AGREEMENT
Exhibit 10.1
This Agreement, dated as of April 1, 2008 (the “Agreement”), is by and among Xxxxxxx’x Inc., a Delaware corporation (the “Company”), and Barington Capital Group, L.P. and certain of its affiliates (“Barington”), Clinton Group, Inc. and certain of its affiliates (“Clinton”) and RJG Capital Management, LLC and certain of its affiliates (“RJG Capital”; Xxxxxxxxx, Xxxxxxx and RJG Capital each an “Investor” and, together, the “Investors”).
WHEREAS, the Investors economically own (as defined below) shares of Class A Common Stock, $0.01 par value, of the Company (the “Common Stock”) as specified on Schedule A of this Agreement (the “Shares”);
WHEREAS, prior to the date hereof an affiliate of the Investors delivered a letter (the “Nomination Notice Letter”) to the Company, dated as of March 17, 2008, indicating its intention to nominate (the “Nomination”) four individuals for election to the Board of Directors of the Company (the “Board”) by the Class A Stockholders (the “Class A Stockholders”);
WHEREAS, the Company and the Investors have agreed that it is in their mutual interests to enter into this Agreement, which, among other things, terminates the pending proxy contest for the election of directors at the 2008 Annual Meeting (as defined below);
WHEREAS, the Company has agreed that in connection with the Company’s 2008 Annual Meeting of Stockholders (the “2008 Annual Meeting”), the Board will nominate for election as a member of the Board, and recommend that the Class A Stockholders vote to elect as a director of the Company, (i) Xxxx Xxxxx and Xxxxx Xxxx (each, an “Investor Nominee”; together, the “Investor Nominees”) and (ii) Xxxxx Xxxxxx and Xxxx Xxxxxx (each together with the Investor Nominees, the “Class A Nominees”); and
WHEREAS, the Investors have agreed to refrain from submitting any stockholder proposal or director nominations at the 2008 Annual Meeting and to vote for the election of the Company’s nominees for directors at the 2008 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:
ARTICLE I
DEFINITIONS
Section 1.1 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) “Associate” has the meaning set forth in Rule 12b-2
promulgated by the SEC under the Exchange Act.
(c) 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. The terms “economic owner”
and “economically own” shall have the same meanings as
“beneficial owner” and “beneficially own”, except that a person will
also be deemed to economically own and to be the economic owner of (i)
all shares of capital stock of the Company which such person has the
right to acquire pursuant to the exercise of any rights in connection
with any securities or any agreement, regardless of when such rights may
be exercised and whether they are conditional, and (ii) all shares of
capital stock of the Company in which such person has any long economic
interest, including pursuant to a cash settled call option or other
derivative security, contract or instrument (but excluding, for
avoidance of doubt, put options and other short position securities)
Section 1.2 Interpretation. When reference is made in this
Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. Whenever the words “include”,
“includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” The words
“hereof,” “herein,” “hereby” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. The word “or” shall
not be exclusive. This Agreement shall be construed without regard to
any presumption or rule requiring construction or interpretation against
the party drafting or causing any instrument to be drafted.
ARTICLE II
COVENANTS
Section 2.1 Board of Directors, Annual Meeting and Related Matters.
(a) Nomination of New Directors. The Company agrees that at the
2008 Annual Meeting, the Board will:
(1) nominate each of the Class A Nominees as a director of the Company
whose term shall expire at the 2009 Annual Meeting; and
(2) cause all proxies received by the Company to be voted in the manner
specified by such proxies.
(b) Election of New Directors. The Company shall use all
reasonable best efforts to ensure that each of the Class A Nominees are
elected by Class A Stockholders at the 2008 Annual Meeting including,
without limitation, recommending that the Company’s stockholders vote in
favor of the election of the Class A Nominees at the 2008 Annual
Meeting. Neither the Board nor the Company shall take any position, make
any statements or take any action inconsistent with such recommendation.
(c) Qualifications. Prior to the execution of this Agreement, the
Executive Committee of the Board has reviewed and approved the
qualifications of each of the Class A Nominees to serve as members of
the Board and has determined that each of the Class A Nominees (i) is
“independent” as defined by the listing standards of the New York Stock
Exchange and in accordance with requirements of Article III, Section 2
of the Bylaws of the Company and (ii) is otherwise qualified to serve as
a Class A director of the Company.
(d) Role of Nominees. Each of the Class A Nominees, upon election
to the Board, will serve as an integral member of the Board and will 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, without limitation, with respect to
insurance, indemnification, compensation and fees, as are applicable to
all independent directors of the Company. In addition, at least one of
the Class A Nominees shall be nominated and recommended by management to
serve on (i) the Audit Committee and (ii) the Stock Option and Executive
Compensation Committee (except to the extent, if any, that none of the
Class A Nominees is qualified to serve on such a committee under
applicable law or New York Stock Exchange rules).
(e) Proxy Solicitation Materials. The Company and the Board agree
that the Company’s proxy statement for the 2008 Annual Meeting and all
other solicitation materials to be delivered to stockholders in
connection with the 2008 Annual Meeting (in each case excepting any
materials delivered prior to the date hereof) shall be prepared in
accordance with, and in furtherance of, this Agreement. The Company will
provide the Investors with copies of any portion of proxy materials or
other solicitation materials that contain statements relating to the
Investors, the Investor Nominees and this Agreement at least two
business days in advance of filing such materials with the SEC or
disseminating the same in order to permit the Investors a reasonable
opportunity to review and comment on such materials, and will consider
in good faith any comments received by the Investors and their counsel.
The Investors will provide, as promptly as reasonably practicable, all
information relating to the Investor Nominees (and other information, if
any) to the extent required under applicable law to be included in the
Company’s proxy statement and any other solicitation materials to be
delivered to stockholders in connection with the 2008 Annual Meeting.
The proxy statement for the 2008 Annual Meeting shall contain the same
type of information concerning the Investor Nominees as provided for the
Company’s other director nominees.
(f) Replacement Directors. If at any time prior to the Company’s
2009 Annual Meeting of Stockholders (the “2009 Annual Meeting”)
any Investor Nominee is unable or unwilling to serve (or continue to
serve) as a director of the Company for any reason, then the Investors
shall be entitled to designate a replacement Investor Nominee subject to
the consent of the Company, such consent not to be unreasonably
withheld, delayed or conditioned (any replacement Investor Nominee
selected in accordance with this Section 2.1(f), a “Replacement
Nominee”), and such Replacement Nominee shall be deemed an Investor
Nominee for all purposes of this Agreement. In proposing an individual
as a Replacement Nominee pursuant to this Section 2.1(f), the Investors
shall provide the Company with such information regarding such
individual as would be required to nominate such individual as a
director pursuant to Article III, Section 16 of the Company’s By-laws.
(g) Expenses. Within five business days from the date of this
Agreement, the Company shall pay the Investors $200,000 to reimburse the
Investors for their expenses incurred prior to the date of this
Agreement in connection with the Nomination, the contemplated proxy
solicitation, the drafting, negotiation and execution of this Agreement
and all of their other activities and matters related to the foregoing,
including, without limitation, the preparation of related filings with
the SEC and the fees and disbursements of counsel, proxy solicitors,
public relations firms, consultants and other advisors, provided the
Investors provide reasonable documentation with respect to such
expenses. The Investors hereby agree that such payment shall be in full
satisfaction of any claims or rights they may have as of the date hereof
for reimbursement of fees, expenses or costs in connection therewith.
(h) Capital Structure. The Company and the Board agree to examine
in good faith and take commercially reasonable steps to achieve (in a
manner consistent with any applicable laws or fiduciary duties) an
optimal capital structure for the Company, which steps may include
repurchase of shares of Common Stock (as operating profits, capital
markets, and any other applicable considerations and constraints permit).
Section 2.2 Voting Provisions. The Investors, together with their
respective Affiliates, will cause all shares of Common Stock for which
they have the right to vote as of the record date for the 2008 Annual
Meeting to be present for quorum purposes and to be voted at such
meeting or at any adjournments or postponements thereof (a) in favor of
each director nominated and recommended by the Board for election at
such meeting and (b) against any stockholder nominations for director
which are not approved and recommended by the Board for election at such
meeting, provided that the slate of directors nominated and recommended
by the Board includes the Class A Nominees.
Section 2.3 Undertakings by the Investors. By executing this
Agreement, the Investors hereby (i) irrevocably withdraw the Nomination
Notice Letter and any nominations to the Board made prior to the date
hereof, (ii) irrevocably withdraw the demand to inspect certain of the
Company’s books and records, pursuant to a demand letter, dated as of
March 20, 2008, sent by affiliates of the Investors to the Company and
(iii) agree to terminate the pending proxy contest with respect to the
election of directors at the 2008 Annual Meeting. Within two business
days of the date of this Agreement, the Investors shall file, or cause
to be filed on its behalf, with the SEC an amendment to its Schedule 13D
with respect to the Company disclosing the material contents of this
Agreement.
Section 2.4 Publicity. Promptly after the execution of this
Agreement, the Company will issue a press release in the form attached
hereto as Schedule B.
ARTICLE III
OTHER PROVISIONS
Section 3.1 Representations and Warranties.
(a) Representations and Warranties of the Company. 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 stockholders
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, as amended, or the By-Laws of the Company,
as amended, 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) Representations and Warranties of the Investors. Each of the
Investors represents and warrants that this Agreement and the
performance by each such Investor of its obligations hereunder has been
duly authorized, executed and delivered by such Investor, and is a valid
and binding obligation of such Investor, enforceable against such
Investor in accordance with its terms. Each Investor hereby further
represents and warrants that, as of the date hereof, it and its
Affiliates and Associates are, collectively, the economic owners of such
number of shares of Common Stock as are respectively set forth on Schedule
A of this Agreement.
Section 3.2 Confidentiality. The Company has no obligation to
furnish Confidential Information to the Investors or their respective
representatives by virtue of this Agreement except for Confidential
Information provided to the Investor Nominees in their capacity as
directors (and as nominees for director) of the Company. Each of the
Investors hereby acknowledges that it is aware that the United States
securities laws prohibit any person who has material, non-public
information with respect to the Company from transacting in the
securities of the Company or from communicating such information to any
other person under circumstances in which it is reasonably foreseeable
that such person is likely to transact in such securities.
Section 3.3 Remedies.
(a) Each party hereto hereby acknowledges and agrees, on behalf of
itself and its Affiliates, that irreparable harm 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. It is
accordingly agreed that the parties will be entitled to specific relief
hereunder, including 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 New York, 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 New
York (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 3.5
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 New
York, 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.
Section 3.4 Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof
and may be amended only by an agreement in writing executed by the
parties hereto.
Section 3.5 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: |
Xxxxxxx’x Inc.
Xxxx Xxxxxx Xxx 000 Xxxxxx Xxxx, XX 00000 Facsimile: (000) 000-0000 Attention: General Counsel |
|
| with a copy to: |
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 Facsimile: (000) 000-0000 Attention: Xxxx Xxxxxxxx Xxxxx Xxxxx |
| if to the Investors: |
Barington Capital Group, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Facsimile: (000) 000-0000 Attention: Xxxxx X. Xxxxxxxxxxx |
|
|
Xxxxxxx Group, Inc.
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Facsimile: (000) 000-0000 Attention: Xxxxxxx Xxxxxxx, Esq. |
||
| with a copy to: |
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx, Xxx Xxxx 00000 Facsimile: (000) 000-0000 Attention: Xxxxx X. Xxxxx, Esq. |
|
|
Xxxxxxx Xxxx & Xxxxx LLP 000 Xxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 Facsimile: (000) 000-0000 Attention: Xxxx Xxxxxxxxxx, Esq. |
Section 3.6 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to the choice of law principles of such state.
Section 3.7 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.
Section 3.8 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.
Section 3.9 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.
[Remainder of Page Left Blank Intentionally]
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.
XXXXXXX’X INC.
By: /s/ Xxxx X. Xxxxxxxxx, Xx.
Name: Xxxx X. Xxxxxxxxx, Xx.
Title:
Vice President and General Counsel
THE
INVESTORS:
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
BARINGTON INVESTMENTS, L.P.
By: Barington Companies Advisors, LLC, its general partner
By: /s/ Xxxxx X. Xxxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxxx
Title:
Managing Member
BARINGTON COMPANIES ADVISORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxxx
Title: Managing Member
BARINGTON COMPANIES OFFSHORE FUND, LTD.
By: /s/ Xxxxx X. Xxxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxxx
Title:
Authorized Signatory
BARINGTON OFFSHORE ADVISORS II, LLC
By: /s/ Xxxxx X. Xxxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxxx
Title:
Managing Member
BARINGTON CAPITAL GROUP, L.P.
By: LNA Capital Corp., its general partner
By: /s/ Xxxxx X. Xxxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxxx
Title:
President and CEO
LNA CAPITAL CORP.
By: /s/ Xxxxx X. Xxxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxxx
Title:
President and CEO
RJG CAPITAL PARTNERS, L.P.
By: RJG Capital Management, LLC, its general partner
By: /s/ Xxxxxx Xxxxx.
Name: Xxxxxx Xxxxx
Title:
Managing Member
RJG CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxx Xxxxx.
Name: Xxxxxx Xxxxx
Title: Managing Member
CLINTON MULTISTRATEGY MASTER FUND, LTD.
By: Clinton Group, Inc., its investment manager
By: /s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title:
Chief Financial Officer
CLINTON SPECIAL OPPORTUNITIES MASTER FUND, LTD.
By: Clinton Group, Inc., its investment manager
By: /s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title:
Chief Financial Officer
XXXXXXX XXXXXXXX MASTER FUND, LTD.
By: Clinton Group, Inc., its investment manager
By: /s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title:
Chief Financial Officer
CLINTON LEXINGTON MASTER FUND, L.P.
By: Clinton Group, Inc., its investment manager
By: /s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title:
Chief Financial Officer
CLINTON GROUP, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title: Chief Financial Officer
SCHEDULE A
|
Entity |
Number of Shares Economically Owned |
| Barington | 2,034,869 |
| Clinton | 1,762,150 |
| RJG Capital | 11,500 |
| Total | 3,808,519 |
SCHEDULE B
Agreed form of Press Release
DILLARD’S REACHES SETTLEMENT AGREEMENT WITH BARINGTON AND XXXXXXX
Xxxxxx Rock, Ark. – April 1, 2008 – Xxxxxxx’x, Inc. (NYSE: DDS)
announced today that it has reached an agreement with Barington Capital
Group, L.P. and Clinton Group, Inc., in conjunction with Southeastern
Asset Management, that will avoid a proxy contest at the Company’s 2008
Annual Meeting of Stockholders scheduled for May 17, 2008.
The Company has agreed to nominate the following candidates for the
slate of Class A directors at the annual meeting: Xxxxx X. Xxxxxx, III,
Chief Executive Officer of Pilot Travel Centers LLC; R. Xxxx Xxxxxx,
former chairman and CEO of Saks Inc.; Xxxxx X. Xxxx, Co-Chief Executive
Officer and President of Takihyo Inc. and former President and CEO of
Xxxx Xxxxx, Inc. and former CEO and founding Partner of Xxxxx Karan
International; and Xxxx Xxxxx, President and Chief Executive Officer of
White & Associates and former Executive Vice President and General
Manager of the Supercenter division of Wal-Mart Stores, Inc.
Barington and Clinton have agreed to cease their efforts to elect a
slate of four nominees to the Dillard’s Board of Directors at the 2008
annual meeting and to vote for the election of the company’s nominees.
Chairman and CEO Xxxxxxx (Xxxx) Xxxxxxx XX, said, “We are pleased to
have reached an agreement with Barington and Clinton. Both the Board and
management welcome the perspectives and insights of our proposed new
directors. The Class B board members are committed to working with the
new Class A board members to ensure that the best operating plan and
management team possible are in place.”
Dillards is committed to reviewing whether the company’s real estate
assets and capital are being optimally deployed to prudently build the
most value per share for long-term owners. Specifically, the company
plans to close underperforming stores in order to rationalize real
estate as soon as possible, will cut unnecessary costs, and subject all
future commitments for new stores to strict return on capital
requirements that will be set by the board and management.
About Dillard’s
Xxxxxxx’x, Inc. is one of the nation’s largest
fashion apparel and home furnishing retailers. The Company’s stores
operate with one name, Dillard’s, and span 29 states. Dillard’s stores
offer a broad selection of merchandise, including products sourced and
marketed under Dillard’s exclusive brand names.
Forward-Looking Information
The information above contains certain
forward-looking statements. The following are or may constitute forward
looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995: (a) words such as “may,” “will,” “could,”
“believe,” “expect,” “future,” “potential,” “anticipate,” “intend,”
“plan,” “estimate,” “continue,” or the negative or other variations
thereof, and (b) statements regarding matters that are not historical
facts. The Company cautions that forward-looking statements contained in
this report are based on estimates, projections, beliefs and assumptions
of management and information available to management at the time of
such statements and are not guarantees of future performance. The
Company disclaims any obligation to update or revise any forward-looking
statements based on the occurrence of future events, the receipt of new
information, or otherwise. Forward-looking statements of the Company
involve risks and uncertainties and are subject to change based on
various important factors. Actual future performance, outcomes and
results may differ materially from those expressed in forward-looking
statements made by the Company and its management as a result of a
number of risks, uncertainties and assumptions. Representative examples
of those factors include (without limitation) general retail industry
conditions and macro-economic conditions in markets in which the Company
operates; changes in operating expenses, including employee wages,
commission structures and related benefits.
