UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 3, 2013
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 000-51315
CITI TRENDS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE |
|
52-2150697 |
(State or other jurisdiction of |
|
(I.R.S. Employer |
incorporation or organization) |
|
Identification No.) |
104 Coleman Boulevard |
|
|
Savannah, Georgia |
|
31408 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrants telephone number, including area code (912) 236-1561
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer o |
|
Accelerated Filer x |
|
|
|
Non-Accelerated Filer o (Do not check if a smaller reporting company) |
|
Smaller Reporting Company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date.
Class |
|
Outstanding as of August 19, 2013 |
Common Stock, $.01 par value |
|
15,463,172 shares |
CITI TRENDS, INC.
FORM 10-Q
PART I - FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets
August 3, 2013 and February 2, 2013
(Unaudited)
(in thousands, except share data)
|
|
August 3, |
|
February 2, |
| ||
|
|
2013 |
|
2013 |
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
61,242 |
|
$ |
37,263 |
|
Short-term investment securities |
|
15,847 |
|
12,771 |
| ||
Inventory |
|
120,402 |
|
141,473 |
| ||
Prepaid and other current assets |
|
13,527 |
|
10,648 |
| ||
Income tax receivable |
|
699 |
|
1,134 |
| ||
Deferred tax asset |
|
4,405 |
|
6,088 |
| ||
Assets held for sale |
|
1,415 |
|
1,415 |
| ||
Total current assets |
|
217,537 |
|
210,792 |
| ||
Property and equipment, net of accumulated depreciation and amortization of $153,147 and $142,770 as of August 3, 2013 and February 2, 2013, respectively |
|
65,213 |
|
70,995 |
| ||
Long-term investment securities |
|
8,353 |
|
5,754 |
| ||
Deferred tax asset |
|
5,586 |
|
3,863 |
| ||
Other assets |
|
716 |
|
741 |
| ||
Total assets |
|
$ |
297,405 |
|
$ |
292,145 |
|
Liabilities and Stockholders Equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
|
$ |
64,292 |
|
$ |
62,690 |
|
Accrued expenses |
|
16,041 |
|
14,435 |
| ||
Accrued compensation |
|
8,951 |
|
8,129 |
| ||
Layaway deposits |
|
1,903 |
|
660 |
| ||
Total current liabilities |
|
91,187 |
|
85,914 |
| ||
Other long-term liabilities |
|
8,743 |
|
10,260 |
| ||
Total liabilities |
|
99,930 |
|
96,174 |
| ||
Stockholders equity: |
|
|
|
|
| ||
Common stock, $0.01 par value. Authorized 32,000,000 shares; 15,626,497 shares issued as of August 3, 2013 and 15,295,780 shares issued as of February 2, 2013; 15,460,747 shares outstanding as of August 3, 2013 and 15,130,030 outstanding as of February 2, 2013 |
|
150 |
|
149 |
| ||
Paid-in-capital |
|
81,212 |
|
80,380 |
| ||
Retained earnings |
|
116,278 |
|
115,607 |
| ||
Treasury stock, at cost; 165,750 shares as of August 3, 2013 and February 2, 2013 |
|
(165 |
) |
(165 |
) | ||
Total stockholders equity |
|
197,475 |
|
195,971 |
| ||
Commitments and contingencies (note 10) |
|
|
|
|
| ||
Total liabilities and stockholders equity |
|
$ |
297,405 |
|
$ |
292,145 |
|
See accompanying notes to the condensed consolidated financial statements (unaudited).
Citi Trends, Inc.
Condensed Consolidated Statements of Operations
Twenty-Six Weeks Ended August 3, 2013 and July 28, 2012
(Unaudited)
(in thousands, except per share data)
|
|
Twenty-Six Weeks Ended |
| ||||
|
|
August 3, |
|
July 28, |
| ||
|
|
2013 |
|
2012 |
| ||
Net sales |
|
$ |
319,649 |
|
$ |
330,012 |
|
Cost of sales |
|
202,804 |
|
210,931 |
| ||
Gross profit |
|
116,845 |
|
119,081 |
| ||
Selling, general and administrative expenses |
|
103,828 |
|
103,601 |
| ||
Depreciation and amortization |
|
11,262 |
|
12,183 |
| ||
Asset impairment |
|
681 |
|
|
| ||
Income from operations |
|
1,074 |
|
3,297 |
| ||
Interest income |
|
135 |
|
128 |
| ||
Interest expense |
|
(96 |
) |
(113 |
) | ||
Income before income tax expense |
|
1,113 |
|
3,312 |
| ||
Income tax expense |
|
442 |
|
1,133 |
| ||
Net income |
|
$ |
671 |
|
$ |
2,179 |
|
|
|
|
|
|
| ||
Basic net income per common share |
|
$ |
0.05 |
|
$ |
0.15 |
|
Diluted net income per common share |
|
$ |
0.05 |
|
$ |
0.15 |
|
|
|
|
|
|
| ||
Weighted average number of shares outstanding |
|
|
|
|
| ||
Basic |
|
14,776 |
|
14,654 |
| ||
Diluted |
|
14,778 |
|
14,656 |
|
Citi Trends, Inc.
Condensed Consolidated Statements of Operations
Thirteen Weeks Ended August 3, 2013 and July 28, 2012
(Unaudited)
(in thousands, except per share data)
|
|
Thirteen Weeks Ended |
| ||||
|
|
August 3, |
|
July 28, |
| ||
|
|
2013 |
|
2012 |
| ||
Net sales |
|
$ |
137,821 |
|
$ |
132,318 |
|
Cost of sales |
|
88,299 |
|
87,903 |
| ||
Gross profit |
|
49,522 |
|
44,415 |
| ||
Selling, general and administrative expenses |
|
51,920 |
|
50,932 |
| ||
Depreciation and amortization |
|
5,667 |
|
6,038 |
| ||
Asset impairment |
|
654 |
|
|
| ||
Loss from operations |
|
(8,719 |
) |
(12,555 |
) | ||
Interest income |
|
67 |
|
66 |
| ||
Interest expense |
|
(49 |
) |
(64 |
) | ||
Loss before income tax benefit |
|
(8,701 |
) |
(12,553 |
) | ||
Income tax benefit |
|
(3,208 |
) |
(4,628 |
) | ||
Net loss |
|
$ |
(5,493 |
) |
$ |
(7,925 |
) |
|
|
|
|
|
| ||
Basic net loss per common share |
|
$ |
(0.37 |
) |
$ |
(0.54 |
) |
Diluted net loss per common share |
|
$ |
(0.37 |
) |
$ |
(0.54 |
) |
|
|
|
|
|
| ||
Weighted average number of shares outstanding |
|
|
|
|
| ||
Basic |
|
14,801 |
|
14,673 |
| ||
Diluted |
|
14,801 |
|
14,673 |
|
See accompanying notes to the condensed consolidated financial statements (unaudited).
Citi Trends, Inc.
Condensed Consolidated Statements of Cash Flows
Twenty-Six Weeks Ended August 3, 2013 and July 28, 2012
(Unaudited)
(in thousands)
|
|
Twenty-Six Weeks Ended |
| ||||
|
|
August 3, |
|
July 28, |
| ||
|
|
2013 |
|
2012 |
| ||
Operating activities: |
|
|
|
|
| ||
Net income |
|
$ |
671 |
|
$ |
2,179 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
|
11,262 |
|
12,183 |
| ||
Asset impairment |
|
681 |
|
|
| ||
Loss on disposal of property and equipment |
|
1 |
|
10 |
| ||
Deferred income taxes |
|
(40 |
) |
(852 |
) | ||
Noncash stock-based compensation expense |
|
1,772 |
|
1,227 |
| ||
Excess tax benefits from stock-based payment arrangements |
|
356 |
|
432 |
| ||
Changes in assets and liabilities: |
|
|
|
|
| ||
Inventory |
|
21,071 |
|
(2,247 |
) | ||
Prepaid and other current assets |
|
(2,879 |
) |
391 |
| ||
Other assets |
|
25 |
|
24 |
| ||
Accounts payable |
|
1,602 |
|
(6,982 |
) | ||
Accrued expenses and other long-term liabilities |
|
(236 |
) |
1,365 |
| ||
Accrued compensation |
|
822 |
|
447 |
| ||
Income tax receivable |
|
79 |
|
4,454 |
| ||
Layaway deposits |
|
1,243 |
|
1,392 |
| ||
Net cash provided by operating activities |
|
36,430 |
|
14,023 |
| ||
Investing activities: |
|
|
|
|
| ||
Sales/redemptions of investment securities |
|
2,715 |
|
34 |
| ||
Purchases of investment securities |
|
(8,390 |
) |
|
| ||
Purchases of property and equipment |
|
(5,837 |
) |
(3,526 |
) | ||
Net cash used in investing activities |
|
(11,512 |
) |
(3,492 |
) | ||
Financing activities: |
|
|
|
|
| ||
Excess tax benefits from stock-based payment arrangements |
|
(356 |
) |
(432 |
) | ||
Shares acquired to settle withholding taxes on the vesting of nonvested restricted stock |
|
(583 |
) |
(355 |
) | ||
Net cash used in financing activities |
|
(939 |
) |
(787 |
) | ||
Net increase in cash and cash equivalents |
|
23,979 |
|
9,744 |
| ||
Cash and cash equivalents: |
|
|
|
|
| ||
Beginning of period |
|
37,263 |
|
41,986 |
| ||
End of period |
|
$ |
61,242 |
|
$ |
51,730 |
|
|
|
|
|
|
| ||
Supplemental disclosures of cash flow information: |
|
|
|
|
| ||
Cash paid for interest |
|
$ |
63 |
|
$ |
77 |
|
Cash payments (refunds) of income taxes |
|
$ |
403 |
|
$ |
(2,469 |
) |
Supplemental disclosures of noncash investing activities: |
|
|
|
|
| ||
Increase (decrease) in accrual for purchases of property and equipment |
|
$ |
325 |
|
$ |
(884 |
) |
See accompanying notes to the condensed consolidated financial statements (unaudited).
Citi Trends, Inc.
Notes to the Condensed Consolidated Financial Statements (unaudited)
August 3, 2013
1. Basis of Presentation
Citi Trends, Inc. and its subsidiary (the Company) operate as a value-priced retailer of urban fashion apparel and accessories for the entire family. As of August 3, 2013, the Company operated 506 stores in 29 states.
The condensed consolidated balance sheet as of August 3, 2013, the condensed consolidated statements of operations for the twenty-six and thirteen week periods ended August 3, 2013 and July 28, 2012, and the condensed consolidated statements of cash flows for the twenty-six week periods ended August 3, 2013 and July 28, 2012 have been prepared by the Company without audit. The condensed consolidated balance sheet as of February 2, 2013 has been derived from the audited financial statements as of that date, but does not include all required year-end disclosures. In the opinion of management, such statements include all adjustments considered necessary to present fairly the Companys financial position as of August 3, 2013 and February 2, 2013, and its results of operations and cash flows for all periods presented. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Companys latest Annual Report on Form 10-K for the year ended February 2, 2013.
The accompanying unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by U.S. GAAP for complete financial statements. Operating results for the interim periods ended August 3, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending February 1, 2014.
The following contains references to years 2013 and 2012, which represent fiscal years ending or ended on February 1, 2014 and February 2, 2013, respectively. Fiscal 2013 has a 52-week accounting period and fiscal 2012 had a 53-week accounting period.
2. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and use assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The most significant estimates made by management include those used in the valuation of inventory, property and equipment, self-insurance liabilities, leases and income taxes. Management periodically evaluates estimates used in the preparation of the consolidated financial statements for continued reasonableness. Appropriate adjustments, if any, to the estimates used are made prospectively based on such periodic evaluations.
3. Cash and Cash Equivalents/Concentration of Credit Risk
For purposes of the condensed consolidated balance sheets and condensed consolidated statements of cash flows, the Company considers all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents. Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents. The Company places its cash and cash equivalents in what it believes to be high credit quality banks and institutional money market funds. The Company maintains cash accounts that exceed federally insured limits.
4. Earnings per Share
Basic earnings per common share amounts are calculated using the weighted average number of common shares outstanding for the period. Diluted earnings per common share amounts are calculated using the weighted average number of common shares outstanding plus the additional dilution for all potentially dilutive securities, such as nonvested restricted stock and stock options. During loss periods, diluted loss per share amounts are based on the weighted average number of common shares outstanding, because the inclusion of common stock equivalents would be antidilutive.
The dilutive effect of stock-based compensation arrangements is accounted for using the treasury stock method. This method assumes that the proceeds the Company receives from the exercise of stock options are used to repurchase common shares in the market. The Company includes as assumed proceeds the amount of compensation cost attributed to future services and not yet recognized, and the amount of tax benefits, if any, that would be credited to additional paid-in capital assuming exercise of outstanding options and vesting of nonvested restricted stock. For the twenty-six weeks ended August 3, 2013 and July 28, 2012, there were 46,000 and 45,000 stock options, respectively, and 609,000 and 351,000 shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution. For the thirteen weeks ended August 3, 2013 and July 28, 2012, there were 46,000 and 40,000 stock options, respectively, and 657,000 and 414,000 shares of nonvested restricted stock, respectively, excluded from the calculation of diluted earnings per share because of antidilution.
The following table provides a reconciliation of the average number of common shares outstanding used to calculate basic earnings per share to the number of common shares and common stock equivalents outstanding used in calculating diluted earnings per share for the twenty-six and thirteen week periods ended August 3, 2013 and July 28, 2012:
|
|
Twenty-Six Weeks Ended |
| ||
|
|
August 3, 2013 |
|
July 28, 2012 |
|
Average number of common shares outstanding |
|
14,776,427 |
|
14,654,456 |
|
Incremental shares from assumed exercises of stock options |
|
1,517 |
|
1,548 |
|
Incremental shares from assumed vesting of nonvested restricted stock |
|
|
|
|
|
Average number of common shares and common stock equivalents outstanding |
|
14,777,944 |
|
14,656,004 |
|
|
|
Thirteen Weeks Ended |
| ||
|
|
August 3, 2013 |
|
July 28, 2012 |
|
Average number of common shares outstanding |
|
14,801,217 |
|
14,673,403 |
|
Incremental shares from assumed exercises of stock options |
|
|
|
|
|
Incremental shares from assumed vesting of nonvested restricted stock |
|
|
|
|
|
Average number of common shares and common stock equivalents outstanding |
|
14,801,217 |
|
14,673,403 |
|
5. Fair Value Measurement
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market at the measurement date. Fair value is established according to a hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available. Level 3 inputs are given the lowest priority in the fair value hierarchy.
As of August 3, 2013, the Companys investment securities are classified as held-to-maturity since the Company has the intent and ability to hold the investments to maturity. Such securities are carried at amortized cost plus accrued interest and consist of the following (in thousands):
|
|
Amortized Cost |
|
Gross |
|
Gross |
|
Fair Market |
| ||||
Short-term: |
|
|
|
|
|
|
|
|
| ||||
Obligations of states and municipalities (Level 2) |
|
$ |
1,444 |
|
$ |
4 |
|
$ |
|
|
$ |
1,448 |
|
Obligations of the U. S. Treasury (Level 1) |
|
4,997 |
|
19 |
|
|
|
5,016 |
| ||||
Bank certificates of deposit (Level 2) |
|
9,406 |
|
|
|
|
|
9,406 |
| ||||
|
|
$ |
15,847 |
|
$ |
23 |
|
$ |
|
|
$ |
15,870 |
|
Long-term: |
|
|
|
|
|
|
|
|
| ||||
Obligations of the U. S. Treasury (Level 1) |
|
$ |
5,205 |
|
$ |
|
|
$ |
(7 |
) |
$ |
5,198 |
|
Bank certificates of deposit (Level 2) |
|
3,148 |
|
|
|
|
|
3,148 |
| ||||
|
|
$ |
8,353 |
|
$ |
|
|
$ |
(7 |
) |
$ |
8,346 |
|
The amortized cost and fair market value of investment securities as of August 3, 2013 by contractual maturity are as follows (in thousands):
|
|
Amortized |
|
Fair Market |
| ||
Mature in one year or less |
|
$ |
15,847 |
|
$ |
15,870 |
|
Mature after one year through five years |
|
8,353 |
|
8,346 |
| ||
|
|
$ |
24,200 |
|
$ |
24,216 |
|
As of February 2, 2013, the Companys investment securities were classified as held-to-maturity and consisted of the following (in thousands):
|
|
Amortized |
|
Gross |
|
Gross |
|
Fair |
| ||||
Short-term: |
|
|
|
|
|
|
|
|
| ||||
Obligations of the U. S. Treasury (Level 1) |
|
$ |
4,993 |
|
$ |
39 |
|
$ |
|
|
$ |
5,032 |
|
Obligations of states and municipalities (Level 2) |
|
1,731 |
|
9 |
|
|
|
1,740 |
| ||||
Bank certificates of deposit (Level 2) |
|
6,047 |
|
|
|
|
|
6,047 |
| ||||
|
|
$ |
12,771 |
|
$ |
48 |
|
$ |
|
|
$ |
12,819 |
|
Long-term: |
|
|
|
|
|
|
|
|
| ||||
Bank certificates of deposit (Level 2) |
|
$ |
5,754 |
|
$ |
6 |
|
$ |
|
|
$ |
5,760 |
|
The amortized cost and fair market value of investment securities as of February 2, 2013 by contractual maturity were as follows (in thousands):
|
|
Amortized |
|
Fair |
| ||
Mature in one year or less |
|
$ |
12,771 |
|
$ |
12,819 |
|
Mature after one year through five years |
|
5,754 |
|
5,760 |
| ||
|
|
$ |
18,525 |
|
$ |
18,579 |
|
There were no changes among the levels in the twenty-six weeks ended August 3, 2013.
Fair market values of Level 2 investments are determined by management with the assistance of a third party pricing service. Because quoted prices in active markets for identical assets are not available, these prices are determined by the third party pricing service using observable market information such as quotes from less active markets and quoted prices of similar securities.
6. Impairment of Long-Lived Assets
If facts and circumstances indicate that a long-lived asset may be impaired, the carrying value is reviewed. If this review indicates that the carrying value of the asset will not be recovered as determined based on projected undiscounted cash flows related to the asset over its remaining life, the carrying value of the asset is reduced to its estimated fair value. Non-cash impairment expense related to leasehold improvements and fixtures and equipment at underperforming stores totaled $0.7 million in the twenty-six and thirteen week periods ended August 3, 2013. There was no impairment expense in the twenty-six weeks ended July 28, 2012.
7. Revolving Line of Credit
On October 27, 2011, the Company entered into a five-year, $50 million credit facility with Bank of America to replace its prior $20 million credit facility. The facility includes a $25 million uncommitted accordion feature that under certain circumstances could allow the Company to increase the size of the facility to $75 million. Borrowings, if any, under the facility will bear interest (a) for LIBOR Rate Loans, at LIBOR plus 1.5%, or (b) for Base Rate Loans, at a rate equal to the highest of (i) the prime rate plus 0.5%, (ii) the Federal Funds Rate plus 1.0%, or (iii) LIBOR plus 1.5%. The facility is secured by the Companys inventory, accounts receivable and related assets, but not its real estate, fixtures and equipment, and it contains one financial covenant, a fixed charge coverage ratio, which is applicable and tested only in certain circumstances. The facility has an unused commitment fee of 0.25% and permits the payment of cash dividends subject to certain limitations, including a requirement that there were no borrowings outstanding in the 30 days prior to the dividend payment and no borrowings are expected in the 30 days subsequent to the payment. The Company has had no borrowings under either the existing or prior facility.
8. Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
For the twenty-six weeks ended August 3, 2013, the Company has utilized the discrete effective tax rate method, as allowed by ASC 740-270, Income Taxes - Interim Reporting, to calculate income taxes. Under the discrete method, the Company determines its tax expense based upon actual results as if the interim period were an annual period. ASC 740 requires companies to apply their estimated full-year tax rate on a year-to-date basis in each interim period unless the estimated full-year tax rate is not reliably predictable. For the twenty-six-week period ended August 3, 2013, the Company concluded that the use of the discrete method was more appropriate than the annual effective tax rate method, because the annual rate method would not be reliable due to its sensitivity to minimal changes in forecasted annual pre-tax earnings.
9. Other Long-Term Liabilities
The components of other long-term liabilities as of August 3, 2013 and February 2, 2013 are as follows (in thousands):
|
|
August 3, |
|
February 2, |
| ||
Deferred rent |
|
$ |
2,719 |
|
$ |
3,342 |
|
Tenant improvement allowances |
|
4,458 |
|
5,384 |
| ||
Other |
|
1,566 |
|
1,534 |
| ||
|
|
$ |
8,743 |
|
$ |
10,260 |
|
10. Commitments and Contingencies
On August 12, 2011, the Company received a letter of determination from the U.S. Equal Employment Opportunity Commission (the EEOC) commencing a conciliation process regarding alleged discrimination against males by the Company in its hiring and promotion practices during the years 2004 through 2006. In its letter of determination, the EEOC sought recovery in the amount of $0.2 million on behalf of a former male employee and in the additional amount of $3.8 million in a settlement fund for a class of unidentified males who sought or considered seeking manager or assistant manager positions in the Companys stores. The EEOC also seeks certain undertakings by the Company with regard to its employment policies and procedures and a reporting obligation to the EEOC with respect to the Companys compliance with these undertakings.
The Company has not received full documentation or information from the EEOC in support of its letter of determination, but has undertaken its own internal analysis of the EEOCs claims and defenses to such claims and has had discussions with the EEOC in that regard. Following discussions with the EEOC regarding possible settlement, the EEOC has proposed a settlement amount to be paid by the Company of $2.5 million, with any unclaimed funds following efforts to identify and compensate claimants to be directed to one or more charities. In the interest of reaching a satisfactory conciliation agreement with the EEOC, the Company has proposed a total economic settlement offer of $1.0 million to cover all claims and the expenses of administering and complying with the settlement (excluding professional fees), with no reversion of unclaimed funds back to the Company. The Company continues to await the EEOCs response to the Companys most recent proposal regarding settlement. The Company is also evaluating other aspects of the conciliation process established by the EEOC.
On February 24, 2012, a suit was filed in the United States District Court for the Northern District of Alabama, Middle Division, by certain individuals as a purported collective action on behalf of current and former employees of the Company holding store managerial positions. The plaintiffs allege that store managers have been improperly classified as exempt from the obligation to pay overtime in violation of the Fair Labor Standards Act. The Company intends to vigorously defend the claims that have been asserted in this lawsuit. The trial court conditionally certified a class of store managers and ruled that the store managers are not subject to arbitration. The size and scope of the class remains undetermined, however, and the decision on arbitration is expected to be subject to appellate review. Also, notwithstanding the initial actions by the trial court, the conditional class may be subject to decertification at the close of discovery. Because no discovery has been conducted to date, the Company is unable to determine the probability of any particular outcome and it is not reasonably possible to estimate a range of loss with respect to this matter. Accordingly, no accrual for costs has been recorded, and the potential impact of this matter on the Companys financial position, results of operations and cash flows cannot be determined at this time.
The Company from time to time is also involved in various other legal proceedings incidental to the conduct of its business, including claims by customers, employees or former employees. Once it becomes probable that the Company will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, it establishes appropriate reserves. While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, the Company is not aware of any other legal proceedings pending or threatened against it that it expects to have a material adverse effect on its financial condition, results of operations or liquidity.
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Except for specific historical information, many of the matters discussed in this Form 10-Q may express or imply projections of revenues or expenditures, statements of plans and objectives for future operations, growth or initiatives, statements of future economic performance, or statements regarding the outcome or impact of pending or threatened litigation. These, and similar statements, are forward-looking statements concerning matters that involve risks, uncertainties and other factors that may cause the actual performance of the Company to differ materially from those expressed or implied by these statements. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors. The words believe, anticipate, project, plan, expect, estimate, objective, forecast, goal, intend, will likely result, or will continue and similar words and expressions generally identify forward-looking statements. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and therefore, actual results may differ materially from those projected in the forward-looking statements.
The factors that may result in actual results differing from such forward-looking information include, but are not limited to: transportation and distribution delays or interruptions; changes in freight rates; the Companys ability to negotiate effectively the cost and purchase of merchandise; inventory risks due to shifts in market demand; the Companys ability to gauge fashion trends and changing consumer preferences; changes in consumer spending on apparel; changes in product mix; interruptions in suppliers businesses; a deterioration in general economic conditions caused by acts of war or terrorism or other factors; temporary changes in demand due to weather patterns; seasonality of the Companys business; delays associated with building, opening and operating new stores; delays associated with building, opening or expanding new or existing distribution centers; and other factors described in the section titled Item 1A. Risk Factors and elsewhere in the Companys Annual Report on Form 10-K for the fiscal year ended February 2, 2013 and in Part II, Item 1A. Risk Factors and elsewhere in the Companys Quarterly Reports on Form 10-Q and any amendments thereto and in the other documents the Company files with the SEC, including reports on Form 8-K.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. Except as may be required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this Form 10-Q or to reflect the occurrence of unanticipated events. Readers are advised, however, to read any further disclosures the Company may make on related subjects in its public disclosures or documents filed with the SEC, including reports on Form 8-K.
Overview
We are a value-priced retailer of urban fashion apparel and accessories for the entire family. Our merchandise offerings are designed to appeal to the preferences of fashion conscious consumers, particularly African-Americans. We operated 506 stores in both urban and rural markets in 29 states as of August 3, 2013.
We measure performance using key operating statistics. One of the main performance measures we use is comparable store sales growth. We define a comparable store as a store that has been opened for an entire fiscal year. Therefore, a store will not be considered a comparable store until its 13th month of operation at the earliest or until its 24th month at the latest. As an example, stores opened in fiscal 2012 and fiscal 2013 are not considered comparable stores in fiscal 2013. Relocated and expanded stores are included in the comparable store sales results. We also use other operating statistics, most notably average sales per store, to measure our performance. As we typically occupy existing space in established shopping centers rather than sites built specifically for our stores, store square footage (and therefore sales per square foot) varies by store. We focus on overall store sales volume as the critical driver of profitability.
In addition to sales, we measure gross profit as a percentage of sales and store operating expenses, with a particular focus on labor, as a percentage of sales. These results translate into store level contribution, which we use to evaluate overall performance of each individual store. Finally, we monitor corporate expenses against budgeted amounts. All of the statistics discussed above are critical components of earnings before interest, taxes, depreciation and amortization (EBITDA) and Adjusted EBITDA (comprised of EBITDA plus non-cash asset impairment expense), which are considered our most important operating statistics. Although EBITDA and Adjusted EBITDA provide useful information on an operating cash flow basis, they are limited measures in that they exclude the impact of cash requirements for capital expenditures, income taxes and interest expense. Therefore, EBITDA and Adjusted EBITDA should be used as supplements to results of operations and cash flows as reported under U.S. GAAP and should not be used as a singular measure of operating performance or as a substitute for U.S. GAAP results. Provided below is a reconciliation of net income to EBITDA and to Adjusted EBITDA for the twenty-six and thirteen week periods ended August 3, 2013 and July 28, 2012:
|
|
Twenty-Six Weeks Ended |
|
Thirteen Weeks Ended |
| ||||||||
|
|
August 3, 2013 |
|
July 28, 2012 |
|
August 3, 2013 |
|
July 28, 2012 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) |
|
$ |
671 |
|
$ |
2,179 |
|
$ |
(5,493 |
) |
$ |
(7,925 |
) |
|
|
|
|
|
|
|
|
|
| ||||
Plus: |
|
|
|
|
|
|
|
|
| ||||
Interest expense |
|
96 |
|
113 |
|
49 |
|
64 |
| ||||
Income tax expense |
|
442 |
|
1,133 |
|
|
|
|
| ||||
Depreciation and amortization |
|
11,262 |
|
12,183 |
|
5,667 |
|
6,038 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Less: |
|
|
|
|
|
|
|
|
| ||||
Interest income |
|
(135 |
) |
(128 |
) |
(67 |
) |
(66 |
) | ||||
Income tax benefit |
|
|
|
|
|
(3,208 |
) |
(4,628 |
) | ||||
EBITDA |
|
12,336 |
|
15,480 |
|
(3,052 |
) |
(6,517 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Asset impairment |
|
681 |
|
|
|
654 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Adjusted EBITDA |
|
$ |
13,017 |
|
$ |
15,480 |
|
$ |
(2,398 |
) |
$ |
(6,517 |
) |
Accounting Periods
The following discussion contains references to fiscal years 2013 and 2012, which represent fiscal years ending or ended on February 1, 2014 and February 2, 2013, respectively. Fiscal 2013 has a 52-week accounting period and fiscal 2012 had a 53-week accounting period. This discussion and analysis should be read with the unaudited condensed consolidated financial statements and the notes thereto.
Results of Operations
The following discussion of the Companys financial performance is based on the unaudited condensed consolidated financial statements set forth herein. The nature of the Companys business is seasonal. Historically, sales in the first and fourth quarters have been higher than sales achieved in the second and third quarters of the fiscal year. Expenses and, to a greater extent, operating income, vary by quarter. Results of a period shorter than a full year may not be indicative of results expected for the entire year. Furthermore, the seasonal nature of the Companys business may affect comparisons between periods.
Twenty-Six Weeks Ended August 3, 2013 and July 28, 2012
Net Sales. Net sales decreased $10.4 million, or 3.1%, to $319.6 million in the first half of 2013 from $330.0 million in the first half of 2012. The sales comparison to the prior year for the first half of fiscal 2013 is affected by the calendar shift created by fiscal 2012 having 53 weeks. The first half of fiscal 2013 began and ended one week later on the calendar than the first half of fiscal 2012. This calendar shift had a significant impact on the first half sales comparison because the beginning and ending weeks of the period affected by the shift had varying levels of sales volume. In the first half of fiscal 2013, the comparison of sales to last years fiscal first half was adversely affected by $5.5 million due to the difference in the sales levels of such beginning and ending weeks. In addition to the effect of the calendar shift, sales declined $5.3 million due to a 1.7% decrease in comparable store sales on a comparable weeks basis. This sales decrease in the 501 comparable stores was reflected in an average unit sale that was 10% lower, partially offset by a 4% increase in the number of customer transactions and a 4% increase in the average number of items per transaction. Comparable store sales changes by major merchandise class were as follows in the first half of 2013: Accessories +15%; Home +15%; Kids -1%; Mens -6%; and Ladies -12%. Lastly, the five new stores opened in 2012 and 2013, net of ten closed stores, accounted for an increase of $0.4 million in sales, partially offsetting the sales decreases discussed above.
Gross Profit. Gross profit decreased $2.3 million, or 1.9%, to $116.8 million in the first half of 2013 from $119.1 million in last years first half. The decrease in gross profit is a result of the decrease in sales discussed above, partially offset by an increase in the gross margin to 36.6% from 36.1% in last years first half. The higher gross margin was due entirely to an increase in the core merchandise margin (initial mark-up, net of markdowns) as a result of the need for a higher level of markdowns in last years more challenging sales environment.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $0.2 million, or 0.2%, to $103.8 million in the first half of 2013 from $103.6 million in last years first half. As a percentage of sales, selling, general and administrative expenses increased to 32.5% in the first half of fiscal 2013 from 31.4% in the first half of fiscal 2012, due primarily to the deleveraging effect associated with the $10.4 million decline in sales discussed above. In particular, the calendar shift that adversely impacted the sales comparison by $5.5 million had very little effect on expenses, resulting in expense deleverage of approximately 60 basis points.
Depreciation and Amortization. Depreciation and amortization expense decreased $0.9 million, or 7.6%, to $11.3 million in the first half of 2013 from $12.2 million in the first half of 2012 due to the slowing of our store opening pace in 2012 and 2013 in relation to previous years.
Asset Impairment. Impairment charges for property and equipment at certain underperforming stores totaled $0.7 million in the first half of 2013. No such charges were required in the first half of 2012.
Income Tax Expense. Income tax expense decreased $0.7 million to $0.4 million in this years first half from $1.1 million in the first half of 2012 due to a reduction in pretax income, partially offset by an increase in the effective income tax rate to 39.7% from 34.2%. The income tax rate for the first half of 2013 was higher than the rate for last years first half, because a valuation allowance was established in the second quarter of 2013 when the Company concluded that its ability to utilize certain tax credits in one state was no longer more likely than not. The effect of the 2013 valuation allowance was to increase income tax expense by $0.4 million; however, such effect was almost entirely offset by a benefit from Work Opportunity Tax Credits (WOTC). In 2012, Congress did not extend WOTC legislation until after the second quarter, therefore, no benefit from such credits was recorded in the first half of that year.
Net Income. Net income decreased to $0.7 million in the first half of 2013 from $2.2 million in the first half of 2012 due to the factors discussed above.
Thirteen Weeks Ended August 3, 2013 and July 28, 2012
Net Sales. Net sales increased $5.5 million, or 4.2%, to $137.8 million in the second quarter of 2013 from $132.3 million in the second quarter of 2012. Sales comparisons to the prior year for each quarter of 2013 are affected by the calendar shift created by fiscal 2012 having 53 weeks. Each of the first three quarters in 2013 begins and ends one week later on the calendar than the same quarter of 2012. This calendar shift can have a significant impact on quarterly sales comparisons if the beginning and ending weeks of the period affected by the shift have varying levels of sales volume. In the second quarter of 2013, the comparison of sales to last years second quarter benefited by $3.6 million due to the difference in the sales levels of such beginning and ending weeks. In addition to the effect of the calendar shift, sales improved $2.3 million due to a 1.7% increase in comparable store sales on a comparable weeks basis. This sales increase in the 501 comparable stores was reflected in a 6% increase in the number of customer transactions and a 1% increase in the average number of items per transaction, partially offset by an average unit sale that was approximately 5% lower. Comparable store sales changes by major merchandise class were as follows in the second quarter of 2013: Accessories +17%; Home +9%; Kids +1%; Mens -5%; and Ladies -7%. Lastly, the ten stores closed in 2012 and 2013, net of five new stores, accounted for a decrease of $0.4 million in sales, partially offsetting the sales increases discussed above.
Gross Profit. Gross profit increased $5.1 million, or 11.5%, to $49.5 million in the second quarter of 2013 from $44.4 million in last years second quarter. The increase in gross profit is a result of the increase in sales discussed above and an improvement in the gross margin to 35.9% from 33.6% in last years second quarter. The higher gross margin was due primarily to an increase in the core merchandise margin (initial mark-up, net of markdowns) of 180 basis points as a result of the need for a higher level of markdowns in last years more challenging sales environment. The remainder of the gross margin improvement was due to lower freight costs.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $1.0 million, or 1.9%, to $51.9 million in the second quarter of 2013 from $50.9 million in last years second quarter. As a percentage of sales, selling, general and administrative expenses decreased to 37.7% in the second quarter of 2013 from 38.5% in the second quarter of 2012, due to the leveraging effect associated with the $5.5 million increase in sales discussed above. In particular, the calendar shift that favorably impacted the sales comparison by $3.6 million had very little effect on expenses, resulting in expense leverage of approximately 100 basis points.
Depreciation and Amortization. Depreciation and amortization expense decreased $0.3 million, or 6.1%, to $5.7 million in the second quarter of 2013 from $6.0 million in the second quarter of 2012, due to the slowing of our store opening pace in 2012 and 2013 in relation to previous years.
Asset Impairment. Impairment charges for property and equipment at certain underperforming stores totaled $0.7 million in the second quarter of 2013. No such charges were required in the second quarter of 2012.
Income Tax Benefit. Income tax benefit decreased $1.4 million to $3.2 million in this years second quarter from $4.6 million in the second quarter of 2012 due to a decrease in pretax income. The effective income tax rate of 36.9% in the second quarter of 2013 was the same as last years second quarter. The second quarter of 2013 included a valuation allowance to recognize that the Company concluded that its ability to utilize certain tax credits in one state was no longer more likely than not. However, the effect of the allowance (increase in income tax expense of $0.4 million) was almost entirely offset by a benefit from Work Opportunity Tax Credits (WOTC). In 2012, Congress did not extend WOTC legislation until after the second quarter, therefore, no benefit from such credits was recorded in the second quarter of that year.
Net Loss. Net loss decreased to $5.5 million in the second quarter of 2013 from $7.9 million in the second quarter of 2012 due to the factors discussed above.
Liquidity and Capital Resources
Our cash requirements are primarily for working capital, opening of new stores, remodeling of our existing stores and the improvement of our information systems. In recent years, we have met these cash requirements using cash flow from operations and short-term trade credit. We expect to be able to meet future cash requirements with cash flow from operations, short-term trade credit, existing balances of cash and investment securities and, if necessary, borrowings under our revolving credit facility.
Current Financial Condition. As of August 3, 2013, we had total cash and cash equivalents of $61.2 million compared to $37.3 million as of February 2, 2013. Additionally, we had $15.8 million and $8.4 million of short-term and long-term investment securities, respectively, as of August 3, 2013, compared to $12.8 million and $5.8 million, respectively, as of February 2, 2013. These securities are comprised of bank certificates of deposit and obligations of the U.S. Treasury, states and municipalities. Inventory represented 40.5% of our total assets as of August 3, 2013. Managements ability to manage our inventory can have a significant impact on our cash flows from operations during a given interim period or fiscal year. In addition, inventory purchases can be seasonal in nature, such as the purchase of warm-weather or Christmas-related merchandise.
Cash Flows From Operating Activities. Net cash provided by operating activities was $36.4 million in the first half of 2013 compared to $14.0 million in the same period of 2012. Sources of cash provided during the first half of 2013 included net income adjusted for noncash expenses such as depreciation and amortization, asset impairment, loss on disposal of property and equipment, deferred income taxes and stock-based compensation expense, totaling $14.3 million (compared to $14.7 million in the first half of 2012). The other significant source of cash in the first half of 2013 was a $21.1 million decrease in inventory (compared to an increase of $2.2 million in the first half of 2012) due to (a) an effort to reduce inventory levels as a result of the challenging sales environment, and (b) an effort to reduce inventory levels at the beginning of the third quarter in relation to the beginning of the first quarter since sales are traditionally lower in the third quarter than they are in the first quarter due to seasonality.
Accounts payable typically fluctuates at a similar rate as inventory due to the natural relationship between the two accounts; however, that did not occur in the first half of 2013, as accounts payable increased $1.6 million while inventory was decreasing. This relationship between payables and inventory occurred because much of the decrease in inventory was accomplished by reducing merchandise purchases in March and April. As a result, purchases in the second quarter of 2013 did not have to be reduced significantly from the prior year second quarter in order to reach our inventory reduction goal, resulting in an accounts payable balance at August 3, 2013 that was similar as a percentage of inventory to the second quarter of 2012.
Cash Flows From Investing Activities. Cash used in investing activities was $11.5 million in the first half of 2013 compared to $3.5 million in the first half of 2012. Cash used for purchases of property and equipment totaled $5.8 million and $3.5 million in the first half of 2013 and 2012, respectively. Purchases of investment securities, net of sales/redemptions, used cash of $5.7 million in the first half of 2013.
Cash Flows From Financing Activities. Cash flows from financing activities were insignificant in the first twenty-six weeks of both 2013 and 2012.
Cash Requirements
Our principal sources of liquidity consist of: (i) cash and cash equivalents (which equaled $61.2 million as of August 3, 2013); (ii) short-term and long-term investment securities (which equaled $15.8 million and $8.4 million, respectively, as of August 3, 2013); (iii) short-term trade credit; (iv) cash generated from operations on an ongoing basis as we sell our merchandise inventory; and (v) a $50 million revolving credit facility. Trade credit represents a significant source of financing for inventory purchases and arises from customary payment terms and trade practices with our vendors. Historically, our principal liquidity requirements have been for working capital and capital expenditure needs.
We believe that our existing sources of liquidity will be sufficient to fund our operations and anticipated capital expenditures for at least the next 12 months.
Critical Accounting Policies
The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. There have been no material changes to the Critical Accounting Policies outlined in the Companys Annual Report on Form 10-K for the year ended February 2, 2013.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in our market risk during the twenty-six weeks ended August 3, 2013 compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended February 2, 2013.
Item 4. Controls and Procedures.
We have carried out an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of August 3, 2013 pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer each concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information has been accumulated and communicated to our management, including the officers who certify our financial reports, as appropriate, to allow timely decisions regarding the required disclosures.
Our disclosure controls and procedures are designed to provide reasonable assurance that the controls and procedures will meet their objectives. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended August 3, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
On August 12, 2011, we received a letter of determination from the U.S. Equal Employment Opportunity Commission (the EEOC) commencing a conciliation process regarding alleged discrimination against males by us in our hiring and promotion practices during the years 2004 through 2006. In its letter of determination, the EEOC sought recovery in the amount of $0.2 million on behalf of a former male employee and in the additional amount of $3.8 million in a settlement fund for a class of unidentified males who sought or considered seeking manager or assistant manager positions in our stores. The EEOC also seeks certain undertakings by us with regard to our employment policies and procedures and a reporting obligation to the EEOC with respect to our compliance with these undertakings.
We have not received full documentation or information from the EEOC in support of its letter of determination, but have undertaken our own internal analysis of the EEOCs claims and defenses to such claims and have had discussions with the EEOC in that regard. Following discussions with the EEOC regarding possible settlement, the EEOC has proposed a settlement amount to be paid by us of $2.5 million, with any unclaimed funds following efforts to identify and compensate claimants to be directed to one or more charities. In the interest of reaching a satisfactory conciliation agreement with the EEOC, we have proposed a total economic settlement offer of $1.0 million to cover all claims and the expenses of administering and complying with the settlement (excluding professional fees), with no reversion of unclaimed funds back to us. We continue to await the EEOCs response to our most recent proposal regarding settlement. We are also evaluating other aspects of the conciliation process established by the EEOC.
On February 24, 2012, a suit was filed in the United States District Court for the Northern District of Alabama, Middle Division, by certain individuals as a purported collective action on behalf of current and former employees of the Company holding store managerial positions. The plaintiffs allege that store managers have been improperly classified as exempt from the obligation to pay overtime in violation of the Fair Labor Standards Act. We intend to vigorously defend the claims that have been asserted in this lawsuit. The trial court conditionally certified a class of store managers and ruled that the store managers are not subject to arbitration. The size and scope of the class remains undetermined, however, and the decision on arbitration is expected to be subject to appellate review. Also, notwithstanding the initial actions by the trial court, the conditional class may be subject to decertification at the close of discovery. Because no discovery has been conducted to date, we are unable to determine the probability of any particular outcome and it is not reasonably possible to estimate a range of loss with respect to this matter. Accordingly, no accrual for costs has been recorded, and the potential impact of this matter on our financial position, results of operations and cash flows cannot be determined at this time.
We are from time to time also involved in various other legal proceedings incidental to the conduct of our business, including claims by customers, employees or former employees. Once it becomes probable that we will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, we establish appropriate reserves. While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, we are not aware of any other legal proceedings pending or threatened against us that we expect to have a material adverse effect on our financial condition, results of operations or liquidity.
There are no material changes to the Risk Factors described under the section ITEM 1A. RISK FACTORS in the Companys Annual Report on Form 10-K for the fiscal year ended February 2, 2013.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Not applicable.
10.1 |
|
Employment Non-Compete, Non-Solicit and Confidentiality Agreement between the Company and Bruce D. Smith dated May 1, 2013.* |
|
|
|
10.2 |
|
Employment Non-Compete, Non-Solicit and Confidentiality Agreement between the Company and Ivy D. Council dated May 1, 2013.* |
|
|
|
10.3 |
|
Employment Non-Compete, Non-Solicit and Confidentiality Agreement between the Company and James A. Dunn dated May 1, 2013.* |
|
|
|
10.4 |
|
Employment Non-Compete, Non-Solicit and Confidentiality Agreement between the Company and Charles D. Crowell dated May 1, 2013.* |
|
|
|
10.5 |
|
Severance Agreement between the Company and Bruce D. Smith dated May 1, 2013.* |
|
|
|
10.6 |
|
Severance Agreement between the Company and Ivy D. Council dated May 1, 2013.* |
|
|
|
10.7 |
|
Severance Agreement between the Company and James A. Dunn dated May 1, 2013.* |
|
|
|
10.8 |
|
Severance Agreement between the Company and Charles D. Crowell dated May 1, 2013.* |
|
|
|
31.1 |
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
31.2 |
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
32.1 |
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
101 |
|
The following financial information from Citi Trends, Inc.s Quarterly Report on Form 10-Q for the quarter ended August 3, 2013, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets as of August 3, 2013 and February 2, 2013, (ii) the Condensed Consolidated Statements of Operations for the twenty-six and thirteen-week periods ended August 3, 2013 and July 28, 2012, (iii) the Condensed Consolidated Statements of Cash Flows for the twenty-six week periods ended August 3, 2013 and July 28, 2012, and (iv) Notes to the Condensed Consolidated Financial Statements.^ |
* Filed herewith.
Pursuant to Securities and Exchange Commission Release No. 33-8238, this certification will be treated as accompanying this Quarterly Report on Form 10-Q and not filed as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of Section 18 of the Securities Exchange Act of 1934 and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the registrant specifically incorporates it by reference.
^ In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed furnished and not filed.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, and the undersigned also has signed this report in his capacity as the Registrants Chief Financial Officer (Principal Financial Officer).
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CITI TRENDS, INC. | |
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Date: September 4, 2013 |
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By: |
/s/ Bruce D. Smith |
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Name: |
Bruce D. Smith |
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Title: |
Executive Vice President, Chief Financial Officer and Secretary |
Exhibit 10.1
EMPLOYMENT NON-COMPETE, NON-SOLICIT AND CONFIDENTIALITY AGREEMENT
This Employment Non-Compete, Non-Solicit and Confidentiality Agreement (Agreement) is entered into between Citi Trends, Inc. (Company), and Bruce D. Smith (Employee), effective as of the 1st day of May, 2013.
For and in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree:
1. Employment; Scope of Services. Company shall employ Employee, and Employee shall be employed by Company, as Executive Vice President, Chief Financial Officer (EVPCFO). Employee shall use his/her best efforts and shall devote his/her full time, attention, knowledge and skills to the faithful performance of his/her duties and responsibilities as a Company employee. Employee shall have such authority and such other duties and responsibilities as assigned by the Chief Executive Officer. Employee shall comply with Companys policies and procedures, shall conduct him/herself as an ethical business professional, and shall comply with federal, state and local laws.
2. At-Will Employment. Nothing in this Agreement alters the at-will employment relationship between Employee and Company. Employment with Company is at-will which means that either Employee or Company may terminate the employment relationship at any time, with or without notice, with or without cause. The date of Employees cessation of employment for any reason is the Separation Date.
3. Confidentiality.
(a) Employee acknowledges and agrees that (1) the retail sale of value-priced/off- price family apparel is an extremely competitive industry; (2) Company has an ongoing strategy for expansion of its business in the United States; (3) Companys major competitors operate throughout the United States and some internationally; and (4) because of Employees position as EVPCFO, he/she will have access to, knowledge of, and be entrusted with, highly sensitive and competitive Confidential Information (as defined in subsection (b) below) of Company, including without limitation information regarding sales margins, purchasing and pricing strategies, marketing strategies, vendors and suppliers, plans for expansion and placement of stores, and also specific information about Companys districts and stores, such as staffing, budgets, profits and the financial success of individual districts and stores.
(b) As used herein, Confidential Information means and includes any and all Company data and information in any form whatsoever (tangible or intangible) which: (1) relates to the business of Company, irrespective of whether the data or information constitutes a trade secret (as defined by applicable law); (2) is disclosed to Employee or which Employee obtains or becomes aware of as a consequence of Employees relationship with Company; (3) has value to Company; and (4) is not generally known to Companys competitors. Confidential Information includes (but is not limited to) technical or sales data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data and
statements, financial plans and strategies, product plans, sales or advertising information and plans, marketing information and plans, pricing information, the identity or lists of employees, vendors and suppliers of Company, and confidential or proprietary information of such employees, vendors and suppliers. Employee acknowledges and agrees that all Confidential Information is and remains the sole and exclusive property of Company.
(c) Employee agrees that he/she shall hold all Confidential Information in strictest confidence, and that he/she shall protect such Confidential Information from disclosure by or to others. Employee further agrees that he/she shall not at any time (except as authorized by Company in connection with Employees duties and responsibilities as an employee): (1) disclose, publish, transfer, or communicate Confidential Information to any person or entity, other than authorized Company personnel; or (2) use or reproduce Confidential Information for personal benefit or for any purpose or reason other than furthering the legitimate business interest of Company within the scope of Employees duties with Company; or (3) remove or transfer any Confidential Information from Companys premises or systems (by any method or means) except for use in Companys business and consistent with Employees duties with the Company. The foregoing covenants and obligations are in addition to, and do not limit, any common law or statutory rights and/or protections afforded to Company.
(d) Employee acknowledges that Company has provided or will provide Employee with Company property, including without limitation, employee handbooks, policy manuals, price lists, financial reports, and vendor and supplier information, among other items. Upon the Separation Date, or upon the request of Company, Employee shall immediately deliver to Company all property belonging to Company, including without limitation, all Confidential Information and any property related to Company, whether in electronic or other format, as well as any copies thereof, then in Employees custody, control or possession. Upon the Separation Date, Employee shall provide Company with a declaration certifying that all Confidential Information and any other Company property have been returned to Company, that Employee has not kept any copies of such items or distributed such items to any third party, and that Employee has otherwise complied with the terms of Section 3 of this Agreement.
4. Covenant Not to Compete. Employee agrees that he/she will not, at any point during his/her employment with Company, work for or engage or participate in any business, enterprise, or endeavor that in any way competes with any aspect of Companys business or that otherwise conflicts with Companys interest. In addition, for a period of one (1) year following the Separation Date, and regardless of the reason for separation, Employee shall not, within the continental United States: (a) become employed by or work for a Competitor (as defined below) in any position or capacity involving duties and/or responsibilities which are the same as or substantially similar to any of the duties and/or responsibilities Employee had with and/or performed for Company; or (b) perform or provide any services which are the same as or substantially similar to any of the services which Employee performed or provided for the Company, for or on behalf of any Competitor. For purposes of this Section 4, the term Competitor shall mean only the following businesses, commonly known as: Cato, TJX (including without limitation TJMAXX and Marshalls), Burlington Stores, and Ross Stores.
5. Covenant Not to Solicit. During Employees employment with Company, and for a period of eighteen (18) months following the Separation Date, and regardless of the reason for separation, Employee agrees not to solicit any Merchandise Vendors (as defined below) for the purpose of obtaining merchandise and/or inventory for or on behalf of any Competitor (as defined in Section 4 of this Agreement). As used herein, Merchandise Vendors means and includes any person or entity who/that has been a vendor or supplier of merchandise and/or inventory to Company during the eighteen (18) months immediately preceding the Separation Date or to whom/which Company is actively soliciting for the provision of merchandise and/or inventory, and with whom/which Employee had material contact. For purposes of this agreement, material contact means that Employee either had access to confidential information regarding the Merchandise Vendor, or was directly involved in negotiations or retention of such Merchandise Vendor.
Employee specifically acknowledges and agrees that, as EVPCFO, his/her duties include, without limitation, establishing purchasing and pricing strategies and policies, managing sales margins, involvement in establishing and maintaining vendor relationships, and having contact with and confidential and/or proprietary information regarding Merchandise Vendors. The non- solicitation restrictions set forth in this Section 5 are specifically limited to Merchandise Vendors with whom Employee had contact (whether personally, telephonically, or through written or electronic correspondence) during employment as EVPCFO or about whom/which Employee had confidential or proprietary information because of his/her position with Company.
6. Covenant Not to Recruit Personnel. During Employees employment with Company, and for a period of two (2) years following the Separation Date, and regardless of the reason for separation, Employee will not: (a) recruit or solicit to hire or assist others in recruiting or soliciting to hire, any employee of Company; or (b) cause or assist others in causing any employee of Company to terminate an employment relationship with Company.
7. Severability. If any provision of this Agreement is held invalid, illegal, or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially enforceable provisions to the extent enforceable, shall be binding and remain in full force and effect. Further, each particular prohibition or restriction set forth in any Section of this Agreement shall be deemed a severable unit, and if any court of competent jurisdiction determines that any portion of such prohibition or restriction is against the policy of the law in any respect, but such restraint, considered as a whole, is not so clearly unreasonable and overreaching in its terms as to be unconscionable, the court shall enforce so much of such restraint as is determined to be reasonably necessary to protect the legitimate interests of Company. Employee and Company expressly agree that, should any court of competent jurisdiction find or determine that any of the covenants contained herein are overly-broad or otherwise unenforceable, the court may blue- pencil, modify, and/or reform any such covenant (in whole or in part) so as to cure the over- breadth or to otherwise render the covenant enforceable.
8. Survival of Covenants. All rights and covenants contained in Sections 3, 4, 5, and 6 of this Agreement, and all remedies relating thereto, shall survive the termination of this Agreement for any reason.
9. Governing Law. All matters affecting this Agreement, including the validity thereof, are to be subject to, and interpreted and construed in accordance with, the laws of the State of Georgia applicable to contracts executed in and to be performed in that State.
10. Acknowledgment of Reasonableness/Remedies/Enforcement.
(a) Employee acknowledges that: (1) Company has valid interests to protect pursuant to Sections 3, 4, 5, and 6 of this Agreement; (2) the breach of the provisions of Sections 3, 4, 5, or 6 of this Agreement would result in irreparable injury and permanent damage to Company; and (3) such restrictions are reasonable and necessary to protect the interests of Company, are critical to the success of Companys business, and do not cause undue hardship on Employee.
(b) Employee agrees that determining damages in the event of a breach of Sections 3, 4, 5, or 6 by Employee would be difficult and that money damages alone would be an inadequate remedy for the injuries and damages which would be suffered by Company from such breach. Therefore, Employee agrees that Company shall be entitled (in addition to any other remedies it may have under this Agreement, at law, or otherwise) to immediate injunctive and other equitable relief to prevent or curtail any such breach by Employee. Employee and Company waive any requirement that a bond or any other security be posted. Nothing in this Agreement shall prohibit Company from seeking or recovering any legal or monetary damages to which it may be entitled if Employee breaches any provision in this Agreement.
11. Miscellaneous. This Agreement constitutes the entire agreement between the parties and supersedes any and all prior contracts, agreements, or understandings between the parties which may have been entered into by Company and Employee relating to the subject matter hereof. This Agreement may not be amended or modified in any manner except by an instrument in writing signed by both Company and Employee. The failure of either party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. All remedies are cumulative, including the right of either party to seek equitable relief in addition to money damages.
EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND KNOWS AND UNDERSTANDS ITS CONTENTS, THAT HE/SHE ENTERS INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY, AND THAT HE/SHE INDICATES HIS/HER CONSENT BY SIGNING THIS FINAL PAGE.
(SIGNATURES TO FOLLOW ON NEXT PAGE)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the day and year first above written.
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Citi Trends, Inc. |
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Employee Signature | |
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By: |
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Employee Residence Address: |
R. Edward Anderson |
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Chairman and Chief Executive Officer |
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Exhibit 10.2
EMPLOYMENT NON-COMPETE, NON-SOLICIT AND CONFIDENTIALITY AGREEMENT
This Employment Non-Compete, Non-Solicit and Confidentiality Agreement (Agreement) is entered into between Citi Trends, Inc. (Company), and Ivy Council (Employee), effective as of the 1st day of May, 2013.
For and in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree:
1. Employment; Scope of Services. Company shall employ Employee, and Employee shall be employed by Company, as Executive Vice President, Human Resources (EVPHR). Employee shall use his/her best efforts and shall devote his/her full time, attention, knowledge and skills to the faithful performance of his/her duties and responsibilities as a Company employee. Employee shall have such authority and such other duties and responsibilities as assigned by the Chief Executive Officer. Employee shall comply with Companys policies and procedures, shall conduct him/herself as an ethical business professional, and shall comply with federal, state and local laws.
2. At-Will Employment. Nothing in this Agreement alters the at-will employment relationship between Employee and Company. Employment with Company is at-will which means that either Employee or Company may terminate the employment relationship at any time, with or without notice, with or without cause. The date of Employees cessation of employment for any reason is the Separation Date.
3. Confidentiality.
(a) Employee acknowledges and agrees that (1) the retail sale of value-priced/off- price family apparel is an extremely competitive industry; (2) Company has an ongoing strategy for expansion of its business in the United States; (3) Companys major competitors operate throughout the United States and some internationally; and (4) because of Employees position as EVPHR, he/she will have access to, knowledge of, and be entrusted with, highly sensitive and competitive Confidential Information (as defined in subsection (b) below) of Company, including without limitation information regarding sales margins, purchasing and pricing strategies, marketing strategies, vendors and suppliers, plans for expansion and placement of stores, and also specific information about Companys districts and stores, such as staffing, budgets, profits and the financial success of individual districts and stores.
(b) As used herein, Confidential Information means and includes any and all Company data and information in any form whatsoever (tangible or intangible) which: (1) relates to the business of Company, irrespective of whether the data or information constitutes a trade secret (as defined by applicable law); (2) is disclosed to Employee or which Employee obtains or becomes aware of as a consequence of Employees relationship with Company; (3) has value to Company; and (4) is not generally known to Companys competitors. Confidential Information includes (but is not limited to) technical or sales data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data and
statements, financial plans and strategies, product plans, sales or advertising information and plans, marketing information and plans, pricing information, the identity or lists of employees, vendors and suppliers of Company, and confidential or proprietary information of such employees, vendors and suppliers. Employee acknowledges and agrees that all Confidential Information is and remains the sole and exclusive property of Company.
(c) Employee agrees that he/she shall hold all Confidential Information in strictest confidence, and that he/she shall protect such Confidential Information from disclosure by or to others. Employee further agrees that he/she shall not at any time (except as authorized by Company in connection with Employees duties and responsibilities as an employee): (1) disclose, publish, transfer, or communicate Confidential Information to any person or entity, other than authorized Company personnel; or (2) use or reproduce Confidential Information for personal benefit or for any purpose or reason other than furthering the legitimate business interest of Company within the scope of Employees duties with Company; or (3) remove or transfer any Confidential Information from Companys premises or systems (by any method or means) except for use in Companys business and consistent with Employees duties with the Company. The foregoing covenants and obligations are in addition to, and do not limit, any common law or statutory rights and/or protections afforded to Company.
(d) Employee acknowledges that Company has provided or will provide Employee with Company property, including without limitation, employee handbooks, policy manuals, price lists, financial reports, and vendor and supplier information, among other items. Upon the Separation Date, or upon the request of Company, Employee shall immediately deliver to Company all property belonging to Company, including without limitation, all Confidential Information and any property related to Company, whether in electronic or other format, as well as any copies thereof, then in Employees custody, control or possession. Upon the Separation Date, Employee shall provide Company with a declaration certifying that all Confidential Information and any other Company property have been returned to Company, that Employee has not kept any copies of such items or distributed such items to any third party, and that Employee has otherwise complied with the terms of Section 3 of this Agreement.
4. Covenant Not to Compete. Employee agrees that he/she will not, at any point during his/her employment with Company, work for or engage or participate in any business, enterprise, or endeavor that in any way competes with any aspect of Companys business or that otherwise conflicts with Companys interest. In addition, for a period of one (1) year following the Separation Date, and regardless of the reason for separation, Employee shall not, within the continental United States: (a) become employed by or work for a Competitor (as defined below) in any position or capacity involving duties and/or responsibilities which are the same as or substantially similar to any of the duties and/or responsibilities Employee had with and/or performed for Company; or (b) perform or provide any services which are the same as or substantially similar to any of the services which Employee performed or provided for the Company, for or on behalf of any Competitor. For purposes of this Section 4, the term Competitor shall mean only the following businesses, commonly known as: Cato, TJX (including without limitation TJMAXX and Marshalls), Burlington Stores, and Ross Stores.
5. Covenant Not to Solicit. During Employees employment with Company, and for a period of eighteen (18) months following the Separation Date, and regardless of the reason for separation, Employee agrees not to solicit any Merchandise Vendors (as defined below) for the purpose of obtaining merchandise and/or inventory for or on behalf of any Competitor (as defined in Section 4 of this Agreement). As used herein, Merchandise Vendors means and includes any person or entity who/that has been a vendor or supplier of merchandise and/or inventory to Company during the eighteen (18) months immediately preceding the Separation Date or to whom/which Company is actively soliciting for the provision of merchandise and/or inventory, and with whom/which Employee had material contact. For purposes of this agreement, material contact means that Employee either had access to confidential information regarding the Merchandise Vendor, or was directly involved in negotiations or retention of such Merchandise Vendor.
Employee specifically acknowledges and agrees that, as EVPHR, his/her duties include, without limitation, establishing purchasing and pricing strategies and policies, managing sales margins, involvement in establishing and maintaining vendor relationships, and having contact with and confidential and/or proprietary information regarding Merchandise Vendors. The non- solicitation restrictions set forth in this Section 5 are specifically limited to Merchandise Vendors with whom Employee had contact (whether personally, telephonically, or through written or electronic correspondence) during employment as EVPHR or about whom/which Employee had confidential or proprietary information because of his/her position with Company.
6. Covenant Not to Recruit Personnel. During Employees employment with Company, and for a period of two (2) years following the Separation Date, and regardless of the reason for separation, Employee will not: (a) recruit or solicit to hire or assist others in recruiting or soliciting to hire, any employee of Company; or (b) cause or assist others in causing any employee of Company to terminate an employment relationship with Company.
7. Severability. If any provision of this Agreement is held invalid, illegal, or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially enforceable provisions to the extent enforceable, shall be binding and remain in full force and effect. Further, each particular prohibition or restriction set forth in any Section of this Agreement shall be deemed a severable unit, and if any court of competent jurisdiction determines that any portion of such prohibition or restriction is against the policy of the law in any respect, but such restraint, considered as a whole, is not so clearly unreasonable and overreaching in its terms as to be unconscionable, the court shall enforce so much of such restraint as is determined to be reasonably necessary to protect the legitimate interests of Company. Employee and Company expressly agree that, should any court of competent jurisdiction find or determine that any of the covenants contained herein are overly-broad or otherwise unenforceable, the court may blue- pencil, modify, and/or reform any such covenant (in whole or in part) so as to cure the over- breadth or to otherwise render the covenant enforceable.
8. Survival of Covenants. All rights and covenants contained in Sections 3, 4, 5, and 6 of this Agreement, and all remedies relating thereto, shall survive the termination of this Agreement for any reason.
9. Governing Law. All matters affecting this Agreement, including the validity thereof, are to be subject to, and interpreted and construed in accordance with, the laws of the State of Georgia applicable to contracts executed in and to be performed in that State.
10. Acknowledgment of Reasonableness/Remedies/Enforcement.
(a) Employee acknowledges that: (1) Company has valid interests to protect pursuant to Sections 3, 4, 5, and 6 of this Agreement; (2) the breach of the provisions of Sections 3, 4, 5, or 6 of this Agreement would result in irreparable injury and permanent damage to Company; and (3) such restrictions are reasonable and necessary to protect the interests of Company, are critical to the success of Companys business, and do not cause undue hardship on Employee.
(b) Employee agrees that determining damages in the event of a breach of Sections 3, 4, 5, or 6 by Employee would be difficult and that money damages alone would be an inadequate remedy for the injuries and damages which would be suffered by Company from such breach. Therefore, Employee agrees that Company shall be entitled (in addition to any other remedies it may have under this Agreement, at law, or otherwise) to immediate injunctive and other equitable relief to prevent or curtail any such breach by Employee. Employee and Company waive any requirement that a bond or any other security be posted. Nothing in this Agreement shall prohibit Company from seeking or recovering any legal or monetary damages to which it may be entitled if Employee breaches any provision in this Agreement.
11. Miscellaneous. This Agreement constitutes the entire agreement between the parties and supersedes any and all prior contracts, agreements, or understandings between the parties which may have been entered into by Company and Employee relating to the subject matter hereof. This Agreement may not be amended or modified in any manner except by an instrument in writing signed by both Company and Employee. The failure of either party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. All remedies are cumulative, including the right of either party to seek equitable relief in addition to money damages.
EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND KNOWS AND UNDERSTANDS ITS CONTENTS, THAT HE/SHE ENTERS INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY, AND THAT HE/SHE INDICATES HIS/HER CONSENT BY SIGNING THIS FINAL PAGE.
(SIGNATURES TO FOLLOW ON NEXT PAGE)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the day and year first above written.
Citi Trends, Inc. |
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Employee Signature | |
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By: |
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Employee Residence Address: |
R. Edward Anderson |
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Chairman and Chief Executive Officer |
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Exhibit 10.3
EMPLOYMENT NON-COMPETE, NON-SOLICIT AND CONFIDENTIALITY AGREEMENT
This Employment Non-Compete, Non-Solicit and Confidentiality Agreement (Agreement) is entered into between Citi Trends, Inc. (Company), and James A. Dunn (Employee), effective as of the 1st day of May, 2013.
For and in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree:
1. Employment; Scope of Services. Company shall employ Employee, and Employee shall be employed by Company, as Senior Vice President, Store Operations (SVPSO). Employee shall use his/her best efforts and shall devote his/her full time, attention, knowledge and skills to the faithful performance of his/her duties and responsibilities as a Company employee. Employee shall have such authority and such other duties and responsibilities as assigned by the Chief Executive Officer. Employee shall comply with Companys policies and procedures, shall conduct him/herself as an ethical business professional, and shall comply with federal, state and local laws.
2. At-Will Employment. Nothing in this Agreement alters the at-will employment relationship between Employee and Company. Employment with Company is at-will which means that either Employee or Company may terminate the employment relationship at any time, with or without notice, with or without cause. The date of Employees cessation of employment for any reason is the Separation Date.
3. Confidentiality.
(a) Employee acknowledges and agrees that (1) the retail sale of value-priced/off- price family apparel is an extremely competitive industry; (2) Company has an ongoing strategy for expansion of its business in the United States; (3) Companys major competitors operate throughout the United States and some internationally; and (4) because of Employees position as SVPSO, he/she will have access to, knowledge of, and be entrusted with, highly sensitive and competitive Confidential Information (as defined in subsection (b) below) of Company, including without limitation information regarding sales margins, purchasing and pricing strategies, marketing strategies, vendors and suppliers, plans for expansion and placement of stores, and also specific information about Companys districts and stores, such as staffing, budgets, profits and the financial success of individual districts and stores.
(b) As used herein, Confidential Information means and includes any and all Company data and information in any form whatsoever (tangible or intangible) which: (1) relates to the business of Company, irrespective of whether the data or information constitutes a trade secret (as defined by applicable law); (2) is disclosed to Employee or which Employee obtains or becomes aware of as a consequence of Employees relationship with Company; (3) has value to Company; and (4) is not generally known to Companys competitors. Confidential Information includes (but is not limited to) technical or sales data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data and
statements, financial plans and strategies, product plans, sales or advertising information and plans, marketing information and plans, pricing information, the identity or lists of employees, vendors and suppliers of Company, and confidential or proprietary information of such employees, vendors and suppliers. Employee acknowledges and agrees that all Confidential Information is and remains the sole and exclusive property of Company.
(c) Employee agrees that he/she shall hold all Confidential Information in strictest confidence, and that he/she shall protect such Confidential Information from disclosure by or to others. Employee further agrees that he/she shall not at any time (except as authorized by Company in connection with Employees duties and responsibilities as an employee): (1) disclose, publish, transfer, or communicate Confidential Information to any person or entity, other than authorized Company personnel; or (2) use or reproduce Confidential Information for personal benefit or for any purpose or reason other than furthering the legitimate business interest of Company within the scope of Employees duties with Company; or (3) remove or transfer any Confidential Information from Companys premises or systems (by any method or means) except for use in Companys business and consistent with Employees duties with the Company. The foregoing covenants and obligations are in addition to, and do not limit, any common law or statutory rights and/or protections afforded to Company.
(d) Employee acknowledges that Company has provided or will provide Employee with Company property, including without limitation, employee handbooks, policy manuals, price lists, financial reports, and vendor and supplier information, among other items. Upon the Separation Date, or upon the request of Company, Employee shall immediately deliver to Company all property belonging to Company, including without limitation, all Confidential Information and any property related to Company, whether in electronic or other format, as well as any copies thereof, then in Employees custody, control or possession. Upon the Separation Date, Employee shall provide Company with a declaration certifying that all Confidential Information and any other Company property have been returned to Company, that Employee has not kept any copies of such items or distributed such items to any third party, and that Employee has otherwise complied with the terms of Section 3 of this Agreement.
4. Covenant Not to Compete. Employee agrees that he/she will not, at any point during his/her employment with Company, work for or engage or participate in any business, enterprise, or endeavor that in any way competes with any aspect of Companys business or that otherwise conflicts with Companys interest. In addition, for a period of one (1) year following the Separation Date, and regardless of the reason for separation, Employee shall not, within the continental United States: (a) become employed by or work for a Competitor (as defined below) in any position or capacity involving duties and/or responsibilities which are the same as or substantially similar to any of the duties and/or responsibilities Employee had with and/or performed for Company; or (b) perform or provide any services which are the same as or substantially similar to any of the services which Employee performed or provided for the Company, for or on behalf of any Competitor. For purposes of this Section 4, the term Competitor shall mean only the following businesses, commonly known as: Cato, TJX (including without limitation TJMAXX and Marshalls), Burlington Stores, and Ross Stores.
5. Covenant Not to Solicit. During Employees employment with Company, and for a period of eighteen (18) months following the Separation Date, and regardless of the reason for separation, Employee agrees not to solicit any Merchandise Vendors (as defined below) for the purpose of obtaining merchandise and/or inventory for or on behalf of any Competitor (as defined in Section 4 of this Agreement). As used herein, Merchandise Vendors means and includes any person or entity who/that has been a vendor or supplier of merchandise and/or inventory to Company during the eighteen (18) months immediately preceding the Separation Date or to whom/which Company is actively soliciting for the provision of merchandise and/or inventory, and with whom/which Employee had material contact. For purposes of this agreement, material contact means that Employee either had access to confidential information regarding the Merchandise Vendor, or was directly involved in negotiations or retention of such Merchandise Vendor.
Employee specifically acknowledges and agrees that, as SVPSO, his/her duties include, without limitation, establishing purchasing and pricing strategies and policies, managing sales margins, involvement in establishing and maintaining vendor relationships, and having contact with and confidential and/or proprietary information regarding Merchandise Vendors. The non- solicitation restrictions set forth in this Section 5 are specifically limited to Merchandise Vendors with whom Employee had contact (whether personally, telephonically, or through written or electronic correspondence) during employment as SVPSO or about whom/which Employee had confidential or proprietary information because of his/her position with Company.
6. Covenant Not to Recruit Personnel. During Employees employment with Company, and for a period of two (2) years following the Separation Date, and regardless of the reason for separation, Employee will not: (a) recruit or solicit to hire or assist others in recruiting or soliciting to hire, any employee of Company; or (b) cause or assist others in causing any employee of Company to terminate an employment relationship with Company.
7. Severability. If any provision of this Agreement is held invalid, illegal, or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially enforceable provisions to the extent enforceable, shall be binding and remain in full force and effect. Further, each particular prohibition or restriction set forth in any Section of this Agreement shall be deemed a severable unit, and if any court of competent jurisdiction determines that any portion of such prohibition or restriction is against the policy of the law in any respect, but such restraint, considered as a whole, is not so clearly unreasonable and overreaching in its terms as to be unconscionable, the court shall enforce so much of such restraint as is determined to be reasonably necessary to protect the legitimate interests of Company. Employee and Company expressly agree that, should any court of competent jurisdiction find or determine that any of the covenants contained herein are overly-broad or otherwise unenforceable, the court may blue- pencil, modify, and/or reform any such covenant (in whole or in part) so as to cure the over- breadth or to otherwise render the covenant enforceable.
8. Survival of Covenants. All rights and covenants contained in Sections 3, 4, 5, and 6 of this Agreement, and all remedies relating thereto, shall survive the termination of this Agreement for any reason.
9. Governing Law. All matters affecting this Agreement, including the validity thereof, are to be subject to, and interpreted and construed in accordance with, the laws of the State of Georgia applicable to contracts executed in and to be performed in that State.
10. Acknowledgment of Reasonableness/Remedies/Enforcement.
(a) Employee acknowledges that: (1) Company has valid interests to protect pursuant to Sections 3, 4, 5, and 6 of this Agreement; (2) the breach of the provisions of Sections 3, 4, 5, or 6 of this Agreement would result in irreparable injury and permanent damage to Company; and (3) such restrictions are reasonable and necessary to protect the interests of Company, are critical to the success of Companys business, and do not cause undue hardship on Employee.
(b) Employee agrees that determining damages in the event of a breach of Sections 3, 4, 5, or 6 by Employee would be difficult and that money damages alone would be an inadequate remedy for the injuries and damages which would be suffered by Company from such breach. Therefore, Employee agrees that Company shall be entitled (in addition to any other remedies it may have under this Agreement, at law, or otherwise) to immediate injunctive and other equitable relief to prevent or curtail any such breach by Employee. Employee and Company waive any requirement that a bond or any other security be posted. Nothing in this Agreement shall prohibit Company from seeking or recovering any legal or monetary damages to which it may be entitled if Employee breaches any provision in this Agreement.
11. Miscellaneous. This Agreement constitutes the entire agreement between the parties and supersedes any and all prior contracts, agreements, or understandings between the parties which may have been entered into by Company and Employee relating to the subject matter hereof. This Agreement may not be amended or modified in any manner except by an instrument in writing signed by both Company and Employee. The failure of either party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. All remedies are cumulative, including the right of either party to seek equitable relief in addition to money damages.
EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND KNOWS AND UNDERSTANDS ITS CONTENTS, THAT HE/SHE ENTERS INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY, AND THAT HE/SHE INDICATES HIS/HER CONSENT BY SIGNING THIS FINAL PAGE.
(SIGNATURES TO FOLLOW ON NEXT PAGE)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the day and year first above written.
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R. Edward Anderson |
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Chairman and Chief Executive Officer |
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Exhibit 10.4
EMPLOYMENT NON-COMPETE, NON-SOLICIT AND CONFIDENTIALITY AGREEMENT
This Employment Non-Compete, Non-Solicit and Confidentiality Agreement (Agreement) is entered into between Citi Trends, Inc. (Company), and Charles D. Crowell (Employee), effective as of the 1st day of May, 2013.
For and in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree:
1. Employment; Scope of Services. Company shall employ Employee, and Employee shall be employed by Company, as Senior Vice President, Supply Chain (SVPSC). Employee shall use his/her best efforts and shall devote his/her full time, attention, knowledge and skills to the faithful performance of his/her duties and responsibilities as a Company employee. Employee shall have such authority and such other duties and responsibilities as assigned by the Chief Executive Officer. Employee shall comply with Companys policies and procedures, shall conduct him/herself as an ethical business professional, and shall comply with federal, state and local laws.
2. At-Will Employment. Nothing in this Agreement alters the at-will employment relationship between Employee and Company. Employment with Company is at-will which means that either Employee or Company may terminate the employment relationship at any time, with or without notice, with or without cause. The date of Employees cessation of employment for any reason is the Separation Date.
3. Confidentiality.
(a) Employee acknowledges and agrees that (1) the retail sale of value-priced/off- price family apparel is an extremely competitive industry; (2) Company has an ongoing strategy for expansion of its business in the United States; (3) Companys major competitors operate throughout the United States and some internationally; and (4) because of Employees position as SVPSC, he/she will have access to, knowledge of, and be entrusted with, highly sensitive and competitive Confidential Information (as defined in subsection (b) below) of Company, including without limitation information regarding sales margins, purchasing and pricing strategies, marketing strategies, vendors and suppliers, plans for expansion and placement of stores, and also specific information about Companys districts and stores, such as staffing, budgets, profits and the financial success of individual districts and stores.
(b) As used herein, Confidential Information means and includes any and all Company data and information in any form whatsoever (tangible or intangible) which: (1) relates to the business of Company, irrespective of whether the data or information constitutes a trade secret (as defined by applicable law); (2) is disclosed to Employee or which Employee obtains or becomes aware of as a consequence of Employees relationship with Company; (3) has value to Company; and (4) is not generally known to Companys competitors. Confidential Information includes (but is not limited to) technical or sales data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data and
statements, financial plans and strategies, product plans, sales or advertising information and plans, marketing information and plans, pricing information, the identity or lists of employees, vendors and suppliers of Company, and confidential or proprietary information of such employees, vendors and suppliers. Employee acknowledges and agrees that all Confidential Information is and remains the sole and exclusive property of Company.
(c) Employee agrees that he/she shall hold all Confidential Information in strictest confidence, and that he/she shall protect such Confidential Information from disclosure by or to others. Employee further agrees that he/she shall not at any time (except as authorized by Company in connection with Employees duties and responsibilities as an employee): (1) disclose, publish, transfer, or communicate Confidential Information to any person or entity, other than authorized Company personnel; or (2) use or reproduce Confidential Information for personal benefit or for any purpose or reason other than furthering the legitimate business interest of Company within the scope of Employees duties with Company; or (3) remove or transfer any Confidential Information from Companys premises or systems (by any method or means) except for use in Companys business and consistent with Employees duties with the Company. The foregoing covenants and obligations are in addition to, and do not limit, any common law or statutory rights and/or protections afforded to Company.
(d) Employee acknowledges that Company has provided or will provide Employee with Company property, including without limitation, employee handbooks, policy manuals, price lists, financial reports, and vendor and supplier information, among other items. Upon the Separation Date, or upon the request of Company, Employee shall immediately deliver to Company all property belonging to Company, including without limitation, all Confidential Information and any property related to Company, whether in electronic or other format, as well as any copies thereof, then in Employees custody, control or possession. Upon the Separation Date, Employee shall provide Company with a declaration certifying that all Confidential Information and any other Company property have been returned to Company, that Employee has not kept any copies of such items or distributed such items to any third party, and that Employee has otherwise complied with the terms of Section 3 of this Agreement.
4. Covenant Not to Compete. Employee agrees that he/she will not, at any point during his/her employment with Company, work for or engage or participate in any business, enterprise, or endeavor that in any way competes with any aspect of Companys business or that otherwise conflicts with Companys interest. In addition, for a period of one (1) year following the Separation Date, and regardless of the reason for separation, Employee shall not, within the continental United States: (a) become employed by or work for a Competitor (as defined below) in any position or capacity involving duties and/or responsibilities which are the same as or substantially similar to any of the duties and/or responsibilities Employee had with and/or performed for Company; or (b) perform or provide any services which are the same as or substantially similar to any of the services which Employee performed or provided for the Company, for or on behalf of any Competitor. For purposes of this Section 4, the term Competitor shall mean only the following businesses, commonly known as: Cato, TJX (including without limitation TJMAXX and Marshalls), Burlington Stores, and Ross Stores.
5. Covenant Not to Solicit. During Employees employment with Company, and for a period of eighteen (18) months following the Separation Date, and regardless of the reason for separation, Employee agrees not to solicit any Merchandise Vendors (as defined below) for the purpose of obtaining merchandise and/or inventory for or on behalf of any Competitor (as defined in Section 4 of this Agreement). As used herein, Merchandise Vendors means and includes any person or entity who/that has been a vendor or supplier of merchandise and/or inventory to Company during the eighteen (18) months immediately preceding the Separation Date or to whom/which Company is actively soliciting for the provision of merchandise and/or inventory, and with whom/which Employee had material contact. For purposes of this agreement, material contact means that Employee either had access to confidential information regarding the Merchandise Vendor, or was directly involved in negotiations or retention of such Merchandise Vendor.
Employee specifically acknowledges and agrees that, as SVPSC, his/her duties include, without limitation, establishing purchasing and pricing strategies and policies, managing sales margins, involvement in establishing and maintaining vendor relationships, and having contact with and confidential and/or proprietary information regarding Merchandise Vendors. The non- solicitation restrictions set forth in this Section 5 are specifically limited to Merchandise Vendors with whom Employee had contact (whether personally, telephonically, or through written or electronic correspondence) during employment as SVPSC or about whom/which Employee had confidential or proprietary information because of his/her position with Company.
6. Covenant Not to Recruit Personnel. During Employees employment with Company, and for a period of two (2) years following the Separation Date, and regardless of the reason for separation, Employee will not: (a) recruit or solicit to hire or assist others in recruiting or soliciting to hire, any employee of Company; or (b) cause or assist others in causing any employee of Company to terminate an employment relationship with Company.
7. Severability. If any provision of this Agreement is held invalid, illegal, or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially enforceable provisions to the extent enforceable, shall be binding and remain in full force and effect. Further, each particular prohibition or restriction set forth in any Section of this Agreement shall be deemed a severable unit, and if any court of competent jurisdiction determines that any portion of such prohibition or restriction is against the policy of the law in any respect, but such restraint, considered as a whole, is not so clearly unreasonable and overreaching in its terms as to be unconscionable, the court shall enforce so much of such restraint as is determined to be reasonably necessary to protect the legitimate interests of Company. Employee and Company expressly agree that, should any court of competent jurisdiction find or determine that any of the covenants contained herein are overly-broad or otherwise unenforceable, the court may blue- pencil, modify, and/or reform any such covenant (in whole or in part) so as to cure the over- breadth or to otherwise render the covenant enforceable.
8. Survival of Covenants. All rights and covenants contained in Sections 3, 4, 5, and 6 of this Agreement, and all remedies relating thereto, shall survive the termination of this Agreement for any reason.
9. Governing Law. All matters affecting this Agreement, including the validity thereof, are to be subject to, and interpreted and construed in accordance with, the laws of the State of Georgia applicable to contracts executed in and to be performed in that State.
10. Acknowledgment of Reasonableness/Remedies/Enforcement.
(a) Employee acknowledges that: (1) Company has valid interests to protect pursuant to Sections 3, 4, 5, and 6 of this Agreement; (2) the breach of the provisions of Sections 3, 4, 5, or 6 of this Agreement would result in irreparable injury and permanent damage to Company; and (3) such restrictions are reasonable and necessary to protect the interests of Company, are critical to the success of Companys business, and do not cause undue hardship on Employee.
(b) Employee agrees that determining damages in the event of a breach of Sections 3, 4, 5, or 6 by Employee would be difficult and that money damages alone would be an inadequate remedy for the injuries and damages which would be suffered by Company from such breach. Therefore, Employee agrees that Company shall be entitled (in addition to any other remedies it may have under this Agreement, at law, or otherwise) to immediate injunctive and other equitable relief to prevent or curtail any such breach by Employee. Employee and Company waive any requirement that a bond or any other security be posted. Nothing in this Agreement shall prohibit Company from seeking or recovering any legal or monetary damages to which it may be entitled if Employee breaches any provision in this Agreement.
11. Miscellaneous. This Agreement constitutes the entire agreement between the parties and supersedes any and all prior contracts, agreements, or understandings between the parties which may have been entered into by Company and Employee relating to the subject matter hereof. This Agreement may not be amended or modified in any manner except by an instrument in writing signed by both Company and Employee. The failure of either party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. All remedies are cumulative, including the right of either party to seek equitable relief in addition to money damages.
EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND KNOWS AND UNDERSTANDS ITS CONTENTS, THAT HE/SHE ENTERS INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY, AND THAT HE/SHE INDICATES HIS/HER CONSENT BY SIGNING THIS FINAL PAGE.
(SIGNATURES TO FOLLOW ON NEXT PAGE)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the day and year first above written.
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R. Edward Anderson |
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Chairman and Chief Executive Officer |
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Exhibit 10.5
SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (this Agreement) made this 1st day of May 2013, is by and between Citi Trends, Inc., a Delaware corporation (the Company), and Bruce D. Smith, an individual (the Executive).
WHEREAS, the Company and the Executive are also parties to an Employment Non-Compete, Non-Solicit and Confidentiality Agreement (the Confidentiality Agreement) and certain restricted stock award and stock option agreements (collectively, the Equity Agreements) which are to remain in full force and effect;
NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the parties agree as follows:
1. Termination Payments and Benefits. Regardless of the circumstances of the Executives termination, Executive shall be entitled to payment when due of any earned and unpaid base salary, expense reimbursements and vacation days accrued prior to the termination of Executives employment, and other unpaid vested amounts or benefits under Company retirement and health benefit plans, and, as applicable, under Equity Agreements in accordance with their terms, and to no other compensation or benefits. If (i) the Company terminates the Executives employment without Cause, or (ii) the Executive terminates employment with the Company within twelve (12) months following the occurrence of a Change in Control, provided that within such period, (a) either Executives job duties have been materially and permanently diminished or the Executives compensation has been materially decreased and (b) Executive provides written notice to the Company within ninety (90) days of the occurrence of such event and the Company fails to cure the event within thirty (30) days following the Companys receipt of the Executives written notice, then, in the case of either (i) or (ii) above, the Company will provide the Executive with separation payments of twelve (12) months base salary at Executives base salary rate at the time of Executives termination or if greater, the Executives base rate in effect on the Change of Control Date; to be paid in twenty-six (26) regular bi-weekly pay periods beginning on the first pay period occurring after the sixtieth (60th) day following the Executives separation from service, provided the Executive executes and does not subsequently revoke the Separation and General Release Agreement referenced below within such sixty (60) day period.
For a period of twelve months from the Executives separation from service, the Company will pay to the Executive the monthly gross amount, minus all applicable taxes and withholdings, of Executives COBRA premiums for continued health insurance; provided the Executive executes and does not subsequently revoke the Separation and General Release Agreement referenced below within such sixty (60) day period.
For purposes of this Agreement, Change in Control shall mean the occurrence of any one of the following events:
(1) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the 1934 Act)) (a Person) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 50% or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities); provided, however, that for purposes of this subsection (1), the following acquisitions shall not constitute a Change of Control: (i) any acquisition by a Person who is on the date of this Agreement the beneficial owner of 50% or more of the Outstanding Company Voting Securities, (ii) any acquisition directly from the Company, (iii) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (v) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this definition; or
(2) individuals who, as of the date of this Agreement, constitute the Board of Directors of the Company (the Incumbent Board) cease for any reason to constitute at least a majority of the Board of Directors of the Company; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Companys shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors of the Company; or
(3) consummation of a reorganization, merger, consolidation or share exchange or sale or other disposition of all or substantially all of the assets of the Company (a Business Combination), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Companys assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Voting Securities, and (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(4) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
These separation payments are conditioned upon Executive executing a Separation and General Release Agreement at the time of termination which releases and waives any and all claims against the Company and its affiliated persons and companies, and is acceptable to the Company.
In all other circumstances of separation, including if the Executive resigns, retires or is terminated for Cause, the Executive shall not be entitled to receive any separation payments. For purposes of this Agreement, Cause shall mean the Executives:
(1) commission of an act of fraud or dishonesty, the purpose or effect of which, in the CEO and/or Boards sole determination, adversely affects the Company;
(2) conviction of a felony or a crime involving embezzlement, conversion of property or moral turpitude (whether by plea of nolo contendere or otherwise);
(3) engaging in willful or reckless misconduct or gross negligence in connection with any property or activity of the Company, the purpose or effect of which, in the CEO and/or Boards sole determination, adversely affects the Company;
(4) material breach of any of the Executives obligations as an employee or stockholder as set forth in the Companys Information Security Policies and Code of Business Conduct, the Confidentiality Agreement or any other agreement in effect between the Company and the Executive; provided that, in the event such breach is susceptible to cure, the Executive has been given written notice by the CEO and/or Board of such breach and 30 days from such notice fails to cure the breach; or
(5) failure or refusal to perform any material duty or responsibility under this Agreement or a determination that the Executive has breached his fiduciary obligations to the Company; provided that, in the event such failure, refusal or breach is susceptible to cure, the Executive has been given written notice by the CEO and/or Board of such failure, refusal or breach and 30 days from such notice fails to cure such failure, refusal or breach.
2. Notice. The Executive will send all communications to the Company in writing, to: Executive Vice President of Human Resources, Citi Trends, Inc., 104 Coleman Blvd., Savannah, Georgia 31408, Fax: (912) 443-3663. All communications from the Company to the Executive relating to this Agreement shall be sent to the Executive in writing at his office and home address as reflected in the Companys records.
3. Amendment. No provisions of this Agreement may be modified, waived, or discharged except by a written document signed by a duly authorized Company officer and the Executive. A waiver of any conditions or provisions of this Agreement in a given instance shall not be deemed a waiver of such conditions or provisions at any other time in the future.
4. Choice of Law and Venue. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Georgia (excluding any that mandate the use of another jurisdictions laws). Any action to enforce or for breach of this Agreement shall be brought exclusively in the state or federal courts of the County of Chatham, City of Savannah.
5. Successors. This Agreement shall be binding upon, and shall inure to the benefit of, the Executive and Executives estate, but the Executive may not assign or pledge this Agreement or any rights arising under it, except to the extent permitted under the terms of the benefit plans in which Executive participates. Without the Executives consent, the Company may assign this Agreement to any affiliate or to a successor to substantially all the business and assets of the Company.
6. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute the same instrument.
7. Entire Agreement. This Agreement and the Confidentiality Agreement between the parties constitute the entire agreement between the parties and supersede any and all prior contracts, agreements, or understandings between the parties which may have been entered into by Company and the Executive relating to the subject matter hereof. This Agreement may not be amended or modified in any manner except by an instrument in writing signed by both the Company and the Executive. The failure of either party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. All remedies are cumulative, including the right of either party to seek equitable relief in addition to money damages.
8. Employment At-Will Relationship. Executive and the Company agree that nothing in this Agreement alters the at-will nature of Executives employment relationship with the Company.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first written above.
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Bruce D. Smith |
Exhibit 10.6
SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (this Agreement) made this 1st day of May 2013, is by and between Citi Trends, Inc., a Delaware corporation (the Company), and Ivy D. Council, an individual (the Executive).
WHEREAS, the Company and the Executive are also parties to an Employment Non-Compete, Non-Solicit and Confidentiality Agreement (the Confidentiality Agreement) and certain restricted stock award and stock option agreements (collectively, the Equity Agreements) which are to remain in full force and effect;
NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the parties agree as follows:
1. Termination Payments and Benefits. Regardless of the circumstances of the Executives termination, Executive shall be entitled to payment when due of any earned and unpaid base salary, expense reimbursements and vacation days accrued prior to the termination of Executives employment, and other unpaid vested amounts or benefits under Company retirement and health benefit plans, and, as applicable, under Equity Agreements in accordance with their terms, and to no other compensation or benefits. If (i) the Company terminates the Executives employment without Cause, or (ii) the Executive terminates employment with the Company within twelve (12) months following the occurrence of a Change in Control, provided that within such period, (a) either Executives job duties have been materially and permanently diminished or the Executives compensation has been materially decreased and (b) Executive provides written notice to the Company within ninety (90) days of the occurrence of such event and the Company fails to cure the event within thirty (30) days following the Companys receipt of the Executives written notice, then, in the case of either (i) or (ii) above, the Company will provide the Executive with separation payments of twelve (12) months base salary at Executives base salary rate at the time of Executives termination or if greater, the Executives base rate in effect on the Change of Control Date; to be paid in twenty-six (26) regular bi-weekly pay periods beginning on the first pay period occurring after the sixtieth (60th) day following the Executives separation from service, provided the Executive executes and does not subsequently revoke the Separation and General Release Agreement referenced below within such sixty (60) day period.
For a period of twelve months from the Executives separation from service, the Company will pay to the Executive the monthly gross amount, minus all applicable taxes and withholdings, of Executives COBRA premiums for continued health insurance; provided the Executive executes and does not subsequently revoke the Separation and General Release Agreement referenced below within such sixty (60) day period.
For purposes of this Agreement, Change in Control shall mean the occurrence of any one of the following events:
(1) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the 1934 Act)) (a Person) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 50% or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities); provided, however, that for purposes of this subsection (1), the following acquisitions shall not constitute a Change of Control: (i) any acquisition by a Person who is on the date of this Agreement the beneficial owner of 50% or more of the Outstanding Company Voting Securities, (ii) any acquisition directly from the Company, (iii) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (v) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this definition; or
(2) individuals who, as of the date of this Agreement, constitute the Board of Directors of the Company (the Incumbent Board) cease for any reason to constitute at least a majority of the Board of Directors of the Company; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Companys shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors of the Company; or
(3) consummation of a reorganization, merger, consolidation or share exchange or sale or other disposition of all or substantially all of the assets of the Company (a Business Combination), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Companys assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Voting Securities, and (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(4) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
These separation payments are conditioned upon Executive executing a Separation and General Release Agreement at the time of termination which releases and waives any and all claims against the Company and its affiliated persons and companies, and is acceptable to the Company.
In all other circumstances of separation, including if the Executive resigns, retires or is terminated for Cause, the Executive shall not be entitled to receive any separation payments. For purposes of this Agreement, Cause shall mean the Executives:
(1) commission of an act of fraud or dishonesty, the purpose or effect of which, in the CEO and/or Boards sole determination, adversely affects the Company;
(2) conviction of a felony or a crime involving embezzlement, conversion of property or moral turpitude (whether by plea of nolo contendere or otherwise);
(3) engaging in willful or reckless misconduct or gross negligence in connection with any property or activity of the Company, the purpose or effect of which, in the CEO and/or Boards sole determination, adversely affects the Company;
(4) material breach of any of the Executives obligations as an employee or stockholder as set forth in the Companys Information Security Policies and Code of Business Conduct, the Confidentiality Agreement or any other agreement in effect between the Company and the Executive; provided that, in the event such breach is susceptible to cure, the Executive has been given written notice by the CEO and/or Board of such breach and 30 days from such notice fails to cure the breach; or
(5) failure or refusal to perform any material duty or responsibility under this Agreement or a determination that the Executive has breached his fiduciary obligations to the Company; provided that, in the event such failure, refusal or breach is susceptible to cure, the Executive has been given written notice by the CEO and/or Board of such failure, refusal or breach and 30 days from such notice fails to cure such failure, refusal or breach.
2. Notice. The Executive will send all communications to the Company in writing, to: Executive Vice President of Human Resources, Citi Trends, Inc., 104 Coleman Blvd., Savannah, Georgia 31408, Fax: (912) 443-3663. All communications from the Company to the Executive relating to this Agreement shall be sent to the Executive in writing at his office and home address as reflected in the Companys records.
3. Amendment. No provisions of this Agreement may be modified, waived, or discharged except by a written document signed by a duly authorized Company officer and the Executive. A waiver of any conditions or provisions of this Agreement in a given instance shall not be deemed a waiver of such conditions or provisions at any other time in the future.
4. Choice of Law and Venue. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Georgia (excluding any that mandate the use of another jurisdictions laws). Any action to enforce or for breach of this Agreement shall be brought exclusively in the state or federal courts of the County of Chatham, City of Savannah.
5. Successors. This Agreement shall be binding upon, and shall inure to the benefit of, the Executive and Executives estate, but the Executive may not assign or pledge this Agreement or any rights arising under it, except to the extent permitted under the terms of the benefit plans in which Executive participates. Without the Executives consent, the Company may assign this Agreement to any affiliate or to a successor to substantially all the business and assets of the Company.
6. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute the same instrument.
7. Entire Agreement. This Agreement and the Confidentiality Agreement between the parties constitute the entire agreement between the parties and supersede any and all prior contracts, agreements, or understandings between the parties which may have been entered into by Company and the Executive relating to the subject matter hereof. This Agreement may not be amended or modified in any manner except by an instrument in writing signed by both the Company and the Executive. The failure of either party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. All remedies are cumulative, including the right of either party to seek equitable relief in addition to money damages.
8. Employment At-Will Relationship. Executive and the Company agree that nothing in this Agreement alters the at-will nature of Executives employment relationship with the Company.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first written above.
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CITI TRENDS, INC. | |
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By: |
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R. Edward Anderson |
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Chairman and Chief Executive Officer |
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Ivy D. Council |
Exhibit 10.7
SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (this Agreement) made this 1st day of May 2013, is by and between Citi Trends, Inc., a Delaware corporation (the Company), and James A. Dunn, an individual (the Executive).
WHEREAS, the Company and the Executive are also parties to an Employment Non-Compete, Non-Solicit and Confidentiality Agreement (the Confidentiality Agreement) and certain restricted stock award and stock option agreements (collectively, the Equity Agreements) which are to remain in full force and effect;
NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the parties agree as follows:
1. Termination Payments and Benefits. Regardless of the circumstances of the Executives termination, Executive shall be entitled to payment when due of any earned and unpaid base salary, expense reimbursements and vacation days accrued prior to the termination of Executives employment, and other unpaid vested amounts or benefits under Company retirement and health benefit plans, and, as applicable, under Equity Agreements in accordance with their terms, and to no other compensation or benefits. If (i) the Company terminates the Executives employment without Cause, or (ii) the Executive terminates employment with the Company within twelve (12) months following the occurrence of a Change in Control, provided that within such period, (a) either Executives job duties have been materially and permanently diminished or the Executives compensation has been materially decreased and (b) Executive provides written notice to the Company within ninety (90) days of the occurrence of such event and the Company fails to cure the event within thirty (30) days following the Companys receipt of the Executives written notice, then, in the case of either (i) or (ii) above, the Company will provide the Executive with separation payments of twelve (12) months base salary at Executives base salary rate at the time of Executives termination or if greater, the Executives base rate in effect on the Change of Control Date; to be paid in twenty-six (26) regular bi-weekly pay periods beginning on the first pay period occurring after the sixtieth (60th) day following the Executives separation from service, provided the Executive executes and does not subsequently revoke the Separation and General Release Agreement referenced below within such sixty (60) day period.
For a period of twelve months from the Executives separation from service, the Company will pay to the Executive the monthly gross amount, minus all applicable taxes and withholdings, of Executives COBRA premiums for continued health insurance; provided the Executive executes and does not subsequently revoke the Separation and General Release Agreement referenced below within such sixty (60) day period.
For purposes of this Agreement, Change in Control shall mean the occurrence of any one of the following events:
(1) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the 1934 Act)) (a Person) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 50% or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities); provided, however, that for purposes of this subsection (1), the following acquisitions shall not constitute a Change of Control: (i) any acquisition by a Person who is on the date of this Agreement the beneficial owner of 50% or more of the Outstanding Company Voting Securities, (ii) any acquisition directly from the Company, (iii) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (v) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this definition; or
(2) individuals who, as of the date of this Agreement, constitute the Board of Directors of the Company (the Incumbent Board) cease for any reason to constitute at least a majority of the Board of Directors of the Company; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Companys shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors of the Company; or
(3) consummation of a reorganization, merger, consolidation or share exchange or sale or other disposition of all or substantially all of the assets of the Company (a Business Combination), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Companys assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Voting Securities, and (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(4) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
These separation payments are conditioned upon Executive executing a Separation and General Release Agreement at the time of termination which releases and waives any and all claims against the Company and its affiliated persons and companies, and is acceptable to the Company.
In all other circumstances of separation, including if the Executive resigns, retires or is terminated for Cause, the Executive shall not be entitled to receive any separation payments. For purposes of this Agreement, Cause shall mean the Executives:
(1) commission of an act of fraud or dishonesty, the purpose or effect of which, in the CEO and/or Boards sole determination, adversely affects the Company;
(2) conviction of a felony or a crime involving embezzlement, conversion of property or moral turpitude (whether by plea of nolo contendere or otherwise);
(3) engaging in willful or reckless misconduct or gross negligence in connection with any property or activity of the Company, the purpose or effect of which, in the CEO and/or Boards sole determination, adversely affects the Company;
(4) material breach of any of the Executives obligations as an employee or stockholder as set forth in the Companys Information Security Policies and Code of Business Conduct, the Confidentiality Agreement or any other agreement in effect between the Company and the Executive; provided that, in the event such breach is susceptible to cure, the Executive has been given written notice by the CEO and/or Board of such breach and 30 days from such notice fails to cure the breach; or
(5) failure or refusal to perform any material duty or responsibility under this Agreement or a determination that the Executive has breached his fiduciary obligations to the Company; provided that, in the event such failure, refusal or breach is susceptible to cure, the Executive has been given written notice by the CEO and/or Board of such failure, refusal or breach and 30 days from such notice fails to cure such failure, refusal or breach.
2. Notice. The Executive will send all communications to the Company in writing, to: Executive Vice President of Human Resources, Citi Trends, Inc., 104 Coleman Blvd., Savannah, Georgia 31408, Fax: (912) 443-3663. All communications from the Company to the Executive relating to this Agreement shall be sent to the Executive in writing at his office and home address as reflected in the Companys records.
3. Amendment. No provisions of this Agreement may be modified, waived, or discharged except by a written document signed by a duly authorized Company officer and the Executive. A waiver of any conditions or provisions of this Agreement in a given instance shall not be deemed a waiver of such conditions or provisions at any other time in the future.
4. Choice of Law and Venue. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Georgia (excluding any that mandate the use of another jurisdictions laws). Any action to enforce or for breach of this Agreement shall be brought exclusively in the state or federal courts of the County of Chatham, City of Savannah.
5. Successors. This Agreement shall be binding upon, and shall inure to the benefit of, the Executive and Executives estate, but the Executive may not assign or pledge this Agreement or any rights arising under it, except to the extent permitted under the terms of the benefit plans in which Executive participates. Without the Executives consent, the Company may assign this Agreement to any affiliate or to a successor to substantially all the business and assets of the Company.
6. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute the same instrument.
7. Entire Agreement. This Agreement and the Confidentiality Agreement between the parties constitute the entire agreement between the parties and supersede any and all prior contracts, agreements, or understandings between the parties which may have been entered into by Company and the Executive relating to the subject matter hereof. This Agreement may not be amended or modified in any manner except by an instrument in writing signed by both the Company and the Executive. The failure of either party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. All remedies are cumulative, including the right of either party to seek equitable relief in addition to money damages.
8. Employment At-Will Relationship. Executive and the Company agree that nothing in this Agreement alters the at-will nature of Executives employment relationship with the Company.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first written above.
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CITI TRENDS, INC. | |
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By: |
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Name: |
R. Edward Anderson |
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Title: |
Chairman and Chief Executive Officer |
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James A. Dunn |
Exhibit 10.8
SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (this Agreement) made this 1st day of May 2013, is by and between Citi Trends, Inc., a Delaware corporation (the Company), and Charles D. Crowell, an individual (the Executive).
WHEREAS, the Company and the Executive are also parties to an Employment Non-Compete, Non-Solicit and Confidentiality Agreement (the Confidentiality Agreement) and certain restricted stock award and stock option agreements (collectively, the Equity Agreements) which are to remain in full force and effect;
NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the parties agree as follows:
1. Termination Payments and Benefits. Regardless of the circumstances of the Executives termination, Executive shall be entitled to payment when due of any earned and unpaid base salary, expense reimbursements and vacation days accrued prior to the termination of Executives employment, and other unpaid vested amounts or benefits under Company retirement and health benefit plans, and, as applicable, under Equity Agreements in accordance with their terms, and to no other compensation or benefits. If (i) the Company terminates the Executives employment without Cause, or (ii) the Executive terminates employment with the Company within twelve (12) months following the occurrence of a Change in Control, provided that within such period, (a) either Executives job duties have been materially and permanently diminished or the Executives compensation has been materially decreased and (b) Executive provides written notice to the Company within ninety (90) days of the occurrence of such event and the Company fails to cure the event within thirty (30) days following the Companys receipt of the Executives written notice, then, in the case of either (i) or (ii) above, the Company will provide the Executive with separation payments of twelve (12) months base salary at Executives base salary rate at the time of Executives termination or if greater, the Executives base rate in effect on the Change of Control Date; to be paid in twenty-six (26) regular bi-weekly pay periods beginning on the first pay period occurring after the sixtieth (60th) day following the Executives separation from service, provided the Executive executes and does not subsequently revoke the Separation and General Release Agreement referenced below within such sixty (60) day period.
For a period of twelve months from the Executives separation from service, the Company will pay to the Executive the monthly gross amount, minus all applicable taxes and withholdings, of Executives COBRA premiums for continued health insurance; provided the Executive executes and does not subsequently revoke the Separation and General Release Agreement referenced below within such sixty (60) day period.
For purposes of this Agreement, Change in Control shall mean the occurrence of any one of the following events:
(1) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the 1934 Act)) (a Person) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 50% or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities); provided, however, that for purposes of this subsection (1), the following acquisitions shall not constitute a Change of Control: (i) any acquisition by a Person who is on the date of this Agreement the beneficial owner of 50% or more of the Outstanding Company Voting Securities, (ii) any acquisition directly from the Company, (iii) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (v) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this definition; or
(2) individuals who, as of the date of this Agreement, constitute the Board of Directors of the Company (the Incumbent Board) cease for any reason to constitute at least a majority of the Board of Directors of the Company; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Companys shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors of the Company; or
(3) consummation of a reorganization, merger, consolidation or share exchange or sale or other disposition of all or substantially all of the assets of the Company (a Business Combination), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Companys assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Voting Securities, and (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(4) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
These separation payments are conditioned upon Executive executing a Separation and General Release Agreement at the time of termination which releases and waives any and all claims against the Company and its affiliated persons and companies, and is acceptable to the Company.
In all other circumstances of separation, including if the Executive resigns, retires or is terminated for Cause, the Executive shall not be entitled to receive any separation payments. For purposes of this Agreement, Cause shall mean the Executives:
(1) commission of an act of fraud or dishonesty, the purpose or effect of which, in the CEO and/or Boards sole determination, adversely affects the Company;
(2) conviction of a felony or a crime involving embezzlement, conversion of property or moral turpitude (whether by plea of nolo contendere or otherwise);
(3) engaging in willful or reckless misconduct or gross negligence in connection with any property or activity of the Company, the purpose or effect of which, in the CEO and/or Boards sole determination, adversely affects the Company;
(4) material breach of any of the Executives obligations as an employee or stockholder as set forth in the Companys Information Security Policies and Code of Business Conduct, the Confidentiality Agreement or any other agreement in effect between the Company and the Executive; provided that, in the event such breach is susceptible to cure, the Executive has been given written notice by the CEO and/or Board of such breach and 30 days from such notice fails to cure the breach; or
(5) failure or refusal to perform any material duty or responsibility under this Agreement or a determination that the Executive has breached his fiduciary obligations to the Company; provided that, in the event such failure, refusal or breach is susceptible to cure, the Executive has been given written notice by the CEO and/or Board of such failure, refusal or breach and 30 days from such notice fails to cure such failure, refusal or breach.
2. Notice. The Executive will send all communications to the Company in writing, to: Executive Vice President of Human Resources, Citi Trends, Inc., 104 Coleman Blvd., Savannah, Georgia 31408, Fax: (912) 443-3663. All communications from the Company to the Executive relating to this Agreement shall be sent to the Executive in writing at his office and home address as reflected in the Companys records.
3. Amendment. No provisions of this Agreement may be modified, waived, or discharged except by a written document signed by a duly authorized Company officer and the Executive. A waiver of any conditions or provisions of this Agreement in a given instance shall not be deemed a waiver of such conditions or provisions at any other time in the future.
4. Choice of Law and Venue. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Georgia (excluding any that mandate the use of another jurisdictions laws). Any action to enforce or for breach of this Agreement shall be brought exclusively in the state or federal courts of the County of Chatham, City of Savannah.
5. Successors. This Agreement shall be binding upon, and shall inure to the benefit of, the Executive and Executives estate, but the Executive may not assign or pledge this Agreement or any rights arising under it, except to the extent permitted under the terms of the benefit plans in which Executive participates. Without the Executives consent, the Company may assign this Agreement to any affiliate or to a successor to substantially all the business and assets of the Company.
6. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute the same instrument.
7. Entire Agreement. This Agreement and the Confidentiality Agreement between the parties constitute the entire agreement between the parties and supersede any and all prior contracts, agreements, or understandings between the parties which may have been entered into by Company and the Executive relating to the subject matter hereof. This Agreement may not be amended or modified in any manner except by an instrument in writing signed by both the Company and the Executive. The failure of either party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. All remedies are cumulative, including the right of either party to seek equitable relief in addition to money damages.
8. Employment At-Will Relationship. Executive and the Company agree that nothing in this Agreement alters the at-will nature of Executives employment relationship with the Company.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year first written above.
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CITI TRENDS, INC. | |
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By: |
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Name: |
R. Edward Anderson |
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Title: |
Chairman and Chief Executive Officer |
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Charles D. Crowell |
Exhibit 31.1
CERTIFICATION
I, R. Edward Anderson, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the period ended August 3, 2013 of Citi Trends, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: September 4, 2013
/s/ R. Edward Anderson |
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R. Edward Anderson |
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Chief Executive Officer |
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(Principal Executive Officer) |
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Exhibit 31.2
CERTIFICATION
I, Bruce D. Smith, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the period ended August 3, 2013 of Citi Trends, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: September 4, 2013
/s/ Bruce D. Smith |
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Bruce D. Smith |
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Chief Financial Officer |
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(Principal Financial Officer) |
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Exhibit 32.1
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350, as adopted).
I, R. Edward Anderson, Chief Executive Officer of Citi Trends, Inc.,
and
I, Bruce D. Smith, Chief Financial Officer of Citi Trends, Inc., certify that:
1. We have reviewed this quarterly report on Form 10-Q of Citi Trends, Inc. for the period ended August 3, 2013;
2. Based on our knowledge, this quarterly report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
3. Based on our knowledge, the financial statements, and other information included in this quarterly report, fairly present in all material respects the financial condition and results of operations of the registrant as of, and for, the periods presented in this quarterly report.
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/s/ R. Edward Anderson |
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R. Edward Anderson |
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Chief Executive Officer |
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(Principal Executive Officer) |
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Date: September 4, 2013 |
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/s/ Bruce D. Smith |
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Bruce D. Smith |
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Chief Financial Officer |
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(Principal Financial Officer) |
A signed original of this written statement required by Section 906 has been provided to Citi Trends, Inc. and will be retained by Citi Trends, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.