Tiffany & Co. (NYSE:TIF) will continue its long-term relationship with jewelry designer Elsa Peretti, according to a Securities and Exchange filing reported by Forbes.

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The 20-year agreement, finalized on Dec. 27, 2012, has Tiffany & Co. (NYSE:TIF) as the sole sales outlet for Perretti’s jewelry. The two have been working together since 1974, Tiffany is the only licensee on the intellectual property rights (Peretti Intellectual Property) required to produce and sell Peretti’s products with her trademarks.

In addition, the recent SEC filing included amended terms with the following, “Peretti grants Tiffany an exclusive license, in all of the countries in which Peretti-designed jewelry and products are currently sold, to make, have made, advertise and sell these items, which are made in conformance to Peretti’s designs and bear her trademarks.”

On Dec. 31, 2012, Tiffany paid a $47.2 million-plus one-time fee to Peretti and in exchange, the designer will receive a $450,000 annual royalty fee for the use of Peretti Intellectual Property ($9 million dollars over 20 years), and 5 percent of net sales from Peretti jewelry.

Peretti’s jewelry is one of Tiffany’s most popular brands, representing 10 percent of annual sales from 2009 to 2011. Should the jewelry continue selling at this level, it could be an additional $18 million annually for Peretti. The one-time $450,000 payment did not cut down royalties in the future.

The Peretti-designed pieces are simple in nature and include the popular open hearts, teardrops and round shapes in necklaces, bracelets and rings.

The extended agreement comes as somewhat of a surprise since back in May, it seemed like the relationship would end. A SEC filing disclosed the parties were unable to agree on the price for Tiffany to buy Peretti’s intellectual property rights. Forbes reported that  Peretti’s advisors said to the company she’d “consider exercising her right to terminate the License Agreement,” as noted in regulatory filings.

At the time, the agreement allowed either party to end the agreement via written notice.

In the new agreement, Peretti can terminate “only in the event of a material breach by Tiffany & Co. (NYSE:TIF) or upon a change of control of Tiffany,” while Tiffany can end it “only in the event of a material breach by Ms. Peretti or following an attempt by Ms. Peretti to revoke the exclusive license.”

The agreement also included language about Peretti Intellectual Property, which has Peretti keeping ownership and giving approval and consultation rights regarding the promotion, display, manufacture and merchandising of licensed products. Tiffany is also required to display the licensed products in its stores, use money from its advertising budget to promote the products, increase inventory of non-jewelry licensed products and also protect the use and registration for the Peretti Intellectual Property.

Tiffany & Co. (NYSE:TIF) is the world’s second-largest luxury jeweler and in fiscal 2011, it recorded $3.64 billion in revenues. With the news of the agreement on Dec. 31, Tiffany’s stock increased 1.6 percent to $57.34.

In 2011, shares fell 13 percent.