CONDITIONS OF BONDS

 

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                                                                  Exhibit 10.134

                                                                   Tiffany & Co.

                                  (Translation)              Report on Form 10-K

                               CONDITIONS OF BONDS

 

These Conditions of Bonds shall be applied to the issue of Tiffany & Co. Japan

Inc. First Series Yen Bonds guaranteed by Tiffany & Co. (For Qualified

Institutional Investors Only) (the "Bonds") which Tiffany & Co. Japan Inc. (the

"Issuer") is duly authorized to issue.

 

SECTION 1. AMOUNT, PRINCIPAL AMOUNT AND FORM

 

(1)      Aggregate principal amount of the Bonds shall be 15,000,000,000 Yen.

 

(2)      Principal amount per Bond shall be 100,000,000 Yen.

 

(3)      The form of the bond certificate of the Bonds (the "Bond Certificates")

         shall be limited to bearer bonds with coupons attached (such coupons

         attached to the Bond Certificates shall be hereinafter referred to as

         the "Coupons") and shall not be converted to nonbearer bonds, split

         into the Bond Certificates with par value less than 100,000,000 Yen, or

         consolidated with other Bond Certificates.

 

(4)      The Bond Certificates and Coupons shall bear the signature (including

         the signature in facsimile) of the Executive Vice President and Chief

         Financial Officer of the Issuer and Tiffany & Co. (the "Guarantor").

 

SECTION 2. STATUS OF THE BONDS, GUARANTEE AND NEGATIVE PLEDGE

 

(1)      The Bonds and Coupons shall be direct, unconditional (subject to

         limitations under Section 4(2) hereof), unsecured and unsubordinated

         obligations of the Issuer, ranking pari passu among each other without

         being preferred or subordinated and (subject to limitations under

         Section 4(2) hereof) with all other present and future unsecured and

         unsubordinated obligations of the Issuer (except for preferred

         obligations by operation of forcible laws); provided, however, that in

         the event of insolvency, the Bonds and Coupons shall rank in pari passu

         to the extent permitted under the laws generally affecting creditors'

         rights.

 

(2)      The due and punctual payment by the Issuer of the principal of and

         interest on the Bonds and all other amounts payable under these

         Conditions of Bonds is unconditionally and irrevocably guaranteed by

         the Guarantor in accordance with the payment guarantee (the "Payment

         Guarantee") governed by the laws of the State of New York which is

         separately issued and delivered to the Fiscal Agent by the Guarantor.

 

(3)      The Bond Certificates shall provide that the Guarantor unconditionally

         and irrevocably guaranty the due and punctual payment to the holders of

         the Bonds (the "Bondholders")

 

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         and holders of the Coupons (the "Couponholders") by the Issuer of the

         principal of and interest on the Bonds and all other amounts payable at

         the maturity date or other due dates under these Conditions of Bonds.

 

(4)      The Issuer and the Guarantor respectively undertake that, so long as

         any of the Bonds remains outstanding, each of the Issuer and the

         Guarantor will procure that no External Indebtedness (as defined below)

         of itself or of any of its Principal Subsidiaries (as defined below)

         shall be secured by any mortgage, lien, pledge or other charges, unless

         the Issuer or the Guarantor, as the case may be, shall forthwith take

         any and all action necessary to procure that all amounts payable by it

         under the Bonds and Coupons are secured equally and ratably with such

         mortgage, lien, pledge or other charge. This Section 2(4), however,

         shall not apply to External Indebtedness that: (i) is incurred by the

         Issuer, Guarantor or any Principal Subsidiary in connection with the

         acquisition of fixed assets (or any improvement thereon); (ii) is

         assumed by the Issuer, Guarantor or any Principal Subsidiary in

         connection with the acquisition of any business; or (iii) does not

         exceed 20% of the Guarantor's consolidated net worth.

 

         "External Indebtedness" means all items which constitute, without

         duplication, indebtedness for borrowings, on or after the issue date of

         the Bonds, of the Issuer, Guarantor or Principal Subsidiaries (whether

         in the form of or represented by any bonds, notes or other securities),

         other than Existing Indebtedness and Intercompany Debt.

 

         "Principal Subsidiaries" means Tiffany and Company and Tiffany & Co.

         International, which are subsidiaries of the Guarantor.

 

         "Existing Indebtedness" means indebtedness in existence as of the Issue

         Date and listed in a schedule attached to the Conditions of Bonds and

         any refinancing thereof that does not entail the Issuer's or the

         Guarantor's incurring new liens that are greater than any liens that

         existed with respect to such indebtedness before its refinancing.

 

         "Intercompany Debt" means (i) indebtedness of the Guarantor to one or

         more of its subsidiaries and (ii) indebtedness of one or more of the

         subsidiaries of the Guarantor to the Guarantor or any one or more of

         the other subsidiaries of the Guarantor.

 

         In the event that a security interest is created for the Bond in

         accordance with this Section 2(4), the Issuer shall take all steps and

         procedures (including without limitation, perfection of such security

         interest) necessary for the purpose of these Conditions of Bonds. The

         Issuer shall bear any and all expenses in connection with the creation

         of such security interests, perfection thereof, exercise of powers and

         performance of duties.

 

         This Section 2(4) shall not apply where the full amount of the Bonds is

         unable to be redeemed due to the Bondholder's failure to claim for

         payment on the due date of the Bonds.

 

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SECTION 3 FISCAL AGENT AND NO ESTABLISHMENT OF BOND MANAGEMENT COMPANY

 

(1)      Mizuho Corporate Bank shall act as the fiscal agent of the Issuer in

         connection with the Bonds (the "Fiscal Agent"). The Fiscal Agent shall

         perform duties provided hereunder and under the Fiscal and Paying

         Agency Agreement dated September 12, 2003 between the Issuer and the

         Fiscal Agent and Paying Agent (defined in Section 5 hereof). The Fiscal

         Agent shall act only as an agent of the Issuer, shall have no duties to

         Bondholders, or agency or trustee relationship with Bondholders. A copy

         of the Fiscal and Paying Agency Agreement shall be kept at the main

         office of the Fiscal Agent, and shall be available during normal

         business hours for inspection and copying by the Bondholders. Persons

         requesting such copying shall bear all expenses necessary therefor.

 

(2)      Because the Bonds satisfy the requirements under the proviso of the

         Article 297 of the Commercial Code of Japan (Law No. 48, 1900, as

         amended), a bond management company provided thereunder will not be

         established for the Bonds.

 

(3)      The Issuer may replace or discharge the Fiscal Agent from time to time,

         provided that the Fiscal Agent shall remain in its duty until its

         successor is validly appointed. The Issuer shall make an advance public

         notice to the Bondholders of such change of the Fiscal Agent.

 

SECTION 4 RECORDING OF THE BONDS

 

(1)      Recording agent for the Bonds (the "Recording Agent") shall be Mizuho

         Corporate Bank, Ltd. The Bondholders shall be able to record their

         Bonds at any time.

 

(2)      The Issuer shall bear the expenses of the subscribers' recordation of

         the Bonds, and persons applying for recordation shall bear expenses for

         other recordation. Expenses necessary for the preparation and delivery

         of the Bond Certificates and Coupons upon cancellation of recordation

         of recorded Bonds shall be borne by persons requesting such

         cancellation.

 

SECTION 5 PLACE OF PAYMENTS

 

(1)      The paying agent for the Bonds (the "Paying Agent") and the place of

         payment of the principal and interest shall be as follows:

 

         Mizuho Corporate Bank, Ltd.           Head Office and Osaka Corporate

                                               Banking Division

 

(2)      The Issuer may change or discharge the Paying Agent from time to time.

         The Issuer shall publicly notify in advance the Bondholders of such

         change or discharge. Notwithstanding the foregoing, Paying Agent shall

         not be appointed by the Issuer in the United States of America

         (including each of its States and the District of Columbia) or

 

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         its territories and possessions and other areas which are subject to

         its jurisdiction (the "United States"), and shall not make payments of

         principal of and interest on the Bonds within the United States.

 

         Payments of the principal of and interest on the Bonds shall not be

         made in branch offices of the Paying Agent or by other payment agents

         outside Japan, and no payment shall be made by remittance to a bank

         account within the United States or check sent to an address in the

         United States.

 

SECTION 6 INTEREST

 

(1)      The interest rate for each of the Bonds shall be 2.02% per annum of the

         principal amount.

 

(2)      The Bonds shall accrue interest from October 1, 2003, and the interest

         shall first be payable on March 30, 2004 for the interest accumulated

         to such date, and thereafter, be payable in arrears on March 30 and

         September 30 of each year for the six-month period ending on and

         including each such date. Interests for a period other than six months

         shall be payable for the actual number of days during that period

         (calculated on daily pro rata basis of 365 days per year, rounded off

         at the first decimal place). The interest payment dates provided in

         this subsection shall be hereinafter referred to as the "Interest

         Payment Date."

 

(3)      Interest on the Bonds shall not accrue after the redemption date;

         provided, however, that if the Issuer or Guarantor fails to redeem the

         Bonds on the redemption date, delinquency interest shall be payable for

         the actual number of the days during the period from the date of

         payment (exclusive) to the date of actual redemption (inclusive) at the

         rate provided in this Section 6 (calculated on daily pro rata basis of

         365 days per year, rounded off at the first decimal place); provided,

         further, that the period shall not extend beyond 14 days after the

         public notice by the Fiscal Agent pursuant to Section 8(3) hereof that

         it has received funds for redemption.

 

SECTION 7 REDEMPTION AND REPURCHASE

 

(1)      The Bonds shall be redeemed at the principal amount of the Bonds on

         September 30, 2010, unless redeemed or repurchased prior to such date.

 

(2)      If the Issuer or the Guarantor is highly likely to be obliged to pay an

         Additional Amount (defined in Section 9) at the next due date for the

         Bonds as a result of any change or amendment in the laws (or rules or

         decision under such laws) of the United States or its subdivision, or

         its tax authorities, or application, authoritative interpretation or

         change in enforcement of such laws, rules or decisions, and, in the

         judgment of an authorized officer of the Issuer or Guarantor, the

         Issuer or Guarantor is not able to avoid payment of the Additional

         Amount with reasonable measures without incurring substantial

 

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         expenses, the Issuer or Guarantor may redeem (without deducting

         applicable withholding amounts), at any time, all of the Bonds (no

         partial redemption) at 100 % of the principal amount with interest

         thereon until (and including) the redemption date.

 

         Provided, however, that redemption of the Bonds on the grounds that the

         Guarantor has incurred payment obligation of the Additional Amount can

         only be made if both the Guarantor and Issuer are unable to avoid

         paying the Additional Amount by causing the Issuer to pay the principal

         of and interest on the Bonds.

 

         In such event, the Issuer or Guarantor shall notify the Fiscal Agent in

         writing that: (i) the Issuer or Guarantor is highly likely to bear

         obligation to pay the Additional Amount; (ii) it has elected to redeem

         the Bonds without deducting the withholding amount pursuant to this

         Section 7(2) instead of paying the Additional Amount; (iii) scheduled

         redemption date; and (iv) the payment obligation is unavoidable by

         reasonable measures without incurring substantial expenses in the

         judgment of an authorized officer of the company. The notice shall be

         accompanied by a legal opinion of an outside counsel appointed by the

         Issuer or Guarantor (meaning a legal counsel other than an employee of

         the Issuer, Guarantor or subsidiaries thereof, although a legal counsel

         regularly retained by the Issuer, Guarantor or subsidiaries thereof

         shall qualify as the outside counsel hereunder) (hereinafter the

         "Outside Counsel"), which shall describe that the Issuer or Guarantor

         is or may be obligated to pay the Additional Amount due to the facts

         described in the foregoing paragraph. The notice shall be given as soon

         as practicable upon occurrence of such event. Notices by the Issuer or

         Guarantor under this Section 7(2) to the Fiscal Agent shall be given 30

         days prior to the scheduled redemption date, and the Issuer shall

         publicly notify the Bondholders 14 days prior to the scheduled

         redemption date.

 

         The notice and legal opinion delivered under this Section 7(2) shall be

         kept at the main office of the Fiscal Agent, shall be available during

         normal business hours for inspection and copying by the Bondholders,

         and persons requesting such copying shall bear all expenses necessary

         therefor.

 

         Under these Conditions of Bonds, the principal of the Bond shall

         include premiums payable under this Section 7(2), if any.

 

         All reasonable expenses necessary for the procedures under this Section

         7(2) shall be borne by the Issuer or Guarantor.

 

(3)      The Issuer, the Guarantor or any of their respective subsidiaries may,

         at any time after the issue date, purchase the Bonds in the market or

         otherwise at any price and retain, resell or cancel them.

 

(4)      Unless otherwise provided hereunder, the Issuer shall not pay all or

         part of the principal of or interest on the Bonds prior to the due

         dates.

 

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SECTION 8 PAYMENT

 

(1)      Payment of the principal of or interest on the Bonds represented by the

         Bond Certificates or Coupons shall be made upon surrender of the

         relevant Bond Certificates or Coupons, except as provided under Section

         15, at either place of payment set forth in Section 5.

 

(2)      With respect to recorded Bonds, payment of principal shall be made upon

         surrender of the relevant principal payment voucher, and payment of

         interest shall be made upon surrender of the relevant interest payment

         voucher, at the place of payment designated by the Bondholder at the

         time of the application for recordation. The Paying Agent shall check

         the seal affixed on the principal or interest payment voucher against

         the seal impression submitted to the Recording Agent.

 

(3)      In the event that the Fiscal Agent has received the principal of and

         interest on the Bonds after the relevant due date, the Fiscal Agent

         shall publicly notify the receipt thereof as soon as practicable but no

         later than 14 days from the receipt of such amounts. All expenses in

         connection with the public notice shall be borne by the Issuer.

 

(4)      Redemption of the Bond shall be made upon the surrender of the Bond

         Certificates with all Coupons not yet due, and if such Coupon is

         lacking, the face amount of such missing Coupon shall be deducted from

         the principal of the Bond; provided that such holder of a missing

         Coupon may receive payment for the face amount thereof upon surrender

         of the Coupon within a 5 year period from the redemption date of the

         Bond Certificates to which the missing Coupon was attached.

 

(5)      If a payment date for the principal of or interest on the Bonds falls

         within a banking holiday in Tokyo, Japan, the Bondholder or

         Couponholder shall not be entitled to receive payments due until the

         next banking day, and no interest shall accrue for the delay of

         payment.

 

SECTION 9 TAXES