xxxxxx ("Peretti") in consideration of the mutual
promises contained below:
ARTICLE I
Defined Terms
For the purposes of this Agreement the following terms shall have the meanings
indicated below:
"Affiliated Company" means a company controlling, under common control
with or controlled by Tiffany, directly or indirectly. A person is
"non-Affiliated" if it is not an Affiliated Company.
"Consolidated Advertising Expenditure" means the consolidated fully
allocated cost of product advertising incurred in the Territory by Tiffany
and its Affiliates, including media cost, production cost, licensed
properties and agency fees. Consolidated Advertising Expenditure will be
calculated on a Fiscal Year basis.
"Consolidated Net Sales" means all proceeds paid or payable to Tiffany or
any of its Affiliated Companies in consequence of the first sale in the
Territory to any non-Affiliated purchaser of any product, whether at
wholesale or retail, net of any returns of products accepted by Tiffany or
its Affiliates, during the Fiscal Quarter in question, exclusive of any
separately itemized charges to the purchaser for taxes, shipping, packing,
duties, insurance, freight, handling, engraving, customization and the
like, all as determined by the consolidated books of accounts of Xxxxxxx &
Co., a Delaware corporation, on a consistent basis. In the event that a
sale of a product is transacted in a currency other than the U.S. dollar,
the proceeds of such sale shall be converted to U.S. dollars at the same
exchange rate used by Xxxxxxx & Co. to account for such sales on its books
of account.
"Copyright Notice" means a notice stamped, engraved, printed or otherwise
attached to a Peretti Product, in form satisfactory to Peretti, indicating
that Xxxxxxx claims copyright in the design of the Peretti Product in
question.
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"Corporate Sales Representatives" means sales personnel who specialize in
the sale of Tiffany Merchandise for use by businesses (not for purposes of
resale) throughout the United States and such sales personnel connected
with other Tiffany Stores in the Territory.
"Exclusive Products" mean (i) all Xxxxxxx Xxxxxxx, (ii) all Peretti
Objects sold by Xxxxxxx xxxxx to the effective date of this Agreement and
(iii) any Peretti Objects later made subject to this Agreement by Xxxxxxx
as provided in Section 6.1 below.
"Fiscal Year" means each 12-month period ending on January 31 and "Fiscal
Quarter" means each of the three-month periods ending as of the last day
of April, July, October and January.
"Net Peretti Sales" means all proceeds paid or payable to Tiffany or any
of its Affiliates in consequence of the first sale to any non-Affiliated
purchaser of a Peretti Product, whether at wholesale or retail, net of any
returns of Peretti Products accepted , during the Fiscal Quarter in
question, exclusive of any separately itemized charges to the purchaser
for taxes and other such items ordinarily excluded in calculating net
sales, all as determined by the consolidated books of accounts of Xxxxxxx
& Co., a Delaware corporation, on a consistent basis. In the event that a
sale of a Peretti Product is transacted in a currency other than the U.S.
dollar, the proceeds of such sale shall be converted to U.S. dollars at
the same exchange rate used by Xxxxxxx & Co. to account for such sales on
its books of account.
"Peretti Copyrights" means the copyrights for the Peretti Designs whether
or not the copyrights to such designs have been registered in any
jurisdiction.
"Peretti Designs" means Xxxx Xxxxxxx'x designs for products.
"Peretti Jewelry" means Peretti Products that are rings, pins, bracelets,
brooches, pendants, belts, earrings and comparable items, including
bottles and flasks, which are worn or carried for personal adornment.
"Peretti Objects" means Peretti Products other than Peretti Jewelry, such
as, but not limited to, silver flatware and earthenware.
"Peretti Products" mean products made from the Peretti Designs, including
Xxxxxxx Xxxxxxx and Peretti Objects.
"Peretti Trademarks" means one or more of the trademarks XXXX XXXXXXX,
Xxxx Xxxxxxx (written in stylized signature script), XXXXXXX, the bean
design, DIAMONDS BY THE YARD and PEARLS BY THE YARD.
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"Rights" mean the rights granted by Xxxxxxx to Tiffany under the Peretti
Trademarks and the Peretti Copyrights under Article II of this Agreement.
"Selection" means a selection of Peretti Products that is representative
of the full collection of Peretti Products, but suitable to the space
available and display environment in the Tiffany Store, as agreed upon
from time to time with Peretti; such selection shall include Peretti
Jewelry, and, if tabletop merchandise is offered, Peretti Objects shall
also be offered.
"Territory" means the countries listed on Schedule T attached, as such
schedule may be amended by agreement of Tiffany and Xxxxxxx made from time
to time.
"Tiffany Merchandise" means merchandise bearing the Tiffany Trademarks.
"Tiffany Trademarks" means any one or more of the trademarks TIFFANY,
TIFFANY & CO. or T&CO.
"Tiffany Store" means a retail store or in-store boutique devoted to the
authorized sale of Tiffany Merchandise.
ARTICLE II
Peretti To Allow Tiffany to Use Her Trademarks and Designs
2.1 Peretti hereby grants Tiffany the right to apply the Peretti Trademarks to
the Peretti Products and to use the Peretti Trademarks to promote,
advertise, display and sell the Peretti Products throughout the Territory.
2.2 Subject to Section 2.5 below, Peretti hereby grants Tiffany the right to
use the Peretti Designs under the Peretti Copyrights to make, have made,
promote, import, export, advertise, display and sell Peretti Products
throughout the Territory.
2.3 The Rights shall be exclusive to Tiffany for Exclusive Products.
2.4 Rights granted under this Article I may be exercised by Xxxxxxx's
Affiliated Companies and are subject to all the other terms, conditions,
limitations and obligations under this Agreement and are limited to the
Territory.
2.5 All rights in the Peretti Designs, the Peretti Trademarks and the Peretti
Copyrights which are not specifically granted to Tiffany by this Agreement
are reserved to Xxxxxxx for her sole use.
ARTICLE III
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Tiffany to Pay Peretti Royalties
3.1 Tiffany agrees to pay Xxxxxxx a basic royalty of Three Hundred Thousand
Dollars ($300,000) per Fiscal Year. This royalty will be payable in four
equal installments within thirty (30) days following the end of each
Fiscal Quarter for so long as this Agreement remains effective and Xxxxxxx
remains alive.
3.2 In addition to the basic royalty, Tiffany agrees to pay Xxxxxxx a royalty
of Five Percent (5%) of Net Peretti Sales. This royalty shall be payable
within thirty (30) days following the end of each Fiscal Quarter and will
be accompanied by a written report of Net Peretti Sales prepared by
Tiffany in such detail as Xxxxxxx may reasonably require.
3.3 All royalties shall be payable in U.S. Dollars and will be subject to such
withholding for taxes as Tiffany is required to make under U.S. Law.
ARTICLE IV
Presentation of Collection and Approved Channels of Trade
4.1 Tiffany will display the full collection of Peretti Products for sale in
its flagship store in New York City and a Selection of Peretti Products in
all other Tiffany Stores within the Territory.
4.2 Peretti Jewelry may be offered to selected non-Affiliated retailers who
purchase XXXXXXX brand merchandise through Tiffany's trade division for
resale in the United States and in other countries approved in writing by
Xxxxxxx.
4.3 Peretti Products may be offered through catalogs in the United States and
in other countries approved in writing by Xxxxxxx.
4.4 Peretti Products may be offered through Corporate Sales Representatives in
the Territory.
4.5 A complete listing of all Peretti Products, with photographs and
descriptions, will be maintained and communicated to Peretti by Xxxxxxx
and Xxxxxxx will send to Xxxxxxx a copy of same for use by Xxxxxxx and
Tiffany.
4.6 Tiffany will provide Peretti on an annual basis with a list of all stores,
boutiques and trade accounts in which Peretti Products are sold and will
consult with her on the opening of new stores. Such list dated as of
January 31, 1997 will be provided to Xxxxxxx at Xxxxxxx's earliest
convenience.
4.7 Tiffany will prepare and provide to Xxxxxxx a photographic record of the
Peretti Product display in Tiffany's New York store as of February 1997
for use by Xxxxxxx and Tiffany.
ARTICLE V
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Manufacturing and Quality Control
5.1 The Peretti Trademarks will not be applied to, or used in connection with
the sale of, any products which have not been manufactured in strict
conformance with the Peretti Designs and with standards of quality in
materials and workmanship established by Xxxxxxx.
5.2 Only manufacturing techniques approved by Xxxxxxx will be used in the
production of Peretti Products.
5.3 Peretti shall have the right at any time during regular business hours to
conduct examinations of Peretti Products manufactured or being
manufactured by or for Tiffany to determine compliance with her designs
and standards. If at any time any Peretti Products fail to conform to such
designs or standards, Xxxxxxx shall notify Tiffany. Upon such
notification, Tiffany shall not sell such nonconforming products until
Xxxxxxx's standards of quality have been met.
5.4 Tiffany agrees to furnish to Xxxxxxx or her representatives samples of
Peretti Products as she or her authorized representatives may request from
time to time in quantities sufficient for inspections and tests to assure
conformance with her standards and designs. Upon completion of such
inspections and tests, Xxxxxxx shall return such inspected and tested
samples, if requested by Tiffany. Tiffany shall bear the cost of
transportation of such samples to Xxxxxxx or her representative and for
return of such samples to Tiffany, as well as the risk of loss or damage
to such samples.
5.5 On a regular basis Tiffany will discuss with Peretti its plans for the
manufacture of Peretti Products.
5.6 Tiffany will continue to place orders for manufacture of certain Peretti
Products with manufacturers in Spain who have been designated by Xxxxxxx
and who have, for many years, provided Peretti Products meeting the
quality standards of Peretti and Xxxxxxx. It is understood that such
manufacturers must continue to meet existing quality, price and delivery
standards.
5.7 Tiffany agrees to compensate Xxxxxxx for all quality control services
performed by her or her representatives outside the United States.
5.8 Tiffany will provide to Xxxxxxx a sample of each Peretti Object that is
not presently included in the collection of Peretti Products now
maintained by Xxxxxxx in San Xxxxx-Xxxx, Spain and a sample of each item
of Peretti Jewelry rendered in silver, other than items of Peretti Jewelry
that are manufactured in Spain.
ARTICLE VI
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New Designs
6.1 Peretti shall be under no obligation to produce any new Peretti Designs
for Tiffany. If new designs are created by Xxxxxxx and provided by her to
Tiffany for production of Peretti Products, they will then become subject
to this Agreement.
6.2 It is understood that Xxxxxxx will perform all design work outside the
United States.
ARTICLE VII
Advertising and Catalogs
7.1 Tiffany will use its best efforts to continue the successful support of
sales of Peretti Products through advertising and promotion in the
Territory.
7.2 As a percentage of Consolidated Advertising Expenditure, amounts expended
by Tiffany and its Affiliated Companies to advertise Peretti Products in
any Fiscal Year will equal or exceed the percentage derived by dividing
Net Peretti Sales by Consolidated Net Sales for the previous Fiscal Year.
7.3 All advertising for Peretti Products will be subject to Xxxxxxx's approval
as to both copy and graphic design, and Xxxxxxx will have the right to
approve all photography used.
7.4 Tiffany will use photography created by the photographer Hiro or any other
photographer of comparable stature that Xxxxxxx may specify in advertising
for Peretti Products. Tiffany will purchase unlimited rights to reproduce
and use for commercial purposes any such photography created after the
date of this agreement. Tiffany will fully transfer such rights to
Xxxxxxx. Xxxxxxx, in turn, agrees to permit Tiffany to use such
photography without usage fee for the advertising of Peretti Products.
7.5 Tiffany will consult with Xxxxxxx or her representative on all aspects of
the advertising and promotion of Peretti Products. Tiffany will make
presentations to Peretti of its advertising and promotional plans,
including media, prior to the start of each Fiscal Year and at other times
as requested by Xxxxxxx.
7.6 All references to Peretti Products inserted in catalogs and other media
shall be subject to Xxxxxxx's approval as to both copy and graphic design
and Xxxxxxx will have the right to approve all photography used.
ARTICLE VIII
Promotional Work
8.1 Xxxxxxx retains absolute approval authority with respect to any
promotional appearance suggested by Tiffany and will make herself
available to Tiffany for promotional
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appearances in support of sales of Peretti Products only at times
convenient to her.
8.2 Tiffany will promptly reimburse to Peretti all reasonable expenses
incurred by Xxxxxxx in connection with her promotional appearances for
Tiffany, including round-trip, first-class air transportation (including
to and from Europe) and first-class hotel accommodations for Xxxxxxx and
any one person designated by Xxxxxxx to accompany her.
ARTICLE IX
Retail Pricing
9.1 Tiffany will establish retail prices for Peretti Products in a manner that
provides fair value to the consumer, and that achieves an average gross
margin consistent with such margin achieved by Tiffany in its New York
store, or less.
9.2 Peretti Products will not be subject to advertised promotional pricing or
inventory liquidation events.
9.3 Tiffany shall consult with Xxxxxxx concerning the retail pricing of
Peretti Products and give due consideration to her opinion.
ARTICLE X
Term and Termination
10.1 This Agreement shall continue in effect indefinitely, subject to
termination by either Xxxxxxx or Tiffany. Termination shall be effective
six (6) months following written notice of termination given by either
party.
10.2 Following the effective date of termination, Tiffany shall have a period
of one (1) year during which it may use the Rights to sell all Peretti
Products that Tiffany had on-hand or on-order as of the effective date of
termination. At the conclusion of such one (1) year period, Tiffany will
offer to sell to Peretti or her designee, such Peretti Products as remain
on-hand at Tiffany's cost for such Peretti Products. If Xxxxxxx or her
designee fails to purchase all such Peretti Products remaining on hand,
Xxxxxxx xxx continue to sell such Peretti Products using the Rights. All
sales made by Tiffany under this Section 9.2 (except for sales made to
Peretti or her designee) shall be subject to the payment of royalties as
provided for in Section 2.2 above.
10.3 Termination of this Agreement shall not relieve either party from any
obligation incurred under this Agreement prior to termination. Tiffany
shall continue to have the obligation to pay royalties on and make reports
of Net Peretti Sales, including sales made after the effective date of
termination as permitted in Section 9.2 above.
ARTICLE XI
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Protection of Peretti Trademarks and Copyrights
11.1 Tiffany admits the validity of, and agrees not to challenge, the Peretti
Trademarks and the Peretti Copyrights. This admission shall remain in
effect following the termination of this Agreement for any reason.
11.2 Tiffany agrees that any and all rights that may be acquired by the use of
the Peretti Trademarks shall be for the sole benefit of Xxxxxxx. Tiffany
further agrees that, so long as this Agreement remains effective, Tiffany
will undertake, at its own cost and expense and as Xxxxxxx's agent,
through attorneys acceptable to Xxxxxxx, to complete, renew and keep in
effect the registration of the Peretti Trademarks in such product
categories reasonably necessary to cover the Peretti Products in all
countries within the Territory. Xxxxxxx agrees that Tiffany shall be her
agent for that purpose. Xxxxxxx further agrees to execute all papers and
provide such other cooperation reasonably requested by Tiffany or such
attorneys to effect further registration of, maintenance and renewal of
the Peretti Trademarks.
11.3 Tiffany agrees to execute all papers and provide such other cooperation
reasonably requested by Xxxxxxx or her agents to effect further
registration of, maintenance and renewal of the Peretti Trademarks and
Peretti Copyrights and, where applicable, to record Tiffany as a
registered user of the Peretti Trademarks. This obligation shall remain in
effect following the termination of this Agreement for any reason.
11.4 In the event that Tiffany learns of any infringement or threatened
infringement of the Rights in the Territory, Tiffany shall commence such
proceedings or take such other steps as it believes reasonably necessary
to protect its Rights, either in its own name or in Xxxxxxx's name, and
Xxxxxxx will join in such action, provided that Tiffany shall bear all
costs of such proceedings and shall be entitled to retain all proceeds.
Tiffany will keep Xxxxxxx advised of any such steps taken. If Xxxxxxx
wishes Tiffany to take action, including commencement of litigation, in
addition to those steps taken by Tiffany, Xxxxxxx will so advise Tiffany.
If Tiffany does not promptly agree to take such action, Xxxxxxx may
institute such action, either in her own name or in Tiffany's name, and
Tiffany will join in such action, provided that Xxxxxxx shall bear all
costs of such proceedings and shall be entitled to retain all proceeds.
11.5 Peretti Products will be marked with the Peretti Trademarks, the Tiffany
Trademarks and with the Copyright Notice.
11.6 Xxxxxxx represents that she owns the Peretti Copyrights and the Peretti
Trademarks and that no other person has any rights in the Peretti
Copyrights or the Peretti Trademarks.
11.7 In addition to its obligations under Sections 11.2 and 11.3 above, Xxxxxxx
xxx, at its sole election and expense, undertake, as Xxxxxxx's agent,
through attorneys acceptable to Xxxxxxx, to effect the registration of the
Peretti Trademarks in countries outside the Territory
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selected by Tiffany. Should Tiffany undertake registration of the Peretti
Trademarks outside the Territory, Xxxxxxx agrees to give due consideration
to recommendations given by Tiffany for expansion of the Territory to
include such countries, but the expansion of the Territory, if at all,
shall continue to be within Xxxxxxx's sole discretion.
ARTICLE XII
Assignment, Delegation and Binding Nature of Agreement
12.1 Any design services anticipated under this Agreement are to be performed
personally by Xxxxxxx or under her direct supervision outside the United
States.
12.2 Subject to the conditions stated below, Xxxxxxx may assign this Agreement
and/or the right to receive royalties hereunder and all benefits
hereunder, to any person (including any corporation, trust, partnership,
limited liability company, foundation, estate or other legal entity):
(a) while Xxxxxxx is alive, she alone will exercise or withhold
the various approvals necessary under this Agreement (this
condition will not apply if Xxxxxxx has assigned this
Agreement to a person who is also the owner of the Peretti
Trademarks and the Peretti Copyrights);
(b) no assignment will alter the provisions of Section 12.1 above;
(c) if Xxxxxxx transfers ownership of the Peretti Trademarks and
the Peretti Copyrights to any person, this Agreement shall be
deemed assigned to such person; and
(x) Xxxxxxx agrees that, so long as this Agreement remains
effective, she will not split ownership of the Peretti
Trademarks from the Peretti Copyrights.
12.3 Xxxxxxx xxx not assign this Agreement or the benefits of this Agreement
except as follows: Xxxxxxx xxx assign the benefits of this Agreement, in
whole or in part, to an Affiliated Company. Reference to Tiffany in this
Agreement includes reference to any such Affiliated Company. Any attempt
to assign this Agreement or the benefits of this Agreement to any other
person shall be void.
12.4 This Agreement shall be binding upon the parties and their respective
successors, heirs, estates, administrators and personal representatives
and, subject to Sections 12.2 and 12.3 above, their assigns.
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ARTICLE XIII
Settlement of Differences
13.1 The provisions set forth in this Article XIII shall be the exclusive means
of resolving disputes that arise under this Agreement.
13.2 Before resort to the arbitration provisions set forth in Section 13.3
below, the parties shall try to settle any dispute occurring between them
by consultation with one another on a friendly and cooperative basis. To
this end, Tiffany agrees that it shall always make its Chief Executive
Officer available to Peretti for the purposes of discussing any problems
or concerns that arise.
13.3 Any dispute, controversy or claim arising out of, relating to, or in
connection with this Agreement, or the breach, termination or validity
hereof, shall be finally settled by arbitration. The arbitration shall be
conducted in accordance with the Rules of Conciliation and Arbitration of
the International Chamber of Commerce in effect at the time of the
arbitration, except as they may be modified in this Agreement. The seat of
the arbitration shall be Paris, France, and it shall be conducted in the
English language. The arbitrators shall not have the authority to award
punitive or exemplary damages to either party but will have the authority
to award reasonable attorneys' fees and other arbitration-related costs to
the prevailing party. Any award, order or judgment made by such
arbitration shall be in writing and shall be deemed final and binding on
the parties and may be entered and enforced in any court of competent
jurisdiction. The party initiating arbitration (the "Claimant") shall
appoint its arbitrator in its request for arbitration (the "Request"). The
other party (the "Respondent") shall appoint its arbitrator within 30 days
of receipt of the Request and shall notify the Claimant of such
appointment in writing. If the Respondent fails to appoint an arbitrator
within such 30-day period, the arbitrators shall be appointed by the
International Chamber of Commerce acting in accordance with its Rules of
Conciliation and Arbitration, which shall promptly notify the parties of
the appointments. Otherwise, the two arbitrators appointed by the parties
shall appoint a third arbitrator within 30 days after the Respondent has
notified Claimant of the appointment of the Respondent's arbitrator. When
the third arbitrator has accepted the appointment, the two party-appointed
arbitrators shall promptly notify the parties of the appointment. If the
two arbitrators appointed by the parties fail or are unable so to appoint
a third arbitrator or so to notify the parties, then the appointment of
the third arbitrator shall be made by the International Chamber of
Commerce acting in accordance with its Rules of Conciliation and
Arbitration, which shall promptly notify the parties of the appointment.
The third arbitrator shall act as Chair of the panel of arbitrators.
ARTICLE XIV
Miscellaneous
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14.1 Complete Agreement. This Agreement, including all Schedules and Exhibits
hereto, constitutes the entire agreement between the parties hereto with
respect to the Rights. This Agreement may not be amended or modified
orally, but only by a writing signed by Xxxxxxx or her authorized
representative and by an officer of Tiffany.
14.2 Notices. All notices required or permitted to be given under this
Agreement (other than notices necessary to give or request approvals in
the ordinary course of business which shall be by ordinary mail or by
facsimile) shall be in writing and, unless specifically provided otherwise
in this Agreement, shall be deemed to have been given if personally
delivered or if mailed by registered or certified mail, return receipt
requested, postage prepaid, to the parties concerned at the addresses set
forth below (or at such other address or addressees as Tiffany or Peretti
may from time to time respectively designate by notice to the other in the
manner provided herein for giving notice); notice so sent will be deemed
effective, in the case of mail, on the tenth business day following the
date of mail deposit, and in the case of hand delivery, when delivered:
If to Tiffany to:
Xxxxxxx and Company
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Office of the Chief Executive Officer
If to Peretti to:
Xxxx Xxxxxxx
c/o
Xxxxxxx Xxxxxxxxx
00191 Roma, Italy
Xxx Xxxxx Xxxxxx, 00
With a copy to:
Xxxx Xxxxxxx
Studio Legale Sabelli
00185 Roma, Italy
Xxx Xxxxxx, 00
14.3 Headings. The headings of the Sections and Articles of this Agreement are
for convenience only and do not limit or affect the terms and conditions
of this Agreement.
14.4 Confidentiality. Neither Peretti nor Tiffany shall, at any time during the
Term or thereafter, disclose or use for any purpose, other than as
contemplated by this Agreement, any revealed or otherwise acquired
confidential information or data relating to the
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business of the other, except to the extent such information is or has
become publicly available through no act or failure of such other party.
14.5 Further Assurances. Each of the parties hereto agrees to execute,
acknowledge and deliver all such further instruments and assurances, and
to take all such further action, consistent with the terms of this
Agreement, as shall be necessary or desirable to carry out this Agreement,
and to consummate and effect the transactions contemplated hereby.
14.6 Governing Law. The parties hereto agree that this Agreement shall be
interpreted, governed and construed pursuant to the laws of the State of
New York applicable to agreements made and to be performed in said state.
14.7 Neither Party the Agent of the Other. Except as provided in Section 11.2
above, nothing contained in this Agreement shall be construed to confer or
vest in either party any right or authority to act for or represent the
other, nor to pledge the credit of the other party or contract any
liability on the other party's behalf, nor shall either party be the
employee of the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first mentioned above.
/s/
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Xxxx Xxxx Xxxxxxx
XXXXXXX AND COMPANY
By:/s/
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Xxxxxxx X. Xxxxxx, Chairman
and Chief Executive Officer
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Schedule T to Agreement Between Tiffany and Peretti
Countries Included in the Territory
United States of America, including all territories, protectorates and
possessions
Canada
Japan
Singapore
Australia
Italy
The United Kingdom
Switzerland
Germany
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