SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT, dated this 2nd day of February, 2005
("Agreement"), among Barington Companies Equity Partners, L.P., Barington
Companies Investors, LLC, Xxxxx Xxxxxxxxxxx, Xxxxxxxxx Companies Offshore
Fund, Ltd. (BVI), Barington Companies Advisors, LLC, Barington Capital Group,
L.P., LNA Capital Corp., Parche, LLC, Starboard Value & Opportunity Fund, LLC,
Admiral Advisors, LLC, Ramius Capital Group, LLC, C4S & Co., LLC, Xxxxx X.
Xxxxx, Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx, RJG Capital
Partners, LP, RJG Capital Management, LLC and Xxxxxx Xxxxx (the foregoing
individuals and entities being collectively referred to herein as the
"Barington Group"), and Xxxxxx Xxxxxx, Ltd., a Delaware corporation (the
"Company").
WHEREAS, the Barington Group (i) has publicly stated that it may
solicit proxies for the election of its own opposition slate of nominees (the
"Proxy Solicitation") to the Company's Board of Directors (the "Board"), and
(ii) has taken certain actions in furtherance thereof; and
WHEREAS, the Company and the members of the Barington Group have
determined that the interests of the Company and its stockholders would be
best served by avoiding the substantial expense, disruption and adverse
publicity that would result from the Proxy Solicitation.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, and, intending to be legally bound hereby, the parties
hereby agree as follows:
1. New Director; 2005 Annual Meeting; Related Matters.
(a) The Nominating/Corporate Governance Committee will,
acting in its sole discretion and subject to its fiduciary duties, seek at
least one additional candidate for election to the Board who has a record of
financial and/or retail experience which is generally appropriate for the
Company's business and who satisfies the applicable criteria to serve as an
"independent director" (as such term is defined under Nasdaq Market Rule 4200
(15)(A)) on the Company's Board and who has not, within the past five years,
had a business relationship with Xxxxxx Xxxxxx, Xxxxxxxx X. Xxxxxx or the
Company (the "Additional Independent Director"). The Company will use its
reasonable best efforts to complete all necessary steps sufficiently in
advance of the mailing of the Company's proxy statement for the 2005 Annual
Meeting of Stockholders (the "2005 Annual Meeting") such that the Additional
Independent Director will be included in the proxy statement as a nominee for
election to the Company's Board at the 2005 Annual Meeting; provided however,
that if such Additional Independent Director is not included in such proxy
statement, such Additional Independent Director shall, in any event, be
elected to the Board no later than June 1, 2005. The Persons nominated by the
Board to stand for election to the Board in accordance with this Section 1(a),
and who are included in the 2005 Proxy Statement, are referred to herein as
the "2005 Nominees."
(b) The members of the Barington Group and their Affiliates
and Associates (as such terms are defined in Section 14) shall vote, and shall
cause their respective Affiliates and Associates to vote, all Voting
Securities (as such term is defined in Section 14) which they are entitled to
vote at the 2005 Annual Meeting in favor of the election of each of the 2005
Nominees.
(c) The Barington Group hereby withdraws its demand for a
shareholder list and related information dated December 31, 2004. The
Barington Group will promptly file an amendment to the Schedule 13D regarding
the Common Stock filed with the SEC on July 30, 2004, as amended (the
"Schedule 13D"), reporting the entry into this Agreement, amending applicable
items to conform to its obligations hereunder and appending this Agreement and
the Press Release (as hereinafter defined) as an Exhibits thereto.
(d) The Company and the Board will request that senior
management consult at least quarterly with Xxxxxx X. Xxxx to review the
Company's business, operations, strategic plans and marketing activities with
a view to seeking the benefits of his knowledge, experience and expertise in
the retail and fashion industries. Nothing contained herein is intended to
cause Xx. Xxxx to not be deemed to be an "independent director."
(e) The "independent directors" of the board shall promptly
elect one such director to be a lead "independent director" and shall cause
the "independent directors" of the Board to hold regular meetings (no less
frequently than quarterly). The lead independent director shall: (i) work
closely with the chairman of the board on approving the information flow to
the board and developing meeting agendas and meeting schedules; (ii) chair
board meetings in the absence of the chairman of the board; (iii) oversee
meetings of the non-management directors; (iv) serve as the principal liaison
between the independent directors and the chairman of the board; and (v) take
a leading role in the board evaluation process.
2. Termination Date.
This Agreement shall remain in full force and effect and shall be
fully binding on the parties hereto in accordance with the provisions hereof
until the second anniversary of the date set forth above as the date of the
Agreement (the "Termination Date"). Nothing contained in this Agreement shall
limit any member of the Barington Group or their Associates or Affiliates from
taking any of the actions otherwise prohibited in this Agreement in connection
with any meeting of the Company's stockholders in 2007, including without
limitation, nominating directors, requesting a shareholder list and related
information, making public filings or announcements or taking any other
action, in each case, related to the solicitation of proxies at any 2007
meeting of the Company's stockholders if such action occurs no more than two
weeks prior to the earliest date on which a stockholder is permitted to give
effective notice of its intention to nominate candidates for election at the
Company's Annual Meeting of Stockholders to be held in 2007. To the extent
that the Barington Group utilizes the permission afforded by the preceding
2
sentence, the Company shall not be prohibited from responding publicly
thereto.
3. Standstill.
(a) Subject to Section 3(b) hereof, each member of the
Barington Group jointly and severally agrees that during the period commencing
on the date hereof and ending on the Termination Date, without the prior
written consent of the Board specifically expressed in a written resolution
adopted by a majority vote of the entire Board, he, she or it will not, and
will cause each of his, her or its Affiliates, Associates, employees, agents
and other Persons acting on his, her or its behalf not to:
(i) acquire, offer or propose to acquire, or agree
to acquire (except by way of stock dividends or other distributions or
offerings made available to holders of Voting Securities generally on a pro
rata basis, provided that any such securities so received shall be subject to
the provisions hereof), directly or indirectly, whether by purchase, tender or
exchange offer, through the acquisition of control of another Person (as such
term is defined in Section 14), by joining a partnership, limited partnership,
syndicate or other "group" (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) or
otherwise, any Voting Securities, if after giving effect to such acquisition
the Barington Group (by itself or with any other Person with whom it has any
agreement, understanding or arrangement with respect to Voting Securities)
would beneficially own more than 9.9% of the outstanding Voting Securities;
provided, however, no sales by any member of the Barington Group shall be
required if the increase in the beneficial ownership of Voting Securities over
9.9% of the outstanding Voting Securities results exclusively from a reduction
in the number of outstanding Voting Securities by reason of the Company's
repurchase of Common Stock; provided, that no member of the Barington Group
acquires any additional Voting Securities following disclosure by the Company
of information indicating that the Barington Group beneficially owns in excess
of 9.9% of the outstanding Voting Securities. For the purposes of computing
the beneficial ownership of the Barington Group at the time of any purchase,
the number of outstanding Voting Securities shall be determined by the latest
available Company filing with the Securities and Exchange Commission (the
"SEC").
(ii) engage, or in any way participate, directly or
indirectly, in any "solicitation" (as such term is defined in Rule 14a-1(l)
promulgated by the SEC under the Exchange Act) of proxies or consents (whether
or not relating to the election or removal of directors), seek to advise,
encourage or influence any Person with respect to the voting of any Voting
Securities; initiate, propose or otherwise "solicit" (as such term is defined
in Rule 14a-1(l) promulgated by the SEC under the Exchange Act) stockholders
of the Company for the approval of stockholder proposals whether made pursuant
to Rule 14a-8 or Rule 14a-4 under the Exchange Act or otherwise; induce or
attempt to induce any other Person to initiate any such stockholder proposal;
or otherwise communicate with the Company's stockholders or others pursuant to
Rule 14a-1(l)(2)(iv) under the Exchange Act; or participate in, or take any
3
action pursuant to, any "shareholder access" proposal which may be adopted by
the SEC, whether in accordance with proposed Rule 14a-11 or otherwise;
(iii) except as required pursuant to Item 4 of
Schedule 13D in connection with a Disposition (as hereinafter defined) of
Voting Securities expressly permitted under Section 3(b) of this Agreement,
seek, propose or make any statements with respect to, any merger,
consolidation, business combination, tender or exchange offer, sale or
purchase of assets, sale or purchase of securities, dissolution, liquidation,
restructuring, recapitalization or similar transactions involving the Company
or any of its Affiliates, provided that the Barington Group may publicly
express its opinion with respect to any such announced merger, consolidation
or business combination;
(iv) form, join or in any way participate in any
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to any Voting Securities, other than a "group" that includes all or
some lesser number of the Persons identified as "Reporting Persons" in the
Schedule 13D, but does not include any other members who are not currently
identified as Reporting Persons;
(v) deposit any Voting Securities in any voting
trust or subject any Voting Securities to any arrangement or agreement with
respect to the voting of any Voting Securities, except as expressly set forth
in this Agreement;
(vi) otherwise act, alone or in concert with
others, to control or seek to control or influence or seek to influence the
management, the Board or policies of the Company, except as otherwise
expressly permitted in this Agreement;
(vii) seek, alone or in concert with others, (a) to
call a meeting of stockholders or solicit consents from stockholders, (b) to
obtain representation on the Board, or (c) to effect the removal of any member
of the Board;
(viii) make any proposal (including publicly
disclose or discuss any proposal) or enter into any discussion regarding any
of the foregoing, or make any proposal, statement or inquiry, or disclose any
intention, plan or arrangement (whether written or oral) inconsistent with the
foregoing, or make or disclose any request to amend, waive or terminate any
provision of this Agreement;
(ix) have any discussions or communications, or
enter into any arrangements, understanding or agreements (whether written or
oral) with, or advise, finance, assist or encourage, any other Person in
connection with any of the foregoing, or make any investment in or enter into
any arrangement with, any other Person that engages, or offers or proposes to
engage, in any of the foregoing; or
(x) take or cause or induce others to take any
action inconsistent with any of the foregoing.
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(b) If the Company's announced, actual basic earnings per
share for the three quarters ended September 30, 2005 fail to exceed 90% of
the Expected Per Share Earnings Level (as hereinafter defined) for such
nine-month period, the Barington Group shall be relieved from compliance with
the provisions of Section 3(a) hereof solely to the extent necessary to permit
it to nominate a single candidate for election to the Board as a director to
run as a "short slate" against the Board's slate of nominees for the Company's
2006 Annual Meeting of Stockholders (the "2006 Annual Meeting") and to solicit
proxies in support of such candidate for election to the Board, as well as to
request a shareholder list and related information and make any and all
filings and/or announcements necessary in the sole discretion of the Barington
Group, in connection with such nomination, and to vote all Voting Securities
then beneficially owned in favor of the election of such candidate to the
Board and against one nominee on the slate nominated by the Board for the 2006
Annual Meeting. The term Expected Per Share Earnings Level means for all
purposes herein the product of (1) times (2) where (1) is 65% and (2) is the
lower end of the Estimated Per Share Earnings Range (as hereinafter defined).
The term "Estimated Per Share Earnings Range" shall mean the range of full
year estimated earnings per share which the Company will publicly announce at
its next scheduled quarterly conference call scheduled to occur on March 1,
2005.
4. Dispositions of Voting Securities.
(a) No member of the Barington Group will, and no such
member will permit his or her or its Affiliates and Associates to, directly or
indirectly, sell, assign, transfer, grant an option with respect to or
otherwise dispose of any interest in (or enter into an agreement or
understanding with respect to the foregoing) (collectively, a "Disposition")
any Voting Securities, provided, however, that the foregoing limitation shall
not prohibit any Disposition which complies with Section 4(b) hereof (a
"Permitted Disposition").
(b) The term "Permitted Disposition" shall mean and include
any of the following: (i) any Disposition to or through a nationally
recognized broker-dealer (a "Block Positioner") so long as such Block
Positioner agrees that it shall not, either as principal or agent, make any
Disposition to a Person who, after giving effect to such Disposition, would,
together with its Affiliates, beneficially own 5% or more of the outstanding
Voting Securities unless such Person is either a reporting person with respect
to the Voting Securities on Schedule 13G or is an institutional investor
eligible to use such Schedule 13G; (ii) a Disposition pursuant to a
transaction effected on Nasdaq, any inter-dealer quotation system or on the
floor of a nationally recognized securities exchange in which no member of the
Barington Group has any knowledge that the purchaser is a Person who, after
giving effect to such Disposition, would, together with its Affiliates,
beneficially own 5% or more of the outstanding Voting Securities; or (iii)
Disposition pursuant to a tender or exchange offer.
(c) If any member of the Barington Group or any Affiliate of
any member of the Barington Group acquires any Voting Securities in violation
of this Agreement, it will immediately dispose of such Voting Securities to
Persons which are not members of the Barington Group or Affiliates thereof in
a manner permitted by Section 4(b) hereof, provided that the Company may also
5
pursue any other available remedy to which it may be entitled as a result of
such violation.
5. Common Stock Repurchase Program; Dividends. During the 12-month
period beginning February 1, 2005, the Company will cause a distribution by
the Company of not less than $25,000,000 in cash to the holders of Common
Stock through any combination of cash dividends, repurchases of Common Stock
in the market and one or more self-tender offers to the holders of Common
Stock by the Company. During the 12-month period beginning February 1, 2006,
the Company will cause a distribution of not less than $10,000,000 in cash to
the holders of Common Stock through any combination of cash dividends,
repurchases of Common Stock in the market one or more self-tender offers to
the holders of Common Stock by the Company. All such dividends, share
repurchases and self-tender offers shall be commenced, implemented or
suspended at any time or from time to time, at the discretion of the Board
without prior notice and shall be made in whatever manner the Board approves
in its sole discretion and subject to compliance with applicable rules and
regulations of the SEC and Nasdaq, general economic and market conditions and
the Board's fiduciary duty in light of the Company's business and financial
condition obtaining at the relevant time.
6. Access to Board. On a quarterly basis (or such other more frequent
basis as the Board determines in its sole discretion) occurring reasonably
following the Company's announcement of its quarterly results (beginning
within 30 days of the date hereof and thereafter following the Company's
announcement of its results for the first quarter of 2005), no more than two
designated representatives (the "Designated Representatives") of the Barington
Group shall be afforded an opportunity to meet with the Board. Prior to the
first such meeting the Barington Group shall notify the Chairman of the Board
of the Company of the identity of its Designated Representatives and any
specific topics they may wish to address with the Board. By notice to the
Company, the Designated Representatives may be changed from time to time. Such
meetings shall occur on a date that is mutually convenient for the Board and
the Designated Representatives and the Company shall use its reasonable best
efforts to schedule such meetings within three weeks of receiving such notice
of the Designated Representatives. Such meetings may include participation by
members of the Board by means of a conference telephone or video conference
telephone hook-up that would satisfy the Company's by-law requirement for a
Board meeting, provided, however, a majority of directors shall be present in
person at such meetings.
7. Anti-Takeover Measures. During the period commencing on the date
hereof and ending on the Termination Date, the Company agrees that it shall
not: (i) implement or otherwise adopt a "classified" or "staggered" board; or
(ii) amend or otherwise modify the Rights Agreement by and between the Company
and American Stock Transfer & Trust Company dated November 14, 2001, in any
manner adverse to a potential acquirer (this provision shall in no way prevent
the Company from redeeming the rights issued pursuant to the Rights
Agreement).
8. Representations and Warranties of the Barington Group.
6
The members of the Barington Group jointly and severally represent
and warrant as follows:
(a) Each member of the Barington Group has the power and
authority to execute, deliver and carry out the terms and provisions of this
Agreement and to consummate the transactions contemplated hereby.
(b) This Agreement has been duly and validly authorized,
executed, and delivered by each member of the Barington Group, constitutes a
valid and binding obligation and agreement of each such member, and is
enforceable against each such member in accordance with its terms.
(c) The members of the Barington Group, together with their
Affiliates and Associates, beneficially own, directly or indirectly, an
aggregate of 1,005,420 shares of Common Stock of the Company as set forth by
beneficial owner and amount on Schedule A hereto and such shares of Common
Stock constitute all of the Voting Securities of the Company beneficially
owned by the members of the Barington Group and their Affiliates and
Associates.
9. Representations and Warranties of the Company. The Company hereby
represents and warrants as follows:
(a) The Company has the corporate power and authority to
execute, deliver and carry out the terms and provisions of this Agreement and
to consummate the transactions contemplated hereby.
(b) This Agreement has been duly and validly authorized,
executed and delivered by the Company, constitutes a valid and binding
obligation and agreement of the Company, and is enforceable against the
Company in accordance with its terms.
10. Specific Performance. Each of the members of the Barington Group,
on the one hand, and the Company, on the other hand, acknowledges and agrees
that irreparable injury to the other party hereto would occur in the event any
of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached and that such injury would not
be adequately compensable in damages. It is accordingly agreed that the
members of the Barington Group, on the one hand, and the Company, on the other
hand (the "Moving Party"), shall each be entitled to specific enforcement of,
and injunctive relief to prevent any violation of, the terms hereof and the
other party hereto will not take action, directly or indirectly, in opposition
to the Moving Party seeking such relief on the grounds that any other remedy
or relief is available at law or in equity.
11. Press Release. Immediately following the execution and delivery
of this Agreement, the Company and the Barington Group shall issue the joint
press release attached hereto as Schedule B (the "Press Release"). None of the
parties hereto will make any public statements (including in any filing with
the SEC or any other regulatory or governmental agency, including any stock
7
exchange) that are inconsistent with, or otherwise contrary to, the statements
in the Press Release issued pursuant to this Section 11. Following the date
hereof, neither the Barington Group, nor any of its Affiliates or Associates,
shall issue or cause the publication of any press release or other public
announcement with respect to this Agreement, the Company, its management or
the Board or the Company's business without prior written consent of the
Company, provided, however, that the Barington Group may file an amendment to
the Schedule 13D in accordance with Section 1(c) of this Agreement and may
otherwise make such public announcements as its counsel reasonably determines
are required by law as a result of a statement, fact or development that
itself does not breach or conflict with the terms of this Agreement so long as
the Company is afforded reasonable advance notice thereof and an opportunity
to comment on the form and substance thereof.
12. Expenses. Within 10 business days following receipt of reasonably
satisfactory documentation thereof, the Company will reimburse the Barington
Group for its reasonable, documented out-of-pocket fees and expenses incurred
in connection with its Schedule 13D filings, its putative Proxy Solicitation
and the negotiation and execution of this Agreement and all related activities
and matters, provided such reimbursement shall not exceed $150,000 in the
aggregate.
13. No Waiver. Any waiver by either the Representative (as
hereinafter defined) or the Company of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of either the Representative or the Company to insist
upon strict adherence to any term of this Agreement on one or more occasions
shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.
14. Certain Definitions. As used in this Agreement, (a) the term
"Person" shall mean any individual, partnership, corporation, group,
syndicate, trust, government or agency, or any other organization, entity or
enterprise; (b) the terms "Affiliates" and "Associates" shall have the
meanings set forth in Rule 12b-2 under the Exchange Act and shall include
Persons who become Affiliates or Associates of any Person subsequent to the
date hereof; and (c) the term "Voting Securities" shall mean any securities of
the Company entitled, or which may be entitled, to vote (whether or not
entitled to vote generally in the election of directors), or securities
convertible into or exercisable or exchangeable for such securities, whether
or not subject to passage of time or other contingencies.
15. Successors and Assigns. All the terms and provisions of this
Agreement shall inure to the benefit of and shall be enforceable by the
successor and assigns of the parties hereto.
16. Survival of Representations. All representations and warranties
made by the parties in this Agreement or pursuant hereto shall survive until
the Termination Date.
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17. Entire Agreement; Amendments. This Agreement and the Schedules
hereto contain the entire understanding of the parties hereto with respect to
its subject matter. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth herein. This Agreement may be amended only by a written
instrument duly executed by the parties hereto or their respective successors
or assigns.
18. Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
by hand (with written confirmation of receipt), (b) upon sending if sent by
e-mail or facsimile (with such communication to be in PDF format), with
electronic confirmation of sending; provided, however, that a copy is sent on
the same day by registered mail, return receipt requested, in each case to the
appropriate mailing and e-mail or facsimile addresses set forth below (or to
such other mailing, facsimile and e-mail addresses as a party may designate by
notice to the other parties in accordance with this provision), (c) one (1)
day after being sent by nationally recognized overnight carrier to the
addresses set forth below (or to such other mailing addresses as a party may
designate by notice to the other parties in accordance with this Section 19)
or (d) when actually delivered if sent by any other method that results in
delivery (with written confirmation of receipt):
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If to the Company:
Xxxxxx Xxxxxx, Ltd.
00-00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx
Telecopy: 000 000 0000
Email: xxxxxxxxxxx@XxxxxXxxxxx.xxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Xxxxxxxx X. Xxxxxx, Esq.
Telecopy: 000 000 0000
Email: xxxxxxx@xxxxxxx.xxx
xxxxxxx@xxxxxxx.xxx
and
If to the Barington Group:
Barington Companies Equity Partners, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxxx
Telecopy: 000 000 0000
Email: xxxxxxxxxxxx@xxxxxxxxx.xxx
with a copy to:
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Email: xxxxxxxx@xxxxxxxxx.xxx
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
20. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York without
reference to the conflict of laws principles thereof.
10
21. Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same Agreement.
22. Barington Group Representative. Each member of the Barington
Group hereby irrevocably appoints Xxxxx Xxxxxxxxxxx as such member's
attorney-in-fact and representative (the "Representative"), in such member's
place and stead, to do any and all things and to execute any and all documents
and give and receive any and all notices or instructions in connection with
this Agreement and the transactions contemplated hereby. The Company shall be
entitled to rely, as being binding on each member of the Barington Group, upon
any action taken by the Representative or upon any document, notice,
instruction or other writing given or executed by the Representative.
23. No Admission. Nothing contained herein shall constitute an
admission by any party hereto of liability or wrongdoing.
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IN WITNESS WHEREOF, and intending to be legally bound hereby, each of
the undersigned parties has executed or caused this Agreement to be executed
on the date first above written.
XXXXXX XXXXXX, LTD.
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chief Executive Officer
BARINGTON COMPANIES EQUITY PARTNERS, L.P.
By: Barington Companies Investors, LLC,
its general partner
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Managing Member
BARINGTON COMPANIES INVESTORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Managing Member
XXXXX XXXXXXXXXXX
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
BARINGTON COMPANIES OFFSHORE FUND,
LTD. (BVI)
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Manager
BARINGTON COMPANIES ADVISORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Managing Member
12
BARINGTON CAPITAL GROUP, L.P.
By: LNA Capital Corp., its general partner
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: President & CEO
LNA CAPITAL CORP.
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: President and CEO
PARCHE, LLC
By: Admiral Advisors, LLC, its managing
member
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Signatory
STARBOARD VALUE & OPPORTUNITY FUND, LLC
By: Admiral Advisors, LLC, its managing
member
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Signatory
ADMIRAL ADVISORS, LLC
By: Ramius Capital Group, LLC, its
sole member
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Signatory
RAMIUS CAPITAL GROUP, LLC
By: C4S & Co., its managing member
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
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C4s & CO., LLC
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
XXXXX X. XXXXX
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
XXXXXX X. XXXXX
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
XXXXXXX X. XXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXX
By:
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
RJG CAPITAL PARTNERS, LP
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: Managing Member of RJC Capital
Manangement, LLC, its general partner
RJG CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Name: Xxxxxx Xxxxx
Title: Managing Member
XXXXXX X. XXXXX
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Name: Xxxxxx Xxxxx
14
SCHEDULE A
Summary of Beneficial Ownership of Shares of Common Stock of Xxxxxx Xxxxxx, Ltd.
-----------------------------------------------------------------------------------------------------------
Amount
Beneficially Percent
Beneficial Owner(7) Owned of Class(1)
-----------------------------------------------------------------------------------------------------------
Barington Companies Equity Partners, L.P. ("Barington LP") 288,937 (2)(4) 2.21% (2)(4)
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Barington Companies Investors, LLC ("Barington Investors LLC") (2) (2)
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Xxxxx Xxxxxxxxxxx (2)(4) (2)(4)
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Barington Companies Offshore Fund, Ltd. (BVI)
("Barington Offshore") 48,535 (3)(4) 0.37% (3)(4)
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Barington Companies Advisors, LLC ("Barington Advisors LLC") (3) (3)
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Barington Capital Group, L.P. ("Barington Capital LP") (2)(3)(4) (2)(3)(4)
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LNA Capital Corp. ("LNA") (4) (4)
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Parche, LLC ("Parche") 105,496 (5) 0.81% (5)
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Starboard Value & Opportunity Fund, LLC ("Starboard") 553,852 (5) 4.24% (5)
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Admiral Advisors, LLC ("Admiral") (5) (5)
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Ramius Capital Group, LLC ("RCG") (5) (5)
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C4S & Co., LLC ("C4S") (5) (5)
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Xxxxx X. Xxxxx (5) (5)
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Xxxxxx X. Xxxxx (5) (5)
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Xxxxxxx X. Xxxxxxx (5) (5)
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Xxxxxx X. Xxxxxxx (5) (5)
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RJG Capital Partners, LP ("RJG LP") 8,600 (6) 0.066% (6)
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RJG Capital Management, LLC ("RJG LLC") (6) (6)
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Xxxxxx Xxxxx (collectively with beneficial owners listed above, (6) (6)
"Barington Group")
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BARINGTON GROUP 1,005,420 7.7%
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(1) Based upon based upon the 13,053,505 shares of Common Stock reported by the Company to be issued and
outstanding as of November 3, 2004 in its Form 10-Q filed with the Securities and Exchange Commission
on November 9, 2004 (the "Issued and Outstanding Shares").
(2) The following members of the Barington Group may also be deemed to beneficially own the 288,927
shares of Common Stock owned by Barington LP: (a) as the general partner of Barington LP, Barington
Investors LLC; (b) as the managing member of Barington Investors LLC, Xx. Xxxxxxxxxxx; (c) as the
majority member of Barington Investors LLC, Barington Capital LP; and (d) the other members discussed
in paragraph (4) below.
(3) The following members of the Barington Group may also be deemed to beneficially own the 48,535 shares
of Common Stock owned by Barington Offshore: (a) as the investment advisor to Barington Offshore,
Barington Advisors LLC; (b) as the managing member of Barington Advisors LLC, Barington Capital LP
and (c) the other members discussed in paragraph (4) below.
(4) The following members of the Barington Group may also be deemed to beneficially own both the 288,937
shares owned by Barington LP and the 48,535 shares owned by Barington Offshore, representing an
aggregate of 337,472 shares, constituting approximately 2.58% of the Issued and Outstanding Shares:
(a) Barington Capital LP, as discussed above in paragraphs (2) and (3); (b) as the general partner of
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Xxxxxxxxx Xxxxxxx XX, XXX; and (c) as the sole stockholder and director of LNA, and, as discussed in
paragraph (2) above, as the managing member of Barington Investors LLC, Xx. Xxxxxxxxxxx. Xx.
Xxxxxxxxxxx has sole voting and dispositive power with respect to the 288,937 shares owned by
Barington LP and the 48,535 shares owned by Barington Offshore by virtue of his authority to vote and
dispose of such shares.
(5) The following members of the Barington Group may also be deemed to beneficially own both the 105,496
shares and the 553,852 shares of Common Stock owned by Parche and Starboard, respectively,
representing an aggregate of 659,348 shares, constituting approximately 5.05% of the Issued and
Outstanding Shares: (a) as the managing member of each of Parche and Starboard, Admiral; (b) as the
sole member of Admiral, RCG; (c) as the managing member of RCG, C4S; (d) as the managing members of
C4S, each of Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx. Each of
Messrs. Cohen, Stark, Solomon and Xxxxxxx share voting and dispositive power with respect to the
105,496 shares and 553,852 shares owned by Parche and Starboard, respectfully, by virtue of their
shared authority to vote and dispose of such shares. Messrs. Cohen, Stark, Solomon and Xxxxxxx
disclaim beneficial ownership of such shares.
(6) The following members of the Barington Group may also be deemed to beneficially own the 8,600 shares
owned by RJG LP: (a) as the general partner of RJG LP, RJG LLC; and (b) as the managing member of RJG
LLC, Xxxxxx Xxxxx. Xx. Xxxxx has sole voting and dispositive power with respect to the 8,600 shares
owned by RJG LP by virtue of his authority to vote and dispose of such shares.
(7) Each member of the Barington Group is deemed to have sole voting and dispositive power over the
shares of Common Stock reported as beneficially owned by virtue of their respective positions as
described in paragraphs (1) through (6), with the exception of Messrs. Cohen, Stark, Solomon and
Xxxxxxx, who have shared authority to vote and dispose of such shares. Messrs. Cohen, Stark, Solomon
and Xxxxxxx disclaim beneficial ownership of such shares. With the exception of Messrs. Cohen, Stark,
Solomon and Xxxxxxx, each member of the Barington Group is deemed to have sole voting and dispositive
power with respect to the shares each beneficially owns, regardless of the fact that multiple members
of the Barington Group within the same chain of ownership are deemed to have sole voting and
dispositive power with respect to such shares. Each such member reports sole voting and dispositive
power with respect to such shares based on its relationship to the other members within the same
chain of ownership.
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SCHEDULE B
PRESS RELEASE
For Immediate Release
XXXXXX XXXXXX, LTD. AND THE BARINGTON CAPITAL GROUP
REACH AGREEMENT -
COMPANY WILL ALLOCATE $25 MILLION TO
SHARE REPURCHASE AND/OR DIVIDENDS IN 2005
Company will add an Additional Independent Director to the Board
LONG ISLAND CITY, N.Y. - February 2, 2005 - Xxxxxx Xxxxxx, Ltd. (the
"Company") and a group of investors led by Barington Capital Group, L.P. (the
"Barington Group") that has reported beneficial ownership of approximately
7.7% of the Company's outstanding shares, announced today that they have
reached an agreement that will avoid a proxy contest at the Company's 2005
annual meeting of shareholders.
Under the terms of the Settlement Agreement, the current Board, in
its sole discretion, will determine who will be nominated for re-election to
the Board of Directors at the 2005 annual meeting. The Company will also add a
new independent Board member who will join the recently elected Xxxxxx X. Xxxx
as independent candidates for election at the 2005 annual meeting. The
Barington Group has agreed to vote for the election of each of the Board's
nominees.
The Settlement Agreement includes assurances that the Company will
dedicate additional capital resources to the enhancement of shareholder value
through share repurchases (including possibly by self-tender offer) and/or
dividends. For the fiscal year ended December 31, 2004 the Company repurchased
a total of 545,100 shares for an aggregate of $9.7 million. For 2005, the
Company has committed to spend $25 million, an increase of approximately 150%
over 2004. It has further committed to spend an additional $10 million in
2006. Final programs utilizing cash resources are subject to market conditions
and applicable legal requirements.
Under the Agreement the Board will meet with representatives of the
Barington Group on a quarterly basis to engage in an open dialogue with the
Board. The Company has also agreed to appoint one of its independent directors
as a lead director.
Finally, the Agreement provides that the Barington Group will abide
by certain standstill provisions for a two year period. The Barington Group
will support the Board through the 2006 annual meeting of shareholders,
subject to the terms of the Settlement Agreement, which will be incorporated
into a Report on Form 8-K to be filed by the Company this week.
Xxxxx Xxxxxx, Chairman and Chief Executive Officer of Xxxxxx Xxxxxx,
Ltd. and the Outside Directors of the Company stated, "We are pleased that
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this matter has been resolved in a manner that serves the best interests of
our stockholders. It has always been our intent to enhance shareholder value
and this Agreement clearly evidences that intent."
"Our Board of Directors and the management team are very focused on
growing the business, improving profitability of various divisions, further
building and leveraging the Xxxxx Xxxxxx brand, and enhancing shareholder
value for the long-term. We collectively look forward to turning our full
attention to ensuring that Xxxxxx Xxxxxx, Ltd. remains one of the premier
fashion footwear companies in the marketplace."
Xxxxx X. Xxxxxxxxxxx, Chairman and Chief Executive Officer of
Barington Capital Group, stated, "This agreement demonstrates the commitment
of all parties to addressing the interests of all stockholders in a
significant and positive way. As we have previously stated, we are pleased the
Company added Xxx Xxxx to its Board last December so that the existing
management team can benefit from Xx. Xxxx'x retail and merchandising
expertise. We are also pleased with the agreement to appoint a lead director
and an additional independent director to the Board and that the Company will
dedicate $35 million over the next two years to stockholders through share
repurchases and/or dividends. We believe these actions will provide
significant value to shareholders. We are looking forward to engaging in a
constructive dialogue with the Board."
Xxxxxx Xxxxxx, Ltd. designs and markets fashion-forward footwear for
women, men and children. The shoes are sold through Xxxxx Xxxxxx retail
stores, department stores, apparel and footwear specialty stores, and on-line
at xxxx://xxx.xxxxxxxxxxx.xxx . The Company has several licenses for the Xxxxx
Xxxxxx and Stevies brands, including eyewear, hosiery, and belts, owns and
operates one retail store under its Xxxxxx xxxxx, and is the licensee for
l.e.i Footwear, Candie's Footwear and Unionbay Men's Footwear.
Barington Capital Group, L.P. is an investment management firm that
primarily invests in undervalued, small-capitalization companies. Barington
and its principals are experienced value-added investors who have taken active
roles in assisting management teams in creating or improving shareholder
value.
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