Legal dividend.

Cherokee Inc. is sharing the wealth with its shareholders in announcing a 50-cent special dividend from the proceeds of its arbitration award from Mossimo Inc.

The Van Nuys-based company announced that much of the $6.4 million it received will be distributed to shareholders of record as of May 12.

The award stems from a finder's fee agreement Cherokee had with Mossimo as of March 28, 2000. Cherokee, which licenses its brand to Target Corp. stores, played a key role in getting Santa Monica-based Mossimo products into Target. As a result, Mossimo agreed to pay out 15 percent of all revenue it receives from Target stores to Cherokee.

Russell Riopelle, chief financial officer of Cherokee, said Mossimo paid the royalties for the first year and a half and then stopped paying.

After months of lawsuits, arbitration and appeals, a Los Angeles Superior Court judgment dated June 17, 2003, awarded Cherokee all the withheld finder's fees, full attorneys' fees and 10 percent interest on the withheld finder's fees. In March, the California Supreme Court declined Mossimo's request to review the trial court judgment.

Mossimo previously paid some of Cherokee's earlier attorney's fees; Cherokee is pursuing another $410,000 related to the appeals process. As for the future finder's fees, which add between $2.5 million and $2.7 million to Cherokee's annual revenues of about $35 million, Riopelle said the proceeds could go toward more quarterly dividends or toward acquisition efforts.