EXECUTION COPY
AGREEMENT
AGREEMENT, dated as of April 25, 2007 (the "Agreement"), by and among
Xxxxxxxx'x International, Inc., a Delaware corporation (the "Company"), and the
persons and entities listed on Schedule A hereto (each a "Xxxxxxx Investor" and
collectively, the "Xxxxxxx Investors").
WHEREAS, the Xxxxxxx Investors are the beneficial owners of, in the
aggregate, 4,025,000 shares of common stock, par value $0.01 per share, of the
Company (the "Common Stock");
WHEREAS, on December 11, 2006, the Xxxxxxx Investors delivered to the
Company a "Notice of Intention to Nominate Persons for Election as Directors"
(the "Nomination Letter") and on April 12, 2007, the Xxxxxxx Investors filed a
Proxy Statement (the "Xxxxxxx Investor Proxy") on Schedule 14A with the
Securities and Exchange Commission (the "SEC"); and
WHEREAS, the Company and the Board of Directors of the Company (the
"Board"), on the one hand, and the Xxxxxxx Investors, on the other hand, wish to
enter into certain agreements relating to the future composition of the Board,
the governance of the Company and the termination of the pending proxy contest
for the election of directors at the Company's 2007 Annual Meeting of
Stockholders (the "2007 Annual Meeting").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
I. REPRESENTATIONS
1.1 Authority; Binding Agreement.
(a) The Company hereby represents and warrants that this Agreement and
the performance by the Company of its obligations hereunder (i) has been
duly authorized, executed and delivered by it, and is a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, (ii) does not require the approval of the shareholders of
the Company and (iii) does not and will not violate any law, any order of
any court or other agency of government, the Certificate of Incorporation
of the Company or the Bylaws of the Company (as amended and restated, the
"Bylaws") or any provision of any indenture, agreement or other instrument
to which the Company or any of its properties or assets is bound, or
conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such indenture, agreement or
other instrument, or result in the creation or imposition of, or give rise
to, any lien, charge, restriction, claim, encumbrance or adverse penalty of
any nature whatsoever pursuant to any such indenture, agreement or other
instrument.
(b) Each of the Xxxxxxx Investors represents and warrants, severally
and not jointly, that this Agreement and the performance by such Xxxxxxx
Investor of its obligations hereunder (i) has been duly authorized, executed
and delivered by such Xxxxxxx Investor, and is a valid and binding
obligation of such Xxxxxxx Investor, enforceable against such Xxxxxxx
Investor in accordance with its terms, (ii) does not require approval by any
owners or holders of any equity interest in such Xxxxxxx Investor (except as
has already been obtained) and (iii) does not and will not violate any law,
any order of any court or other agency of government, the charter or other
organizational documents of such Xxxxxxx Investor, as amended, or any
provision of any agreement or other instrument to which such Xxxxxxx
Investor or any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such agreement or other instrument, or result in
the creation or imposition of, or give rise to, any lien, charge,
restriction, claim, encumbrance or adverse penalty of any nature whatsoever
pursuant to any such agreement or instrument.
1.2 Defined Terms.
For purposes of this Agreement:
(a) "Affiliate" has the meaning set forth in Rule 12b-2 promulgated
by the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(b) The terms "beneficial owner" and "beneficially own" have the same
meanings as set forth in Rule 13d-3 promulgated by the SEC under the
Exchange Act.
II. COVENANTS
2.1 Directors.
(a) Appointment of Xxxxxxx Nominees. The Company agrees that
concurrently with the execution of this Agreement, the Company and the
Board, at a duly convened meeting of directors, shall take all actions
necessary to (i) increase the size of the Board from twelve (12) to fourteen
(14) directors and (ii) appoint with immediate effect Xxxxxxx X. Xxxxxxx and
Xxxxxxxx X. Xxxxxx (the "Xxxxxxx Nominees") as directors to fill the two
newly created vacancies, each with a term expiring at the 2007 Annual
Meeting. The composition of the Board's classes of directors shall be
modified, if necessary, by the Company to accomplish the appointment of the
Xxxxxxx Nominees in accordance with the terms of the preceding sentence.
(b) 2007 Annual Meeting. The Company agrees that the Company and the
Board will cause the slate of nominees standing for election, and
recommended by the Board, at the 2007 Annual Meeting to include each of the
current slate of directors recommended for election by the Board (the
"Incumbent Slate") and the Xxxxxxx Nominees (the Incumbent Slate and the
Xxxxxxx Nominees, the "Revised Slate") and specifically to:
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(1) nominate each of the Xxxxxxx Nominees for election at the
2007 Annual Meeting as a director of the Company with a term expiring
at the Company's 2010 Annual Meeting of Shareholders;
(2) recommend each of the Xxxxxxx Nominees for election as
directors of the Company at the 2007 Annual Meeting, and cause the
Company to use its reasonable efforts to solicit proxies in favor of
the election of, each of the Xxxxxxx Nominees; and
(3) cause all proxies received by the Company to be voted in the
manner specified by such proxies.
(c) Reduction of Board Size by 2008 Annual Meeting. The Company
agrees that by no later than the 2008 Annual Meeting of the Shareholders of
the Company (the "2008 Annual Meeting"), the Company shall decrease the size
of the Board from fourteen (14) to twelve (12) directors and at or prior to
the 2008 Annual Meeting, the Company shall take all necessary action,
including amending the Bylaws (if required) in accordance with Article VIII
thereof, to effectuate the foregoing.
(d) Committee Representation. Concurrently with their respective
appointments or elections as members of the Board, the Board shall appoint
(i) Xxxxxxx X. Xxxxxxx as a member of each of the Strategy Committee, the
Executive Compensation Committee of the Board and the Corporate
Governance/Nominating Committee of the Board and (ii) Xxxxxxxx X. Xxxxxx as
a member of each of the Corporate Governance/Nominating Committee of the
Board and the Audit Committee of the Board. The Company hereby confirms that
it is not the Company's intention to create an executive committee of the
Board, but in the event that an executive committee is created at any time
that a Xxxxxxx Nominee is serving as a director, the Board shall afford at
least one Xxxxxxx Nominee the opportunity to serve on such committee. The
Company hereby confirms that it is the practice of the Company that all
independent members of the Board are entitled to attend as an observer, all
meetings of any committee of the Board and agrees that it will maintain this
practice throughout the Xxxxxxx Investor Representation Period.
(e) Role of Xxxxxxx Nominees. Each of the Xxxxxxx Nominees, upon
appointment or election to the Board, will serve as an integral member of
the Board and be governed by the same protections and obligations regarding
confidentiality, conflicts of interests, fiduciary duties, trading and
disclosure policies and other governance guidelines, and shall have the same
rights and benefits, including (but not limited to) with respect to
insurance, indemnification, compensation and fees, as are applicable to all
independent directors of the Company.
(f) Replacement Nominees. If at any time during the Xxxxxxx Investor
Representation Period either of the Xxxxxxx Nominees is or becomes unwilling
or unable to serve as a nominee or, following such person's appointment or
election, as a director of the Company, the Xxxxxxx Investors shall be
entitled to appoint a replacement nominee or director, as the case may be;
provided that no breach of the terms hereof on the part of the Xxxxxxx
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Investors has occurred and is continuing; provided further that, unless such
proposed replacement is one of the four individuals nominated by the Xxxxxxx
Investors in the Nomination Letter (each of whom shall be deemed
acceptable), such replacement nominee or director, as the case may be, shall
be reasonably acceptable to the Governance/Nominating Committee. Any such
replacement nominee or director, as the case may be, shall be deemed to be a
Xxxxxxx Nominee for the purposes of this Agreement.
(g) Proxy Solicitation Materials. The Company agrees that as promptly
as practicable following the date hereof, the Company shall take all steps
reasonably necessary to amend, and refile as amended with the SEC, the Proxy
Statement on Schedule 14A filed by the Company with the SEC on April 9, 2007
(the "Company Proxy") to include the Xxxxxxx Nominees as "Nominees" (as
defined in the Company Proxy) thereunder. The Company and the Board agree
that the Company Proxy (as amended pursuant to the terms of this Agreement)
and all other solicitation materials to be delivered to stockholders in
connection with the 2007 Annual Meeting shall be prepared in accordance
with, and in furtherance of, this Agreement. The Company will provide the
Xxxxxxx Investors with copies of any proxy materials or other solicitation
materials to be delivered to stockholders in connection with the 2007 Annual
Meeting at least two business days, in the case of proxy statements, and at
least one business day, in the case of other solicitation materials, in
advance of filing such materials with the SEC or disseminating the same in
order to permit the Xxxxxxx Investors a reasonable opportunity to review and
comment on such materials. The Xxxxxxx Investors will provide, as promptly
as reasonably practicable, all information relating to the Xxxxxxx Nominees
(and other information, if any) to the extent required under applicable law
to be included in the Company Proxy (as amended in accordance with the terms
of this Agreement) and any other solicitation materials to be delivered to
stockholders in connection with the 2007 Annual Meeting. The Company Proxy,
as amended pursuant to the terms of this Agreement, shall contain the same
type of information concerning the Xxxxxxx Nominees as provided for the
incumbent director nominees.
(h) Other Matters. The Company agrees that no matters will be
presented by the Board for a vote of shareholders of the Company at the 2007
Annual Meeting other than the election of directors (as specified herein),
the ratification of the Company's registered public accounting firm and the
approval of Amendment No. 7 to the Xxxxxxxx'x International, Inc. Employee
Stock Purchase Plan.
(i) Publicity. Promptly after the execution of this Agreement, the
Company will issue a press release in the form attached hereto as Schedule
B.
(j) Reimbursement of Expenses. As promptly as practicable after the
date hereof but in any event by April 30, 2007, the Company shall pay to the
Xxxxxxx Investors the sum of $500,000, as reimbursement for their expenses
incurred in connection with the preparation of the Xxxxxxx Investor Proxy
and this Agreement, and other matters related thereto or hereto.
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2.2 Xxxxxxx Investor Voting Provisions.
(a) Withdrawal of Nomination Letter. Concurrently with the
appointment of the Xxxxxxx Nominees as directors of the Company and their
nomination for election at the 2007 Annual Meeting in accordance with
Sections 2.1(a) and (b) of this Agreement, the Xxxxxxx Nominees shall
irrevocably withdraw the Nomination Letter and the Xxxxxxx Investors and the
Company shall terminate the pending proxy contest with respect to the
election of directors at the 2007 Annual Meeting.
(b) Xxxxxxx Investor Actions. Commencing on the appointment of the
Xxxxxxx Nominees as directors of the Company and their nomination for
election at the 2007 Annual Meeting in accordance with Sections 2.1(a) and
(b) of this Agreement and thereafter for so long as at least one Xxxxxxx
Nominee is serving as a member of the Board (such period, the "Xxxxxxx
Investor Representation Period"), none of the Xxxxxxx Investors, nor any of
their respective Affiliates, will (i) with respect to the Company or its
Common Stock, make, engage or in any way participate in, directly or
indirectly, any "solicitation" (as such term is used in the proxy rules of
the SEC) 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 Common Stock (other than Affiliates), or
(ii) except as specifically and expressly set forth in this Agreement, seek,
alone or in concert with others, election or appointment to, or
representation on, or nominate or propose the nomination of any candidate
to, the Board, or (iii) initiate, propose or otherwise "solicit" (as such
term is used in the proxy rules of the SEC) shareholders of the Company for
the approval of shareholder proposals whether made pursuant to Rule 14a-8 or
Rule 14a-4 under the Exchange Act, or otherwise, or cause or encourage or
attempt to cause or encourage any other person to initiate any such
shareholder proposal, regardless of its purpose, otherwise communicate with
the Company's shareholders or others pursuant to Rule 14a-1(l)(2)(iv)(A)
under the Exchange Act.
(c) Xxxxxxx Investor Voting. The Xxxxxxx Investors will cause all
shares of Common Stock beneficially owned by them and their respective
Affiliates as to which they are entitled to vote at the 2007 Annual Meeting
to be voted in favor of the election of each member of the Revised Slate.
The Xxxxxxx Investors and their Affiliates shall not, directly or
indirectly, sell, transfer or otherwise dispose of, or pledge, hypothecate
or otherwise encumber, or transfer or convey in any manner any voting rights
with respect to, any shares of Common Stock beneficially owned by any of
them at the time of the execution of this Agreement until after the date
which is the record date fixed by the Board for determining the Company's
shareholders entitled to vote at the 2007 Annual Meeting.
III. OTHER PROVISIONS
3.1 Remedies.
(a) Each party hereto hereby acknowledges and agrees, on behalf of
itself and its Affiliates, that irreparable harm would occur in the event
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any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly
agreed that the parties will be entitled to specific relief hereunder,
including, without limitation, an injunction or injunctions to prevent and
enjoin breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any state or federal court
in the State of Delaware, in addition to any other remedy to which they may
be entitled at law or in equity. Any requirements for the securing or
posting of any bond with such remedy are hereby waived.
(b) Each party hereto agrees, on behalf of itself and its Affiliates,
that any actions, suits or proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby will be brought solely and
exclusively in any state or federal court in the State of Delaware (and the
parties agree not to commence any action, suit or proceeding relating
thereto except in such courts), and further agrees that service of any
process, summons, notice or document by U.S. registered mail to the
respective addresses set forth in Section 3.3 will be effective service of
process for any such action, suit or proceeding brought against any party in
any such court. Each party, on behalf of itself and its Affiliates,
irrevocably and unconditionally waives any objection to the laying of venue
of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby, in the state or federal courts in the
State of Delaware, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an improper
or inconvenient forum.
3.2 Amendment.
This Agreement may be amended only by an agreement in writing
executed by the parties hereto.
3.3 Notices.
All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto
shall be in writing and shall be deemed validly given, made or served, if
(a) given by telecopy, when such telecopy is transmitted to the telecopy
number set forth below and the appropriate confirmation is received or (b)
if given by any other means, when actually received during normal business
hours at the address specified in this subsection:
if to the Company:
Xxxxxxxx'x International, Inc.
0000 X. 000xx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Corporate Secretary
with a copy to:
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Cravath, Swaine & Xxxxx LLP
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
if to the Xxxxxxx Investors:
Xxxxxxx Partners L.P.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
with a copy to:
Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx LLP
0 Xxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxxx
3.4 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware, without
regard to any conflict of laws provisions thereof.
3.5 Further Assurances. Each party agrees to take or cause to be taken
such further actions, and to execute, deliver and file or cause to be executed,
delivered and filed such further documents and instruments, and to obtain such
consents, as may be reasonably required or requested by the other party in order
to effectuate fully the purposes, terms and conditions of this Agreement.
3.7 Third-Party Beneficiaries. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns, and nothing in this Agreement is intended to confer on any person other
than the parties hereto or their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
3.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement,
or caused the same to be executed by its duly authorized representative as of
the date first above written.
XXXXXXXX'X INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxx
Title: Co-Chairman, Strategy Committee
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XXXXXXX INVESTORS
XXXXXXX CAPITAL MANAGEMENT LLC
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
XXXXXXX PARTNERS L.P.
By: Xxxxxxx Capital Partners LLC,
its general partner
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
XXXXXXX PARTNERS (CALIFORNIA) L.P.
By: Xxxxxxx Capital Partners LLC,
its general partner
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
XXXXXXX PARTNERS HOLDCO LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Director
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------
XXXXXXX X. XXXXXXX
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Schedule A
Xxxxxxx Investors
Xxxxxxx Capital Management LLC
Xxxxxxx Partners X.X.
Xxxxxxx Partners (California) X.X.
Xxxxxxx Partners Holdco Ltd.
Xxxxxxx X. Xxxxxxx
Schedule B
