Exhibit 10.1
 
SETTLEMENT AGREEMENT
 
THIS SETTLEMENT AGREEMENT (the “Agreement”) is made and entered into as of the
14th day of July, 2011, by and among the parties listed on Schedule I attached
hereto (collectively, the “Wynnefield Group”, and individually, a “member” of
the Wynnefield Group) and CROWN CRAFTS, INC., a Delaware corporation (the
“Company”).
 
W I T N E S S E T H:
 
WHEREAS, the Company is scheduled to hold its 2011 annual meeting of
stockholders on August 9, 2011 (including any adjournments or postponements
thereof, the “2011 Annual Meeting”);
 
WHEREAS, the Wynnefield Group beneficially owns in the aggregate 1,573,573
shares of the Company’s Series A Common Stock, par value $0.01 per share (such
class of common stock being referred to herein as “Common Stock”);
 
WHEREAS, the Wynnefield Group has provided notice to the Company of its
intention to nominate Patricia Stensrud (the “Wynnefield Nominee”) to the board
of directors of the Company (the “Board”) at the 2011 Annual Meeting and to
communicate with stockholders of the Company in connection with the election of
directors of the Company at the 2011 Annual Meeting and has filed a preliminary
proxy statement with the Securities and Exchange Commission (the “SEC”) with
respect to its intention to solicit proxies to elect the Wynnefield Nominee to
the Board; and
 
WHEREAS, the parties hereto agree that it is in the best interests of all
stockholders of the Company for the Company and the Wynnefield Group to come to
an amicable agreement with respect to the matters addressed herein;
 
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 are hereby acknowledged, the parties hereby agree as
follows:
 
1.           Covenants of the Company.
 
(a)           The Company agrees to (i) include the Wynnefield Nominee together
with Donald Ratajczak (the “Company Nominee”) in its slate of nominees for
election as Class III directors of the Company in the Company’s definitive proxy
statement to be filed with SEC with respect to the 2011 Annual Meeting, (ii) use
its reasonable best efforts to cause the election of the Wynnefield Nominee to
the Board at the 2011 Annual Meeting (including, without limitation,
recommending that the Company’s stockholders vote in favor of the election of
the Wynnefield Nominee in the Company’s proxy statement with respect to the 2011
Annual Meeting), and (iii) use its best efforts to hold the 2011 Annual Meeting
on or before August 9, 2011.
 
(b)           The Company shall not, and shall cause its directors, officers and
other representatives not to, prior to or at the 2011 Annual Meeting, (i)
increase the size of the Board to more than seven (7) directors, (ii) create any
new class of directors of the Board, or (iii) otherwise amend the Company’s
bylaws or certificate of incorporation for the purpose of accomplishing any of
the foregoing.
 
 
 

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(c)           The Company represents that each of the members of the Board has
confirmed to the Company that he has no intention of resigning from the Board as
a result of the election of the Wynnefield Nominee to the Board at the 2011
Annual Meeting.
 
2.           Covenants of the Wynnefield Group.
 
(a)           Wynnefield Partners Small Cap Value, L.P. hereby withdraws its
letter to the Company dated June 3, 2011, requesting the opportunity to inspect
and review certain books and records of the Company, and its letter to the
Company dated May 27, 2011, providing notice to the Company of its intention to
nominate the Wynnefield Nominee for election as a director of the Company at the
2011 Annual Meeting (the “Stockholder Nomination”).  Except as permitted herein,
the Wynnefield Group shall immediately cease all efforts, direct or indirect, in
furtherance of the Stockholder Nomination and any related solicitation.
 
(b)           Each member of the Wynnefield Group shall cause all shares of
Common Stock beneficially owned, directly or indirectly, by such member as of
the record date for the 2011 Annual Meeting to be present for quorum purposes
and to be voted, at the 2011 Annual Meeting in favor of the Company Nominee and
the Wynnefield Nominee for election at the 2011 Annual Meeting.
 
3.           Press Release.  The parties agree to issue a joint press release
announcing the parties’ resolution of the matters addressed in this Agreement,
in the form annexed hereto as Exhibit A.
 
4.           Specific Performance; Attorneys’ Fees.  Each of the Company, on the
one hand, and the members of the Wynnefield Group, on the other hand,
acknowledge and agree that irreparable damage 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 seek specific relief hereunder, including, without
limitation, an injunction or injunctions to prevent and enjoin breaches or
threatened 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.  In the event either party
institutes any legal action to enforce such party’s rights under, or recover
damages for breach of, this Agreement, the prevailing party or parties in such
action shall be entitled to recover from the other party or parties all costs
and expenses, including, without limitation, reasonable attorneys’ fees, court
costs, witness fees, disbursements and any other expenses of litigation or
negotiation incurred by such prevailing party or parties.
 
5.           Miscellaneous.
 
(a)           This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to any conflict of
law rules that would otherwise cause the application of the laws of any other
state.
 
 
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(b)           The parties to this Agreement agree that any suit, action or
proceeding to enforce any provision of, or based on any matter arising out of or
in connection with, this Agreement may be brought only in a federal court
located in Delaware or in any Delaware state court, and each party irrevocably
consents to the jurisdiction of such courts (and of the appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives any
objection it may now or hereafter have to the laying of venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
 
(c)           If at any time subsequent to the date hereof any provision of this
Agreement shall be held by any court of competent jurisdiction to be illegal,
void or unenforceable, such provision shall be of no force and effect, but the
illegality or unenforceability of such provision shall have no effect upon the
legality or enforceability of any other provision of this Agreement, provided
that the provision determined to be unenforceable shall not deprive any party
hereto of the substantial benefits of this Agreement.  Neither party hereto
shall directly or indirectly institute any proceeding questioning the
enforceability of this Agreement or any provision hereof.
 
(d)           This Agreement contains the entire understanding of the parties
with respect to the transactions contemplated hereby, and this Agreement may be
amended only by an agreement in writing executed by all parties hereto.  Any of
the terms, covenants and conditions of this Agreement may be waived at any time
by the party entitled to the benefit of such term, covenant or condition.
 
(e)           Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
 
(f)           For the convenience of the parties, any number of counterparts of
this Agreement may be executed by the parties hereto and each such executed
counterpart shall be, and shall be deemed to be, an original
instrument.  Executed counterparts may be delivered by facsimile transmission or
in portable document format.
 
(g)           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 given upon (i) the transmitter’s confirmation
of a receipt of a facsimile transmission, (ii) confirmed delivery by a standard
overnight carrier or when delivered by hand, or (iii) the expiration of five (5)
business days after the day when mailed by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by like notice):
 
If to the Company, to:
 
Crown Crafts, Inc.
916 S. Burnside Avenue
Gonzales, Louisiana  70737
Attention:  Mr. E. Randall Chestnut
Facsimile:  (225) 647-9112
 
 
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with a copy to (which shall not constitute notice):
 
Rogers & Hardin LLP
2700 International Tower
229 Peachtree Street, NE
Atlanta, Georgia  30303
Attention:  Steven E. Fox, Esq.
Facsimile:  (404) 230-0938
 
If to any member of the Wynnefield Group, to:
 
Wynnefield Partners Small Cap Value, L.P.
450 Seventh Avenue, Suite 509
New York, New York  10123
Attention:  Mr. Nelson Obus
Facsimile:  (212) 760-0824
 
with a copy to (which shall not constitute notice):
 
Kane Kessler PC
1350 Avenue of the Americas
New York, New York 10019
Attention:  Jeffrey S. Tullman, Esq.
Facsimile:  (212) 245-3009
 
(h)           This Agreement and all the provisions hereof are binding upon and
will inure to the benefit of the parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
and obligations hereunder may be assigned or delegated by either party without
the prior written consent of the other party.  Nothing in this Agreement,
whether expressed or implied, may be construed to give any person or entity
other than the parties any legal or equitable right, remedy or claim under or in
respect of this Agreement.
 
(i)           Each of the parties hereto acknowledges that it has been
represented by counsel of its choice throughout all negotiations that have
preceded the execution of this Agreement and that it has executed the same with
the advice of said independent counsel.  Each party and its counsel cooperated
and participated in the drafting and preparation of this Agreement and the
documents referred to herein, and any and all drafts relating thereto exchanged
among the parties shall be deemed the work product of all of the parties and may
not be construed against any party by reason of its drafting or
preparation.  Accordingly, any rule of law or any legal decision that would
require interpretation of any ambiguities in this Agreement against any party
that drafted or prepared it is of no application and is hereby expressly waived
by each of the parties hereto, and any controversy over interpretations of this
Agreement shall be decided without regards to events of drafting or preparation.
 
[Signature pages follow.]

 
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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or
caused this Agreement to be duly executed by their respective officers, each of
whom is duly authorized, all as of the day and year first above written.
 

 
CROWN CRAFTS, INC.
 
           
By:
/s/ E. Randall Chestnut      
E. Randall Chestnut, Chairman of the Board,
President and Chief Executive Officer
 

 
[Signatures continue on following pages.]

 
 

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WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P.
           
By:
Wynnefield Capital Management, LLC,
its general partner
                      By: /s/ Nelson Obus        
Nelson Obus, Co-Managing Member
 

 
 
 

 
WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P. I
           
By:
Wynnefield Capital Management, LLC,
its general partner
                      By: /s/ Nelson Obus        
Nelson Obus, Co-Managing Member
 

 
 

 
WYNNEFIELD SMALL CAP VALUE OFFSHORE FUND, LTD.
           
By:
Wynnefield Capital, Inc.
                      By: /s/ Nelson Obus        
Nelson Obus, President
 

 

 
WYNNEFIELD CAPITAL MANAGEMENT, LLC
 
           
By:
/s/ Nelson Obus
     
Nelson Obus, Co-Managing Member
 

 
 

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WYNNEFIELD CAPITAL, INC.
 
           
By:
/s/ Nelson Obus
     
Nelson Obus, President
 

 
 
 

 
CHANNEL PARTNERSHIP II, L.P.
 
           
By:
/s/ Nelson Obus
     
Nelson Obus, General Partner
 

 
 

 
WYNNEFIELD CAPITAL, INC. PROFIT SHARING & MONEY PURCHASE PLAN

           
By:
/s/ Nelson Obus
     
Nelson Obus, Portfolio Manager
                 
/s/ Nelson Obus
    NELSON OBUS          
 
 
   
/s/ Joshua H. Landes 
    JOSHUA H. LANDES  

 
 
 

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Schedule I
 
Wynnefield Partners Small Cap Value, L.P.
 
Wynnefield Partners Small Cap Value, L.P. I
 
Wynnefield Small Cap Value Offshore Fund, Ltd.
 
Wynnefield Capital Management, LLC
 
Wynnefield Capital, Inc.
 
Channel Partnership II, L.P.
 
Wynnefield Capital, Inc. Profit Sharing & Money Purchase Plan
 
Nelson Obus
 
Joshua H. Landes
 
 
 

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Exhibit A
 
[crownlogo.jpg]

July 15, 2011

Crown Crafts Reaches Agreement with
the Wynnefield Group Regarding Director Nominations

Gonzales, Louisiana – Crown Crafts, Inc. (NASDAQ-CM: CRWS) today reported that
it has reached an agreement with the Company’s largest stockholder, Wynnefield
Partners Small Cap Value, L.P. and certain of its affiliates (collectively, the
“Wynnefield Group”), regarding the slate of directors to be nominated for
election at the Company’s 2011 annual meeting of stockholders, scheduled for
Tuesday, August 9, 2011.

Under the terms of the agreement, Patricia Stensrud will be included on the
Company’s slate of nominees for election as Class III directors.  Joining Ms.
Stensrud for election to the Board will be Dr. Donald Ratajczak, who has served
on the Board since 2001.  Pursuant to the agreement, the Wynnefield Group has
agreed to discontinue its own proxy solicitation in connection with the annual
meeting and vote its shares of the Company’s common stock in favor of the
Company’s nominees.  As part of the settlement, Joseph Kling, currently a Class
III director whose term expires at the annual meeting, is not being re-nominated
to the board.

“We are pleased to have reached an amicable settlement with the Wynnefield Group
and, thus, avoid another costly and distracting proxy fight with them,” said E.
Randall Chestnut, Chairman, President and Chief Executive Officer.  “We
sincerely thank Joe Kling for his insight and counsel over the years. During his
tenure with us, he was a strong contributor to our independent Board and a
driving force in our international expansion efforts. At the same time, we
welcome Patricia Stensrud, who we believe will be a valuable addition to the
Company’s Board.  We look forward to having the opportunity to work closely with
her as we continue to execute our strategic initiatives,” said Chestnut.

Nelson Obus, President of Wynnefield Capital, said, “We are extremely happy that
the Board has agreed to nominate Ms. Stensrud.  Accordingly, we are terminating
our proxy solicitation efforts.  Her strong background in businesses that relate
to Crown Crafts’ areas of endeavor will bring fresh thinking and new ideas to
the Board, which should benefit all stockholders.”
 
 
 

916 S. Burnside Avenue   *   PO Box 1028   *   Gonzales,
LA   70707-1028   *   (225) 647-9100  *   Fax (225) 647-9104
 
 

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About Crown Crafts, Inc.

Crown Crafts, Inc. designs, markets and distributes infant, toddler and juvenile
consumer products, including crib and toddler bedding and blankets; nursery and
bath accessories; reusable and disposable bibs and floor mats; burp cloths; room
décor; and disposable placemats, toilet seat covers and changing mats.  The
Company’s operating subsidiaries include Crown Crafts Infant Products, Inc. in
California and Hamco, Inc. in Louisiana.  Crown Crafts is America’s largest
producer of infant bedding, bibs and bath items.  The Company’s products include
licensed and branded collections as well as exclusive private label programs for
certain of its customers.  The latest news about Crown Crafts can be found at
www.crowncrafts.com.

About the Wynnefield Group
 
The Wynnefield Group is Crown Crafts’ largest stockholder, holding approximately
16% of the Company’s outstanding common stock.  Established in 1992, the
Wynnefield Group includes several affiliates of Wynnefield Capital, Inc., a
value investor specializing in U.S. small cap situations that have company- or
industry-specific catalysts.

Contact:

Olivia Elliott
Vice President and Chief Financial Officer
225-647-9124
e-mail to:  oelliott@crowncrafts.com

or

Halliburton Investor Relations
972- 458-8000
 
 
 
 
 
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