Exhibit 10.128a
MEMORANDUM OF AGREEMENT
Regarding Extension and Amendment of 2001 Agreement
(i) Xxxxxxx & Co. Japan, Inc. ("Tiffany-Japan"), a corporation organized and
existing under the laws of the State of Delaware with its Japan branch offices
at 0-0-00, Xxxxxx-Xxxxxx, Xxxxxx-xx, Xxxxx 000-0000, Xxxxx, and (ii) Mitsukoshi
Limited ("Mitsukoshi"), a corporation organized and existing under the laws of
Japan with its executive offices at 4-1, Nihombashi Xxxxxxxxx 0-xxxxx, Xxxx-Xx,
Xxxxx 000-0000, Xxxxx, hereby agree as follows with respect to the extension of
and amendment to the Agreement, dated as of August 1, 2001, entered into between
Tiffany-Japan and Mitsukoshi (the "Agreement", which definition shall include
several Memorandums of Agreement that have been entered into between the parties
hereto to amend the Agreement):
1. Definitions
The terms defined in the Agreement shall, when used in this Memorandum of
Agreement, have the same meanings given respectively in the Agreement
unless otherwise determined in this Memorandum of Agreement.
2. Background of this Memorandum of Agreement
While the Agreement was to expire as of January 31, 2007, and both
Tiffany-Japan and Mitsukoshi had been engaging in a good-faith negotiation
for new agreement applicable after the expiration of the Agreement, the
parties failed to enter into such new agreement before the expiration of
the Agreement. Both Tiffany-Japan and Mitsukoshi mutually understand that
it will still take time before both parties reach agreement in full
regarding such new agreement. In light of this status, the parties are
mutually desirous of confirming and agreeing on one year extension of the
Agreement and special treatment applicable during the extended period.
3. Extension of the Agreement
Subject to the terms and conditions set forth herein, the parties hereby
agree that definition of the Expiration Date shall be amended so that the
Expiration Date means January 31, 2008. The period from February 1, 2007
through January 31, 2008 shall be referred to as the "Extended Period".
4. Amendment to the Agreement
4.1 Base Percentage
Definition of "Base Percentage" shall be amended to read as follows:
"Base Percentage" means the applicable percentage of Net Sales for the
month in question, as follows:
------------------------ ------------------------
Base Percentage
------------------------ ------------------------
Standard Boutiques 23%
------------------------ ------------------------
------------------------ ------------------------
In-store Concession 16%
Boutiques
------------------------ ------------------------
Stand-alone Concession 14%
Boutiques
------------------------ ------------------------
4.2 Categories of Merchandise
Definitions of "Category A Merchandise", "Category B Merchandise" and
"Category C Merchandise" shall be deleted, and there shall be no
differentiation about the Base Percentage or otherwise among those
categories during the Extended Period.
4.3 "Incentive Fee"
Definition of "Incentive Fee" shall be deleted, and for the purpose of the
Agreement applicable during the Extended Period, Incentive Fee shall be
deemed to be 0%.
4.4 "Sales Adjustment Factor"
Definition of "Sales Adjustment Factor" shall be amended to read as
follows:
"Sales Adjustment Factor" means Zero Point One Percent (0.1%) for each
Boutique that achieves Net Sales of at least One and a Half Billion
Yen ((Y)1,500,000,000), but less than Two Billion Yen
((Y)2,000,000,000) during the Term; One Percent (1%) for each Boutique
that achieves Net Sales of at least Two Billion Yen
((Y)2,000,000,000), but less than Two and a Half Billion Yen
((Y)2,500,000,000) during the Term; One and a Half Percent (1.5%) for
each Boutique that achieves Net Sales of at least Two and a Half
Billion Yen ((Y)2,500,000,000), but less than Three Billion Yen
((Y)3,000,000,000) during the Term; Two Percent (2%) for each Boutique
that achieves Net Sales of at least Three Billion Yen
((Y)3,000,000,000), but less than Three and a Half Billion Yen
((Y)3,500,000,000) during the Term; Two and a Half Percent (2.5%) for
each Boutique that achieves Net Sales of at least Three and a Half
Billion Yen ((Y)3,500,000,000), but less than Four Billion Yen
((Y)4,000,000,000) during the Term; or Three Percent (3%) for each
Boutique that achieves Net Sales of at least Four Billion Yen
((Y)4,000,000,000) during the Term.
4.5 Amendments to Schedule I
(1) Close of Certain Boutiques
a. The parties mutually acknowledge and confirm that the Boutique listed
as Boutique Number 9 in Schedule I of the Agreement (i.e., Ikspiari
Boutique) was closed as of January 31, 2007 in accordance with mutual
agreement.
b. The parties mutually agree that the Boutiques listed as Boutique
Numbers 15 and 26 in Schedule I of the Agreement (i.e., Hoshigaoka
Boutique and Okinawa Boutique) shall be closed as of April 1, 2007,
and that that the Boutique listed as Boutique Number 19 in Schedule I
of the Agreement (i.e., Hiroshima Boutique) shall be closed as of
January 1, 2008.
(2) Conversion to Concession Boutiques
a. The parties mutually acknowledge and confirm that the Boutique listed
as Boutique Number 5 in Schedule I of the Agreement (i.e., Ginza
Boutique) has been converted to Concession Boutique as from February
1, 2007.
b. The parties mutually agree that the Boutiques listed as Boutique
Numbers 3 and 8 in Schedule I of the Agreement (i.e., Niigata Boutique
and Chiba Boutique) shall be converted to Concession Boutiques as from
September 1, 2007.
(3) Relocation and Refurbishment
The parties mutually agree that the Boutique listed as Boutique Number 11
(i.e., Landmark Boutique) shall be relocated and renewed upon such
relocation by the end of January, 2008.
(4) Replacement of Schedule I
As a result of changes indicated in (2) and (3) above, Schedule I, Boutique
Numbers 3, 5, 8 and 11 attached to the Agreement shall respectively be
replaced with those attached to this Memorandum of Agreement.
5. New Agreement
The parties shall continue to have good-faith discussions so that they may
reach agreement as soon as possible on the new agreement setting forth the
terms and conditions applicable after the expiration of the Agreement as
extended hereby.
6. Effect of the Agreement
This Memorandum of Agreement shall take effect retroactively as from
February 1, 2007. The Agreement shall continue to have full force and
effect until January 31, 2008 in accordance with the terms and conditions
set forth therein, as amended by express provisions hereof.
[End of this page; continued to the signature page]
IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS MEMORANDUM OF AGREEMENT.
MITSUKOSHI LIMITED
("Mitsukoshi")
By: /s/ Xxxxxx Xxxxxxx
------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Executive Officer
Deputy General Manager, Department Store Business Headquaters
General Manager, Central Merchandising Division
Date: May 16, 2007
XXXXXXX & CO. JAPAN, INC.
("Tiffany-Japan")
By: /s/ Xxxxxxx X. Xxxxxx
--------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
Date: May 16, 2007
I-3
SCHEDULE I
Boutique Number 3
[Bracketed Items Indicate Changes Made Upon Conversion]
Present Boutique Location: NIIGATA
New Location: N/A
Type of Boutique: Standard [Concession]
Conversion Date
(converted from Standard to Concession): September 1, 2007
Cash Register Operated By: Mitsukoshi Staff [Tiffany Staff]
Monthly Remission Date
(for prior months' receipts less Base Percentage): 20th day of month
Number of Brand Managers From Tiffany-Japan: 1 [1]
Number of Assistant Brand Managers From Tiffany-Japan: 1 [1]
Number of Boutique Managers From Host Store 1 [1]
Number of Assistant Boutique Managers From Host Store: 1 [1]
Indicate if Boutique Managers and Assistants Have Other Duties: No [Yes]
Number of Tiffany Staff Members for Boutique
(includes Brand Managers and Assistants):
Regular 2 [10]
Last Renovation Date/Renovation Cycle March 3, 2001/ 5 years
Number of Mitsukoshi Staff Members for Boutique:
(includes Boutique Managers and Assistants):
Regular 11 [2]
Describe Boutique Improvements to be completed: N/A
Completion Schedule for Boutique Improvements: N/A
I-5
SCHEDULE I
Boutique Number 5
[Bracketed Items Indicate Changes Made Upon Conversion]
Present Boutique Location: GINZA
New Location: N/A
Type of Boutique: Standard [Concession]
Conversion Date
(converted from Standard to Concession): 2/1/07
Cash Register Operated By: Mitsukoshi Staff [Tiffany Staff]
Monthly Remission Date
(for prior months' receipts less Base Percentage): 20th day of month
Number of Brand Managers From Tiffany-Japan: 1 [1]
Number of Assistant Brand Managers From Tiffany-Japan: 2 [1]
Number of Boutique Managers From Host Store 1 [1]
Number of Assistant Boutique Managers From Host Store: 1 [1]
Indicate if Boutique Managers and Assistants Have Other Duties: No [Yes]
Number of Tiffany Staff Members for Boutique
(includes Brand Managers and Assistants):
Regular 3 [18]
Last Renovation Date/Renovation Cycle September 15, 2006/ 4 - 6 years
Number of Mitsukoshi Staff Members for Boutique:
(includes Boutique Managers and Assistants):
Regular 27 [2]
Describe Boutique Improvements to be completed: Renovation
On Conversion: [ Security
Equipment, Shutters and Safe]
Completion Schedule for Boutique Improvements: N/A
I-8
SCHEDULE I
Boutique Number 8
[Bracketed Items Indicate Changes Made Upon Conversion]
Present Boutique Location: CHIBA
New Location: N/A
Type of Boutique: Standard [Concession]
Conversion Date
(converted from Standard to Concession): September 1, 2007
Cash Register Operated By: Mitsukoshi Staff [Tiffany Staff]
Monthly Remission Date
(for prior months' receipts less Base Percentage): End
Number of Brand Managers From Tiffany-Japan: 1 [1]
Number of Assistant Brand Managers From Tiffany-Japan: 1 [1]
Number of Boutique Managers From Host Store 1 [1]
Number of Assistant Boutique Managers From Host Store: 1 [1]
Indicate if Boutique Managers and Assistants Have Other Duties: No [Yes]
Number of Tiffany Staff Members for Boutique
(includes Brand Managers and Assistants):
Regular 2 [10]
Last Renovation Date/Renovation Cycle March 11, 2000/ 5 years
Number of Mitsukoshi Staff Members for Boutique:
(includes Boutique Managers and Assistants):
Regular 11 [2]
Describe Boutique Improvements to be completed: N/A
Completion Schedule for Boutique Improvements: N/A
I-11
SCHEDULE I
Boutique Number 11
[Bracketed Items Indicate Changes Made Upon Conversion]
Present Boutique Location: LANDMARK
New Location: N/A
Type of Boutique: Standard [Concession]
Conversion Date
(converted from Standard to Concession): 3/1/02
Cash Register Operated By: Mitsukoshi Staff [Tiffany Staff]
Monthly Remission Date
(for prior months' receipts less Base Percentage): 20th day of month
Number of Brand Managers From Tiffany-Japan: 1 [1]
Number of Assistant Brand Managers From Tiffany-Japan: 2 [1]
Number of Boutique Managers From Host Store 1 [1]
Number of Assistant Boutique Managers From Host Store: 1 [1]
Indicate if Boutique Managers and Assistants Have Other Duties: No [No]
Number of Tiffany Staff Members for Boutique
(includes Brand Managers and Assistants):
Regular 3 [22]
Last Renovation Date/Renovation Cycle March 31, 2001/5years
Number of Mitsukoshi Staff Members for Boutique:
(includes Boutique Managers and Assistants):
Regular 22 [2]
Describe Boutique Improvements to be completed: Relocation and renewal
To be relocated and renewed upon
elocation by the end of January
2008
Completion Schedule for Boutique Improvements:
By the end of January 2008
