Delaware | 5600 | 52-2150697 | ||
(State or other jurisdiction of
incorporation or organization) |
(Primary standard industrial
classification code number) |
(IRS employer
identification number) |
William F. Schwitter, Esq. | Richard C. Tilghman, Jr., Esq. | |
Paul, Hastings, Janofsky & Walker LLP | Wm. David Chalk, Esq. | |
75 East 55th Street | DLA Piper Rudnick Gray Cary US LLP | |
New York, New York 10022 | 6225 Smith Avenue | |
(212) 318-6000 | Baltimore, Maryland 21209 | |
(212) 319-4090 (fax) | (410) 580-3000 | |
(410) 580-3001 (fax) |
Proposed Maximum | |||||||||
Title of Each Class of | Amount to be | Aggregate Offering | Amount of | ||||||
Securities to be Registered | Registered | Price(1)(2) | Registration Fee(3) | ||||||
Common Stock, par value $.01 per share
|
4,427,500 | $57,557,500 | $6,774.52 | ||||||
(1) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. |
(2) | Includes shares of common stock subject to the underwriters over-allotment option. |
(3) | Of this amount, $6,767.75 has previously been paid. |
The information
in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and we
are not soliciting offers to buy these securities in any state
where the offer or sale is not
permitted.
|
Per Share | Total | |||||||
Price to the public
|
$ | $ | ||||||
Underwriting discount
|
||||||||
Proceeds to Citi Trends, Inc.
|
||||||||
Proceeds to the selling stockholders
|
Piper Jaffray | SG Cowen & Co. | Wachovia Securities |
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F-1 | ||||||||
EX-4.1: SPECIMEN CERTIFICATE FOR SHARES OF COMMON STOCK | ||||||||
EX-5.1: OPINION OF PAUL, HASTINGS, JANOFSKY & WALKER LLP | ||||||||
EX-10.13: FORM OF REGISTRATION RIGHTS AGREEMENT | ||||||||
EX-10.15: FORM OF TERMINATION AGREEMENT | ||||||||
EX-14.1: CODE OF BUSINESS CONDUCT | ||||||||
EX-23.1: CONSENT OF KPMG LLP |
| grown our store base from 85 stores at the time of the acquisition to 212 stores as of April 22, 2005; | |
| increased average sales per store from $0.8 million in fiscal 2000 to $1.1 million in fiscal 2004; | |
| generated comparable store sales increases in each of the past five fiscal years; | |
| increased sales from $80.9 million in fiscal 2000 to $203.4 million in fiscal 2004, representing a compound annual growth rate of approximately 26%; and | |
| increased net income from $1.2 million in fiscal 2000 to $7.3 million in fiscal 2004. | |
1
| focus on providing a timely and fashionable assortment of urban apparel and accessories; | |
| superior value proposition, with nationally recognized brands offered at 20% to 60% discounts to department and specialty stores regular prices; | |
| merchandise mix that appeals to the entire family, distinguishing our stores from many competitors that focus only on women and reducing our exposure to fashion trends and demand cycles in any single category; | |
| strong and flexible sourcing relationships managed by our 20-member buying team, staffed by individuals with an average of more than 20 years of retail experience; | |
| attractive fashion presentation and store environment similar to a specialty apparel retailer, rather than a typical off-price store; and | |
| highly profitable store model. |
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
a 26-for-one stock split of our common stock, which will occur
simultaneously with the completion of this offering;
no exercise of outstanding options to purchase
1,847,248 shares of common stock outstanding as of
April 28, 2005, at a weighted average exercise price of
$1.10 per share, other than the 29,654 options to be exercised
by certain selling stockholders in connection with this
offering; and
no exercise of the underwriters over-allotment option.
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Fiscal Year Ended
(1)
February 3,
February 2,
February 1,
January 31,
January 29,
2001
2002
2003
2004
2005
(dollars in thousands, except per share amounts)
$
80,939
$
97,933
$
124,951
$
157,198
$
203,442
51,762
62,050
77,807
98,145
127,308
29,177
35,883
47,144
59,053
76,134
26,834
31,405
38,760
48,845
63,594
2,343
4,478
8,385
10,208
12,540
787
455
256
563
732
1,556
4,023
8,129
9,645
11,808
358
1,566
3,101
3,727
4,551
$
1,198
$
2,457
$
5,028
$
5,918
$
7,257
$
0.09
$
0.23
$
0.51
$
0.62
$
0.78
$
0.09
$
0.22
$
0.44
$
0.54
$
0.67
9,269,000
9,219,167
9,295,000
9,295,000
9,302,800
9,269,000
9,791,999
10,757,110
10,771,410
10,879,388
23
12
16
25
40
0
4
2
1
1
115
123
137
161
200
786,534
891,843
1,043,713
1,290,039
1,715,943
17.6%
6.5%
14.6%
5.7%
3.0%
$
782
$
823
$
961
$
1,055
$
1,127
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As of January 29, 2005
Actual
As Adjusted
(in thousands)
$
11,801
$
37,429
70,790
96,417
47,025
41,543
23,765
54,875
(1)
Our fiscal year ends on the Saturday closest to January 31 of
each year. Fiscal years 2001, 2002, 2003 and 2004 comprise
52 weeks. Fiscal year 2000 comprises 53 weeks.
(2)
Our Series A Preferred Stock, which will be redeemed using
a portion of the net proceeds from this offering, was
reclassified as debt as of the second quarter of fiscal 2003, in
accordance with the Financial Accounting Standards Boards
(FASB) Statement of Financial Accounting Standards
(SFAS) No. 150,
Accounting for Certain
Financial Instruments with Characteristics of both Liabilities
and Equity
. The amount of dividends treated as interest
expense was $324,450 in fiscal 2004, $189,000 in fiscal 2003 and
none in fiscal 2002.
(3)
Stores included in the comparable store sales calculation for
any period are those stores that were opened prior to the
beginning of the preceding fiscal year and were still open at
the end of such period. Relocated stores and expanded stores are
included in the comparable store sales results.
(4)
Average sales per store is defined as net sales divided by the
average of stores open at the end of the prior period and stores
open at the end of the current period.
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political instability or the threat of terrorism, in particular
in countries where our vendors source merchandise such as Taiwan
and the Philippines;
enhanced security measures at United States and foreign ports,
which could delay delivery of imports;
imposition of new or supplemental duties, taxes, and other
charges on imports;
delayed receipt or non-delivery of goods due to the failure of
foreign-source suppliers to comply with applicable import
regulations;
delayed receipt or non-delivery of goods due to organized labor
strikes or unexpected or significant port congestion at United
States ports; and
local business practice and political issues, including issues
relating to compliance with domestic or international labor
standards which may result in adverse publicity.
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actual or anticipated fluctuations in our operating results;
changes in securities analysts recommendations or
estimates of our financial performance;
publication of research reports by analysts;
changes in market valuations of companies similar to ours;
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announcements by us, our competitors or other retailers;
the trading volume of our common stock in the public market;
changes in economic conditions;
financial market conditions; and
the realization of some or all of the risks described in this
section entitled Risk Factors.
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implementation of our growth strategy;
our ability to anticipate and respond to fashion trends;
competition in our markets;
consumer spending patterns;
actions of our competitors or anchor tenants in the strip
shopping centers where our stores are located;
anticipated fluctuations in our operating results; and
economic conditions in general.
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approximately $3.5 million to redeem all of our outstanding
Series A Preferred Stock and to pay all accrued and unpaid
dividends thereon;
approximately $1.5 million to repay all outstanding
indebtedness under the loan from National Bank of Commerce to
us, which is secured by our Savannah, Georgia headquarters,
bears interest at a fixed rate of 6.80% and matures on
July 12, 2007; and
any remaining net proceeds for new store openings, the
acquisition, design and construction or lease of a new
distribution center in fiscal 2006 and general corporate
purposes.
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on an actual basis; and
as adjusted to give effect to (a) the sale by us of shares of
common stock in this offering, (b) the receipt of net proceeds
of $31.1 million, after deducting estimated underwriting
discounts and commissions and estimated offering expenses
payable by us and assuming an initial public offering price of
$13.00 per share, (c) the receipt of proceeds from the
exercise of options by certain selling stockholders in
connection with this offering, (d) the application of the
net proceeds as described under the section entitled Use
of Proceeds and (e) the filing of our second amended
and restated certificate of incorporation upon consummation of
this offering.
As of January 29, 2005
Actual
As Adjusted
(in thousands, except share and per
share amounts)
$
11,801
$
37,429
$
1,605
$
108
$
1,407
$
1,407
Series A preferred stock, $.01 par value per share,
5,000 shares authorized, 3,605 shares issued and
outstanding, actual; 5,000 authorized, none issued or
outstanding, as
adjusted
(1)
3,985
-
4
31
4,121
35,204
(24
)
(24
)
19,829
19,829
(165
)
(165
)
23,765
54,875
$
30,762
$
56,390
(1)
Our Series A Preferred Stock, which will be redeemed using
a portion of the net proceeds from this offering, was
reclassified as debt as of the second quarter of fiscal 2003, in
accordance with SFAS No. 150. Subsequent to
January 29, 2005, we have made a dividend and principal
payment of $500,000 with respect to the Series A Preferred
Stock.
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an increase in our total assets to reflect the net proceeds from
this offering (assuming an initial public offering price of
$13.00 per share); and
the issuance of an additional 2,700,000 shares of common
stock in this offering.
$
13.00
$
2.41
2.05
4.46
$
8.54
(1)
(1)
Assuming exercise of all exercisable options to purchase common
stock outstanding as of January 29, 2005, the dilution per
share of common stock to new investors in this offering would be
$8.99.
Share Purchased
Total Consideration
Average Price
Number
Percent
Amount
Percent
Per Share
9,295,000
77
%
$
4,124,533
11
%
$
0.44
2,700,000
23
%
$
35,100,000
89
%
$
13.00
11,995,000
100
%
$
39,224,533
100
%
(1)
Does not give effect to sales of shares by the selling
stockholders in this offering.
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Fiscal Year Ended
(1)
February 3,
February 2,
February 1,
January 31,
January 29,
2001
2002
2003
2004
2005
(dollars in thousands, except per share amounts)
$
80,939
$
97,933
$
124,951
$
157,198
$
203,442
51,762
62,050
77,807
98,145
127,308
29,177
35,883
47,144
59,053
76,134
26,834
31,405
38,760
48,845
63,594
2,343
4,478
8,385
10,208
12,540
787
455
256
563
732
1,556
4,023
8,129
9,645
11,808
358
1,566
3,101
3,727
4,551
$
1,198
$
2,457
$
5,028
$
5,918
$
7,257
$
0.09
$
0.23
$
0.51
$
0.62
$
0.78
$
0.09
$
0.22
$
0.44
$
0.54
$
0.67
9,269,000
9,219,167
9,295,000
9,295,000
9,302,800
9,269,000
9,791,999
10,757,110
10,771,410
10,879,388
23
12
16
25
40
4
2
1
1
115
123
137
161
200
786,534
891,843
1,043,713
1,290,039
1,715,943
17.6%
6.5%
14.6%
5.7%
3.0%
$
782
$
823
$
961
$
1,055
$
1,127
$
1,496
$
4,098
$
5,825
$
9,954
$
11,801
25,023
29,733
36,127
49,213
70,790
21,552
23,997
25,529
32,709
47,025
3,471
5,736
10,598
16,504
23,765
(1)
Our fiscal year ends on the Saturday closest to January 31
of each year. Fiscal years 2001, 2002, 2003 and 2004 comprise
52 weeks. Fiscal year 2000 comprises 53 weeks.
(2)
Our Series A Preferred Stock, which will be redeemed using
a portion of the net proceeds from this offering, was
reclassified as debt as of the second quarter of fiscal 2003, in
accordance with SFAS No. 150,
Accounting for Certain
Financial Instruments with Characteristics of both Liabilities
and Equity
. The amount of dividends treated as interest
expense was $324,450 in fiscal 2004, $189,000 in fiscal 2003 and
none in fiscal 2002.
(3)
Stores included in the comparable store sales calculation for
any period are those stores that were opened prior to the
beginning of the preceding fiscal year and were still open at
the end of such period. Relocated stores and expanded stores are
included in the comparable store sales results.
(4)
Average sales per store is defined as net sales divided by the
average of stores open at the end of the prior period and stores
open at the end of the current period.
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21
22
Fiscal Year Ended | ||||||||||||||||||||||||
February 1, | January 31, | January 29, | ||||||||||||||||||||||
2003 | 2004 | 2005 | ||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Statement of Income Data
|
||||||||||||||||||||||||
Net sales
|
$ | 124,951 | 100.0 | % | $ | 157,198 | 100.0 | % | $ | 203,442 | 100.0 | % | ||||||||||||
Cost of sales
|
77,807 | 62.3 | 98,145 | 62.4 | 127,308 | 62.6 | ||||||||||||||||||
Gross profit
|
47,144 | 37.7 | 59,053 | 37.6 | 76,134 | 37.4 | ||||||||||||||||||
Selling, general and administrative expenses
|
38,760 | 31.0 | 48,845 | 31.1 | 63,594 | 31.3 | ||||||||||||||||||
Income from operations
|
8,385 | 6.7 | 10,208 | 6.5 | 12,540 | 6.1 | ||||||||||||||||||
Interest expense
|
256 | 0.2 | 563 | 0.4 | 732 | 0.3 | ||||||||||||||||||
Income before income taxes
|
8,129 | 6.5 | 9,645 | 6.1 | 11,808 | 5.8 | ||||||||||||||||||
Income tax expense
|
3,101 | 2.5 | 3,727 | 2.4 | 4,551 | 2.2 | ||||||||||||||||||
Net income
|
$ | 5,028 | 4.0 | % | $ | 5,918 | 3.8 | % | $ | 7,257 | 3.6 | % | ||||||||||||
23
Fiscal Year Ended | ||||||||||||
February 1, | January 31, | January 29, | ||||||||||
2003 | 2004 | 2005 | ||||||||||
Total stores open, beginning of period
|
123 | 137 | 161 | |||||||||
New stores
|
16 | 25 | 40 | |||||||||
Closed stores
|
2 | 1 | 1 | |||||||||
Total stores open, end of period
|
137 | 161 | 200 | |||||||||
Comparable store sales increase
|
14.6 | % | 5.7 | % | 3.0 | % |
24
25
26
Quarter Ended | ||||||||||||||||||||||||||||||||||
Jan. 31, | July 31, | Oct. 30, | Jan. 29, | |||||||||||||||||||||||||||||||
May 3, 2003 | Aug. 2, 2003 | Nov. 1, 2003 | 2004 | May 1, 2004 | 2004 | 2004 | 2005 | |||||||||||||||||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||
Statement of Income Data:
|
||||||||||||||||||||||||||||||||||
Net sales
|
$ | 37,575 | $ | 34,209 | $ | 36,168 | $ | 49,246 | $ | 48,069 | $ | 43,011 | $ | 46,049 | $ | 66,313 | ||||||||||||||||||
Cost of sales
|
22,023 | 22,452 | 22,991 | 30,679 | 29,034 | 28,095 | 29,159 | 41,020 | ||||||||||||||||||||||||||
Gross profit
|
15,552 | 11,757 | 13,177 | 18,567 | 19,035 | 14,916 | 16,890 | 25,293 | ||||||||||||||||||||||||||
Selling, general and administrative expenses
|
11,719 | 11,655 | 12,558 | 12,913 | 15,221 | 14,806 | 16,413 | 17,154 | ||||||||||||||||||||||||||
Income from operations
|
3,833 | 102 | 619 | 5,654 | 3,814 | 110 | 477 | 8,139 | ||||||||||||||||||||||||||
Interest expense
|
57 | 98 | 160 | 248 | 173 | 176 | 208 | 175 | ||||||||||||||||||||||||||
Earnings (loss) before income taxes
|
3,776 | 4 | 459 | 5,406 | 3,641 | (66 | ) | 269 | 7,964 | |||||||||||||||||||||||||
Income tax expense (benefit)
|
1,459 | 1 | 177 | 2,090 | 1,402 | (25 | ) | 104 | 3,070 | |||||||||||||||||||||||||
Net income (loss)
|
$ | 2,317 | $ | 2 | $ | 282 | $ | 3,317 | $ | 2,239 | $ | (41 | ) | $ | 165 | $ | 4,894 | |||||||||||||||||
Net income per common share:
|
||||||||||||||||||||||||||||||||||
Basic
|
$ | 0.24 | $ | (0.01 | ) | $ | 0.03 | $ | 0.36 | $ | 0.24 | $ | (0.00 | ) | $ | 0.02 | $ | 0.53 | ||||||||||||||||
Diluted
|
$ | 0.21 | $ | (0.00 | ) | $ | 0.03 | $ | 0.31 | $ | 0.21 | $ | (0.00 | ) | $ | 0.02 | $ | 0.45 | ||||||||||||||||
Weighted average shares used to compute net income per share:
|
||||||||||||||||||||||||||||||||||
Basic
|
9,295,000 | 9,295,000 | 9,295,000 | 9,295,000 | 9,305,400 | 9,310,600 | 9,300,200 | 9,295,000 | ||||||||||||||||||||||||||
Diluted
|
10,814,502 | 10,794,447 | 10,810,836 | 10,834,839 | 10,867,016 | 10,875,182 | 10,864,496 | 10,902,736 | ||||||||||||||||||||||||||
Additional Operating Data:
|
||||||||||||||||||||||||||||||||||
Number of stores:
|
||||||||||||||||||||||||||||||||||
Open, beginning of quarter
|
137 | 147 | 154 | 159 | 161 | 178 | 182 | 195 | ||||||||||||||||||||||||||
Opened during quarter
|
10 | 7 | 6 | 2 | 17 | 5 | 13 | 5 | ||||||||||||||||||||||||||
Closed during quarter
|
- | - | 1 | - | - | 1 | - | - | ||||||||||||||||||||||||||
Total open at end of period
|
147 | 154 | 159 | 161 | 178 | 182 | 195 | 200 | ||||||||||||||||||||||||||
Comparable store sales increase
|
3.2% | 5.6% | 9.6% | 5.2% | 3.5% | 0.3% | 3.0% | 4.6% |
27
28
Payments Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Contractual obligations:
|
||||||||||||||||||||
Series A Preferred
Stock
(1)
|
$ | 5,364 | $ | - | $ | - | $ | 5,364 | $ | - | ||||||||||
Long-term
debt
(2)
|
1,822 | 181 | 1,641 | - | - | |||||||||||||||
Capital leases
|
1,528 | 801 | 727 | - | - | |||||||||||||||
Operating
leases
(3)
|
29,262 | 8,224 | 13,351 | 7,072 | 615 | |||||||||||||||
Purchase obligations
|
39,237 | 39,237 | - | - | - | |||||||||||||||
Consulting
fee
(4)
|
960 | 240 | 480 | 240 | - | |||||||||||||||
Total contractual cash obligations
|
$ | 78,173 | $ | 48,683 | $ | 16,199 | $ | 12,676 | $ | 615 | ||||||||||
(1) | Includes Series A Preferred Stock of $3.6 million, accrued dividends of approximately $380,000 as of January 29, 2005 and dividends of $1.4 million accruing through maturity in April 2009. The board of directors approved a resolution whereby we began making payments of approximately $500,000 per quarter beginning in the second quarter of fiscal 2004. Our Series A Preferred Stock will be redeemed using a portion of the net proceeds from this offering. |
(2) | Our outstanding long-term debt will be repaid using a portion of the net proceeds from this offering. |
(3) | Represents fixed minimum rentals in stores and does not include incremental rents which are computed as a percentage of net sales. For example, in fiscal 2004 incremental percentage rent was approximately $723,000, which represented 8.6% of total rent expense. |
(4) | Represents minimum payments for the four year term of a management consulting agreement that is subject to automatic annual renewals unless terminated with 60 days notice by either party. Upon consummation of this offering, the parties shall terminate the consulting agreement and we will recognize an expense for a termination fee of $1.2 million. We are obligated to make such payment no later than December 31, 2005; accordingly, such payment will not be made from the proceeds of this offering. |
29
30
31
32
33
| focusing our merchandise offerings on more urban fashion apparel for the entire family, with greater emphasis on nationally recognized brands; | |
| accelerating and completing the remodeling of virtually all of the 85 stores acquired in 1999 to create a more appealing shopping environment; | |
| refining our new store model and implementing a real estate approach focused on locating stores in low to moderate income neighborhoods close to our core customers; | |
| rebranding our stores and our company to Citi Trends in order to convey more effectively our positioning to consumers; | |
| investing in infrastructure to support growth, including opening an additional distribution center and installing new point of sale systems in all of our stores; and | |
| implementing an aggressive growth strategy, including entering several new markets such as Houston, Norfolk and, most recently, Baltimore and Washington, D.C. |
34
35
36
37
Percentage of | ||
Net Sales | ||
Womens
|
38% | |
Childrens
|
27% | |
Mens
|
21% | |
Accessories
|
13% | |
Home décor
|
1% |
38
39
40
41
42
Name | Age | Position | ||||
R. Edward Anderson
|
55 | Chief Executive Officer and Director | ||||
George A. Bellino*
|
57 | President, Chief Merchandising Officer and Director | ||||
Thomas W. Stoltz
|
44 | Chief Financial Officer | ||||
James A. Dunn
|
48 | Vice President of Store Operations | ||||
Gregory P. Flynn
|
48 | Chairman of the Board of Directors | ||||
Laurens M. Goff*
|
32 | Director | ||||
John S. Lupo
|
58 | Director | ||||
Tracy L. Noll
|
56 | Director |
* | Will resign from our board of directors upon the consummation of this offering. |
43
44
Audit Committee |
| have direct responsibility for the selection, compensation, retention, replacement and oversight of the work of our independent auditors, including prescribing what services are allowable and approve in advance all services provided by the auditors; | |
| set clear hiring policies for employees or former employees of the independent auditors; | |
| review all proposed company hires formerly employed by the independent auditors; | |
| have direct responsibility for ensuring its receipt from the independent auditors at least annually of a formal written statement delineating all relationships between the auditor and us, consistent with Independence Standards Board Standard No. 1; | |
| discuss with the independent directors any disclosed relationships or services that may impact the objectivity and independence of the auditor and for taking, or recommending that the full board of directors take, appropriate action to oversee the independence of the independent auditor; | |
| discuss with the internal auditors and the independent auditors the overall scope and plans for their respective audits, including the adequacy of staffing, compensation and resources; | |
| review, at least annually, the results and scope of the audit and other services provided by our independent auditors and discuss any audit problems or difficulties and managements response; | |
| review our annual audited financial statement and quarterly financial statements and discuss the statements with management and the independent auditors (including disclosures in our Exchange Act reports in response to Item 303, Managements Discussion and Analysis of Financial Condition and Results of Operations, of Regulation S-K); | |
| review and discuss with management, the internal auditors and the independent auditors the adequacy and effectiveness of our internal controls, including our ability to monitor and manage business risk, legal and ethical compliance programs and financial reporting; | |
| review and discuss separately with the internal auditors and the independent auditors, with and without management present, the results of their examinations; |
45
| review our compliance with legal and regulatory independence; | |
| review and discuss our interim financial statements and the earnings press releases prior to the filing of our quarterly reports on Form 10-Q, as well as financial information and earnings guidance provided to analysts and rating agencies; | |
| review and discuss our risk assessment and risk management policies; | |
| prepare an audit committee report required by the Commission to be included in our annual proxy statement; | |
| engage independent counsel and other advisors to assist the audit committee in carrying out its duties; | |
| review and approve all related party transactions consistent with the rules applied to companies listed on the Nasdaq National Market; and | |
| establish procedures regarding complaints received by us or our employees regarding accounting, accounting controls or accounting matters. |
Compensation Committee |
| review and approve corporate goals and objectives relevant to our Chief Executive Officers and other named executive officers compensation; | |
| evaluate the Chief Executive Officers performance in light of these goals and objectives; | |
| either as a committee, or together with the other independent directors, determine and approve the Chief Executive Officers compensation; | |
| make recommendations to our board of directors regarding the salaries, incentive compensation plans and equity-based plans for our employees; and | |
| produce a compensation committee report on executive compensation as required by the Commission to be included in our annual proxy statements or annual reports on Form 10-K filed with the Commission. |
Compensation Committee Interlocks and Insider Participation |
Nominating and Corporate Governance Committee |
| identify individuals qualified to become board members, consistent with criteria approved by the board of directors; |
46
| recommend the individuals identified be selected as nominees at annual meetings of our stockholders; | |
| develop and recommend to the board of directors a set of corporate governance principles applicable to us; and | |
| oversee the evaluation of the board of directors and management. |
Code of Business Conduct |
| honest and ethical conduct; | |
| full, fair, accurate, timely and understandable disclosure in reports and documents that we file with the Commission and in our other public communications; | |
| compliance with applicable laws, rules and regulations, including insider trading compliance; and | |
| accountability for adherence to the code and prompt internal reporting of violations of the code, including illegal or unethical behavior regarding accounting or auditing practices. |
Long-Term | |||||||||||||||||
Annual Compensation (1) | Compensation | ||||||||||||||||
Securities | |||||||||||||||||
Name and Principal Position | Fiscal Year | Salary | Bonus | Underlying Options | |||||||||||||
R. Edward Anderson
|
2004 | $ | 327,693 | $ | 144,000 | $619 | |||||||||||
Chief Executive Officer | |||||||||||||||||
George A. Bellino
|
2004 | $ | 248,077 | $ | 114,000 | $ | 1,342 | ||||||||||
President and Chief | |||||||||||||||||
Merchandising Officer | |||||||||||||||||
Thomas W. Stoltz
|
2004 | $ | 173,769 | $ | 40,000 | | |||||||||||
Chief Financial Officer | |||||||||||||||||
James A. Dunn
|
2004 | $ | 140,769 | $ | 39,900 | | |||||||||||
Vice President of Store Operations |
(1) | Excludes perquisites and other benefits, which for each named individual are less than 10% of the sum of such individuals annual salary and bonus. |
47
Potential
Realizable Value
at Assumed Rates
of Stock Price
% of Total Options
Appreciation for
Number of Securities
Granted to
Exercise
Option Term
(1)
Underlying Options
Employees in
Price Per
Expiration
Name
Granted
Fiscal Year
Share
Date
5%
10%
312
0.3
%
$
6.85
10/30/14
$
4,470
$
8,383
676
0.7
%
$
6.85
10/30/14
$
9,684
$
18,163
(1) | Potential realizable value is based upon the assumed initial public offering price of our common stock of $13.00. Potential realizable values are net of exercise price, but before taxes associated with exercise. Amounts representing hypothetical gains are those that could be achieved if options are exercised at the end of the option term. The assumed 5% and 10% rates of stock price appreciation are provided in accordance with rules of the Commission, based on the assumed initial public offering price of $13.00 per share and do not represent our estimate or projection of the future stock price. |
Number of Securities Underlying | Value of Unexercised | |||||||||||||||||||
Unexercised Options at Fiscal Year End | In-the-Money Options (1) | |||||||||||||||||||
Name | Total | Exercisable | Unexercisable | Exercisable | Unexercisable | |||||||||||||||
R. Edward Anderson
|
437,502 | 437,502 | | $ | 5,517,993 | $ | | |||||||||||||
George A. Bellino
|
361,504 | 361,504 | | 4,555,111 | | |||||||||||||||
Thomas W. Stoltz
|
78,000 | 78,000 | | 984,360 | | |||||||||||||||
James A. Dunn
|
65,000 | 51,350 | 13,650 | 648,037 | 172,263 |
(1) | The options were granted under our Amended and Restated 1999 Stock Option Plan. These options generally vest in equal installments over four years from the date of grant and are generally exercisable up to ten years from the date of grant. The fair value of the options granted during the year ended January 29, 2005 was $2.50 using the Black-Scholes option-pricing model, with weighted average assumptions: no dividend yield; 50% expected volatility; 2.50% risk-free interest rate; ten year expected life and a 10% forfeiture rate. |
48
Shares Subject to the Plan |
Administration |
49
Eligibility |
Stock Options |
Stock Appreciation Rights (SARs) |
Exercise Price for Stock Options and SARs |
Exercise and Term of Options and SARs |
50
Restricted Shares |
Performance Awards |
51
Tandem Awards |
Initial Awards |
Income Tax Withholding |
Transferability |
Certain Corporate Transactions |
52
53
| conviction or guilty plea to a serious felony, a crime of moral turpitude or other specified financial offenses, | |
| a board determination that Mr. Bellino has committed a crime of moral turpitude, | |
| a board determination that Mr. Bellino knowingly breached his fiduciary obligations to us, subject to notice and a cure period, | |
| Mr. Bellinos failure to discharge his duties under the agreement or substance abuse which materially interferes with the discharge of his duties, subject to notice and a cure period, | |
| Mr. Bellinos material violation of any non-competition or confidentiality agreement with us, | |
| Mr. Bellinos material violation of any other personal obligations under his agreement, subject to notice and a cure period, and | |
| any other violation of law by Mr. Bellino that could have a material adverse effect on us, subject to notice and a cure period. |
| own, manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in, whether as a proprietor, partner, stockholder, lender, director, officer, employee, joint venturer, investor, lessor, agent, representative or other participant, any business which competes with us in any state where we operate, or | |
| recruit, solicit or otherwise induce or influence any proprietor, partner, stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, customer, agent, representative or any other person with a business relationship with us to discontinue, reduce or modify their relationship with us. | |
54
| any breach of the directors duty of loyalty to us or our stockholders; | |
| any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; | |
| any act related to unlawful stock repurchases, redemptions or other distributions or payment of dividends; or | |
| any transaction from which the director derived an improper personal benefit. |
| we may indemnify our directors, officers and employees to the fullest extent permitted by the Delaware General Corporation Law, subject to limited exceptions; | |
| we may advance expenses to our directors, officers and employees in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to limited exceptions; and | |
| the rights provided in our by-laws are not exclusive. | |
55
| four members of our board of directors may be designated by the owners of the majority of the voting stock beneficially owned by Hampshire Equity Partners and its affiliates, | |
| our stockholders have agreed generally not to transfer their shares, | |
| our management stockholders have been granted tag-along rights in the event of the sale of more than 50% of our common stock, | |
| our management stockholders have agreed to cooperate in any sale of the company by Hampshire Equity Partners, and | |
| we have agreed to register shares of our common stock held by the stockholder parties in the event that we register additional shares of our common stock under the Securities Act of 1933, as amended, other than on a registration statement on Form S-4 or S-8, or in connection with an exchange offer, merger, acquisition, dividend reinvestment plan, stock option or other employee benefit plan. | |
56
57
| each stockholder known by us to own beneficially more than 5% of our common stock; | |
| each of our directors and named executive officers; | |
| all directors and executive officers as a group; and | |
| each of the selling stockholders. |
Number of | ||||||||||||||||||||
Number of | Shares | Percentage | ||||||||||||||||||
Shares | Beneficially | of Shares | Percentage of | |||||||||||||||||
Beneficially | Number of | Owned | Outstanding | Shares | ||||||||||||||||
Owned Prior | Shares Being | After the | Before the | Outstanding After | ||||||||||||||||
Name of Beneficial Owner | to the Offering | Offered | Offering | Offering | the Offering | |||||||||||||||
Directors and Named Executive Officers: | ||||||||||||||||||||
R. Edward Anderson
Chief Executive Officer and Director |
528,502 | (1) | 61,837 | 466,665 | 5.4 | % | 3.8 | % | ||||||||||||
George A. Bellino
President, Chief Merchandising Officer and Director |
556,504 | (2) | 65,432 | 491,072 | 5.8 | % | 4.0 | % | ||||||||||||
Thomas W. Stoltz
Chief Financial Officer |
78,000 | (3) | 9,083 | 68,917 | * | * | ||||||||||||||
James A. Dunn
Vice President of Store Operations |
65,000 | (3) | 7,569 | 57,431 | * | * | ||||||||||||||
Tracy L. Noll
Director |
90,064 | (3) | | 90,064 | * | * | ||||||||||||||
John S. Lupo
Director |
5,200 | (3) | | 5,200 | * | * | ||||||||||||||
Gregory P.
Flynn
(4)
Director |
8,893,612 | 993,077 | 7,900,535 | 95.0 | % | 65.5 | % | |||||||||||||
Laurens M.
Goff
(5)
Director |
8,893,612 | 993,077 | 7,900,535 | 95.0 | % | 65.5 | % | |||||||||||||
Directors and executive officers as a group (eight persons)
|
10,216,882 | 1,136,998 | 9,079,884 | 98.7 | % | 69.6 | % |
58
Number of | ||||||||||||||||||||
Number of | Shares | Percentage | ||||||||||||||||||
Shares | Beneficially | of Shares | Percentage of | |||||||||||||||||
Beneficially | Number of | Owned | Outstanding | Shares | ||||||||||||||||
Owned Prior | Shares Being | After the | Before the | Outstanding After | ||||||||||||||||
Name of Beneficial Owner | to the Offering | Offered | Offering | Offering | the Offering | |||||||||||||||
5% Stockholder:
|
||||||||||||||||||||
Hampshire Equity Partners II, L.P.
(6)
|
8,893,612 | 993,077 | 7,900,535 | 95.0 | % | 65.5 | % | |||||||||||||
Other Selling Stockholders:
|
||||||||||||||||||||
Jon Devorkin
Divisional Merchandise Manager |
52,000 (3 | ) | 6,055 | 45,945 | * | * | ||||||||||||||
Allison Smith
Divisional Merchandise Manager |
52,000 (3 | ) | 6,055 | 45,945 | * | * | ||||||||||||||
Rimma Schusterman
Divisional Merchandise Manager |
15,600 (3 | ) | 892 | 14,708 | * | * |
(1) | Includes 91,000 shares of common stock and 437,502 options to purchase shares of common stock exercisable within 60 days of April 28, 2005. |
(2) | Includes 195,000 shares of common stock and 361,504 options to purchase shares of common stock exercisable within 60 days of April 28, 2005. |
(3) | Consists of options to purchase shares of common stock exercisable within 60 days of April 28, 2005. |
(4) | Mr. Flynn is the Managing Partner of Hampshire Equity Partners and is deemed to beneficially own the shares of common stock held by it. Mr. Flynn has disclaimed beneficial ownership of the shares of common stock held by Hampshire Equity Partners. |
(5) | Mr. Goff is a Principal of Hampshire Equity Partners and is deemed to beneficially own the shares of common stock held by it. Mr. Goff has disclaimed beneficial ownership of the shares of common stock held by Hampshire Equity Partners. |
(6) | The address of Hampshire Equity Partners II, L.P. is 520 Madison Avenue, New York, New York 10022. Lexington Equity Partners II, L.P. is the general partner of Hampshire Equity Partners and has ultimate voting and investment control over the shares of our common stock held by Hampshire Equity Partners. The general partner of Lexington Equity Partners II, L.P. is Lexington Equity Partners II, Inc., or Lexington Inc. Tracey Rudd, an employee of Hampshire Equity Partners, is the President of Lexington Inc. and Mr. Flynn, one of our directors, is the Vice President of Lexington Inc. |
* | Less than 1%. |
59
60
| the business combination, or the transaction in which the stockholder became an interested stockholder, is approved by our board of directors prior to the time the interested stockholder attained that status; | |
| upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or | |
| at or after the time a person became an interested stockholder, the business combination is approved by our board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder. |
61
| for breach of duty of loyalty; | |
| for acts or omissions not in good faith or involving intentional misconduct or knowing violation of law; | |
| under Section 174 of the Delaware General Corporation Law (unlawful dividends or stock repurchases); or | |
| for transactions from which the director derived improper personal benefit. |
62
| the prohibition on stockholder action by written consent; | |
| the ability to call a special meeting of stockholders being vested solely in (1) the chairman of our board of directors, (2) our board of directors pursuant to a resolution adopted by our board of directors and (3) our board of directors upon a request by holders of at least 50% in voting power of all the outstanding shares entitled to vote at that meeting; | |
| the provisions relating to the classification of our board of directors; | |
| the provisions relating to the size of our board of directors; | |
| the provisions relating to the quorum requirements for stockholder action and the removal of directors; | |
| the limitation on the liability of our directors to us and our stockholders; | |
| the provisions granting authority to our board of directors to amend or repeal our by-laws without a stockholder vote, as described in more detail in the next succeeding paragraph; and | |
| the supermajority voting requirements listed above. |
63
64
65
Underwriters | Number of Shares | ||||
CIBC World Markets Corp.
|
|||||
Piper Jaffray & Co.
|
|||||
SG Cowen & Co., LLC
|
|||||
Wachovia Capital Markets, LLC
|
|||||
Total
|
3,850,000 | ||||
Total Without | Total With Full | |||||||||||
Exercise of Over- | Exercise of Over- | |||||||||||
Per Share | Allotment Option | Allotment Option | ||||||||||
Citi Trends, Inc.
|
$ | $ | $ | |||||||||
Selling Stockholders
|
66
| the history and prospects for the industry in which we compete; | |
| our past and present operations; | |
| our historical results of operations; | |
| our prospects for future business and earning potential; | |
| our management; | |
| the general condition of the securities markets at the time of this offering; | |
| the recent market prices of securities of generally comparable companies; and | |
| the market capitalization and stages of development of other companies which we and the representative believe to be comparable to us. |
67
| Stabilizing transactionsThe representative may make bids or purchases for the purpose of pegging, fixing or maintaining the price of the shares, so long as stabilizing bids do not exceed a specified maximum. | |
| Over-allotments and syndicate covering transactionsThe underwriters may sell more shares of our common stock in connection with this offering than the number of shares than they have committed to purchase. This over-allotment creates a short position for the underwriters. This short sales position may involve either covered short sales or naked short sales. Covered short sales are short sales made in an amount not greater than the underwriters over-allotment option to purchase additional shares in this offering described above. The underwriters may close out any covered short position either by exercising their over-allotment option or by purchasing shares in the open market. To determine how they will close the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market, as compared to the price at which they may purchase shares through the over-allotment option. Naked short sales are short sales in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that, in the open market after pricing, there may be downward pressure on the price of the shares that could adversely affect investors who purchase shares in this offering. | |
| Penalty bidsIf the representative purchases shares in the open market in a stabilizing transaction or syndicate covering transaction, they may reclaim a selling concession from the underwriters and selling group members who sold those shares as part of this offering. |
68
69
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED
JANUARY 29, 2005,
JANUARY 31, 2004 AND FEBRUARY 1, 2003 |
||
F-2 | ||
F-3 | ||
F-4 | ||
F-5 | ||
F-6 | ||
F-7 |
F-1
/s/ KPMG LLP |
F-2
January 29,
January 31,
2005
2004
Assets
$
11,801,442
$
9,954,232
36,172,832
22,712,369
2,600,933
1,770,998
1,139,000
530,604
51,714,207
34,968,203
17,573,767
12,749,601
1,371,404
1,371,404
130,182
123,992
$
70,789,560
$
49,213,200
Liabilities and Stockholders Equity
$
$
28,132,301
19,577,370
3,199,772
2,121,520
2,537,643
1,669,462
78,953
74,762
718,425
566,667
2,455,247
331,342
252,791
133,028
37,375,132
24,474,151
1,526,110
1,494,302
688,473
494,547
3,984,763
5,160,313
818,000
333,445
2,632,113
752,574
47,024,591
32,709,332
9,460,750 and 9,445,150 shares issued in 2005 and 2004;
9,295,000 shares outstanding in 2005 and 2004
3,639
3,633
4,120,894
4,011,601
19,828,629
12,571,384
(164,550
)
(57,750
)
(23,643
)
(25,000
)
23,764,969
16,503,368
$
70,789,560
$
49,213,200
F-3
Fiscal
Fiscal
Fiscal
2004
2003
2002
$
203,441,772
$
157,198,306
$
124,950,935
127,307,594
98,145,216
77,806,541
76,134,178
59,053,090
47,144,394
63,593,731
48,844,888
38,759,624
12,540,447
10,208,202
8,384,770
732,202
563,342
255,708
11,808,245
9,644,860
8,129,062
4,551,000
3,726,914
3,101,237
$
7,257,245
$
5,917,946
$
5,027,825
$
0.78
$
0.62
$
0.51
$
0.67
$
0.54
$
0.44
9,302,800
9,295,000
9,295,000
10,879,388
10,771,410
10,757,110
F-4
Fiscal 2004
Fiscal 2003
Fiscal 2002
$
7,257,245
$
5,917,946
$
5,027,825
324,450
189,263
4,871,682
4,032,602
3,014,549
(123,841
)
161,883
541,742
80,719
23,396
93,189
(9,643
)
103,299
123,273
161,882
(13,460,463
)
(5,669,857
)
(2,110,472
)
(845,787
)
(577,991
)
374,919
195,068
60,795
(29,334
)
(16,020
)
(39,294
)
8,554,931
6,108,110
1,956,945
2,823,842
647,045
576,631
868,181
(247,906
)
880,225
2,123,905
331,342
119,763
(28,761
)
(82,278
)
12,658,949
11,189,393
10,456,658
(8,631,233
)
(6,117,954
)
(5,926,622
)
(50,000
)
37,716,044
26,295,521
133,369,853
(37,716,044
)
(26,295,521
)
(137,059,791
)
(831,456
)
(942,054
)
(742,969
)
1,680,000
(1,366,050
)
11,000
6,000
(2,180,506
)
(942,054
)
(2,802,907
)
1,847,210
4,129,385
1,727,129
9,954,232
5,824,847
4,097,718
$
11,801,442
$
9,954,232
$
5,824,847
$
518,557
$
352,933
$
255,708
$
2,550,938
$
3,036,620
$
2,498,700
$
$
135,187
$
327,713
$
1,106,338
$
670,503
$
660,012
192,384
F-5
Common Stock
Treasury Stock
Paid-in
Retained
Subscription
Shares
Amount
Capital
Earnings
Shares
Amount
Receivable
Total
9,445,150
3,633
3,726,446
2,088,513
150,150
(57,750
)
(25,000
)
5,735,842
161,882
161,882
(327,713
)
(327,713
)
5,027,825
5,027,825
9,445,150
3,633
3,888,328
6,788,625
150,150
(57,750
)
(25,000
)
10,597,836
123,273
123,273
(135,187
)
(135,187
)
5,917,946
5,917,946
9,445,150
3,633
4,011,601
12,571,384
150,150
(57,750
)
(25,000
)
16,503,868
15,600
6
5,994
6,000
103,299
103,299
15,600
(106,800
)
(106,800
)
(9,643
)
(9,643
)
11,000
11,000
7,257,245
7,257,245
9,460,750
3,639
4,120,894
19,828,629
165,750
(164,550
)
(23,643
)
23,764,969
F-6
(1) | Organization and Business |
(2) | Summary of Significant Accounting Policies |
(a) | Fiscal Year |
(b) | Cash and Cash Equivalents |
(c) | Inventory |
(d) | Property and Equipment, net |
(e) | Goodwill |
(f) | Impairment of Long-Lived Assets |
F-7
(g) | Stock-Based Compensation |
2004 | 2003 | 2002 | |||||||||||
Net income, as reported
|
$ | 7,257,245 | $ | 5,917,946 | $ | 5,027,825 | |||||||
Add stock-based employee compensation expense included in
reported net income, net of tax of $39,791, $45,855 and $62,729,
respectively
|
63,508 | 77,415 | 99,153 | ||||||||||
Deduct total stock-based employee compensation expense
determined under fair-value-based method for all awards, net of
tax of $86,829, $68,120 and $47,157, respectively
|
(138,583 | ) | (114,997 | ) | (74,538 | ) | |||||||
Pro forma net income
|
$ | 7,182,170 | $ | 5,880,364 | $ | 5,052,440 | |||||||
As reported basic income per common share
|
$ | 0.78 | $ | 0.62 | $ | 0.51 | |||||||
Pro forma basic income per common share
|
$ | 0.77 | $ | 0.62 | $ | 0.51 | |||||||
As reported diluted income per common share
|
$ | 0.67 | $ | 0.54 | $ | 0.44 | |||||||
Pro forma diluted income per common share
|
$ | 0.66 | $ | 0.53 | $ | 0.44 | |||||||
(h) | Revenue Recognition |
F-8
(i) | Cost of Sales |
(j) | Certain Financial Instruments with Characteristics of Liabilities and Equity |
2004 | 2003 | 2002 | |||||||||||
Net income, as reported
|
$ | 7,257,245 | $ | 5,917,946 | $ | 5,027,825 | |||||||
Add dividends on preferred shares subject to mandatory redemption
|
324,450 | 189,263 | | ||||||||||
Pro forma net income
|
$ | 7,581,695 | $ | 6,107,209 | $ | 5,027,825 | |||||||
(k) | Earnings per Share |
2004 | 2003 | 2002 | |||||||||||
Net income, as reported
|
$ | 7,257,245 | $ | 5,917,946 | $ | 5,027,825 | |||||||
Subtract dividends on preferred shares subject to mandatory
redemption
|
| 135,188 | 324,450 | ||||||||||
Numerator for EPS calculation
|
$ | 7,257,245 | $ | 5,782,758 | $ | 4,703,375 | |||||||
F-9
2004
2003
2002
9,302,800
9,295,000
9,295,000
1,576,588
1,476,410
1,462,110
10,879,388
10,771,410
10,757,110
(l) | Advertising |
(m) | Operating Leases |
(n) | Store Opening and Closing Costs |
(o) | Income Taxes |
F-10
(p) | Use of Estimates |
(q) | Business Reporting Segments |
(r) | Other Comprehensive Income |
(s) | Recently Issued Accounting Standards Not Currently Effective |
F-11
(3)
Property and Equipment, Net
January 29,
January 31,
2005
2004
$
810,000
$
810,000
1,340,000
1,340,000
12,134,815
8,885,163
13,660,714
9,000,105
6,535,924
4,823,922
34,481,453
24,859,190
16,907,686
12,109,589
$
17,573,767
$
12,749,601
(4) | Revolving Lines of Credit |
(5) | Long-term Debt and Capital Lease Obligations |
F-12
January 29,
January 31,
2005
2004
$
1,496,121
$
1,569,064
108,942
1,406,898
1,061,214
3,011,961
2,630,278
797,378
641,429
$
2,214,583
$
1,988,849
(6) | Income Taxes |
2004 | 2003 | 2002 | |||||||||||
Current:
|
|||||||||||||
Federal
|
$ | 3,910,115 | $ | 2,987,496 | $ | 2,136,445 | |||||||
State
|
764,726 | 577,535 | 423,050 | ||||||||||
4,674,841 | 3,565,031 | 2,559,495 | |||||||||||
Deferred:
|
|||||||||||||
Federal
|
(104,170 | ) | 135,658 | 465,423 | |||||||||
State
|
(19,671 | ) | 26,225 | 76,319 | |||||||||
(123,841 | ) | 161,883 | 541,742 | ||||||||||
$ | 4,551,000 | $ | 3,726,914 | $ | 3,101,237 | ||||||||
F-13
2004
2003
2002
$
4,014,803
$
3,279,252
$
2,763,881
491,736
385,794
329,584
(182,000
)
(161,023
)
(117,004
)
110,313
66,240
116,148
156,651
124,776
$
4,551,000
$
3,726,914
$
3,101,237
2005 | 2004 | |||||||||
Deferred tax assets:
|
||||||||||
Deferred rent amortization
|
$ | 518,531 | $ | 189,682 | ||||||
Inventory capitalization
|
850,156 | 572,515 | ||||||||
Vacation liability
|
177,333 | 61,750 | ||||||||
Stock compensation
|
171,477 | 129,071 | ||||||||
Other
|
56,000 | 16,000 | ||||||||
1,773,497 | 969,018 | |||||||||
Deferred tax liabilities:
|
||||||||||
Book and tax depreciation differences
|
(681,945 | ) | (188,881 | ) | ||||||
Prepaid expenses
|
(462,832 | ) | (309,464 | ) | ||||||
Goodwill
|
(170,652 | ) | (129,612 | ) | ||||||
Other
|
(137,068 | ) | (143,902 | ) | ||||||
(1,452,497 | ) | (771,859 | ) | |||||||
Net deferred tax asset
|
$ | 321,000 | $ | 197,159 | ||||||
(7) | Preferred Shares Subject to Mandatory Redemption |
F-14
(8) | Stockholders Equity |
(a) | Stockholders Agreement |
(b) | Equity Transactions with Officer |
(c) | Equity Transactions with Majority Stockholder |
(d) | Stock Options |
F-15
2004 | 2003 | 2002 | ||||||||||||||||||||||
Wtd Avg | Wtd Avg | Wtd Avg | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
Outstanding at beginning of period
|
1,791,374 | 0.77 | 1,728,896 | 0.40 | 1,718,496 | $ | 0.38 | |||||||||||||||||
Granted
|
124,774 | 6.75 | 192,478 | 3.79 | 46,800 | 2.09 | ||||||||||||||||||
Exercised
|
(15,600 | ) | 0.38 | | | | | |||||||||||||||||
Forfeited
|
(39,000 | ) | 3.35 | (130,000 | ) | 0.65 | (36,400 | ) | 0.38 | |||||||||||||||
Outstanding end of period
|
1,861,548 | 1.12 | 1,791,374 | 0.77 | 1,728,896 | 0.40 | ||||||||||||||||||
Options exercisable end of period
|
1,616,498 | 0.67 | 1,383,096 | 0.49 | 962,910 | $ | 0.38 | |||||||||||||||||
Total Intrinsic | ||||||||||||||||||||
Exercise Price & | Weighted Average | Value of Options | ||||||||||||||||||
Fair Value of Stock | Number | Remaining | Number | at Date of | ||||||||||||||||
on Date of Grant | Quarter of Grant | Outstanding | Contractual Life | Exercisable | Grant | |||||||||||||||
$ 0.38*
|
4th Quarter 2001 and prior | 1,552,096 | 5.4 | 1,498,146 | $ | 336,000 | ||||||||||||||
$1.92
|
1st Quarter 2002 | 20,800 | 7.0 | 10,400 | | |||||||||||||||
$2.69
|
2nd Quarter 2002 | 10,400 | 7.5 | 5,200 | | |||||||||||||||
$3.62
|
2nd Quarter 2003 | 101,478 | 8.4 | 58,578 | | |||||||||||||||
$3.81
|
3rd Quarter 2003 | 26,000 | 8.6 | 6,500 | | |||||||||||||||
$4.46
|
4th Quarter 2003 | 26,000 | 8.8 | 6,500 | | |||||||||||||||
$6.54
|
1st Quarter 2004 | 36,400 | 9.2 | | | |||||||||||||||
$6.81
|
2nd Quarter 2004 | 20,800 | 9.3 | | | |||||||||||||||
$6.85
|
3rd Quarter 2004 | 67,574 | 9.6 | 31,174 | | |||||||||||||||
1,861,548 | 1,616,498 | $ | 336,000 | |||||||||||||||||
* | 436,800 shares were granted during the 4th quarter 2001, the exercise price was $0.38 and the fair value of the options were $1.15. |
F-16
2005
2004
2003
0.00%
0.00%
0.00%
50.00%
50.00%
50.00%
2.50%
2.50%
3.60%
10 years
10 years
10 years
10.00%
10.00%
10.00%
(9) | Commitments and Contingencies |
Fiscal Year: | |||||
2005
|
$ | 8,223,506 | |||
2006
|
7,318,638 | ||||
2007
|
6,032,679 | ||||
2008
|
4,706,191 | ||||
2009
|
2,365,894 | ||||
Thereafter
|
614,920 | ||||
Total future minimum lease payments
|
$ | 29,261,828 | |||
(10) | Related Party Transactions |
F-17
Term and Termination |
Compensation |
(11) | Valuation and Qualifying Accounts |
Inventory | |||||
Shrinkage | |||||
Reserve | |||||
Balance at February 2, 2002
|
$ | 806,367 | |||
Additions charged to costs and expenses
|
2,066,634 | ||||
Deductions
|
(1,808,188 | ) | |||
Balance at February 1, 2003
|
$ | 1,064,813 | |||
Additions charged to costs and expenses
|
2,541,749 | ||||
Deductions
|
(2,672,235 | ) | |||
Balance at January 31, 2004
|
$ | 934,327 | |||
Additions charged to costs and expenses
|
2,917,053 | ||||
Deductions
|
(2,629,883 | ) | |||
Balance at January 29, 2005
|
$ | 1,221,497 | |||
F-18
(12) | Subsequent Events |
F-19
Piper Jaffray | SG Cowen & Co. | Wachovia Securities |
II-1
II-2
II-3
II-4
II-5
Item 13.
Other Expenses of Issuance and Distribution.
$
6,774.52
6,255.75
5,000.00
250,000.00
700,000.00
450,000.00
15,000.00
116,969.73
$
1,550,000.00
Item 14.
Indemnification of Directors and Officers.
any breach of the directors duty of loyalty to us or our
stockholders;
any act or omission not in good faith or that involves
intentional misconduct or a knowing violation of law;
any act related to unlawful stock repurchases, redemptions or
other distributions or payment of dividends; or
any transaction from which the director derived an improper
personal benefit.
we may indemnify our directors, officers and employees to the
fullest extent permitted by the Delaware General Corporation
Law, subject to limited exceptions;
we may advance expenses to our directors, officers and employees
in connection with a legal proceeding to the fullest extent
permitted by the Delaware General Corporation Law, subject to
limited exceptions; and
the rights provided in our amended and restated by-laws are not
exclusive.
Table of Contents
Item 15.
Recent Sales of Unregistered Securities.
Table of Contents
Item 16.
Exhibits and Financial Statement Schedules
Exhibit No.
Description
1.1
Form of Underwriting Agreement*
3.1
Form of Second Amended and Restated Certificate of Incorporation*
3.2
Form of Amended and Restated By-laws*
4.1
Specimen certificate for shares of common stock, $.01 par
value**
5.1
Opinion of Paul, Hastings, Janofsky & Walker LLP**
10.1
Letter Agreement by and between R. Edward Anderson and Citi
Trends, Inc., dated November 16, 2001*
10.2
Employment and Non-Interference Agreement by and between George
Bellino and Citi Trends, Inc., dated as of April 13, 1999*
10.3
Amendment No. 1 to the Employment and Non-Interference
Agreement by and between George Bellino and Citi Trends, Inc.,
dated as of December 2001*
10.4
The Loan and Security Agreement, dated as of April 2, 1999,
by and between Congress Financial Corporation (Southwest) and
Allied Fashion, Inc.*
10.5
First Amendment to Loan and Security Agreement, dated as of
June 28, 2000, by and between Congress Financial
Corporation (Southwest) and Allied Fashion, Inc.*
10.6
Second Amendment to Loan and Security Agreement, dated as of
November 30, 2000, by and between Congress Financial
Corporation (Southwest) and Allied Fashion, Inc.*
10.7
Third Amendment to Loan and Security Agreement, dated as of
January 2003, by and between Congress Financial Corporation
(Southwest) and Citi Trends, Inc.*
10.8
Fourth Amendment to Loan and Security Agreement, dated as of
February 9, 2005, by and between Congress Financial
Corporation (Southwest) and Citi Trends, Inc.*
10.9
Lease Agreement, dated as of September 30, 2004, by and
between Meyer Warehouse, LLC, as landlord, and Citi Trends,
Inc., as tenant*
10.1
0
$3.0 Million Promissory Note of Citi Trends, Inc. payable
to Bank of America issued on June 21, 2004*
10.1
1
Form of 2005 Long Term Incentive Plan*
10.1
2
Form of Nominating Agreement by and between Citi Trends, Inc.
and Hampshire Equity Partners II, L.P.*
10.1
3
Form of Registration Rights Agreement by and between Citi
Trends, Inc. and Hampshire Equity Partners II, L.P.**
Table of Contents
Exhibit No.
Description
10.1
4
Amended and Restated Hampshire Management Consulting Agreement,
effective as of February 1, 2004 by and between Citi Trends,
Inc. and Hampshire Management Company LLC*
10.1
5
Form of Termination Agreement by and between Citi Trends, Inc.
and Hampshire Management Company LLC**
14.1
Citi Trends, Inc. Code of Business Conduct**
23.1
Consent of KPMG LLP**
23.2
Consent of Paul Hastings, Janofsky & Walker LLP
(included in Exhibit 5.1)**
24.1
Power of Attorney*
Item 17.
Undertakings.
(1) For purposes of determining any
liability under the Securities Act of 1933, as amended, the
information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933, as amended, shall be deemed to be part
of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining
any liability under the Securities Act of 1933, as amended, each
post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
Table of Contents
CITI TRENDS, INC.
By:
/s/
R. Edward Anderson
R. Edward Anderson
Chief Executive
Officer (Principal Executive Officer)
By:
/s/
Thomas W. Stoltz
Thomas W. Stoltz
Chief Financial
Officer (Principal Financial and Accounting Officer)
Signature
Title
Date
/s/
R. Edward Anderson
on behalf of himself as well as Attorney-in-Fact
Chief Executive Officer (Principal Executive Officer)
April 29, 2005
/s/
Thomas W. Stoltz
on behalf of himself as well as Attorney-in-Fact
Chief Financial Officer (Principal Financial and Accounting
Officer)
April 29, 2005
*
Director
April 29, 2005
*
Director
April 29, 2005
*
Director
April 29, 2005
*
Director
April 29, 2005
*
Director
April 29, 2005
*By: /s/
R.
Edward Anderson
Attorney-in-Fact
*By: /s/
Thomas W.
Stoltz
Attorney-in-Fact
Table of Contents
Exhibit No.
Description
1.1
Form of Underwriting Agreement*
3.1
Form of Second Amended and Restated Certificate of Incorporation*
3.2
Form of Amended and Restated By-laws*
4.1
Specimen certificate for shares of common stock, $.01 par
value**
5.1
Opinion of Paul, Hastings, Janofsky & Walker LLP**
10.1
Letter Agreement by and between R. Edward Anderson and Citi
Trends, Inc., dated November 16, 2001*
10.2
Employment and Non-Interference Agreement by and between George
Bellino and Citi Trends, Inc., dated as of April 13, 1999*
10.3
Amendment No. 1 to the Employment and Non-Interference
Agreement by and between George Bellino and Citi Trends, Inc.,
dated as of December 2001*
10.4
The Loan and Security Agreement, dated as of April 2, 1999,
by and between Congress Financial Corporation (Southwest) and
Allied Fashion, Inc.*
10.5
First Amendment to Loan and Security Agreement, dated as of
June 28, 2000, by and between Congress Financial
Corporation (Southwest) and Allied Fashion, Inc.*
10.6
Second Amendment to Loan and Security Agreement, dated as of
November 30, 2000, by and between Congress Financial
Corporation (Southwest) and Allied Fashion, Inc.*
10.7
Third Amendment to Loan and Security Agreement, dated as of
January 2003, by and between Congress Financial Corporation
(Southwest) and Citi Trends, Inc.*
10.8
Fourth Amendment to Loan and Security Agreement, dated as of
February 9, 2005, by and between Congress Financial
Corporation (Southwest) and Citi Trends, Inc.*
10.9
Lease Agreement, dated as of September 30, 2004, by and
between Meyer Warehouse, LLC, as landlord, and Citi Trends,
Inc., as tenant*
10.1
0
$3.0 Million Promissory Note of Citi Trends, Inc. payable
to Bank of America issued on June 21, 2004*
10.1
1
Form of 2005 Long Term Incentive Plan*
10.1
2
Form of Nominating Agreement by and between Citi Trends, Inc.
and Hampshire Equity Partners II, L.P.*
10.1
3
Form of Registration Rights Agreement by and between Citi
Trends, Inc. and Hampshire Equity Partners II, L.P.**
10.1
4
Amended and Restated Hampshire Management Consulting Agreement,
effective February 1, 2004, by and between Citi Trends,
Inc. and Hampshire Management Company LLC*
Table of Contents
Exhibit No.
Description
10.1
5
Form of Termination Agreement, by and between Citi Trends, Inc.
and Hampshire Management Company LLC**
14.1
Citi Trends, Inc. Code of Business Conduct**
23.1
Consent of KPMG LLP**
23.2
Consent of Paul Hastings, Janofsky & Walker LLP
(included in Exhibit 5.1)**
24.1
Power of Attorney (included on the signature page hereto)*
EXHIBIT 4.1
(CITI TRENDS LOGO)
COMMON STOCK COMMON STOCK
(NUMBER GRAPHIC) (SHARES GRAPHIC)
INCORPORATED UNDER THE LAWS SEE REVERSE FOR OF THE STATE OF DELAWARE CERTAIN DEFINITIONS CUSIP 17306X 102 THIS CERTIFIES THAT |
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $0.01 OF CITI TRENDS, INC. (hereinafter, the "Corporation") transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this Certificate properly endorsed or assigned. This Certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Corporation's Certificate of Incorporation, as amended, and By-laws, as amended. This Certificate is not valid until countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated
(SEAL GRAPHIC)
/s/ Thomas W. Stoltz /s/ R. Edward Anderson Secretary Chief Executive Officer |
COUNTERSIGNED AND REGISTERED:
American Stock Transfer & Trust Company
Transfer Agent and Registrar
By
Authorized Signature
CITI TRENDS, INC.
THE CORPORATION WILL FURNISH, WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS IN WRITING, A FULL STATEMENT OF THE DESIGNATION, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF EACH CLASS AUTHORIZED TO BE ISSUED, AND A FULL STATEMENT OF THE DESIGNATION, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF EACH SERIES OF ANY CLASS OF PREFERRED SHARES AUTHORIZED TO BE ISSUED SO FAR AS THE SAME MAY HAVE BEEN FIXED AND THE AUTHORITY OF THE BOARD TO DESIGNATE AND FIX THE RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF OTHER SERIES. ANY SUCH REQUEST SHOULD BE ADDRESSED TO THE SECRETARY OF THE COMPANY, OR TO THE TRANSFER AGENT AND REGISTRAR NAMED ON THE FACE OF THIS CERTIFICATE.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -- as tenants in common TEN ENT -- as tenants by the entireties JT TEN -- as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT-- _________ Custodian __________ (Cust) (Minor) under Uniform Gifts to Minors Act __________________________ (State) |
Additional abbreviations may also be used though not in the above list.
For value received, ______________________hereby sell, assign and transfer unto
__________________________________________________________________________Shares of the Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint _________________________________________________________
SIGNATURE(S) GUARANTEED: _______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION, (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM). PURSUANT TO S.E.C. RULE 17Ad-15.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE CORPORATION MAY REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
Exhibit 5.1
[Letterhead of Paul, Hastings, Janofsky & Walker LLP]
April 28, 2005
Citi Trends, Inc.
102 Fahm Street
Savannah, GA 31401
Re: Citi Trends, Inc. Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as counsel to Citi Trends, Inc., a Delaware corporation (the "Company"), in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Act of 1933, as amended (the "Securities Act"), of the Registration Statement on Form S-1 (File No. 333-123028) of the Company (the "Registration Statement") relating to the proposed offer and sale (the "Offering") of up to an aggregate of 3,850,000 shares of the Company's common stock, par value $.01 per share, by the Company and certain stockholders of the Company (the "Selling Stockholders", and such shares of Common Stock, including up to 577,500 shares that may be sold by the Company upon exercise of the underwriters' over-allotment option and any additional shares that may be registered in accordance with Rule 462(b) under the Securities Act, the "Shares") pursuant to an underwriting agreement (the "Underwriting Agreement") to be entered into among the Company, the Selling Stockholders and the several underwriters named therein. We refer to the Shares to be issued and sold by the Company pursuant to the Underwriting Agreement as the "Company Shares" and to the Shares to be sold by the Selling Stockholders pursuant to the Underwriting Agreement as the "Stockholder Shares".
In connection with this opinion, we have examined originals or copies of such documents, resolutions, certificates and instruments of the Company as we have deemed necessary to form a basis for the opinions hereinafter expressed. In addition, we have reviewed certificates of public officials, statutes, records and such other instruments and documents and have made such investigations of law as we have deemed necessary to form a basis for the opinion hereinafter expressed. In our examination of the foregoing, we have assumed, without independent investigation, (i) the genuineness of all signatures and the authority of all persons or entities signing all documents examined by us, (ii) the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of
Citi Trends, Inc.
April 28, 2005
all documents submitted to us as certified, conformed or photostatic copies and
(iii) the authenticity of the originals of such latter documents. With regard to
certain factual matters, we have relied, without independent investigation or
verification, upon, and assumed the accuracy and completeness of, statements and
representations of representatives of the Company. We have also assumed that the
Company Shares will be sold for a price per share not less than the par value
per share of the Common Stock, and that the Shares will be issued and sold as
described in the Registration Statement and the Underwriting Agreement.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company Shares have been duly authorized, and when issued, delivered and paid for in the manner set forth in the Registration Statement and pursuant to the Underwriting Agreement, will be validly issued, fully paid and nonassessable.
2. The Stockholder Shares have been duly authorized and are validly issued, fully paid and nonassessable.
We are members of the Bar of the State of New York, and accordingly, do not purport to be experts on or to be qualified to express any opinion herein concerning the laws of any jurisdiction other than laws of the State of New York and the Delaware General Corporation Law, including the applicable provisions of the Delaware Constitution and the reported cases interpreting those laws, as currently in effect.
This opinion letter deals only with the specified legal issues expressly addressed herein, and you should not infer any opinion that is not explicitly addressed herein from any matter stated in this letter.
We consent to the use of this opinion as an exhibit to the Registration
Statement, to the reference to our firm under the caption "Legal Matters" in the
Prospectus which is a part of the Registration Statement and to the
incorporation by reference of this opinion and consent as exhibits to any
registration statement filed in accordance with Rule 462(b) under the Securities
Act relating to the Offering. In giving such consent, we do not hereby admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act and the rules and regulations thereunder. This
opinion is rendered to you as of the date hereof and we assume no obligation to
advise you or any other person hereafter with regard to any change after the
date hereof in the circumstances or the law that may bear on the
Citi Trends, Inc.
April 28, 2005
matters set forth herein even though the change may affect the legal analysis or a legal conclusion or other matters in this letter.
Very truly yours,
/s/ Paul, Hastings, Janofsky & Walker LLP |
Exhibit 10.13
FORM OF REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered into as of this ____ day of May, 2005, by and between Citi Trends, Inc., a Delaware corporation (the "Company") and Hampshire Equity Partners II, L.P., a Delaware limited partnership ("Hampshire").
WHEREAS, as set forth in this Agreement, the Company has agreed to grant to Hampshire certain registration rights with respect to the shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), owned by Hampshire as of the date hereof, as more fully set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and considerations herein set forth, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms shall have the following meanings:
"Affiliate" as applied to any Person, shall mean any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and, in addition to the foregoing, a Person shall be deemed to control another Person if the controlling Person owns 15% or more of any class of voting securities (or other ownership interest) of the controlled Person.
"Agreement" shall have the meaning set forth in the Preamble.
"Business Day" shall mean a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.
"Common Stock" shall have the meaning set forth in the Preamble.
"Company" shall have the meaning set forth in the Preamble.
"Form S-1" means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC used for the initial public offering of securities.
"Form S-3" means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.
"Hampshire" shall have the meaning set forth in the Preamble and shall include any permitted transferee thereof who is a subsequent holder of the Registrable Securities pursuant to the terms hereof.
"Holder" shall mean any Person owning or having the right to acquire Registrable Securities, or any assignee thereof in accordance with the terms hereof. If the Company receives
conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company may act upon the basis of the instructions, notice or election received from the registered owner of such Registrable Securities.
"NASD" shall mean the National Association of Securities Dealers.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, all as the same shall be in effect at the time.
"Person" shall mean any individual, partnership, corporation, joint venture, limited liability company, association, trust, unincorporated organization, or government or agency or political subdivision thereof or any other entity of whatever nature.
"Prospectus" shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus.
"Register," "registered" and "registration" refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such Registration Statement or document by the SEC.
"Registrable Securities" means (a) the shares of Common Stock held by Hampshire as of the date hereof; (b) any shares of Common Stock hereafter distributed by the Company as a result of a stock dividend, stock split, reclassification, recapitalization or otherwise by virtue of the ownership of shares of Common Stock; and (c) any other security issued as a dividend or other distribution with respect to, in exchange for, in replacement or redemption of, or in reduction of the liquidation value of, any of the securities referred to in the preceding clauses; provided, however, that any such securities shall cease to be Registrable Securities when (A) such securities shall have been registered under the Securities Act, the registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of pursuant to such effective registration statement; (B) such securities shall have been otherwise transferred, if new certificates or other evidences of ownership for them not bearing a legend restricting further transfer and not subject to any stop transfer order or other restrictions on transfer shall have been delivered by the Company and subsequent disposition of such securities shall not require registration or qualification of such securities under the Securities Act or any state securities law then in force; (C) such securities shall cease to be outstanding; (D) the holding period that would be applicable under Rule 144(k) of the Securities Act expires, such securities are freely tradable by Hampshire thereof under Rule 144(k) without regard to volume limitations or other restrictions and the Company shall have removed any restrictive legends and stop transfer restrictions with respect to such securities; or (E) such securities are sold to the public pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the Securities Act.
"Registration Statement" shall mean any registration statement of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement,
including post-effective amendments, and all exhibits and all material incorporated by reference in such Registration Statement.
"Rule 144" means Rule 144 under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.
"Rule 144A" means Rule 144A under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.
"SEC" shall mean the U.S. Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act.
"Securities Act" shall mean the Securities Act of 1933 as amended, or any similar federal statute and the rules and regulations promulgated thereunder, all as the same shall be in effect at the time.
2. Registration.
(a) Piggy-Back Registrations. If (but without any obligation
to do so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than Hampshire) any
of its stock or other securities under the Securities Act in connection with the
public offering of such securities solely for cash (other than a registration on
Form S-8 (or similar or successor form) relating solely to the sale of
securities to participants in a Company stock option, stock purchase or other
stock-based compensation arrangement to the extent includable on Form S-8 (or
similar or successor form), or a registration relating solely to a transaction
under Rule 145 of the Securities Act on Form S-4 (or similar or successor form)
or a registration in which the only Common Stock being registered is Common
Stock issuable upon conversion of debt securities or Common Stock comprising
part of a unit or otherwise sold in connection with the issuance or sale of debt
securities which are also being registered) (each such registration not
withdrawn or abandoned prior to the effective date thereof being herein called a
"Piggy-back Registration"), the Company shall, at such time, promptly give
Hampshire written notice of such registration not later than forty-five (45)
days prior to the anticipated filing date of such Piggy-back Registration. Upon
the written request of Hampshire given within twenty (20) days after the
delivery of such notice by the Company in accordance with Section 8(c), the
Company shall use commercially reasonable efforts to cause to be registered
under the Securities Act all of the Registrable Securities that Hampshire has
requested to be registered. The Company shall have no obligation under this
Section 2(a) to make any offering of its securities, or to complete an offering
of its securities that it proposes to make. Hampshire shall be permitted to
withdraw all or any part of its Registrable Securities from any Piggy-back
Registration at any time prior to the effective date of such Piggy-back
Registration.
(b) Demand Registration.
(i) Request by Hampshire. If, at any time following the initial public offering of securities of the Company, the Company receives a written request from Hampshire to file a Registration Statement under the Securities Act on Form S-1 or such other form as Hampshire may reasonably request covering the registration of Registrable Securities, then the Company shall, within ten (10) business days of the receipt of such written request, give written
notice of such request ("Request Notice") to Hampshire, and use commercially reasonable efforts to effect, as soon as practicable, the registration under the Securities Act of all Registrable Securities that Hampshire requests to be registered and included in such registration by written notice given by Hampshire to the Company within twenty (20) days after receipt of the Request Notice; provided, that Hampshire shall no longer have such right once its beneficial ownership of the Common Stock is less than 10% on a fully-diluted basis. If requested by Hampshire, the Company shall register such Registrable Securities on Form S-1 or any successor registration form.
(ii) Underwriting. If Hampshire intends to distribute the Registrable Securities covered by its request pursuant to Section 2(b) by means of an underwriting, then it shall so advise the Company as a part of its request, and the Company shall include such information in the written notice referred to in Section 2(b)(i). In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting by the Holders of a majority of the Registrable Securities being registered and reasonably acceptable to the Company (including a market stand-off agreement of up to ninety (90) days if required by such underwriters). Notwithstanding any other provision of this Section 2(b), if the underwriter(s) advise(s) the Company in writing that marketing factors require a limitation of the number of securities to be underwritten then the Company shall so advise all Holders of Registrable Securities that would otherwise be registered and underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be reduced as required by the underwriter(s) and allocated among the Holders of Registrable Securities on a pro rata basis according to the number of Registrable Securities then outstanding held by each Holder requesting registration; provided, however, that the number of shares of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities of the Company and any selling securityholder other than the Holders are first entirely excluded from the underwriting and registration. Any Registrable Securities excluded and withdrawn from such underwriting shall be withdrawn from the registration.
(iii) Maximum Number of Demand Registrations. The
Company shall not be obligated to effect in the case of a demand request in
accordance with the provisions of Section 2(b), more than two (2) registrations,
provided, however, that once the Company has satisfied the requirements to file
a Form S-3 there shall be no limit on the number of demand requests made by
Hampshire; provided, that Hampshire shall no longer have such right once its
beneficial ownership of the Common Stock is less than 10% on a fully-diluted
basis. In order to count as one of the demand registrations pursuant to Section
2(b), the Registration Statement in respect thereof must have not been withdrawn
and all Registrable Securities which Hampshire requested to be registered
pursuant to it must have been so included and sold pursuant to an effective
Registration Statement.
(iv) Deferral. Notwithstanding the foregoing, if the Company shall furnish to Hampshire, a certificate signed by the Chief Executive Officer of the Company stating
that in the good faith judgment of the Board of Directors, it would be materially detrimental to the Company and its stockholders for such Registration Statement to be filed, then the Company shall have the right to defer such filing for a period of not more than sixty (60) days after receipt of the request of Hampshire; provided, however, that the Company may not utilize this right more than once in any twelve (12) month period.
(v) Expenses. All expenses incurred in connection with any registration pursuant to this Section 2(b), including all federal and Blue Sky registration, filing and qualification fees, printer's and accounting fees, and fees and disbursements of counsel for the Company (but excluding underwriters' discounts and commissions relating to shares sold by Hampshire and any fees and disbursements of counsel to Hampshire), shall be borne by the Company. Hampshire shall bear its proportionate share (based on the total number of shares sold in such registration other than for the account of the Company) of all discounts, commissions or other amounts payable to underwriters or brokers in connection with such offering by Hampshire. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to this Section 2(b) if the registration request is subsequently withdrawn at the request of Hampshire, unless Hampshire agrees that such registration constitutes the use by Hampshire of one (1) demand registration pursuant to this Section 2(b); provided further, however, that if at the time of such withdrawal, Hampshire has learned of a material adverse change relating to the business or operations of the Company not known to Hampshire at the time of its request for such registration and has withdrawn its request for registration after learning of such material adverse change, then Hampshire shall not be required to pay any of such expenses and such registration shall not constitute the use of a demand registration pursuant to this Section 2(b).
(c) Failure to File Registration Statement and Other Events. The Company and Hampshire agree that Hampshire will suffer damages if the Registration Statement is not filed and maintained in the manner contemplated herein during the Effectiveness Period (as defined below). The Company and Hampshire further agree that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, if (i) the Company fails to file with the SEC a request for acceleration in accordance with Rule 461 promulgated under the Securities Act within five (5) Business Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the SEC that a Registration Statement will not be "reviewed," or not subject to further review, or (ii) the Registration Statement is filed with and declared effective by the SEC but thereafter ceases to be effective as to all Registrable Securities at any time prior to the expiration of the Effectiveness Period, without being succeeded immediately by a subsequent Registration Statement filed with the SEC, except as otherwise permitted by this Agreement (any such failure or breach being referred to as an "Event"), the Company will make payments to Hampshire in an amount equal to 1.0% of the aggregate amount invested by Hampshire for each twenty (20)-day period or pro rata for any portion thereof following the date on which the Event occurred. Such payments shall be in partial compensation to Hampshire and shall not constitute Hampshire's exclusive remedy for such Events. Such payments shall be made to Hampshire in cash. The amounts payable pursuant to this paragraph shall be payable in lawful money of the United States within two (2) Business Days of the last day of each such twenty (20)-day period during which the Registration Statement should have been filed for which no Registration Statement was filed with respect to the Registrable Securities.
Notwithstanding the foregoing, the Company shall remain obligated to cure the breach or correct the condition that caused such Event, and Hampshire shall have the right to take any action necessary or desirable to enforce such obligation.
(d) Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not the Registration Statement is filed or becomes effective and whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with each securities exchange, quotation system, market or over-the-counter bulletin board on which Registrable Securities are required hereunder to be listed, (B) with respect to filings required to be made with the SEC, and (C) in compliance with state securities or Blue Sky laws, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing or photocopying Prospectuses), (iii) messenger, telephone and delivery expenses, (iv) Securities Act liability insurance, if the Company so desires such insurance and (v) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, including, without limitation, the Company's independent public accountants (including, in the case of an underwritten offering, the expenses of any comfort letters or costs associated with the delivery by independent public accountants of a comfort letter or comfort letters) and legal counsel. In addition, each of Hampshire and the Company shall be responsible for all of their respective internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. Notwithstanding the preceding, the Company shall have no obligation to pay any underwriting discounts or selling commission attributable to the Registrable Securities being sold by Hampshire and any fees and disbursement of counsel to Hampshire, which such amounts shall be borne by Hampshire.
(e) Effectiveness.
(i) The Company shall use reasonable best efforts to have the Registration Statement declared effective not later than the earlier to occur of (y) sixty (60) days after the date of filing of such Registration Statement, or (z) five (5) Business Days following the Company's receipt of oral or written (whichever is first) notice from the SEC that the Registration Statement will not be "reviewed" or not be subject to further review; provided, however, if the Registration Statement is not declared effective within the time period set forth above, the Company shall continue to use its reasonable best efforts to have the Registration Statement declared effective as soon as possible thereafter.
(ii) For not more than thirty (30) consecutive days or for a total of not more than sixty (60) days in any twelve (12) month period, the Company may delay the disclosure of material non-public information concerning the Company, which the Company is not otherwise required to disclose, by terminating or suspending effectiveness of any registration contemplated by this Section 2, if the disclosure of such material non-public information would
be required by such registration and at the time is not, in the reasonable
determination of the Company's Board of Directors, in the best interests of the
Company (an "Allowed Delay"); provided, that the Company shall promptly (a)
notify Hampshire in writing of the existence of (but in no event shall the
Company be required to disclose to Hampshire any of the facts or circumstances
regarding) material non-public information giving rise to an Allowed Delay, and
(b) advise Hampshire in writing to cease all sales under the Registration
Statement until the end of the Allowed Delay.
(f) Notice of Effectiveness. Within three (3) Business Days after the Registration Statement which includes the Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to Hampshire) confirmation that the Registration Statement has been declared effective by the SEC.
(g) Underwritten Offering. If any offering pursuant to a Registration Statement involves an underwritten offering, the Company shall have the right to select an investment banker and manager to administer the offering, which investment banker or manager shall be reasonably satisfactory to Hampshire.
3. Company Obligations. The Company will use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible:
(a) use its reasonable best efforts to cause such Registration Statement to become effective and to remain continuously effective for a period that will terminate upon the earlier of (x) the date when all Registrable Securities covered by such Registration Statement have been sold, or (y) with respect to Hampshire, such time as all Registrable Securities held by Hampshire may be sold without any restriction pursuant to Rule 144(k) (the "Effectiveness Period");
(b) (i) prepare and file with the SEC such amendments and post-effective supplements to the Registration Statement as may be necessary to keep the Registration Statement effective with respect to all Registrable Securities for the Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; (iii) respond as promptly as possible, and in no event later than fifteen (15) Business Days to the first set of comments and ten (10) Business Days to each set of comments thereafter received from the SEC with respect to the Registration Statement or any amendment thereto and as promptly as reasonably possible provide Hampshire true and complete copies of all correspondence from and to the SEC relating to the Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and the 1934 Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by Hampshire thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented;
(c) notify Hampshire of Registrable Securities to be sold as
promptly as possible (i) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed
(but in no event in the case of this subparagraph (i), less than five (5)
Business Days prior to date of such filing); (ii) when the SEC notifies the
Company whether there will be a "review" of such Registration Statement and
whenever the SEC comments in writing on such Registration Statement; and (iii)
with respect to the Registration Statement or any post-effective amendment,
when the same has become effective, and after the effectiveness thereof: (A) of
any request by the SEC or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or Prospectus or for
additional information; (B) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement covering any or all
of the Registrable Securities or the initiation of any suit, action or
proceeding for that purpose; (C) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any suit, action or
proceeding for such purpose; and (D) if the financial statements included in
the Registration Statement become ineligible for inclusion therein or of the
occurrence of any event that makes any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. Without limitation to any remedies to which
Hampshire may be entitled under this Agreement, if any of the events described
in Section 3(c)(iii)(A), 3(c)(iii)(B) and 3(c)(iii)(C) occur, the Company shall
use its best efforts to respond to and correct the event;
(d) furnish to Hampshire such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as Hampshire may reasonably request in order to facilitate the disposition of the Registrable Securities owned by Hampshire;
(e) if requested by Hampshire, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration Statement
such information as the Company reasonably agrees should be included therein and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(f) in the event the Company selects an underwriter for the public offering, the Company shall enter into and perform its reasonable obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the underwriter of such offering;
(g) if required by the underwriter, the Company shall furnish, on the effective date of the Registration Statement (i) an opinion, dated as of such date, from independent legal counsel representing the Company for purposes of such Registration Statement, in form, scope
and substance as is customarily given in an underwritten public offering, addressed to the underwriter and (ii) a letter, dated such date, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriter;
(h) use its reasonable best efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, if such order is issued, obtain the withdrawal of any such order at the earliest possible moment or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable time;
(i) prior to any public offering of Registrable Securities, use its reasonable best efforts to register or qualify or cooperate with Hampshire and its counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the state securities or Blue Sky laws of such jurisdictions reasonably requested by Hampshire and do any and all other reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, that, the Company shall not for any purpose be required to qualify to do business as a foreign corporation in any jurisdiction wherein it is not so qualified or execute a general consent to service of process in any jurisdiction;
(j) cause all Registrable Securities covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system, market or over-the-counter bulletin board on which similar securities issued by the Company are then listed or, if no such listing then exists, as reasonably determined by the Company;
(k) following the occurrence of any event contemplated by
Section 3(c)(iii)(D), as promptly as possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(l) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC under the Securities Act and the 1934 Act and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available to its security holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act (for the purpose of this subsection 3(l), "Availability Date" means the 45th day following the end of the fourth fiscal quarter that includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the Company's fiscal year, "Availability Date" means the 90th day after the end of such fourth fiscal quarter);
(m) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration and provide the transfer agent with printed certificates for Registrable Securities in a form eligible for deposit with The Depositary Trust Company; and
(n) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter" that is required to be retained in accordance with the rules and regulations of the NASD).
4. Due Diligence Review; Information. The Company shall make available, during normal business hours, for reasonable inspection and review by Hampshire, advisors to and representatives of Hampshire (who may or may not be affiliated with Hampshire), and any underwriter participating in any disposition of Common Stock on behalf of Hampshire pursuant to a Registration Statement or amendments or supplements thereto or any Blue Sky, NASD or other filing, all financial and other records, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review, and cause the Company's officers, directors and employees, within a reasonable time period, to supply all such information reasonably requested by Hampshire or any such representative, advisor or underwriter in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for the sole purpose of enabling Hampshire and such representatives, advisors and underwriters and its accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration Statement.
Notwithstanding the foregoing, the Company shall not disclose material non-public information to Hampshire, or to advisors to or representatives of Hampshire, unless prior to disclosure of such information the Company identifies such information as being material non-public information and provides Hampshire, such advisors and representatives with the opportunity to accept or refuse to accept such material non-public information for review.
5. Obligations of Hampshire.
(a) Hampshire shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least fifteen (15) Business Days prior to the first anticipated filing date of any Registration Statement, the Company shall notify Hampshire of the information the Company requires from Hampshire if Hampshire elects to have any of the Registrable Securities included in the Registration Statement. Hampshire shall provide such information to the Company at least ten (10) Business Days prior to the first anticipated filing date of such Registration Statement if Hampshire elects to have any of the Registrable Securities included in the Registration Statement.
(b) Hampshire, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless Hampshire has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.
(c) In the event the Company determines to engage the services of an underwriter, Hampshire agrees to enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the managing underwriter of such offering and take such other actions as are reasonably required in order to expedite or facilitate the dispositions of the Registrable Securities.
(d) Hampshire agrees that, upon receipt of any notice from the Company of the happening of any event rendering a Registration Statement no longer effective, Hampshire will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until Hampshire's receipt of copies of the supplemented or amended Prospectus filed with the SEC and declared effective and, if so directed by the Company, Hampshire shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in Hampshire's possession of the Prospectus covering the Registrable Securities current at the time of receipt of such notice.
(e) Hampshire may not participate in any third party underwritten registration hereunder unless it (i) agrees to sell the Registrable Securities on the basis provided in any underwriting arrangements in usual and customary form entered into by the Company, (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions. Notwithstanding the foregoing, Hampshire shall not be required to make any representations to such underwriter, other than those with respect to itself and the Registrable Securities owned by it, including its right to sell the Registrable Securities, and any indemnification in favor of the underwriter by Hampshire shall be limited to the net proceeds received by Hampshire from the sale of its Registrable Securities. The scope of any such indemnification in favor of an underwriter shall be limited to the same extent as the indemnity provided in Section 6(b) hereof.
6. Indemnification.
(a) Indemnification by the Company. The Company will indemnify and hold harmless Hampshire and its respective Affiliates, officers, directors, members, employees and agents, successors and assigns, against any losses, claims, damages or liabilities, joint or several, to which Hampshire, such Affiliate, officer, director, member, employee, agent, successor or assign may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, prospectus or preliminary prospectus or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein (in the case of a prospectus or preliminary prospectus, in
the light of the circumstances under which they were made) not misleading; (ii)
any Blue Sky application or other document executed by the Company specifically
for Blue Sky compliance or based upon written information furnished by the
Company filed in any state or other jurisdiction in order to qualify any or all
of the Registrable Securities under the securities laws thereof (any such
application, document or information herein called a "Blue Sky Application");
(iii) any violation by the Company, or its directors, officers, employees or
agents of any rule or regulation promulgated under the Securities Act or the
1934 Act or any state securities laws relating to action or inaction required of
the Company or any of them in connection with such registration; or (iv) any
failure to use its best efforts to register or qualify the Registrable
Securities included in any such Registration Statement in any state where the
Company or its agents has affirmatively undertaken or agreed in writing that the
Company will undertake such registration or qualification on Hampshire's behalf
(the undertaking of any underwriter chosen by the Company being attributed to
the Company) and will reimburse Hampshire, and each such officer, director or
member and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
allegedly untrue statement or omission or alleged omission made in conformity
with information furnished in writing by Hampshire or any such controlling
person specifically for use in such Registration Statement or Prospectus.
(b) Indemnification by Hampshire. In connection with any Registration Statement pursuant to the terms of this Agreement, Hampshire will furnish to the Company in writing such information as the Company reasonably requests concerning Hampshire or the proposed manner of Hampshire's distribution for use in connection with any Registration Statement or Prospectus and agrees, severally but not jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company and its directors, officers, employees, shareholders and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including reasonable attorney fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or preliminary prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished in writing by Hampshire to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto. In no event shall the liability of Hampshire be greater in amount than the aggregate dollar amount of the proceeds received by Hampshire upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of
such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it completely harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of Hampshire be greater in amount than the aggregate dollar amount of the proceeds received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.
7. Rule 144. As long as Hampshire owns Common Stock, if the Company is required to file reports pursuant to Section 13(a) or 15(d) of the 1934 Act, it will prepare and make publicly available in accordance with Rule 144(c) promulgated under the Securities Act annual and quarterly financial statements, together with a discussion and analysis of such financial statements in form and substance substantially similar to those that would otherwise be required to be included in reports required by Section 13(a) or 15(d) of the 1934 Act, as well as any other information required thereby, in the time period that such filings would have been required to have been made under the 1934 Act. The Company further covenants that it will take such further action as Hampshire may reasonably request, all to the extent required from time to time to enable such Person to sell shares of Common Stock without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act. Upon the request of Hampshire, the Company shall deliver to Hampshire a written certification of a duly authorized officer as to whether it has complied with such requirements.
8. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or Hampshire, of any of their obligations under this Agreement, Hampshire or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and Hampshire agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.
(b) Amendments and Waivers. This Agreement may be amended only by a writing signed by the then current parties hereto. The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of Hampshire.
(c) Notices. Any notice or other communication in connection with this Agreement or the shares of Common Stock shall be deemed to be delivered and received if in writing (or in the form of a telex or telecopy) addressed as provided below (i) when actually delivered, in person, (ii) if telexed or telecopied to said address, when electronically confirmed, (iii) when delivered if delivered by overnight courier or (iv) in the case of delivery by mail, five (5) business days shall have elapsed after the same shall have been deposited in the United States mails, postage prepaid and registered or certified:
If to the Company, to:
Citi Trends, Inc.
102 Fahm Street
Savannah, Georgia 31401
Attention: R. Edward Anderson
Facsimile: (912) 443-3674
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, New York 10022
Attention: William F. Schwitter, Esq.
Facsimile: (212) 319-4090
If to Hampshire, to:
Hampshire Equity Partners II, L.P.
520 Madison Avenue, 33rd Floor
New York, New York 10022
Attention: Laurens M. Goff
Facsimile: (415) 362-1192
(d) Assignments and Transfers by Hampshire. The provisions of this Agreement shall be binding upon and inure to the benefit of Hampshire and its respective successors and assigns. Hampshire may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities by Hampshire to such person, provided, that, Hampshire complies with all applicable laws thereto and provides written notice of assignment to the Company promptly after such assignment is effected.
(f) Assignments and Transfers by the Company. This Agreement shall not be assigned by the Company without the prior written consent of Hampshire, except that without the prior written consent of Hampshire, but after notice duly given, the Company shall assign its rights and delegate its duties hereunder to any successor-in-interest corporation, and such successor-in-interest shall assume such rights and duties, in the event of a merger or consolidation of the Company with or into another corporation or the sale of all or substantially all of the Company's assets.
(g) Benefits of the Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(h) Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.
(i) Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.
(j) Severability. In the event that any provision of this Agreement is invalid or enforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.
(k) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(l) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.
(m) Specific Enforcement; Governing Law; Consent to Jurisdiction. The Company and Hampshire acknowledge and agree that irreparable damage would occur in the event that 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 shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity. This Agreement shall be enforced, governed by and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof. The parties hereto hereby agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this instrument or the consummation of the transactions contemplated hereby, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements in an amount judicially determined.
[Signature Pages Follow]
[COMPANY SIGNATURE PAGE]
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Registration Rights Agreement as of the date first above written.
The Company: CITI TRENDS, INC. By:_________________________ Name: R. Edward Anderson Title: Chief Executive Officer |
[HAMPSHIRE SIGNATURE PAGE]
IN WITNESS WHEREOF, the undersigned has caused its duly authorized officer to execute this Registration Rights Agreement as of the date first above written.
Hampshire: HAMPSHIRE EQUITY PARTNERS II, L.P. By: Lexington Equity Partners II, L.P., its General Partner By: Lexington Equity Partners Inc., its General Partner By:________________________________ Name: Title: Address: ____________________________________ ____________________________________ |
Exhibit 10.15
FORM OF TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (this "Agreement"), dated as of May __, 2005, is entered into by and between Citi Trends, Inc., a Delaware corporation (the "Company"), and Hampshire Management Company LLC, a Delaware limited liability company and affiliate of Hampshire Equity Partners II, L.P. (the "Consultant").
WHEREAS, the Company and the Consulting are parties to that certain Amended and Restated Hampshire Management and Consulting Agreement, effective as of February 1, 2004 (the "Consulting Agreement");
WHEREAS, the parties agree that upon the consummation of the Company's initial public offering of its common stock, par value $.01 per share (the "Common Stock"), they shall execute this Agreement, thereby terminating the Consultant Agreement; and
WHEREAS, Hampshire and the Company wish to make certain agreements with respect to the termination of the Consulting Agreement, upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and considerations herein set forth, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Termination. The parties agree that upon the consummation of the Company's initial public offering of its Common Stock the Consulting Agreement shall be terminated and the provisions thereunder shall no longer be valid or enforceable.
2. Consideration. As partial consideration for the termination of the Consulting Agreement, the Company hereby agrees to pay to the Consultant, $1.2 million prior to December 31, 2005. Such payment shall be recognized as an expense by the Company upon the consummation of the offering.
3. Modification, Amendment, Waiver. No modification, amendment or waiver of any provision of this Agreement shall be effective unless approved in writing by the Company and the Consultant. The failure of either party at any time to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the rights of the party thereafter to enforce the provisions of this Agreement in accordance with its terms.
4. Invalid or Unenforceable Provisions. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any term or provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. The parties further agree that any court of competent jurisdiction is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement, or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law. The parties expressly agree that this Agreement as so modified by a court of competent jurisdiction shall be binding upon and enforceable against each of them.
5. Entire Agreement. Except as otherwise expressly set forth herein, this document embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way.
6. Binding Effect; Assignment. All of the terms of this Agreement shall inure to the benefit of and shall be binding upon the Company and the Consultant and their respective successors and permitted assigns; provided, however, that this Agreement may not be assigned without the prior written consent of the other party hereto.
7. Remedies. The parties hereto will be entitled to enforce their rights under this Agreement specifically (without posting a bond or other security), to recover damages by reason of any material breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief in order to enforce or prevent any violation of the provisions of this Agreement. In the event of any dispute involving the terms of this Agreement, the prevailing party shall be entitled to collect reasonable fees and expenses incurred by the prevailing party in connection with such dispute from the other parties to such dispute.
8. Notices. Any notice or other communication in connection with this Agreement shall be deemed to be delivered and received if in writing (or in the form of a telex or telecopy) addressed as provided below (a) when actually delivered, in person, (b) if telexed or telecopied to said address, when electronically confirmed, (c) when delivered if delivered by overnight courier or (d) in the case of delivery by mail, five (5) business days shall have elapsed after the same shall have been deposited in the United States mails, postage prepaid and registered or certified:
If to the Company, to:
Citi Trends, Inc.
102 Fahm Street
Savannah, Georgia 31401
Attention: R. Edward Anderson
Facsimile: (912) 443-3674
with a copy to:
Paul, Hastings, Janofsky & Walker LLP 75 East 55th Street New York, New York 10022 Attention: William F. Schwitter, Esq.
Facsimile: (212) 319-4090
If to the Consultant, to:
Hampshire Management Company LLC
c/o Hampshire Equity Partners II, L.P.
520 Madison Avenue, 33rd Floor
New York, New York 10022
Attention: Laurens M. Goff
Facsimile: (415) 362-1192
9. Governing Law; Submission to Jurisdiction. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal laws of the State of Delaware, without giving effect to principles of conflicts of law. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the courts of the State of Delaware or the United States of America located in the State of Delaware for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby (and the parties agree not to commence any action, suit or proceeding relating hereto except in such courts), and further agree that service of any process, summons, notice or documents by United States registered mail to a party in accordance with Section 8 hereof shall be effective service of process for any action, suit or proceeding brought against such party in any such court and, absent any statute, rule or order to the contrary, that each party shall have thirty (30) days from actual receipt of any complaint to answer or otherwise plead with respect thereto. The parties hereby irrevocably and unconditionally waive 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 courts of the State of Delaware or the United States of America located in the State of Delaware, and hereby further irrevocably and unconditionally waive and agree 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 inconvenient forum.
10. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.
11. Counterparts. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together will constitute one and the same agreement.
(Signature Page Follows)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
COMPANY:
CITI TRENDS, INC., a Delaware corporation
By: _______________________________________
Name: R. Edward Anderson
Title: Chief Executive Officer
CONSULTANT:
HAMPSHIRE MANAGEMENT COMPANY LLC, a Delaware
limited liability company
By: _______________________________________
Name: Thomas J. Walker
Title: Vice President
[Termination Agreement]
Exhibit 14.1
(CITI TRENDS LOGO)
CODE OF BUSINESS CONDUCT
CHIEF EXECUTIVE'S LETTER
Dear Fellow Associate, Director, Officer or Employee:
Citi Trends, Inc. ("Citi Trends") is proud of its strong reputation for honesty, integrity and fairness, which is extended by persons such as yourself. We cannot, and shall not, allow our reputation for these qualities to be compromised. Therefore, it is appropriate that our principles of conducting business be written for all to read and understand.
The guidelines set forth in our Code of Business Conduct are being used in an effort to define and summarize the standards and basic guiding principles to which all employees, directors and officers of Citi Trends are expected to adhere. Citi Trends' Code of Business Conduct is nothing new in basic conduct, which has already been exemplified over the years by Citi Trends' associates, directors, officers and employees. What we have here is a statement, distributed to associates, directors, officers and employees, so that we can continue to maintain and build upon our already high standards for making good business judgments.
I would like for you to read our Code of Business Conduct and refer to it as a guide for your actions and decisions. Although the Code of Business Conduct covers a wide range of business practices and procedures, we know that all situations cannot be covered, but that your exercising good judgment will protect your reputation and the reputation of Citi Trends. After your have carefully read the Code of Business Conduct, please sign the acknowledgement form on the last page and return it to Gail Oberg for our records. I am sure each of you will want to join me in building on our strong principles of business conduct.
Ed Anderson Chief Executive Officer
CODE OF BUSINESS CONDUCT
TABLE OF CONTENTS
SUBJECT PAGE Introduction Guidelines for Business Conduct - Confidentiality 2 - Honesty and Integrity 2 - Independence When Dealing With Suppliers 3 - Receipt of Gifts 3 - Kickbacks and Rebates 3 - Compliance with Laws, Rules and Regulations 4 - Conflict of Interest 4 - Protection and Proper Use of Company Assets 6 - Charitable Contributions 6 - Insider Trading 6 - Public Disclosure 7 - Corporate Opportunities 7 - Competition and Fair Dealing 7 - Discrimination and Harassment 7 - Health and Safety 8 - Record-Keeping 8 - Payments to Government Personnel 9 - Waivers of the Code of Business Conduct 9 - Reporting any Illegal or Unethical Behavior; No Retaliation 9 - Accounting Complaints 10 - Compliance Procedures 10 - Application of Code of Business Conduct/Compliance Required 11 Exhibit A - Acknowledgment of Receipt of Code of Business Conduct |
CITI TRENDS, INC.
CODE OF BUSINESS CONDUCT
INTRODUCTION
Set forth herein is the Code of Business Conduct (the "Code") adopted by Citi Trends, Inc. (the "Company"). This Code summarizes basic guiding principles and standards of conduct to guide all associates, employees, directors and officers of the Company in meeting our goal to achieve the highest business and personal ethical standards as well as compliance with the laws and regulations that apply to our business. This Code covers a wide range of business practices and procedures, but it does not address every applicable law or respond to every ethical question or concern that may arise. All of our associates, employees, directors and officers must conduct themselves accordingly in every aspect of our business and seek to avoid even the appearance of wrongdoing or improper behavior. Our standard has been, and will continue to be, to advance the highest standards of ethical conduct. We expect the Company's agents, consultants, contractors, suppliers and representatives to be guided by the principles and standards set forth in this Code.
Our Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO") and other financial and accounting officers must adhere to our Disclosure Controls and Procedures Policy, which sets forth additional standards in connection with our public disclosures. If you have questions regarding any of the goals, principles, or standards discussed or policies or procedures referred to in this Code or are in doubt about the best course of action to take in a particular situation, you should contact the Manager of Human Resources, or follow the guidelines set forth in Section 21 of this Code.
Every associate, employee, director and officer has a duty to adhere to this Code, and those who violate the standards in this Code will be subject to disciplinary action which may include suspension or dismissal and/or the reporting of violative conduct to appropriate regulatory and criminal authorities. If you are involved in a situation that you believe may violate or lead to a violation of this Code, follow the guidelines described in Section 21 of this Code.
We are committed to continuously reviewing and updating our policies and procedures. Therefore, this Code is subject to modification. This Code supercedes all other such codes, policies, procedures, instructions, practices, rules or written or verbal representations concerning the subject matter of this Code to the extent they are inconsistent.
Please sign the acknowledgment form attached hereto as Exhibit A, indicating that you have received, read, understand and agree to comply with this Code, and return the form as instructed. The signed acknowledgment form will be located in your personnel file. Each year, as part of the annual review process, officers and other appropriate personnel will be asked to sign an acknowledgment indicating their continued understanding of and compliance with the Code. In addition, periodically, you may be asked to participate in seminars, training meetings and similar activities related to reinforcing your understanding of this Code and its applicability to the Company's business.
1. CONFIDENTIALITY
Associates, employees, directors and officers must maintain the confidentiality of confidential information entrusted to them by the Company or its customers, except when disclosure is authorized by the CEO or CFO or required by laws or regulations. The disclosure of any confidential information or data concerning the business, customers, vendors, stockholders, associates, officers, or directors is prohibited. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. It also includes information that suppliers and customers have entrusted to us. The release of this information, either deliberately or carelessly, could be harmful to the person and to the Company. The obligation to preserve confidential information continues even after employment ends.
Associates, employees, directors and officers are prohibited from using any confidential information, obtained directly or indirectly to further their personal interests. This applies regardless of the information, whether technical, business, financial or otherwise, and regardless of how the information was acquired. In addition, the disclosure of any passwords or codes used to gain access to any computer network or system without security authorization is prohibited under this policy and the Citi Trends Computer Security Policy.
The Company and its employees, agents, consultants and contractors must cooperate with appropriate government inquiries and investigations. In this context, however, it is important to protect the legal rights of the Company with respect to its confidential information. All government inquiries and requests for information, documents or investigative interviews (whether in person, by phone, email or written correspondence) must be referred to the Manager of Human Resources, who will be responsible for coordinating a response. No financial information may be disclosed without the prior approval of the CEO or CFO.
If an associate, employee, director or officer has any doubt in regard to what is not confidential, it should be brought to the attention of the Manager of Human Resources immediately.
2. HONESTY AND INTEGRITY
All associates, employees, directors and officers are obligated to perform their duties with the highest degree of honesty and integrity. Whenever an associate, employee, director or officer witnesses a dishonest act committed by a fellow associate or employee, the act should be reported to their supervisor. However, should a supervisor be involved through consent or prior knowledge, this violation should be reported to the Loss Prevention Department.
The Company intends to investigate all reports of dishonesty. Individuals who commit dishonest acts or conspire with others to do so, will be subject to losing their employment.
Since many associates, employees, directors and officers are required to complete and react to various internal company documents and reports, it is expected that all such records be issued with the highest degree of integrity. Associates, employees, directors and officers are prohibited from issuing or authorizing any official company documents which may be false or misleading.
3. INDEPENDENCE WHEN DEALING WITH SUPPLIERS
The Company is a valuable customer to many suppliers of goods, services, and facilities. Persons desiring to do business with the Company should understand that all purchases will be made exclusively on the basis of price, quality, service and suitability to the needs of the Company. Each member of the Company's organization must be careful to avoid circumstances, which may cast a doubt upon the objectivity of that individual and upon the Company. Accordingly, no associate, employee, director or officer shall realize any personal profit or gain as a direct or indirect result of dealing with suppliers, licensees, or persons doing business with the Company.
4. RECEIPT OF GIFTS
Even when gifts and entertainment are exchanged out of the purest motives of personal friendship, these gifts may be misunderstood as attempts to influence our associates, employees, directors or officers to direct corporate business to a particular supplier. In the best interest of the Company, associates, employees, directors and officers and their immediate family members should not accept a gift, prize, trip, or other favor from any one whom they are dealing with on behalf of the Company unless such gift, prize or trip is of such slight value (under $50.00) that refusal to accept would be discourteous or otherwise harmful to the Company.
Associates, employees, directors and officers may accept unsolicited gifts of a nominal value that are perishable or consumable and would be impractical to return. Acceptance of such gifts or reasonable, insubstantial personal entertainment is permissible, but care must be taken to be sure the continuation of such conduct does not result in an undesirable obligation.
A gift of substantial value (over $50.00) must be returned to the donor indicating that the acceptance of such gifts is contrary to our policy. The Company will pay the expense of returning such gifts. The vendor should be requested to refrain from sending such gifts in the future and encouraged to make a donation to the vendor's favorite charity in the name of the Company. In the event that an associate, employee, director or officer receives a gift of substantial value, the acceptance must be reported immediately by the associate to the Manager of Human Resources.
Any trips, gifts, prizes, or other favors of any nature won or awarded as a result of the Company doing business with another person or firm are won by the Company, not by the associate, employee, officer, director or department, or store involved. The Manager of Human Resources must be notified immediately. Failure to report substantial gifts will result in disciplinary action up to and including discharge.
5. KICKBACKS AND REBATES
Corporate purchases or sales of goods and services must not lead to associates, employees, directors, officers or their immediate families receiving personal kickbacks, rebates or improper payments. Any such offering must be reported immediately to your supervisor and the CFO, who is in turn responsible for disclosing the situation to the Audit Committee.
6. COMPLIANCE WITH LAWS, RULES AND REGULATIONS
Obeying the law, both in letter and in spirit, is the foundation on which this Company's ethical standards are built. All associates, employees, directors and officers must respect and obey the laws of the cities, states and countries in which we operate and the rules and regulations applicable to the Company's business. It is important that all associates and employees know enough about these laws, rules and regulations to determine when to seek advice from supervisors, managers or other appropriate personnel who should consult with the CFO or CEO as necessary or appropriate. Compliance with the law does not obviate the need to act with the highest honest and ethical standards.
To promote compliance with laws, rules, regulations and the policies of the Company, including insider trading rules, other securities laws, and anti-discrimination and anti-harassment laws and policies, the Company has established various compliance policies and procedures and, where appropriate, may conduct information and training sessions.
7. CONFLICT OF INTEREST
A "conflict of interest" exists when a person's personal private interest interferes in any way - or even appears to interfere in any way - with the interests of the Company. A conflict situation can arise when an associate, employee, officer or director takes actions or has interests in connection with or as a result of a material transaction or relationship that may make it difficult for him or her or others to perform work or make decisions objectively and effectively in the Company's interest. Conflicts of interest may also arise when an associate, employee, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company. Conflicts of interest, unless approved in accordance with this Code, as applicable, are prohibited as a matter of Company policy. Examples include the following:
(a) EMPLOYMENT/OUTSIDE EMPLOYMENT
In consideration of their employment with the Company, employees are expected to devote their full attention to the business interests of the Company. Employees are prohibited from engaging in any activity that interferes with their performance or responsibilities to the Company or is otherwise in conflict with or prejudicial to the Company. Our policies prohibit any employee from accepting simultaneous employment with a client, credit source, supplier, or competitor, or from taking part in any activity that enhances or supports a competitor's position. If you have any questions regarding this requirement, you should contact the Manager of Human Resources.
(b) OUTSIDE DIRECTORSHIPS
It is a conflict of interest to serve as a director of any company that competes with the Company. Employees may not serve as a director of another company without first obtaining the approval of the Company's CEO. Directors of the Company are required to review with the Company's Board of Directors and the Company's Secretary other proposed directorships to confirm that accepting such directorship is consistent with the Company's Corporate Governance Guidelines.
(c) BUSINESS INTERESTS
If you are considering investing in a client, credit source, supplier or competitor, great care must be taken to ensure that these investments do not compromise your responsibilities to the Company. The term "interest" includes any financial interest, direct or indirect, whether a stockholder, partner or other type of owner. Many factors should be considered in determining whether a conflict exists, including the size and nature of the investment; your ability to influence the Company's decisions; your access to confidential information of the Company or of the other company; and the nature of the relationship between the Company and the other company. The Audit Committee of the Company's Board of Directors and the CEO must approve in advance any such investment, other than purchases of not more than one-half of one percent of the total outstanding shares of such enterprise or entity if it is a publicly owned corporation. The term "publicly-owned corporation" means a corporation having a substantial number of stockholders and for which the shares are listed on a national securities exchange or are frequently traded on the over-the-counter market.
(d) RELATED PARTIES
As a general rule, you should avoid conducting business or engaging in a transaction on behalf of the Company with a family member or significant other, or with a company or firm with which you or a family member or significant other is a significant owner or associated or employed in a significant role or position. "Family members" include any person related by blood, adoption or marriage, including grandparents, aunts, uncles, nieces, nephews, cousins, stepchildren, stepparents, and in-laws. "Significant others" include co-habitants, domestic partners, and persons with whom an employee has (or reasonably expects to have) a consensual romantic, sexual, intimate or dating relationship.
The Audit Committee must review and approve in advance all material related party transactions or business or professional relationships. All instances involving such potential related party transactions or business or professional relationships must be reported to the CFO who will assess the materiality of the transaction or relationship and elevate the matter to the Audit Committee as appropriate. You must not enter into, develop or continue any such material transaction or relationship without obtaining such prior Audit Committee approval. The Company must report all material related party transactions and business or professional relationships under applicable accounting rules and the Securities and Exchange Commission's (the "SEC") rules and regulations. Any dealings with a related party must be conducted in such a way as to avoid preferential treatment and assure that the terms obtained by the Company are no less favorable than could be obtained from unrelated parties on an arm's-length basis.
Conflicts of interest or the material nature of a transaction or relationship may not always be clear-cut; if questions arise, you should consult with management before entering into, developing or continuing a transaction that could reasonably be expected to give rise to a conflict of interest.
(e) OTHER SITUATIONS
Because other conflicts of interest may arise, it would be impractical to attempt to list all possible situations. Any affiliate, employee, officer or director who becomes aware of a conflict of interest or a potential conflict of interest should bring it to the attention of a supervisor,
manager or other appropriate personnel or consult the guidelines described in
Section 21 of this Code.
8. PROTECTION AND PROPER USE OF COMPANY ASSETS
The Company is committed to the protection of its assets. Theft, carelessness, and waste have a direct impact on the Company's profitability. All associates, employees and officers have the responsibility to report to management the Company's vulnerability to theft and for recommending any controls necessary to reasonably protect company assets. In addition, associates, employees and officers are not authorized to use any merchandise, equipment, furnishings, or other item or property belonging to the Company or any of its divisions for any purpose other than the furtherance of the enterprise of the Company. This restriction applies especially to the use of such property for any purpose that is or could be competitive with the Company's interests. Any suspected incident of fraud or theft should be immediately reported for investigation pursuant to Section 21 of this Code.
The theft or misuse of the Company's assets of any kind, no matter how slight, by anyone at any level is prohibited.
The obligation of associates, employees, directors and officers to protect the Company's assets includes its proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks and copyrights, as well as business, marketing and service plans, designs, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information would violate Company policy. It could also be illegal and result in civil or even criminal penalties.
Unauthorized duplication of copyrighted documents or computer software violates the law. You must neither engage in nor tolerate the making or using of unauthorized documents or software copies and must comply with all license and purchase terms regulating the use of any document or software. The Company will provide all documents and software needed to meet legitimate needs.
9. CHARITABLE CONTRIBUTIONS
No associate, employee, director or officer may personally solicit contributions from any charity or similar organized endeavor unless approved by the Chief Executive Officer. Associates are permitted and encouraged to accept positions of responsibility in fund raising activities of well-organized and worthy charitable organizations, but the use of supplier lists for solicitations is strictly prohibited.
10. INSIDER TRADING
Associates, employees, officers and directors who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of our business. All non-public information about the Company should be considered confidential information. To use non-public information about the Company or any other company for personal financial benefit or to "tip" others who might make an investment decision on the basis of this information is not only unethical but also illegal. Please refer to the Company's Statement of Company Policy Regarding Securities Trades. The purpose of such policy is to inform you of your legal responsibilities to make clear to you that the misuse of sensitive information is contrary to Company policies and to set forth procedures with respect to trading in the Company's securities.
11. PUBLIC DISCLOSURE
The Company is committed to providing full, fair, accurate, timely and understandable disclosure in the periodic reports and other information it files with or submits to the SEC and in other public communications, such as press releases, earnings conference calls and industry conferences, made by the Company. In meeting such standards for disclosure, the Company's executive officers and directors shall at all times strive to comply with the Company's disclosure obligations and, as necessary, appropriately consider and balance the need or desirability for confidentiality with respect to non-public negotiations or other business developments. The Company's CEO and CFO are responsible for establishing effective disclosure controls and procedures and internal controls over financial reporting within the meaning of applicable SEC rules and regulations. The Company expects the CEO and CFO to take a leadership role in implementing such controls and procedures and to position the Company to comply with its disclosure obligations and otherwise meet the foregoing standards for public disclosure.
No associate, employee, officer or director should interfere with, hinder or obstruct the Company's efforts to meet the standards for public disclosure set forth above.
12. CORPORATE OPPORTUNITIES
Associates, employees, officers and directors are prohibited from exploiting for their own personal gain opportunities that are discovered through the use of corporate property, information or position unless the opportunity is fully disclosed to the Board of Directors and the Board of Directors declines to pursue such opportunity. No associate, employee, officer or director may use corporate property, information, or position for improper personal gain, and no employee may compete with the Company directly or indirectly. Associates, employees, officers and directors owe a duty to the Company to advance the Company's legitimate interest when the opportunity to do so arises.
13. COMPETITION AND FAIR DEALING
We seek to outperform our competition fairly and honestly. We seek competitive advantages through superior performance, never through unethical or illegal business practices. Stealing proprietary information, possessing trade secret information that was obtained without the owner's consent, or inducing such disclosures by past or present employees of other companies is prohibited. Each associate, employee, director and officer should endeavor to respect the rights of and deal fairly with the Company's customers, suppliers, consultants, competitors and employees. No associate, employee, director or officer should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.
14. DISCRIMINATION AND HARASSMENT
The diversity of the Company's employees is a tremendous asset. It is the Company's policy to provide equal employment opportunity for all applicants and employees. The Company does not unlawfully discriminate on the basis of race, color, religion, sex (including pregnancy, childbirth, or related medical conditions), national origin, age, disability, marital status, veteran status, or any other basis prohibited under federal, state or local law. In addition, the Company is committed to providing a workplace free of unlawful harassment. This includes not only sexual harassment, but also harassment on any of the bases set forth above. The Company strongly disapproves of and will not tolerate harassment of employees by managers,
supervisors, co-workers or non-employees. Similarly, the Company will not tolerate harassment by its employees of non-employees with whom Company employees have a business, service, or professional relationship. For information about the Company's policies against discrimination and harassment, please refer to the Company's Employee Handbook.
All of our employees deserve a positive work environment where they will be respected and we are committed to providing an environment that supports honesty, integrity, respect, trust and responsibility. All of our employees should contribute to the creation and maintenance of such an environment and our executive officers and management and supervisory personnel should take a leadership role in achieving a work environment that meets our diversity standards and is free from the fear of retribution.
15. HEALTH AND SAFETY
The Company strives to provide each employee with a safe and healthful work environment. Each employee has a responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.
Violence and threatening behavior are not permitted, and the use of illegal drugs or alcohol in the workplace will not be tolerated. Employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol.
16. RECORD-KEEPING
The purpose of this policy is to set forth and convey the Company's requirements in managing records, including all recorded information regardless of medium or characteristics. Records include paper documents, CDs, DVDs, computer hard disks, email, floppy disks, microfiche, microfilm or all other media. The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions.
Many employees, officers and directors regularly use business expense accounts, which must be documented and recorded accurately. If you are not sure whether a certain expense is legitimate, ask your supervisor or contact the Company's CFO. Please refer to the Company's business travel policy for further information regarding business expenses.
The Company's responsibilities to its stockholders and the investing public require that all of the Company's books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company's transactions and must conform both to applicable legal requirements and to the Company's system of internal controls and generally accepted accounting practices and principles. No one should rationalize or even consider misrepresenting facts or falsifying records. Unrecorded or "off the books" funds or assets should not be maintained unless permitted by applicable law or regulation.
Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos, and formal reports. Records should always be retained or destroyed according to the Company's record retention policies. No record or document shall be destroyed which is the subject of a subpoena or other legal process or if there is a reasonable belief that litigation proceedings or government investigative proceedings are likely to occur and it is anticipated that such record or document is relevant to such proceedings. All employees are expected to comply with all
federal, state and industry-specific record retention rules and requirements as well as the Company's record retention policies.
17. PAYMENTS TO GOVERNMENT PERSONNEL
The Company encourages associates, employees, officers or directors, as individual citizens, to take an active interest in the political and governmental process. This interest may be evidenced in a variety of ways, such as voting, volunteering for campaigns, making personal contributions to candidates, and supporting efforts toward a particular referendum. However, the U.S. Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country.
In addition, there are a number of federal and state laws and regulations regarding business gratuities which may be accepted by U.S. or state government personnel. The promise, offer or delivery to an official or employee of the U.S. government or a state government of a gift, favor or other gratuity in violation of these rules would not only violate Company policy but could also be a criminal offense. Local governments, as well as foreign governments, may have similar rules.
The following are specifically prohibited:
1) direct contribution of Company funds to a particular political candidate or office holder, or to any organization whose primary purpose is to support a particular candidate or political cause;
2) political contributions through indirect channels such as suppliers, advertising agencies, law firms, etc.;
3) use of the Company's resources (such as Company vehicles, stationery, suppliers, postage and time during working hours) to support a political candidate or cause; and
4) reimbursement of individual political contributions through any subterfuge such as a salary increase and expense claims.
You must consult with management if you have any questions or concerns.
18. WAIVERS OF THE CODE OF BUSINESS CONDUCT
Any waiver of any provision of this Code for executive officers or directors must be approved by the Audit Committee and the Board of Directors and will be promptly disclosed as required by applicable securities law or stock exchange regulation. With regard to employees who are not executive officers, waivers must be approved by the CEO.
19. REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR; NO RETALIATION
It is your obligation and ethical responsibility to help enforce this Code, and to that end, you should promptly report violations of this Code in accordance with the guidelines set forth in Section 21 of this Code. Associates, employees, directors and officers are encouraged to report to supervisors, managers or his or her Human Resources representative about observed or suspected illegal, improper or unethical behavior and when in doubt about the best course of action in a particular situation. Disclosures may be reviewed by the Manager of Human Resources and by the Chief Executive Officer to determine if a conflict of interest does exist. You should know that reprisal, threats, retribution or retaliation against any person who has in
good faith reported a violation or a suspected violation of law, this Code or other Company policies, or against any person who is assisting in any investigation or process with respect to such a violation, is both a violation of Company policy and is prohibited by a variety of state and federal civil and criminal laws including the Sarbanes-Oxley Act of 2002. Accordingly, it is the policy of the Company not to allow retaliation for reports of wrongdoing or misconduct by others made in good faith by employees. Associates, employees, directors and officers are expected to cooperate in internal investigations of wrongdoing or misconduct.
20. ACCOUNTING COMPLAINTS
The Company's policy is to comply with all applicable financial reporting and accounting regulations. If any director, officer, affiliate or employee of the Company has unresolved concerns or complaints regarding questionable accounting, internal control or auditing matters of the Company, then he or she is encouraged to submit those concerns or complaints in accordance with the Company's Complaint Procedures for Accounting and Auditing Matters.
21. COMPLIANCE PROCEDURES
We must all work to ensure prompt and consistent action against violations of this Code. However, in some situations it is difficult to know right from wrong. Since we cannot anticipate every situation that will arise, you should keep in mind the following steps as you consider a particular problem or concern.
(a) Make sure you have all the facts. In order to reach the right solutions, we must be as fully informed as possible.
(b) Ask yourself: What specifically am I being asked to do or ignore? Does it seem illegal, unethical or improper? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your judgment and common sense; if something seems unethical or improper, it may very well be.
(c) Clarify your responsibility and role. In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss your concerns.
(d) You should report violations of this Code to or otherwise discuss your concerns in this regard with your supervisor or your Human Resources representative. In many cases, your supervisor will be more knowledgeable about the question or concern, and will appreciate being brought into the decision-making process. Remember that it is your supervisor's responsibility to help solve problems. Supervisors and Human Resources representatives are obligated to report violations of this Code to the Audit Committee.
(e) In the case where it may not be appropriate to report a violation to or discuss your concerns with your supervisor or your Human Resources representative, or where you do not feel comfortable approaching your supervisor to report a violation or discuss your concerns, you may report the violation or discuss your concerns with the CFO. If you prefer to report violations or your concerns in writing, on an anonymous basis, please address your concerns to our CFO at the following address: Citi Trends, Inc., 102 Fahm Street, Savannah, GA 31401.
(f) Reports of violations of this Code or other complaints made to the persons referenced above will be reviewed by the Manager of Human Resources, the CFO or the CEO or
a designee, who shall either (i) conduct an investigation of the facts and circumstances as he or she deems appropriate and report his or her conclusions and remedial actions taken, if any, to the Audit Committee or (ii) report the alleged violation or other complaint to the Audit Committee for further direction.
(g) Your communications of violations or concerns will be kept confidential to the extent feasible and appropriate, and except as required by law.
(h) All reports of violations of the Code will be promptly investigated and addressed. If you are not satisfied with the response, you may contact the Audit Committee directly.
(i) Always ask first, act later: If you are unsure of what to do in any situation, seek guidance before you act.
22. APPLICATION OF CODE OF BUSINESS CONDUCT/COMPLIANCE REQUIRED
The Code applies to all associates, employees, directors and officers. All managerial and exempt associates, employees, directors or officers are to be provided with a copy of this Code.
The matters covered in this Code are of the utmost importance to the Company, its stockholders and its business partners, and are essential to the Company's ability to conduct its business in accordance with its stated values. We expect all of our directors, officers, employees and associates to adhere to these rules in carrying out their duties for the Company.
Any individual whose actions are found to violate these policies or any other policies of the Company will be subject to disciplinary action, up to and including immediate termination of employment or business relationship. Where the Company has suffered a loss, it may pursue its legal remedies against the individuals or entities responsible.
This Code will be administered by the Manager of Human Resources and the Human Resources Department. A full disclosure of all reported conflicts and violations will be made to the Chief Executive Officer, Chief Financial Officer, and the Manager of Human Resources.
EXHIBIT A
ACKNOWLEDGMENT OF RECEIPT OF CODE
OF BUSINESS CONDUCT
I have received and read the Citi Trends, Inc. Code of Business Conduct (the "Code"). I understand the standards and policies contained in the Code and understand that there may be additional policies or laws specific to my position as an employee, associate, officer or director of the Company. I further agree to comply with the Code.
I have disclosed on the next page of this acknowledgement form any possible violations of the Code, and I understand that I have the responsibility of informing the Manager of Human Resources, Chief Financial Officer or Chief Executive Officer of any additional possible conflicts as soon as possible after such a situation arises. I further understand that if a question concerning compliance with the Code should arise, I will promptly furnish a written statement outlining the details to the Manager of Human Resources. I acknowledge the right of the Chief Executive Officer to determine whether conflicts of interest do occur, and to take necessary steps to protect the interest of the Company.
I further understand that my failure to properly disclose any conflicts of interest or other violations of this Code could result in actions of discipline, termination or other legal means by the Company as a protection of the Company's reputation.
If I have questions concerning the meaning or application of the Code, any Company policies, or the legal and regulatory requirements applicable to my position, I know I can consult my supervisor, my Human Resources representative, the Chief Financial Officer or the Chief Executive Officer knowing that my questions or reports to these sources will be maintained in confidence to the extent feasible and appropriate.
Listed below are items, which I believe could be in conflict with this Code:
(Please indicate "None" if there are no items or potential or known conflict.)
Return this signed copy to the Manager of Human Resources in Home Office of Citi Trends, Inc.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
When the transaction referred to in Note 12(d) of the notes to the financial statements has been consummated, we will be in a position to render the following consent.
/S/ KPMG LLP Board of Directors and Stockholders Citi Trends, Inc.: |
We consent to the use of our report dated March 30, 2005, except as to Note 12(c) which is as of April 28, 2005 and Note 12(d) which is as of May __, 2005, with respect to the balance sheets of Citi Trends, Inc. as of January 29, 2005 and January 31, 2004, and the related statements of income, stockholders' equity, and cash flows for the years ended January 29, 2005, January 31, 2004 and February 1, 2003, incorporated herein by reference and to the reference to our firm under the heading "Experts" in the prospectus.
Our report refers to the adoption of Statement of Financial Accounting Standards No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity".
Jacksonville, Florida
April 28, 2005