UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report: March 23, 2009
TIFFANY & CO.
(Exact name of Registrant as specified in its charter)
Delaware 1-9494 13-3228013
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
727 Fifth Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
|
Registrant's telephone number, including area code: (212) 755-8000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On March 23, 2009, Registrant issued a press release announcing its unaudited earnings and results of operations for the fourth quarter ended January 31, 2009. A copy of the March 23, 2009 press release is attached hereto as Exhibit 99.1 to this Form 8-K.
Item 8.01. Other Events.
On March 18, 2009, Registrant, Tiffany and Company, Tiffany & Co. International, and each other Subsidiary of Registrant that is a Borrower and is a signatory, delivered to The Bank of New York Mellon, Amendment No. 1 to the Credit Agreement dated July 20, 2005. A copy of Amendment No. 1 is attached hereto as an exhibit.
Registrant makes various grants, awards of cash and stock, and provides various benefits to its directors. A copy of the 2008 Directors Equity Compensation Plan approved by the stockholders on May 15, 2008 is attached hereto as an exhibit.
The information in this Current Report on Form 8-K is being furnished pursuant to Item 2.02 Results of Operations and Financial Condition. In accordance with General Instruction B.2 of Form 8-K, the information in this report shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly stated by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press Release dated March 23, 2009.
10.146b Amendment No. 1 to the Credit Agreement dated
July 20, 2005, between The Bank of New York
Mellon and Tiffany & Co., Tiffany and Company,
Tiffany & Co. International, and each other
Subsidiary that is a Borrower.
4.3a 2008 Directors Equity Compensation Plan.
|
SIGNATURE
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.
BY: /s/ Patrick B. Dorsey
-------------------------------------
Patrick B. Dorsey
Senior Vice President, General Counsel
and Secretary
Date: March 23, 2009
|
EXHIBIT INDEX
Exhibit No. Description
99.1 Text of Press Release issued by Tiffany & Co., dated
March 23, 2009.
10.146b Amendment No. 1 to the Credit Agreement dated July 20, 2005,
between The Bank of New York Mellon and Tiffany & Co., Tiffany
and Company, Tiffany & Co. International, and each other
Subsidiary that is a Borrower.
4.3a 2008 Directors Equity Compensation Plan.
|
Exhibit 99.1
TIFFANY & CO.
NEWS RELEASE
Fifth Avenue & 57th Street Contacts:
New York, N.Y. 10022 ---------
James N. Fernandez
(212)230-5315
Mark L. Aaron
(212)230-5301
New York, N.Y., March 23, 2009 - Tiffany & Co. (NYSE: TIF) today reported its financial results for the fourth quarter and full year ended January 31, 2009. The quarter's sales were in line with previously-reported holiday season results. This sales performance, combined with a lower operating margin, led to a decline in fourth quarter earnings as expected. For the full year, net sales declined 3%, while net earnings per diluted share (excluding one-time items noted on the attached "Non-GAAP Measures" schedule) declined 6%.
Michael J. Kowalski, chairman and chief executive officer, said, "Tiffany has clearly not been immune from global economic turmoil in recent months and we are taking a cautious view to business conditions in 2009. We have addressed our cost structure in order to maintain reasonably healthy levels of profitability and strong liquidity, and position Tiffany for future growth."
Net sales in the fourth quarter declined 20% to $841.2 million. On a constant-exchange-rate basis which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars (see attached "Non-GAAP Measures" schedule), worldwide net sales declined 19% and comparable store sales declined 23%. Sales declines in the Americas were the most significant contributing factor.
Net sales of $2.86 billion in 2008 were 3% below the prior year. On a constant-exchange-rate basis, worldwide net sales and comparable store sales declined 4% and 9%.
The Company's fourth quarter and full year 2008 earnings included the following one-time items: (i) a pre-tax charge of $97.8 million, or $0.47 per diluted share after tax, resulting from an early retirement program and other staffing reductions, (ii) pre-tax charges of $7.5 million, or $0.04 per diluted share after tax, due to inventory and other
charges related to the anticipated closing of the Company's IRIDESSE operations;
(iii) pre-tax charges of $12.4 million, or $0.07 per diluted share after tax, to
impair an investment in a diamond mining company; and (iv) a pre-tax charge of
$3.4 million, or $0.02 per diluted share after tax, for the closing of a diamond
polishing facility.
In the fourth quarter, the Company offered an early-retirement package to approximately 800 U.S. employees and approximately 600 accepted the offer. Combined with additional staff reductions that were made and the anticipated closing of IRIDESSE stores, management expects to incur a reduction of 10% of worldwide staffing. This is expected to generate approximately $60 million of pre-tax savings in 2009, to be realized in selling, general and administrative expenses and in cost of sales.
In the prior-year period, the Company also recorded several one-time items.
Excluding the current-year and prior-year one-time items noted on the attached "Non-GAAP Measures" schedule, net earnings per diluted share declined 37% to $0.85 in the fourth quarter of 2008 and declined 6% to $2.33 in the full year.
On a GAAP-reported basis, net earnings in the fourth quarter were $31.1 million, or $0.25 per diluted share, compared with the prior year's $127.4 million, or $0.96 per diluted share. The full year's net earnings were $220.0 million, or $1.74 per diluted share, versus $323.5 million, or $2.34 per diluted share, in the prior year.
A $27.5 million net loss from discontinued operations in 2007 included an after-tax charge of $22.6 million related to the sale of the Company's Little Switzerland business, as well as losses from those operations.
o In the Asia-Pacific region, fourth quarter sales declined 3% to $279.7 million due to declines in several markets, and full year sales increased 8% to $922.0 million. On a constant-exchange-rate basis, sales declined 9% in the quarter and rose 1% in the full year, while comparable store sales declined 13% and 4%. The Company opened nine TIFFANY & CO. stores (net) in Asia-Pacific in 2008.
o In Europe, fourth quarter sales declined 2% to $95.3 million and increased 17% to $284.6 million in the year. On a constant-exchange-rate basis, sales increased 20% in the quarter and 25% in the year largely reflecting incremental sales from new stores, while comparable store sales were unchanged in the quarter and rose 6% in the full year. The Company added seven TIFFANY & CO. stores in Europe in 2008.
o The Company operated 206 TIFFANY & CO. stores and boutiques at January 31, 2009 (86 in the Americas, 96 in Asia-Pacific and 24 in Europe), versus 184 locations a year ago (80 in the Americas, 87 in Asia-Pacific and 17 in Europe).
o Other sales of $7.3 million in the fourth quarter and $66.7 million in the full year were 71% and 18% lower than the respective prior-year periods primarily due to reduced wholesale sales of diamonds.
o Selling, general and administrative (SG&A) expenses declined 19% in the fourth quarter and 3% in the full year. Excluding one-time items in both years, SG&A expenses declined 9% and increased 2% in the respective periods. Costs related to new stores were largely offset by lower management incentive compensation in the year and lower sales-related variable costs in the fourth quarter.
o The operating margin (operating earnings as a percentage of net sales) was 7.3% in the fourth quarter and 13.1% in the year, compared with 18.8% and 18.9% in the respective prior-year periods. However, excluding the one-time items in both years, Tiffany's operating margin in the fourth quarter was 21.6% (versus 26.7% in the prior year) and was 17.3% in 2008 (versus 18.5% in the prior year).
o Other expenses, net in the fourth quarter were higher than the prior year largely due to increased interest expense and lower interest income. Other expenses, net rose in the full year for similar reasons; they also rose due to a third quarter write-off of $4.3 million with respect to an interest-rate swap with Lehman Brothers Special Financing Inc. as counterparty, and foreign currency transaction losses in 2008 associated with the settlements of foreign payables.
o The effective tax rate was 40.3% in the fourth quarter and 36.4% in the year, compared with 35.8% and 36.1% in the prior year.
o Accounts receivable at January 31, 2009 were 15% lower than the prior year due to the decline in sales.
o Net inventories increased 17% in the year to $1.6 billion at January 31, 2009, due to lower-than-expected sales in the latter part of the year, the opening of new stores and increases in raw material inventories.
o The Company suspended its share repurchase program during the third quarter in order to conserve cash and, therefore, did not repurchase any shares of its common stock in the fourth quarter. In the full year, the Company spent $218.4 million to repurchase 5,375,026 shares. At January 31, 2009, the Company had $402 million in authority available for future repurchases under its current program through January 2011, although activity remains suspended.
o Total debt as a percentage of stockholders' equity was 45% at January 31, 2009, versus 26% at the prior year end. This increase reflected the effect of the sales shortfall in the fourth quarter and share repurchases during 2008. In addition, the Company secured $100 million of long-term financing in the fourth quarter and issued an additional $250 million of long-term debt after the close of the year. These funds have been and will be used to refinance existing debt and for general corporate purposes.
He added, "Not surprisingly, it is difficult to plan in this environment.
However, we believe we are being appropriately cautious to expect challenging
economic conditions throughout the year, and our planned spending is based on
the following full year assumptions which may or may not prove valid: (i) a
worldwide sales decline of approximately 11%; (ii) regional sales declines of:
(a) a mid-teens percentage in the Americas (greater in the first half of the
year), (b) a mid-single-digit percentage in the Asia-Pacific region, (c) a
high-single-digit percentage in Europe, as well as (d) a 20% decline in other
sales; (iii) a decline in the operating margin due to the anticipated sales
de-leverage effect on fixed costs (this includes the fixed cost components of
cost of sales and SG&A expenses), partly offset by the benefits from planned
savings from the staffing reductions and other cost-related initiatives; (iv)
other expenses, net of approximately $50 million; (v) an effective tax rate of
approximately 37%; (vi) net earnings from continuing operations of $1.50 - $1.60
per diluted share; (vii) a 33% decline in capital expenditures to $100 million;
(viii) a single-digit percentage decline in net inventories; and (ix) free cash
flow (defined as cash flow from operating activities minus capital expenditures)
in excess of $400 million. Combined with our recently-completed long-term debt
issuances, we're pleased to have a balance sheet that provides more than ample
liquidity to pursue our growth strategies."
Tiffany & Co. operates jewelry and specialty retail stores and manufactures products through its subsidiary corporations. Its principal subsidiary is Tiffany and Company. The Company operates TIFFANY & CO. retail stores and boutiques in the Americas, Asia-Pacific and Europe and engages in direct selling through Internet, catalog and business gift operations. Other operations include consolidated results from ventures operated under trademarks or tradenames other than TIFFANY & CO. For additional information, please visit www.tiffany.com or call our shareholder information line at 800-TIF-0110.
This document contains certain "forward-looking" statements concerning the Company's objectives and expectations with respect to sales, store openings, expenses, operating margin, earnings, inventories, capital expenditures and cash flow. Actual results might differ materially from those projected in the forward-looking statements. Information concerning risk factors that could cause actual results to differ materially is set forth in the Company's 2007 Annual Report on Form 10-K and in other reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.
# # #
TIFFANY & CO. AND SUBSIDIARIES
(Unaudited)
The Company's management does not, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Company presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate the Company's operating results.
The Company reports information in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Internally, management monitors its sales performance on a non-GAAP basis that eliminates the positive or negative effects that result from translating international sales into U.S. dollars ("constant-exchange-rate basis"). Management believes this constant-exchange-rate measurement provides a more representative assessment of the sales performance and provides better comparability between reporting periods.
The following table reconciles sales percentage increases (decreases) from the GAAP to the non-GAAP basis versus the previous year:
Fourth Quarter 2008 vs. 2007 Year-to-Date 2008 vs. 2007
-------------------------------------------- --------------------------------------------
Constant- Constant-
GAAP Translation Exchange- GAAP Translation Exchange-
Reported Effect Rate Basis Reported Effect Rate Basis
-------------------------------------------- --------------------------------------------
Net Sales:
----------
Worldwide (20)% (1)% (19)% (3)% 1 % (4)%
Americas (29)% (2)% (27)% (10)% -- (10)%
U.S. (30)% -- (30)% (11)% -- (11)%
Asia-Pacific (3)% 6 % (9)% 8 % 7 % 1 %
Japan 4 % 17 % (13)% 7 % 14 % (7)%
Other Asia-Pacific (13)% (10)% (3)% 10 % (2)% 12 %
Europe (2)% (22)% 20 % 17 % (8)% 25 %
Comparable Sales:
-----------------
Worldwide (23)% -- (23)% (7)% 2 % (9)%
Americas (32)% (1)% (31)% (14)% -- (14)%
U.S. (33)% -- (33)% (16)% -- (16)%
Asia-Pacific (7)% 6 % (13)% 4 % 8 % (4)%
Japan 1 % 17 % (16)% 4 % 14 % (10)%
Other Asia-Pacific (18)% (9)% (9)% 3 % (2)% 5 %
Europe (18)% (18)% -- 1 % (5)% 6 %
|
Three Months Ended Three Months Ended
January 31, 2009 January 31, 2008
---------------------------------------------------------------------------------
$ $
(in thousands, except per share amounts) (after tax) EPS (after tax) EPS
---------------------------------------------------------------------------------------------------------------------------
Net earnings, as reported $ 31,085 $ 0.25 $ 127,387 $ 0.96
Restructuring charges 59,006 0.47 - -
Watch obsolescence charge a - - 11,633 0.09
Iridesse charges a, b 4,702 0.04 9,852 0.07
Impairment of investments and 8,335 0.07 29,052 0.22
loans b, c
Diamond facility closing charge b 2,198 0.02 - -
---------------------------------------------------------------------------------
Net earnings, as adjusted $ 105,326 $ 0.85 $ 177,924 $ 1.34
=================================================================================
|
a On a pre-tax basis includes $6,300,000 and $19,212,000 of charges within cost of sales for the three months ended January 31, 2009 and 2008.
b On a pre-tax basis includes $15,693,000 and $63,513,000 of charges within SG&A expenses for the three months ended January 31, 2009 and 2008.
c On a pre-tax basis includes $1,311,000 charge within other expenses, net for the three months ended January 31, 2009.
Certain operating data as reported as a percentage of net sales and as adjusted for the items listed in the table above were as follows:
Three Months Ended Three Months Ended
January 31, 2009 January 31, 2008
---------------------------------------------------------------------------------
As Reported As Adjusted As Reported As Adjusted
------------------------------------------------------------------------------------------------------
Gross profit 58.6% 59.3% 57.9% 59.7%
SG&A expenses 39.6% 37.8% 39.1% 33.0%
Operating earnings 7.3% 21.6% 18.8% 26.7%
Net earnings 3.7% 12.5% 12.1% 16.9%
|
Full Year Ended Full Year Ended
January 31, 2009 January 31, 2008
---------------------------------------------------------------------------------
$ $
(in thousands, except per share amounts) (after tax) EPS (after tax) EPS
---------------------------------------------------------------------------------------------------------------------------
Net earnings, as reported $ 220,022 $ 1.74 $ 323,478 $ 2.34
Gain on Tokyo sale-leaseback - - (66,497) (0.48)
Restructuring charges 59,006 0.46 - -
Watch obsolescence charge a - - 11,633 0.09
Iridesse charges a, b 4,702 0.04 9,852 0.07
Impairment of investments and 8,335 0.07 29,052 0.21
loans b, c
Diamond facility closing charge b 2,198 0.02 - -
Contribution to The Tiffany & Co. - - 6,025 0.04
Foundation b
Little Switzerland discontinued - - 27,547 0.20
operations
---------------------------------------------------------------------------------
Net earnings, as adjusted $ 294,263 $ 2.33 $ 341,090 $ 2.47
=================================================================================
|
a On a pre-tax basis, includes $6,300,000 and $19,212,000 of charges within cost of sales for the years ended January 31, 2009 and 2008.
b On a pre-tax basis, includes $15,693,000 and $73,513,000 of charges within SG&A expenses for the years ended January 31, 2009 and 2008.
c On a pre-tax basis includes $1,311,000 charge within other expenses, net for the three months ended January 31, 2009.
Certain operating data as reported as a percentage of net sales and as adjusted for the items listed in the table above were as follows:
Full Year Ended Full Year Ended
January 31, 2009 January 31, 2008
---------------------------------------------------------------------------------
As Reported As Adjusted As Reported As Adjusted
-----------------------------------------------------------------------------------------------------------
Gross profit 57.5% 57.8% 56.4% 57.0%
SG&A expenses 41.0% 40.5% 41.0% 38.5%
Operating earnings 13.1% 17.3% 18.9% 18.5%
Net earnings 7.7% 10.3% 11.0% 10.7%
|
TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands, except per share amounts)
Three Months
Ended January 31, Years Ended January 31,
-------------------------- ---------------------------
2009 2008 2009 2008
----------- ----------- ------------ ------------
Net sales $ 841,215 $ 1,053,157 $ 2,859,997 $ 2,938,771
Cost of sales 348,271 443,303 1,214,577 1,281,506
----------- ----------- ------------ ------------
Gross profit 492,944 609,854 1,645,420 1,657,265
Restructuring charges 97,839 - 97,839 -
Other operating income - - - 105,051
Selling, general and administrative expenses 333,441 411,427 1,172,592 1,204,990
----------- ----------- ------------ ------------
Earnings from continuing operations 61,664 198,427 374,989 557,326
Other expenses (income), net 9,609 (8) 28,914 8,131
----------- ----------- ------------ ------------
Earnings from continuing operations before income taxes 52,055 198,435 346,075 549,195
Provision for income taxes 20,970 71,048 126,053 198,170
----------- ----------- ------------ ------------
Net earnings from continuing operations 31,085 127,387 220,022 351,025
Loss from discontinued operations, net of tax - - - (27,547)
----------- ----------- ------------ ------------
Net earnings $ 31,085 $ 127,387 $ 220,022 $ 323,478
=========== =========== ============ ============
Net earnings from continuing operations per share:
Basic $ 0.25 $ 0.98 $ 1.76 $ 2.61
=========== =========== ============ ============
Diluted $ 0.25 $ 0.96 $ 1.74 $ 2.54
=========== =========== ============ ============
Net earnings per share:
Basic $ 0.25 $ 0.98 $ 1.76 $ 2.40
=========== =========== ============ ============
Diluted $ 0.25 $ 0.96 $ 1.74 $ 2.34
=========== =========== ============ ============
Weighted-average number of common shares:
Basic 123,363 129,637 124,734 134,748
Diluted 123,793 132,583 126,410 138,140
|
TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
January 31, January 31,
2009 2008
----------------- -----------------
ASSETS
------
Current assets:
Cash and cash equivalents and short-term investments $ 160,445 $ 246,654
Accounts receivable, net 164,447 193,974
Inventories, net 1,601,236 1,372,397
Deferred income taxes 13,640 20,218
Prepaid expenses and other current assets 108,966 89,072
------------- -------------
Total current assets 2,048,734 1,922,315
Property, plant and equipment, net 741,048 748,210
Other assets, net 312,501 330,379
------------- -------------
$ 3,102,283 $ 3,000,904
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Short-term borrowings $ 242,966 $ 44,032
Current portion of long-term debt 40,426 65,640
Accounts payable and accrued liabilities 223,566 203,622
Income taxes payable 27,653 203,611
Merchandise and other customer credits 67,311 67,956
------------- -------------
Total current liabilities 601,922 584,861
Long-term debt 425,412 343,465
Pension/postretirement benefit obligations 200,603 79,254
Other long-term liabilities 152,334 131,610
Deferred gains on sale-leasebacks 133,641 145,599
Stockholders' equity 1,588,371 1,716,115
------------- -------------
$ 3,102,283 $ 3,000,904
============= =============
|
Exhibit 10.146b
EXECUTION COPY
AMENDMENT NO. 1 (this "Amendment"), dated as of March 18, 2009, to the Credit Agreement, dated as of July 20, 2005, among Tiffany & Co., Tiffany and Company, Tiffany & Co. International, the other Borrowers party thereto, the Lenders party thereto, and The Bank of New York Mellon (formerly The Bank of New York), as Administrative Agent (as amended and in effect on the date hereof, the "Credit Agreement"). Capitalized terms used herein which are not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
RECITALS
A. Capitalized terms used herein which are not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
B. The Parent, on behalf of itself and the other Loan Parties, has requested an amendment to certain provisions of the Credit Agreement, and the Credit Parties are willing to do so subject to the terms and conditions contained herein.
Accordingly, in consideration of the recitals and the covenants, conditions and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Section 1.1 of the Credit Agreement is hereby amended to amend and restate in its entirety the definition of "Fixed Charge Coverage Ratio" to read as follows:
"Fixed Charge Coverage Ratio": as of any date, the ratio of (a) (i) EBIT in respect of the period comprised of the four consecutive fiscal quarters ended immediately prior to such date in respect of which financial statements have been delivered pursuant to Sections 7.7(a), 7.7(c) or 7.7(d), plus (ii) Rent Expense for such period, plus (iii), if such period includes the fiscal quarter ended January 31, 2009, the 2008 Restructuring Charges (provided that this clause (iii) shall be applicable solely for determining compliance with Section 7.12 and shall not be applicable for any other purpose, including determining the Applicable Margin), to (b) (i) Rent Expense for such period plus (ii) Interest Expense for such period.
2. Section 1.1 of the Credit Agreement is hereby amended to add the following new defined term in alphabetical order:
"2008 Restructuring Charges" the following charges recorded by the Parent for the fiscal quarter ended January 31, 2009 in its financial statements delivered pursuant to Sections 7.7(a), 7.7(c) or 7.7(d):
(i) Staff restructuring charges of not more than $97,838,611,
(ii) Iridesse product channel closedown charges of not more than
$7,548,519,
(iii) Yellowknife, NWT, Canada closedown charges of not more than
$3,381,900, and
(iv) Target Resources plc loan impairment charges of not more than
$12,373,077.
3. The Credit Agreement is hereby amended to amend and restate in its entirety Exhibit L in the form attached hereto.
4. This Amendment shall become effective upon satisfaction of the following conditions:
(a) the Administrative Agent shall have received from Required Lenders, the Parent and each of the other Loan Parties either (i) a counterpart of this Amendment signed on behalf of such Person or (ii) written evidence satisfactory to the Administrative Agent (which may include electronic or facsimile transmission of a signed signature page of this Amendment) that such Person has signed a counterpart of this Amendment, and
(b) receipt by the Administrative Agent of an amendment fee for the account of each Lender that has executed and delivered this Amendment on or prior to 12:00 Noon (New York City time), March 18, 2009, in an amount equal to 0.10% of the sum of the Core Currency Commitment and Individual Currency Commitments of such Lender.
5. The Parent hereby represents and warrants to the Administrative Agent and each Lender that no Default or Event of Default shall have occurred and be continuing.
6. Each of the Parent, and the other Loan Parties (a) reaffirms and admits the validity and enforceability of each Loan Document to which it is a party and all of its obligations thereunder and (b) agrees and admits that it has no defense to or offset against any such obligations.
7. In all other respects, the Loan Documents shall remain in full force and effect, and no amendment, consent or waiver in respect of any term or condition of any Loan Document shall be deemed to be an amendment, consent or waiver in respect of any other term or condition contained in any Loan Document.
8. This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which, when taken together, shall constitute but one agreement. It shall not be necessary in making proof of this Amendment to produce or account for more than one counterpart signed by the party to be charged.
9. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.
[signature pages follow]
TIFFANY & CO.
AMENDMENT NO. 1
IN WITNESS WHEREOF, this Amendment has been executed and delivered as of the day and year first above written.
TIFFANY & CO.,
a Delaware corporation
By: /s/ Patrick B. Dorsey
------------------------------------------------
Name: Patrick B. Dorsey
----------------------------------------------
Title: Senior Vice President, Secretary and
---------------------------------------------
General Counsel
----------------
|
TIFFANY AND COMPANY,
a New York corporation
By: /s/ Patrick B. Dorsey
------------------------------------------------
Name: Patrick B. Dorsey
----------------------------------------------
Title: Senior Vice President, Secretary and
---------------------------------------------
General Counsel
----------------
|
TIFFANY & CO. INTERNATIONAL,
a Delaware corporation
By: /s/ Patrick B. Dorsey
------------------------------------------------
Name: Patrick B. Dorsey
----------------------------------------------
Title: Vice President
---------------------------------------------
|
TIFFANY & CO. JAPAN INC.,
a Delaware corporation
By: /s/ Michael W. Connolly
-----------------------------------------------
Name: Michael W. Connolly
---------------------------------------------
Title: Treasurer
--------------------------------------------
|
TIFFANY & CO.,
a French corporation
By: /s/ Michael W. Connolly
-------------------------------------------
Name: Michael W. Connolly
-------------------------------------------
Title: Authorized Signatory
-------------------------------------------
|
TIFFANY & CO. ITALIA S.P.A.,
an Italian corporation
By: /s/ Michael W. Connolly
-------------------------------------------
Name: Michael W. Connolly
-------------------------------------------
Title: Attorney In Fact
-------------------------------------------
|
TIFFANY & CO.
AMENDMENT NO. 1
TIFFANY & CO. PTE. LTD.,
a Singapore corporation
By: /s/ Michael W. Connolly
-------------------------------------------
Name: Michael W. Connolly
-------------------------------------------
Title: Authorized Signatory
-------------------------------------------
|
TIFFANY & CO.,
a United Kingdom corporation
By: /s/ Michael W. Connolly
-------------------------------------------
Name: Michael W. Connolly
-------------------------------------------
Title: Special Representative
-------------------------------------------
|
TIFFANY & CO. WATCH CENTER AG,
a Swiss corporation
By: /s/ Michael W. Connolly
-------------------------------------------
Name: Michael W. Connolly
-------------------------------------------
Title: Authorized Signatory
-------------------------------------------
|
TIFFANY KOREA LTD.,
a Republic of Korea corporation
By: /s/ Michael W. Connolly
-------------------------------------------
Name: Michael W. Connolly
-------------------------------------------
Title: Authorized Signatory
-------------------------------------------
|
TIFFANY & CO. MEXICO, S.A. de C.V.,
a Mexican corporation
By: /s/ Michael W. Connolly
-------------------------------------------
Name: Michael W. Connolly
-------------------------------------------
Title: Attorney In Fact
-------------------------------------------
|
TIFFANY & CO. OF NEW YORK LIMITED,
a Hong Kong corporation
By: /s/ Michael W. Connolly
-------------------------------------------
Name: Michael W. Connolly
-------------------------------------------
Title: Attorney by Power of Attorney
-------------------------------------------
|
TIFFANY & CO.
AMENDMENT NO. 1
DPFH CO., LTD.,
a British Virgin Islands corporation
By: /s/ Michael W. Connolly
-------------------------------------------
Name: Michael W. Connolly
-------------------------------------------
Title: Treasurer
-------------------------------------------
|
TCO MACAU LIMITED,
a commercial company organized under the laws of
the Macau Special Administrative Region of the
People's Republic of China
By: /s/ David Darren Chen
-----------------------------------------------
Name: David Darren Chen
---------------------------------------------
Title: Director
--------------------------------------------
|
TIFFANY & CO.
AMENDMENT NO. 1
AGREED:
THE BANK OF NEW YORK MELLON,
as Administrative Agent and as a Lender
By: /s/ David B. Wirl
-----------------------------------------
Name: David B. Wirl
---------------------------------------
Title: Vice Prsident
--------------------------------------
|
TIFFANY & CO.
AMENDMENT NO. 1
AGREED:
ABN AMRO BANK N.V.
By: /s/ Ronald C. Spurga
-----------------------------------------
Name: /s/ Ronald C. Spurga
---------------------------------------
Title: Vice President
--------------------------------------
By: /s/ Dennis Chin
-----------------------------------------
Name: Dennis Chin
---------------------------------------
Title: Assistant Vice President
--------------------------------------
|
TIFFANY & CO.
AMENDMENT NO. 1
AGREED:
BANK OF AMERICA, N.A.
By: /s/ Jaime C. Eng
-----------------------------------------
Name: Jaime C. Eng
---------------------------------------
Title: Assistant Vice President
--------------------------------------
|
TIFFANY & CO.
AMENDMENT NO. 1
AGREED:
HSBC BANK USA, NATIONAL ASSOCIATION
By: /s/ Jeffrey Wieser
-----------------------------------------
Name: Jeffrey Wieser
---------------------------------------
Title: Senior Relationship Manager
--------------------------------------
|
TIFFANY & CO.
AMENDMENT NO. 1
AGREED:
JPMORGAN CHASE BANK, N.A.
By: /s/ Susan H. Atha
-----------------------------------------
Name: Susan H. Atha
---------------------------------------
Title: Vice President
--------------------------------------
|
TIFFANY & CO.
AMENDMENT NO. 1
AGREED:
MIZUHO CORPORATE BANK, LTD.
By: /s/ Bertram Tang
-----------------------------------------
Name: Bertram Tang
---------------------------------------
Title: Senior Vice President & Team Leader
--------------------------------------
|
TIFFANY & CO.
AMENDMENT NO. 1
AGREED:
U.S. BANK, NATIONAL ASSOCIATION
By: /s/ Frances W. Josephic
-----------------------------------------
Name: Frances W. Josephic
---------------------------------------
Title: Vice President
--------------------------------------
U.S. Bank, N.A.
----------------
|
TIFFANY & CO.
AMENDMENT NO. 1
AGREED:
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ John J. Langan
-----------------------------------------
Name: John J. Langan
---------------------------------------
Title: Senior Vice President
--------------------------------------
|
TIFFANY EXHIBIT L
FORM OF COMPLIANCE CERTIFICATE
[Date]
TO THE PARTIES LISTED
ON SCHEDULE A ANNEXED HERETO
Re: Credit Agreement, dated as of July 20, 2005, by and among TIFFANY & CO., Tiffany and Company, Tiffany & Co. International, the other Borrowers party thereto, the Lenders party thereto, and THE BANK OF NEW YORK MELLON (formerly The Bank of New York), as Administrative Agent (as the same may from time to time be amended, supplemented or otherwise modified, the "Agreement")
Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Agreement.
With respect to the financial statements delivered herewith, I hereby certify, on behalf of the Parent and the Borrowers, to the best of my knowledge, as follows:
(A) all such financial statements are true, complete and correct, and
(B) all such financial statements have been prepared in accordance with GAAP (but without footnotes and subject to year-end adjustments).
In addition, I hereby certify, on behalf of the Parent and the Borrowers that, to the best of my knowledge, there exists no violation of any term, covenant or condition of any Loan Document and that no condition or event has occurred which would constitute a Default or an Event of Default.
The Leverage Ratio as at the fiscal quarter ended ___________ is ___________, and attached hereto are sheets showing the calculation of such Leverage Ratio.
For purposes of Section 7.12, the Fixed Charge Coverage Ratio for the four consecutive fiscal quarters ended ___________ is ___________, and attached hereto are sheets showing the calculation of such Fixed Charge Coverage Ratio.
For all other purposes (including for purposes of determining the Applicable Margin), the Fixed Charge Coverage Ratio for the four consecutive fiscal quarters ended ___________ is ___________, and attached hereto are sheets showing the calculation of such Fixed Charge Coverage Ratio.
Attached are sheets setting forth:
(A) with respect to each Loan, (i) the outstanding principal balance of such Loan in the applicable Currency, (ii) if such Loan is an Alternate Currency Loan, the Dollar Equivalent of such outstanding principal balance, and (iii) if such Loan is an Individual Currency Loan or a Bid Loan, the applicable Lender, and
(B) with respect to each Letter of Credit, (i) the undrawn face amount of such Letter of Credit in the applicable Currency, (ii) the amount of unpaid reimbursement obligations in respect of such Letter of Credit, and (iii) if such Letter of Credit is denominated in an Alternate Currency, the Dollar Equivalent of such undrawn face amount and the Dollar Equivalent of such amount of unpaid reimbursement obligations.
TIFFANY & CO.
The Bank of New York Mellon, as Administrative Agent
The Lenders (as defined in the Agreement)
Exhibit 4.3a
TIFFANY & CO.
2008 DIRECTORS EQUITY COMPENSATION PLAN
Section 1 General
1.1 Purpose. The Tiffany & Co. 2008 Directors Equity Compensation Plan (the "Plan") has been established by Tiffany & Co., a Delaware corporation, (the "Company") to advance the interests of the Company by enabling the Company to attract, retain and motivate qualified individuals to serve on the Company's Board of Directors and to further link Participants' interests with those of the Company's stockholders through compensation that is based on the Company's Common Stock, thereby promoting the long-term financial interests of the Company and its Related Companies, including the growth in value of the Company's stockholders' equity and the enhancement of long-term returns to the Company's stockholders.
1.2 Participation. Subject to the terms and conditions of the Plan, the Committee shall, from time to time, determine and designate from among Eligible Individuals those persons who will be granted one or more Awards under the Plan. Eligible Individuals who are granted Awards become "Participants" in the Plan. At the discretion of the Committee, a Participant may be granted any Award permitted under the provisions of the Plan, and more than one Award may be granted to a Participant. Awards need not be identical but shall be subject to the terms and conditions specified in the Plan. Subject to the last two sentences of subsection 2.2 of the Plan, Awards may be granted as alternatives to or in replacement for awards outstanding under the Plan, or any other plan or arrangement of the Company.
1.3 Operation, Administration, and Definitions. The operation and administration of the Plan, including the Awards made under the Plan, shall be subject to the provisions of Section 4 (relating to operation and administration). Initially capitalized terms used in the Plan shall be defined as set forth in the Plan (including in the definitional provisions of Section 7 of the Plan).
1.4 Prior Plan. This Plan is intended to become effective on approval by the Company's stockholders, as provided for in Section 4.1 below. This Plan is intended to replace the Company's 1998 Directors Option Plan approved by the Company's stockholders on May 21, 1998 (the "Prior Plan"). In accordance with the terms of the Prior Plan: (i) no Award may be granted or otherwise made under the Prior Plan after May 21, 2008, but (ii) the Prior Plan shall remain in effect as long as any awards under the Prior Plan are outstanding. Shares subject to the Prior Plan which are not subject to outstanding awards under the Prior Plan as of the Effective Date of this Plan (see subsection 4.1 of this Plan) and which have not been delivered to participants under the Prior Plan as of such Effective Date may not be awarded under the Prior Plan on or after such Effective Date and the Prior Plan shall be deemed amended accordingly on such Effective Date. Shares subject to the Prior Plan, as described in the preceding sentence, shall not be deemed transferred to this Plan.
Section 2 Options
2.1 Definition. The grant of an "Option" entitles the Participant to purchase Shares at an Exercise Price established by the Committee. Options granted under this Section 2 shall be Non-Qualified Options. A "Non-Qualified Option" is an Option that is not intended to be an "incentive stock option" as that term is described in section 422(b) of the Code.
2008 Directors Equity Compensation Plan Page 1 May 15, 2008
2.2 Exercise Price. The per-share "Exercise Price" of each Option granted under this Section 2 shall be established by the Committee or shall be determined by a formula established by the Committee at or prior to the time the Option is granted; except that the Exercise Price shall not be less than 100% of the Fair Market Value of a Share as of the Pricing Date unless the Participant has agreed to forgo all or a portion of his or her annual cash retainer or other fees for service as a director of the Company in exchange for the Option, in which case the difference between (a) the aggregate Fair Market Value of the Shares subject to the Option as of the Pricing Date and (b) the aggregate Exercise Price for the Shares subject to the Option shall be equal to the amount of the cash retainer or other such fees agreed to be forgone by the Participant. For purposes of the preceding sentence, the "Pricing Date" shall be the date on which the Option is granted unless the Option is granted on a date on which the principal exchange on which the Stock is then listed or admitted to trading is closed for trading, in which case the "Pricing Date" shall be the most recent date on which such exchange was open for trading prior to such grant date. Except as provided in subsection 4.2(c), the Exercise Price of any Option may not be decreased after the grant of the Award. An Option may not be surrendered as consideration in exchange for a new Award with a lower Exercise Price.
2.3 Exercise. Options shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the Committee provided that no Option shall be exercisable after, and each Option shall become void no later than, the tenth (10th ) anniversary of the date of the grant of such option.
2.4 Payment of Option Exercise Price. The payment of the Exercise Price of an Option granted under this Section 2 shall be subject to the following:
(a) The Exercise Price may be paid by ordinary check or such other form of tender as the Committee may specify.
(b) If permitted by the Committee, the Exercise Price for Shares purchased upon the exercise of an Option may be paid in part or in full by tendering Shares (by either actual delivery of shares or by attestation, with such shares valued at Fair Market Value as of the date of exercise). The Committee may refuse to accept payment in Shares if such payment would result in an accounting charge to the Company.
(c) The Committee may permit a Participant to elect to pay the Exercise Price upon the exercise of an Option by irrevocably authorizing a third party to sell Shares acquired upon exercise of the Option (or a sufficient portion of such shares) and remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise.
Section 3 Stock Awards
3.1 Definition. A "Stock Award" is a grant of Shares or of a right to receive Shares.
3.2 Restrictions on Stock Awards. Each Stock Award shall be subject to such conditions, restrictions and contingencies, if any, as the Committee shall determine.
2008 Directors Equity Compensation Plan Page 2 May 15, 2008
Section 4 Operation and Administration
4.1 Effective Date and Duration. Subject to approval of the stockholders of the Company at the Company's 2008 annual meeting, the Plan shall be effective as of the date of such approval (the "Effective Date") and shall remain in effect as long as any Awards under the Plan are outstanding; provided, however, that no Award may be granted or otherwise made under the Plan on a date that is more than ten (10) years from the Effective Date.
4.2 Shares Subject to Plan.
(a) (i) Subject to the following provisions of this subsection 4.2, the maximum aggregate number of Shares that may be delivered to Participants and their beneficiaries under the Plan shall be One Million (1,000,000) Shares, provided that such maximum shall be reduced by one and 58 hundredths (1.58) of a Share for each Share that is delivered pursuant to a Stock Award. Shares issued under the Plan may be authorized and unissued Shares or Shares reacquired by the Company.
(ii) Any Shares granted under the Plan that are forfeited because of the failure to meet a Stock Award contingency or condition shall again be available for delivery pursuant to new Awards granted under the Plan. To the extent any Shares covered by an Award are not delivered to a Participant or a Participant's beneficiary because the Award is forfeited or canceled, such shares shall not be deemed to have been delivered for purposes of determining the maximum number of Shares available for delivery under the Plan.
(iii) If the Exercise Price and/or tax withholding obligation for any Option or Award granted under the Plan is satisfied by tendering Shares to the Company (by either actual delivery or attestation) or by the Company withholding Shares, the number of Shares issued on such exercise or Award without offset for the number of Shares so tendered shall be deemed delivered for purposes of determining the maximum number of Shares available for delivery under the Plan; if the Exercise Price and/or tax withholding obligation for any Option or Award granted under the Plan is satisfied by the Company withholding Shares, the full number of Shares for which such Option was exercised or such Award was granted, without reduction for the number of Shares withheld, shall be deemed delivered for purposes of determining the maximum number of Shares available for delivery under the Plan.
(b) Subject to adjustment under paragraph 4.2(c), the following additional limitation is imposed under the Plan: the maximum aggregate number of Shares that may be awarded to any one Participant in any single fiscal year of the Company, either as Shares subject to Options, Stock Awards or any combination of Options and Stock Awards shall be Twenty-five Thousand (25,000) Shares.
(c) If the outstanding Shares are increased or decreased, or are changed into or exchanged for cash, property, or a different number or kind of shares or securities, or if cash, property or Shares or other securities are distributed in respect of such outstanding Shares, in either case as a result of one or more mergers, reorganizations, reclassifications, recapitalizations, stock splits, reverse stock splits, stock dividends, dividends (other than regular, quarterly dividends), or other distributions, spin-offs or the like, or if
2008 Directors Equity Compensation Plan Page 3 May 15, 2008
substantially all of the property and assets of the Company are sold, then, unless the terms of the transaction shall provide otherwise, appropriate adjustments shall be made in the number and/or type of shares or securities for which Awards may thereafter be granted under the Plan and for which Awards then outstanding under the Plan may thereafter be exercised. Any such adjustments in outstanding Awards shall be made without changing the aggregate Exercise Price applicable to the unexercised portions of outstanding Options. The Committee shall make such adjustments to preserve the benefits or potential benefits of the Plan and the Awards; such adjustments may include, but shall not be limited to, adjustment of: (i) the number and kind of shares which may be delivered under the Plan; (ii) the number and kind of shares subject to outstanding Awards; (iii) the Exercise Price of outstanding Options; (iv) the limit specified in subsection 4.2(b) above; and (v) any other adjustments that the Committee determines to be equitable. No right to purchase or receive fractional shares shall result from any adjustment in Options or Stock Awards pursuant to this paragraph 4.2(c). In case of any such adjustment, Shares subject to the Option or Stock Award shall be rounded up to the nearest whole Share.
4.3 Limit on Distribution. Distribution of Shares or other amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall have no obligation to deliver any Shares under the Plan or make any other distribution of benefits under the Plan unless such delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act of 1933) and the applicable requirements of any securities exchange or similar entity and the Committee may impose such restrictions on any Shares acquired pursuant to the Plan as the Committee may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares. In the event that the Committee determines in its discretion that the registration, listing or qualification of the Shares issuable under the Plan on any securities exchange or under any applicable law or governmental regulation is necessary as a condition to the issuance of such Shares under an Option or Stock Award, such Option or Stock Award shall not be exercisable or exercised in whole or in part unless such registration, listing and qualification, and any necessary consents or approvals have been unconditionally obtained.
(b) Distribution of Shares under the Plan may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.
4.4 Tax Withholding. Before distribution of Shares under the Plan, the Company may require the recipient to remit to the Company an amount sufficient to satisfy any federal, state or local tax withholding requirements or, if agreed by the Committee, the Company may withhold from the Shares to be delivered and/or otherwise issued Shares sufficient to satisfy all or a portion of such tax withholding requirements. Whenever under the Plan payments are to be made in cash, such payments shall be in an amount sufficient to satisfy any federal, state or local tax withholding requirements as well as the amount of the cash payment otherwise required. Neither the Company nor any Related Company shall be liable to a Participant or any other person as to any tax consequence expected, but not realized, by any Participant or other person due to the receipt or exercise of any Award hereunder.
2008 Directors Equity Compensation Plan Page 4 May 15, 2008
4.5 Reserved Rights. Subject to the limitations of subsection 4.2 on the number of Shares that may be delivered under the Plan, the Plan does not limit the right of the Company to use available Shares, including authorized but un-issued Shares and treasury Shares, as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of the Company or a Related Company, including the plans or arrangements of the Company or a Related Company, including the plans or arrangements of the Company or a Related Company acquiring another entity (or an interest in another entity). The Committee may provide in the Award Agreement that the Shares to be issued upon exercise of an Option or receipt of a Stock Award shall be subject to such further conditions, restrictions or agreements as the Committee in its discretion may specify, including without limitation, conditions on vesting or transferability, and forfeiture and repurchase provisions.
4.6 Dividends and Dividend Equivalents. An Award may provide the Participant with the right to receive dividends or dividend equivalent payments with respect to Shares which may be paid currently or credited to an account for the Participant, and which may be settled in cash or Shares as determined by the Committee. Any such settlements, and any such crediting of dividends or dividend equivalents or reinvestment in Shares may be subject to such conditions, restrictions and contingencies as the Committee shall establish, including reinvestment of such credited amounts in Stock equivalents.
4.7 Settlements; Deferred Delivery. Awards may be settled through cash
payments, the delivery of Shares, the granting of replacement Awards, or
combinations thereof, all subject to such conditions, restrictions and
contingencies as the Committee shall determine. The Committee may establish
provisions for the deferred delivery of Shares upon the exercise of an Option or
receipt of a Stock Award with the deferral evidenced by use of Stock Units equal
in number to the number of Shares whose delivery is so deferred. A "Stock Unit"
is a bookkeeping entry representing an amount equivalent to the Fair Market
Value of one Share. Stock Units represent an unfunded and unsecured obligation
of the Company except as otherwise provided by the Committee. Settlement of
Stock Units upon expiration of the deferral period shall be made in Shares or
otherwise as determined by the Committee. The amount of Shares, or other
settlement medium, to be so distributed may be increased by an interest factor
or by dividend equivalents. Until a Stock Unit is settled, the number of Shares
represented by a Stock Unit shall be subject to adjustment pursuant to paragraph
4.2(c). Unless otherwise specified by the Committee, any deferred delivery of
Shares pursuant to an Award shall be settled by the delivery of Shares no later
than the 60th day following the date the person to whom such deferred delivery
must be made ceases to be a director of the Company.
4.8 Transferability. Unless otherwise provided by the Committee, any Option granted under the Plan, and, until vested, any Stock Award granted under the Plan, shall by its terms be nontransferable by the Participant otherwise than by will, the laws of descent and distribution, and shall be exercisable by, or become vested in, during the Participant's lifetime, only the Participant.
4.9 Form and Time of Elections. Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification, or revocation thereof, shall be in writing filed with the secretary of the Company at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require.
4.10 Award Agreements with Company; Vesting and Acceleration of Vesting of Awards. At the time of an Award to a Participant, the Committee may require the Participant to enter into an agreement with the Company (an "Award Agreement") in a form specified by the Committee, agreeing to the terms and conditions of the Plan and to such additional terms and conditions, not inconsistent with the Plan, as the Committee may, in its sole discretion, prescribe, including, but not limited to, conditions to the vesting or exercise of an Award, such as continued service as a director of the Company for a specified period of time. The Committee may waive such conditions to and/or accelerate exercisability or vesting of an Option or Stock Award, either automatically upon the occurrence of specified events (including in connection with a change of control of the Company) or otherwise in its discretion.
2008 Directors Equity Compensation Plan Page 5 May 15, 2008
4.11 Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of the Plan or any Award Agreement, acquire any right in or title to any assets, funds or property of the Company or any Related Company whatsoever, including, without limitation, any specific funds, assets, or other property which the Company or any Related Company, in their sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the Shares or amounts, if any, payable under the Plan, unsecured by the assets of the Company or of any Related Company. Nothing contained in the Plan or any Award Agreement shall constitute a guarantee that the assets of such companies shall be sufficient to pay any benefits to any person.
(b) Neither the Plan nor any Award Agreement shall constitute a contract of employment, and selection as a Participant will not confer upon any Participant any right to serve as a director of the Company, nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan or an Award. Except as otherwise provided in the Plan, no Award under the Plan shall confer upon the holder thereof any right as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights.
4.12 Evidence. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which an officer of the Company acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
4.13 Action by Company. Any action required or permitted to be taken by the Company shall be by resolution of the Board, or by action of one or more members of such Board (including a committee of such board) who are duly authorized to act for such Board, or (except to the extent prohibited by applicable law or applicable rules of any stock exchange) by a duly authorized officer of the Company.
4.14 Gender and Number. Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural and the plural shall include the singular.
4.15 Non-exclusivity of the Plan. Neither the adoption of the Plan by the Board of Directors of the Company nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of such Board of Directors or a committee of such Board to adopt such other incentive arrangements as it or they may deem desirable, including without limitation, the granting of restricted stock, stock options or cash bonuses otherwise than under the Plan, and such arrangements may be generally applicable or applicable only in specific cases.
Section 5 Committee
5.1 Administration. The authority to control and manage the operation and administration of the Plan shall be vested in the Board and/or a committee of the Board (either the Board or such committee the "Committee" hereunder) in accordance with this Section 5.
2008 Directors Equity Compensation Plan Page 6 May 15, 2008
5.2 Selection of Committee. If consisting of less than the full membership of the Board, the Committee shall be selected by the Board and shall consist of two or more members of the Board.
5.3 Powers of Committee. The authority to manage and control the operation and administration of the Plan shall be vested in the Committee, subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have the authority and discretion to select from amongst Eligible Individuals those persons who shall receive Awards, to determine who is an Eligible Individual, to determine the time or times of receipt, to determine the types of Awards and the number of Shares covered by the Awards, to establish the terms, conditions, restrictions, and other provisions of such Awards and Award Agreements, and (subject to the restrictions imposed by Section 6) to cancel, amend or suspend Awards. In making such Award determinations, the Committee may take into account such factors as the Committee deems relevant.
(b) The Committee will have the authority and discretion to establish terms and conditions of Awards as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside the United States.
(c) The Committee will have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any Award Agreements, and to make all other determinations that may be necessary or advisable for the administration of the Plan.
(d) Interpretations of the Plan by the Committee and decisions made by the Committee under the Plan are final and binding.
(e) In controlling and managing the operation and administration of the Plan, the Committee shall act by a majority of its then members, by meeting or by writing filed without a meeting. The Committee shall maintain adequate records concerning the Plan and concerning its proceedings and acts in such form and detail as the Committee may decide.
5.4 Delegation by Committee. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate all or any portion of its powers and responsibilities to any one or more of its members and may delegate all or part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time.
5.5 Information to be furnished to Committee. The Company shall furnish the Committee with such data and information as may be requested by the Committee to discharge its duties. The records of the Company as to an Eligible Individual's or a Participant's service as a director shall be conclusive on all persons unless determined to be incorrect by the Committee. Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers necessary or desirable to carry out the terms of the Plan.
2008 Directors Equity Compensation Plan Page 7 May 15, 2008
Section 6 Amendment and Termination
6.1 Board's Right to Amend or Terminate. Subject to the limitations set forth in this Section 6, the Board may, at any time, amend or terminate the Plan.
6.2 Amendments Requiring Stockholder Approval. Other than as provided in subsection 4.2 (c) (relating to certain adjustments to Shares), the approval of the Company's stockholders shall be required for any amendment which: (i) increases the maximum number of Shares that may be delivered to Participants under the Plan set forth in subsection 4.2(a); (ii) increases the maximum limitation contained in Section 4.2(b); (iii) decreases the Exercise Price of any Option below the minimum provided in subsection 2.2; (iv) modifies or eliminates the prohibitions stated in the final two sentences of subsection 2.2; or (v) increases the maximum term of any Option set forth in Section 2.3. Whenever the approval of the Company's stockholders is required pursuant to this subsection 6.2, such approval shall be sufficient if obtained by a majority vote of those stockholders present or represented and actually voting on the matter at a meeting of stockholders duly called, at which meeting a majority of the outstanding shares actually vote on such matter.
6.3 Consent of Affected Participants. No amendment to or termination of the Plan shall, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living or if the Award has been transferred pursuant to a right of transfer contained in an Award Agreement, the affected beneficiary or affected transferee, as the case may be), adversely affect the rights of any Participant, beneficiary or permitted transferee under any Award granted under the Plan prior to the date such amendment or termination is adopted by the Board.
Section 7 Defined Terms
For the purposes of the Plan, the terms listed below shall be defined as follows:
Award. The term "Award" shall mean, individually and collectively, any award or benefit granted to any Participant under the Plan, including, without limitation, the grant of Options and Stock Awards.
Award Agreement. The term "Award Agreement" is defined in subsection 4.10.
Board. The term "Board" shall mean the Board of Directors of the Company.
Code. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. A reference to any provision of the Code shall include reference to any successor provision of the Code or of any law that is enacted to replace the Code.
Eligible Individual. The term "Eligible Individual" shall mean a Non-Employee Director. The term "Non-Employee Director" means a member of the Board who is not at the time of an Award also an employee of the Company or a Related Company.
Fair Market Value. For purposes of determining the "Fair Market Value" of a share of Stock, the following rules shall apply:
2008 Directors Equity Compensation Plan Page 8 May 15, 2008
(i) If the Stock is at the time listed or admitted to trading on any
stock exchange, then the Fair Market Value shall be the higher of (a)
the simple arithmetic mean of the lowest and the highest reported
sales prices of the Stock on the date in question on the principal
exchange on which the Stock is then listed or admitted to trading and
(b) the closing price on such exchange on such date. If no reported
sale of Stock takes place on the date in question on the principal
exchange, then the reported closing asked price of the Stock on such
date on the principal exchange shall be determinative of Fair Market
Value.
(ii) If the Stock is not at the time listed or admitted to trading on a stock exchange, the Fair Market Value shall be the mean between the lowest reported bid price and the highest reported asked price of the Stock on the date in question in the over-the-counter market, as such prices are reported in a publication of general circulation selected by the Committee and regularly reporting the market price of the Stock in such market.
(iii) If the Stock is not listed or admitted to trading on any stock exchange or traded in the over-the-counter market, the Fair Market Value shall be as determined by the Committee, acting in good faith.
Related Companies. The term "Related Company" means:
(i) any corporation, partnership, joint venture or other entity during any period in which such corporation, partnership, joint venture or other entity owns, directly or indirectly, at least fifty percent (50%) of the voting power of all classes of voting stock of the Company (or any corporation, partnership, joint venture or other entity which is a successor to the Company);
(ii) any corporation, partnership, joint venture or other entity
during any period in which the Company (or any corporation,
partnership, joint venture or other entity which is a successor to the
Company or any entity that is a Related Company by reason of clause
(i) next above) owns, directly or indirectly, at least a fifty percent
(50%) voting or profits interest; or
(iii) any business venture in which the Company has a significant interest, as determined at the discretion of the Committee.
Shares. The term "Shares" shall mean shares of the Common Stock of the Company, $.01 par value, as presently constituted, subject to adjustment as provided in paragraph 4.2(c) above.
Section 8 Successors
All obligations of the Company under the Plan with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company.
2008 Directors Equity Compensation Plan Page 9 May 15, 2008