As filed with the Securities and Exchange Commission on June 8, 2005.
Registration No. 333 -____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
under
The Securities Act of 1933
CITI TRENDS, INC.
(Exact name of issuer as specified in its charter)
Delaware 52-2150697
(State of Incorporation) (IRS Employer Identification Number)
102 Fahm Street
Savannah, Georgia 31401
(912) 236-1561
(Address of Principal Executive Offices)
Citi Trends 2005 Long-Term Incentive Plan
Citi Trends Amended and Restated 1999 Stock Option Plan
(Full title of the Plans)
---------------
Thomas W. Stoltz
Chief Financial Officer
Citi Trends, Inc.
102 Fahm Street
Savannah, Georgia 31401
(912) 236-1561
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
Proposed
maximum
Title of securities Amount to be offering Proposed max. Amount of
to be registered registered price per aggregate registration
share offering price fee
Shares of Common Stock 1,300,000(1) $16.58(2) $21,554,000.00(2) $2,536.91
Shares of Common Stock 1,817,594(3) $1.11(4) $ 2,017,529.34(4) $ 237.46
(1) Represents shares of common stock reserved for awards under the Citi Trends
2005 Long-Term Incentive Plan which may be issued under that plan.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h), based on the average high and low prices of the common
stock as quoted on the National Association of Securities Dealers Automated
Quotation (NASDAQ) National Market on June 1, 2005, which is within five
business days prior to the date of filing of this Registration Statement.
(3) Consists of shares of common stock reserved for awards under the Citi Trends
Amended and Restated 1999 Stock Option Plan (the "Old Plan").
(4) Such computation is based on the weighted average exercise price of $1.11
per share covering 1,817,594 outstanding options under the Old Plan.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Incorporated by reference in this Registration Statement are the
following documents filed by Citi Trends, Inc. (the "Registrant") with the
Securities and Exchange Commission (the "Commission"):
(i) The prospectus of the Registrant filed pursuant to Rule 424(b)(4)
under the Securities Act with the Commission on May 18, 2005 (the
"Prospectus");
(ii) The Registrant's audited financial statements for the year ended
January 29, 2005 contained in the Prospectus;
(iii) The description of the Registrant's common stock contained in the
Registrant's Registration Statement on Form 8-A12G, as filed with
the Commission on May 17, 2005, and any amendment or report filed
for the purpose of updating such description;
(iv) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
since January 29, 2005; and
(v) The Registrant's Current Reports on Forms 8-K subsequent to May
18, 2005, and up to and including the date of filing of this
Registration Statement.
In addition, all documents filed by the Registrant with the Commission
pursuant to Sections 13(a), 13(c), 14 or15(d) of the Exchange Act, prior to the
filing of a post-effective amendment to this Registration Statement which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents with the Commission.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein (or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein) modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
You may contact the Registrant to request copies of these filings as
follows:
Citi Trends, Inc.
Attn: Thomas W. Stoltz
102 Fahm Street
Savannah, Georgia 31401
Telephone: (912) 236-1561.
1
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
enables a corporation incorporated in the State of Delaware to eliminate or
limit, through provisions in its original or amended articles of incorporation,
the personal liability of a director for violations of the director's fiduciary
duties, except (i) for any breach of the director's duty of loyalty to the
corporation or its shareholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) any
liability imposed pursuant to Section 174 of the DGCL (providing for liability
of directors for unlawful payment of dividends or unlawful stock purchases or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit. Section 1 of Article Fifth of the Registrant's Second
Amended and Restated Certificate of Incorporation includes such limitations.
Section 145 of the DGCL provides that a corporation incorporated in the
State of Delaware may indemnify any person or persons, including officers and
directors, who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of
such corporation), by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such officer, director, employee, or agent acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the corporation's best interests and, for criminal proceedings, had no
reasonable cause to believe that the challenged conduct was unlawful. A
corporation incorporated in the State of Delaware may indemnify officers and
directors in an action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must provide
indemnification against the expenses that such officer or director actually and
reasonably incurred.
The Company's Amended and Restated Bylaws expressly provide for
indemnification of its directors and officers to the fullest extent permitted by
the DGCL, including advancement of expenses.
Section 145(g) of the DGCL authorizes a corporation incorporated in the
State of Delaware to provide liability insurance for directors and officers for
certain losses arising from claims or charges made against them while acting in
their capacities as directors or officers of the corporation. The Company's
Second Amended and Restated Certificate of Incorporation and Amended and
Restated Bylaws expressly provide that the Company shall indemnify officers and
directors and, to the extent permitted by the Company's board of directors,
employees and agents of the Company, to the full extent permitted by and in the
manner permissible under the laws of the State of
2
Delaware. In addition, the Amended and Restated Bylaws expressly permit the
board of directors to authorize the Company to purchase and maintain insurance
against any liability asserted against any director, officer, employee or agent
of the Company arising out of his capacity as such.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
Exhibit
No. Description
- --- -----------
2.1 Citi Trends 2005 Long-Term Incentive Plan.*
2.2 Citi Trends Amended and Restated 1999 Stock Option Plan.*
4.1 Second Amended and Restated Certificate of Incorporation of Citi
Trends, Inc., dated May 11, 2005.*
4.2 Amended and Restated Bylaws of Citi Trends, Inc., a Delaware
Corporation, adopted May 17, 2005.*
4.3 Specimen Share Certificate (incorporated by reference to Exhibit
4.1 of the Registrant's Registration Statement on Form S-1/A
filed with the Commission on April 29, 2005 (SEC File No.
123028)).
5.1 Opinion of Paul, Hastings, Janofsky & Walker LLP regarding the
legality of the restricted Common Shares being registered.*
23.1 Consent of KPMG LLP.*
23.2 Consent of Paul, Hastings, Janofsky & Walker LLP (included in
Exhibit 5.1).*
24.1 Power of Attorney (included on signature page hereto).*
* Filed Herewith
Item 9. Undertakings
(a) Rule 415 Offering. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a) (3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form
3
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a) (1) (i) and (a) (1) (ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933 (the "Securities Act"), each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) Subsequent Exchange Act Documents. The undersigned Registrant hereby
undertakes that, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Indemnification. The undersigned Registrant hereby undertakes, that,
insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Savannah, State of Georgia, on this 8th day of
June, 2005.
CITI TRENDS, INC.
By: /s/ R. Edward Anderson
----------------------
Name: R. Edward Anderson
Title: Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints R. Edward Anderson and Thomas W. Stoltz, and each of them, the true and
lawful attorney-in-fact and agent of the undersigned, with full power of
substitution and re-substitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement (or any
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended) and to
cause the same to be filed, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
granting to said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing whatsoever requisite or desirable to be
done in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
acts and things that said attorney-in-fact and agent, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ R. Edward Anderson Chief Executive Officer and June 8, 2005
- ---------------------- Director
R. Edward Anderson
/s/ Thomas W. Stoltz Chief Financial Officer June 8, 2005
- --------------------
Thomas W. Stoltz
/s/ Gregory P. Flynn Director June 8, 2005
- --------------------
Gregory P. Flynn
/s/ John S. Lupo Director June 8, 2005
- ----------------
John S. Lupo
/s/ Tracy L. Noll Director June 8, 2005
- -----------------
Tracy L. Noll
5
INDEX TO EXHIBITS
Exhibit
No. Description
- --- -----------
2.1 Citi Trends 2005 Long-Term Incentive Plan.*
2.2 Citi Trends Amended and Restated 1999 Stock Option Plan.*
4.1 Second Amended and Restated Certificate of Incorporation of Citi
Trends, Inc., dated May 11, 2005.*
4.2 Amended and Restated Bylaws of Citi Trends, Inc., a Delaware
Corporation, adopted May 17, 2005.*
4.3 Specimen Share Certificate (incorporated by reference to Exhibit
4.1 of the Registrant's Registration Statement on Form S-1/A
filed with the Commission on April 29, 2005 (SEC File No.
123028)).
5.1 Opinion of Paul, Hastings, Janofsky & Walker LLP regarding the
legality of the restricted Common Shares being registered.*
23.1 Consent of KPMG LLP.*
23.2 Consent of Paul, Hastings, Janofsky & Walker LLP (included in
Exhibit 5.1).*
24.1 Power of Attorney (included on signature page hereto).*
* Filed Herewith
6
Exhibit 2.1
CITI TRENDS
2005 LONG-TERM INCENTIVE PLAN
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
1. Establishment, Purpose and Effective Date.
(a) Establishment
(b) Purpose
(c) Effective Date
2. Definitions.
3. Scope of the Plan.
(a) Number of Shares Available Under the Plan
(b) Reduction in the Available Shares in Connection with Award Grants
(c) Effect of the Expiration, Termination, Cancellation or Settlement
of Awards
4. Administration.
(a) Committee Administration
(b) Board Reservation and Delegation
(c) Committee Authority
(d) Committee Determinations Final
5. Eligibility.
6. Conditions to Grants.
(a) General Conditions.
(b) Grant of Options and Exercise Price
(c) Grant of Incentive Stock Options
(d) Grant of Shares of Restricted Stock
(e) Grant of Performance Units and Performance Shares
(f) Grant of Stock Appreciation Rights
(g) Tandem Awards
7. Non-transferability.
8. Exercise.
(a) Exercise of Options and Stock Appreciation Rights
(b) Exercise of Performance Units
(c) Payment of Performance Shares
(d) Exercise, Cancellation, Expiration or Forfeiture of Tandem Awards
9. Effect of Certain Transactions.
10. Mandatory Withholding Taxes.
11. Termination of Employment.
12. Securities Law Matters.
13. No Funding Required.
14. No Employment Rights.
15. Rights as a Stockholder.
16. Nature of Payments.
17. Non-Uniform Determinations.
18. Adjustments.
19. Amendment of the Plan.
20. Termination of the Plan.
21. No Illegal Transactions.
22. Governing Law.
2
23. Severability.
24. Translations.
3
Exhibit 2.1
1. Establishment, Purpose and Effective Date.
(a) Establishment. The Company hereby establishes the Citi
Trends 2005 Long-Term Incentive Plan (as set forth herein and from time
to time amended, the "Plan").
(b) Purpose. The primary purpose of the Plan is to provide a
means by which key employees and directors of the Company can acquire
and maintain stock ownership, thereby strengthening their commitment to
the success of the Company and their desire to remain employed by the
Company, focusing their attention on managing the Company as an equity
owner, and aligning their interests with those of the Company's
stockholders. The Plan also is intended to attract and retain key
employees and to provide such employees with additional incentive and
reward opportunities designed to encourage them to enhance the
profitable growth of the Company.
(c) Effective Date. The Plan shall become effective upon its
adoption by the Board and a majority of the stockholders of the Company.
2. Definitions. As used in the Plan, terms defined parenthetically
immediately after their use shall have the respective meanings provided by such
definitions and the terms set forth below shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
(a) "Award" means Options, shares of restricted Stock,
performance units, performance shares, Stock Appreciation Rights
or Director's Shares granted under the Plan.
(b) "Award Agreement" means the written agreement by which an
Award is evidenced.
(c) "Beneficial Owner," "Beneficially Owned" and "Beneficially
Owning" shall have the meanings applicable under Rule 13d-3
promulgated under the 1934 Act.
(d) "Board" means the board of directors of the Company.
(e) "Change in Capitalization" means any increase or reduction in
the number of shares of Stock, or any change in the shares of
Stock or exchange of shares of Stock for a different number or
kind of shares or other securities by reason of a stock dividend,
extraordinary dividend, stock split, reverse stock split, share
combination, reclassification, recapitalization, merger,
consolidation, spin-off, split-up, reorganization, issuance of
warrants or rights, liquidation, exchange of shares, repurchase
of shares, change in corporate structure, or similar event, of or
by the Company.
(f) "Change of Control" means any of the following:
(i) the acquisition by any Person of Beneficial
Ownership of Voting Securities which, when added to the Voting
Securities then Beneficially Owned by such Person, would result
in such Person Beneficially Owning 33% or more of the combined
Voting Power of the Company's then outstanding Voting Securities;
provided, however, that for purposes of this paragraph (i), a
Person shall not be deemed to have made an acquisition of Voting
Securities if such Person: (1) acquires Voting Securities as a
result of a stock split, stock dividend or other corporate
restructuring in which all stockholders of the class of such
Voting Securities are treated on a pro rata basis; (2) acquires
the Voting Securities directly from the Company; (3) becomes the
4
Beneficial Owner of 33% or more of the combined Voting Power of
the Company's then outstanding Voting Securities solely as a
result of the acquisition of Voting Securities by the Company or
any Subsidiary which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares
Beneficially Owned by such Person, provided that if (x) a Person
would own at least such percentage as a result of the acquisition
by the Company or any Subsidiary and (y) after such acquisition
by the Company or any Subsidiary, such Person acquires Voting
Securities, then an acquisition of Voting Securities shall have
occurred; (4) is the Company or any corporation or other Person
of which a majority of its voting power or its equity securities
or equity interest is owned directly or indirectly by the Company
(a "Controlled Entity"); or (5) acquires Voting Securities in
connection with a "Non-Control Transaction" (as defined in
paragraph (iii) below); or
(ii) the individuals who, as of the Effective Date, are
members of the Board (the "Incumbent Board") cease for any reason
to constitute at least two-thirds of the Board; provided,
however, that if either the election of any new director or the
nomination for election of any new director by the Company's
stockholders was approved by a vote of at least two-thirds of the
Incumbent Board prior to such election or nomination, such new
director shall be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered
a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated under
the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board (a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy
Contest; or
(iii) consummation of:
(A) a merger, consolidation or reorganization
involving the Company (a "Business Combination"), unless
(1) the stockholders of the Company,
immediately before the Business Combination, own,
directly or indirectly immediately following the
Business Combination, at least a majority of the
combined voting power of the outstanding voting
securities of the corporation resulting from the
Business Combination (the "Surviving Corporation")
in substantially the same proportion as their
ownership of the Voting Securities immediately
before the Business Combination, and
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution
of the agreement providing for the Business
Combination constitute at least a majority of the
members of the Board of Directors of the Surviving
Corporation, and
(3) no Person (other than the Company or
any Controlled Entity, a trustee or other fiduciary
holding securities under one or
5
more employee benefit plans or arrangements (or any
trust forming a part thereof) maintained by the
Company, the Surviving Corporation or any
Controlled Entity, or any Person who, immediately
prior to the Business Combination, had Beneficial
Ownership of 33% or more of the then outstanding
Voting Securities) has Beneficial Ownership of 33%
or more of the combined voting power of the
Surviving Corporation's then outstanding voting
securities (a Business Combination satisfying the
conditions of clauses (1), (2) and (3) of this
subparagraph (A) shall be referred to as a
"Non-Control Transaction");
(B) a complete liquidation or dissolution of the
Company; or
(C) the sale or other disposition of all or
substantially all of the assets of the Company (other than
a transfer to a Controlled Entity).
Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely because 33% or more of the then outstanding Voting Securities is
Beneficially Owned by (x) a trustee or other fiduciary holding securities under
one or more employee benefit plans or arrangements (or any trust forming a part
thereof) maintained by the Company or any Controlled Entity or (y) any
corporation which, immediately prior to its acquisition of such interest, is
owned directly or indirectly by the stockholders of the Company in the same
proportion as their ownership of stock in the Company immediately prior to such
acquisition.
(g) "Committee" means the committee of the Board appointed
pursuant to Article 4.
(h) "Company" means Citi Trends, a Delaware corporation.
(i) "Disability" means a mental or physical condition which, in
the opinion of the Committee, renders a Grantee unable or
incompetent to carry out the job responsibilities which such
Grantee held or the duties to which such Grantee was assigned at
the time the disability was incurred, and which is expected to
be permanent or for an indefinite duration.
(j) "Effective Date" means the date that the Plan is adopted by
the Board.
(k) "Fair Market Value" of any security of the Company or any
other issuer means, as of any applicable date:
(i) if the security is listed for trading on the New
York Stock Exchange, the closing price at the close of the
primary trading session of the security on such date on the New
York Stock Exchange, or if there has been no such closing price
of the security on such date, on the next preceding date on which
there was such a closing price, or
(ii) if the security is not so listed, but is listed on
another national securities exchange, the closing price at the
close of the primary trading session of the security on such date
on such exchange, or if there has been no such closing price of
the security on such date, on the next preceding date on which
there was such a closing price, or
(iii) if the security is not listed for trading on the
New York Stock Exchange or on another national securities
exchange, the last sale price at the end of normal
6
market hours of the security on such date as quoted on the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or, if no such price shall have been so quoted
for such date, on the next preceding date for which such price
was so quoted, or
(iv) if the security is not listed for trading on a
national securities exchange or is not authorized for quotation
on NASDAQ, the fair market value of the security as determined in
good faith by the Committee, and in the case of Incentive Stock
Options, in accordance with Section 422 of the Internal Revenue
Code.
(l) "Grant Date" means the date of grant of an Award determined
in accordance with Article 6.
(m) "Grantee" means an individual who has been granted an Award.
(n) "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Internal Revenue Code and
designated by the Committee as an Incentive Stock Option.
(o) "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, and regulations and rulings thereunder.
References to a particular Section of the Internal Revenue Code
shall include references to successor provisions.
(p) "Measuring Period" has the meaning specified in Article
6(e)(ii)(A).
(q) "Minimum Consideration" means the $.01 par value per share of
Stock or such larger amount determined pursuant to resolution of
the Board to be capital within the meaning of Section 154 of the
Delaware General Corporation Law.
(r) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(s) "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option or other type of statutory stock option
under the Internal Revenue Code.
(t) "Option" means an option to purchase Stock granted or issued
under the Plan.
(u) "Exercise Price" means the per share purchase price of (i)
Stock subject to an Option, (ii) Stock subject to a Stock
Appreciation Right, or (iii) restricted Stock subject to an
Option.
(v) "Performance-Based Compensation" means any Option or Award
that is intended to constitute "performance based compensation"
within the meaning of Section 162(m)(4)(C) of the Internal
Revenue Code and the regulations promulgated thereunder.
(w) "Performance Percentage" has the meaning specified in Article
6(e)(ii)(C).
(x) "Person" means a person within the meaning of Sections 13(d)
and 14(d) of the 1934 Act.
(y) "Plan" has the meaning set forth in Article 1(a).
(z) "SEC" means the Securities and Exchange Commission.
(aa) "Section 16 Grantee" means a person subject to potential
liability with respect to equity securities of the Company under
Section 16(b) of the 1934 Act.
(bb) "Stock" means common stock, par value $.01 per share, of the
Company.
(cc) "Stock Appreciation Right" means a right that permits the
individual to receive a payment equal to the excess of the
stock's value at exercise over the Exercise Price.
(dd) "Subsidiary" means (i) except as provided in subsection (ii)
below, any corporation which is a subsidiary corporation within
the meaning of Section 424(f) of the Internal Revenue Code with
respect to the Company, and (ii) in relation to the eligibility
to receive Options or Awards other than Incentive Stock Options,
any entity, whether or not incorporated, in which the Company
directly or indirectly owns either (A) Voting Securities
possessing at least 50% of the Voting Power of
7
such entity, or (B) if such entity does not issue Voting
Securities, at least 50% of the ownership interests in such
entity.
(ee) "10% Owner" means a person who owns stock (including stock
treated as owned under Section 424(d) of the Internal Revenue
Code) possessing more than 10% of the Voting Power of the
Company.
(ff) "Termination of Employment" occurs the first day on which an
individual is for any reason no longer employed by, or providing
services to, the Company or any of its Subsidiaries, or with
respect to an individual who is an employee of a Subsidiary, the
first day on which the Company no longer owns Voting Securities
possessing at least 50% of the Voting Power of such Subsidiary.
(gg) "Voting Power" means the combined voting power of the then
outstanding Voting Securities.
(hh) "Voting Securities" means, with respect to the Company or
any Subsidiary, any securities issued by the Company or such
Subsidiary, respectively, which generally entitle the holder
thereof to vote for the election of directors of the Company.
3. Scope of the Plan.
(a) Number of Shares Available Under the Plan. The maximum
number of shares of Stock that may be made the subject of Awards granted
under the Plan is 1,300,000 (or the number and kind of shares of Stock
or other securities to which such shares of Stock are adjusted upon a
Change in Capitalization pursuant to Article 18); provided, however,
that in the aggregate, not more than 50% of total shares of Stock may be
made the subject of Awards other than Options. The maximum number of
shares of Stock that may be the subject of Options and Awards granted to
any individual pursuant to the Plan in any calendar year period may not
exceed 5% of total number of reserved shares. The maximum dollar amount
of cash or the Fair Market Value of Stock that any individual may
receive in any calendar year in respect of performance units denominated
in dollars may not exceed $2,500,000. The Company shall reserve for the
purpose of the Plan, out of its authorized but unissued shares of Stock
or out of shares held in the Company's treasury, or partly out of each,
such number of shares as shall be determined by the Board. The Board
shall have the authority to cause the Company to purchase from time to
time shares of Stock to be held as treasury shares and used for or in
connection with Awards.
(b) Reduction in the Available Shares in Connection with Award
Grants. Upon the grant of an Award, the number of shares of Stock
available under Article 3(a) for the granting of further Awards shall be
reduced as follows:
(i) Generally. In connection with the granting of each
Award, other than a performance unit denominated in dollars, the
number of shares of Stock available under Article 3(a) for the
granting of further Awards shall be reduced by a number of shares
equal to the number of shares of Stock in respect of which the
Award is granted or denominated; provided, however, that if any
Award is exercised by tendering shares of Stock, either actually
or by attestation, to the Company as full or partial payment of
the exercise price, the maximum number of shares of Stock
available under Article 3(a) shall be increased by the number of
shares of Stock so tendered.
(ii) Performance Units Denominated in Dollars. In
connection with the granting of a performance unit denominated in
dollars, there shall be no reduction in the
8
number of shares of Stock available under Article 3(a) for the
granting of further Awards. If a performance unit denominated in
dollars is settled in Stock, the number of shares of Stock
available under Article 3(a) for the granting of further Awards
shall be reduced at the time of settlement by the number of
shares of Stock issued in connection with the settlement of the
performance unit.
(iii) Cash Settlement; Shares Subject to Multiple Awards.
Notwithstanding anything contained herein to the contrary, (A) if
an Award is granted that cannot be settled in shares of Stock,
there shall be no reduction in the number of shares of Stock
available under Article 3(a) for the granting of further Awards,
and (B) where two or more Awards are granted with respect to the
same shares of Stock, such shares shall be taken into account
only once for purposes of this Article 3(b).
(c) Effect of the Expiration, Termination, Cancellation or
Settlement of Awards. If and to the extent an Option or Award expires,
terminates or is canceled, settled in cash (including the settlement of
tax withholding obligations using shares of Stock) or forfeited for any
reason without having been exercised in full (including, without
limitation, a cancellation of an Option pursuant to Article 4(c)(vi)),
the shares of Stock associated with the expired, terminated, canceled,
settled or forfeited portion of the Award (to the extent the number of
shares available for the granting of Awards was reduced pursuant to
Article 3(b)) shall again become available for Awards under the Plan.
4. Administration.
(a) Committee Administration. The Plan shall be administered by
the Committee, which shall consist of not less than two "non-employee
directors" within the meaning of Rule 16b-3, and to the extent necessary
for any Award intended to qualify as Performance-Based Compensation to
so qualify, each member of the Committee shall be an "outside director"
within the meaning of Section 162(m) of the Internal Revenue Code. For
purposes of the preceding sentence, if one or more members of the
Committee is not a "non-employee director" within the meaning of Rule
16b-3 and an "outside director" within the meaning of Section 162(m) of
the Internal Revenue Code but recuses himself or herself or abstains
from voting with respect to a particular action taken by the Committee,
then the Committee, with respect to that action, shall be deemed to
consist only of the members of the Committee who have not recused
themselves or abstained from voting.
(b) Board Reservation and Delegation. Except to the extent
necessary for any Award intended to qualify as Performance-Based
Compensation to so qualify, the Board may, in its discretion, reserve to
itself or exercise any or all of the authority and responsibility of the
Committee hereunder and may also delegate to another committee of the
Board any or all of the authority and responsibility of the Committee
with respect to Awards to Grantees who are not Section 16 Grantees at
the time any such delegated authority or responsibility is exercised.
Such other committee may consist of one or more directors who may, but
need not be, officers or employees of the Company or of any of its
Subsidiaries. To the extent that the Board has reserved to itself, or
exercised the authority and responsibility of the Committee, or
delegated the authority and responsibility of the Committee to such
other committee, all references to the Committee in the Plan shall be to
the Board or to such other committee.
9
(c) Committee Authority. The Committee shall have full and final
authority, in its discretion, but subject to the express provisions of
the Plan, as follows:
(i) to grant Awards,
(ii) to determine (A) when Awards may be granted, and
(B) whether or not specific Awards shall be identified with other
specific Awards, and if so, whether they shall be exercisable
cumulatively with, or alternatively to, such other specific
Awards,
(iii) to interpret the Plan and to make all
determinations necessary or advisable for the administration of
the Plan,
(iv) to prescribe, amend, and rescind rules and
regulations relating to the Plan, including, without limitation,
rules with respect to the exercisability and nonforfeitability of
Awards upon the Termination of Employment of a Grantee,
(v) to determine the terms and provisions of the Award
Agreements, which need not be identical and, with the consent of
the Grantee, to modify any such Award Agreement at any time,
(vi) to cancel, with the consent of the Grantee,
outstanding Awards,
(vii) except with respect to Awards made to nonemployee
directors, to accelerate the exercisability of, and to accelerate
or waive any or all of the restrictions and conditions applicable
to, any Award,
(viii) to authorize any action of or make any
determination by the Company as the Committee shall deem
necessary or advisable for carrying out the purposes of the Plan,
and
(ix) to impose such additional conditions,
restrictions, and limitations upon the grant, exercise or
retention of Awards as the Committee may, before or concurrently
with the grant thereof, deem appropriate, including, without
limitation, requiring simultaneous exercise of related identified
Awards, and limiting the percentage of Awards which may from time
to time be exercised by a Grantee.
Notwithstanding anything herein to the contrary, the exercise price of
outstanding Options may not be decreased (except pursuant to Article 18 of the
Plan) and Options may not be cancelled or forfeited and re-granted to effect the
same result. Notwithstanding anything herein to the contrary, with respect to
Grantees working outside the United States, the Committee may determine the
terms and provisions of the Award Agreements and make such adjustments or
modifications to Awards as are necessary and advisable to fulfill the purposes
of the Plan.
(d) Committee Determinations Final. The determination of the
Committee on all matters relating to the Plan or any Award Agreement
shall be conclusive and final. No member of the Committee shall be
liable for any action or determination made in good faith with respect
to the Plan or any Award.
10
5. Eligibility.
Awards may be granted to any employee of the Company, and to any
nonemployee director of the Company. In selecting the individuals to whom Awards
may be granted, as well as in determining the number of shares of Stock subject
to, and the other terms and conditions applicable to, each Award, the Committee
shall take into consideration such factors as it deems relevant in promoting the
purposes of the Plan.
6. Conditions to Grants.
(a) General Conditions.
(i) The Grant Date of an Award shall be the date on
which the Committee grants the Award or such later date as
specified in advance by the Committee.
(ii) The term of each Award (subject to Article 6(c)
with respect to Incentive Stock Options) shall be a period of not
more than ten years from the Grant Date and shall be subject to
earlier termination as provided herein or in the applicable Award
Agreement; provided, however, that the Committee may provide that
an Option (other than an Incentive Stock Option) may, upon the
death of the Grantee, be exercised for up to one year following
the date of the Grantee's death even if such period extends
beyond ten years from the date the Option is granted.
(iii) A Grantee may, if otherwise eligible, be granted
additional Awards in any combination.
(iv) The Committee may grant Awards with terms and
conditions which differ among the Grantees thereof. To the extent
not set forth in the Plan, the terms and conditions of each Award
shall be set forth in an Award Agreement.
(b) Grant of Options and Exercise Price. The Committee may, in
its discretion, shall grant Options as follows:
(i) Employee Options. Options to acquire unrestricted
Stock or restricted Stock may be granted to any employee eligible
under Article 5 to receive Awards. No later than the Grant Date
of any Option, the Committee shall determine the Exercise Price.
(ii) Nonemployee Director Options.
(A) Discretionary Grants. Nonqualified Stock
Options to acquire unrestricted or restricted stock may be
granted to nonemployee directors of the Company from time
to time.
(B) Terms Applicable to all Nonemployee Director
Options. Each Nonqualified Stock Option granted to a
nonemployee director will be granted with an Exercise
Price of not less than 100% of the Fair Market Value of
the Stock on the Grant Date, will become exercisable with
respect to one-third of the underlying shares on each of
the first, second and third anniversaries of the
11
Grant Date, and will have a term of not more than ten
years. If a nonemployee director ceases to serve as a
director of the Company for any reason, any Nonqualified
Stock Option granted to such nonemployee director shall be
exercisable during its remaining term, to the extent that
such Nonqualified Stock Option was exercisable on the date
such nonemployee director ceased to be a director.
(c) Grant of Incentive Stock Options. At the time of the grant
of any Option to an employee of the Company, the Committee may designate
that such Option shall be an Incentive Stock Option. Any Option
designated as an Incentive Stock Option:
(i) shall have an Exercise Price of (A) not less than
100% of the Fair Market Value of the Stock on the Grant Date or
(B) in the case of a 10% Owner, not less than 110% of the Fair
Market Value of the Stock on the Grant Date;
(ii) shall have a term of not more than ten years (five
years, in the case of a 10% Owner) from the Grant Date, and shall
be subject to earlier termination as provided herein or in the
applicable Award Agreement;
(iii) shall, if, with respect to any grant, the
aggregate Fair Market Value of Stock (determined on the Grant
Date) of all Incentive Stock Options granted under the Plan and
"incentive stock options" (within the meaning of Section 422 of
the Internal Revenue Code) granted under any other stock option
plan of the Grantee's employer or any parent or subsidiary
thereof (in either case determined without regard to this Article
6(c)) are exercisable for the first time during any calendar year
exceeds $100,000, be treated as Nonqualified Stock Options. For
purposes of the foregoing sentence, Incentive Stock Options shall
be treated as Nonqualified Stock Options according to the order
in which they were granted such that the most recently granted
Incentive Stock Options are first treated as Nonqualified Stock
Options;
(iv) shall be granted within ten years from the earlier
of the date the Plan is adopted by the Board or the date the Plan
is approved by the stockholders of the Company; and
(v) shall require the Grantee to notify the Committee
of any disposition of any Stock issued pursuant to the exercise
of the Incentive Stock Option under the circumstances described
in Section 421(b) of the Internal Revenue Code (relating to
certain disqualifying dispositions), within ten days of such
disposition.
(d) Grant of Shares of Restricted Stock.
(i) The Committee may, in its discretion, grant shares
of restricted Stock to any individual eligible under Article 5 to
receive Awards.
(ii) Before the grant of any shares of restricted
Stock, the Committee shall determine, in its discretion:
12
(A) whether the certificates for such shares shall
be delivered to the Grantee or held (together with a stock
power executed in blank by the Grantee) in escrow by the
Secretary of the Company until such shares become
nonforfeitable or are forfeited;
(B) the per share purchase price of such shares,
which may be zero; provided, however, that the per share
purchase price of all such shares (other than treasury
shares) shall not be less than the Minimum Consideration
for each such share;
(C) the restrictions applicable to such grant and
the time or times upon which any applicable restrictions
on the restricted Stock shall lapse; provided, however,
that except in the case of shares of restricted Stock
issued to nonemployee directors or the case of restricted
stock issued in full or partial settlement of another
Award or other earned compensation, or in the event of the
Grantee's Termination of Employment, as determined by the
Committee and set forth in an Award Agreement, such
restrictions shall not lapse prior to the first
anniversary of the Grant Date of the restricted Stock; and
(D) whether the payment to the Grantee of
dividends, or a specified portion thereof, declared or
paid on such shares by the Company shall be deferred until
the lapsing of the restrictions imposed upon such shares
and shall be held by the Company for the account of the
Grantee, whether such dividends shall be reinvested in
additional shares of restricted Stock (to the extent
shares are available under Article 3) subject to the same
restrictions and other terms as apply to the shares with
respect to which such dividends are issued or otherwise
reinvested in Stock or held in escrow, whether interest
will be credited to the account of the Grantee with
respect to any dividends which are not reinvested in
restricted or unrestricted Stock, and whether any Stock
dividends issued with respect to the restricted Stock to
be granted shall be treated as additional shares of
restricted Stock.
(iii) Payment of the purchase price (if greater than
zero) for shares of restricted Stock shall be made in full by the
Grantee before the delivery of such shares and, in any event, no
later than ten days after the Grant Date for such shares. Such
payment may be made, as determined by the Committee in its
discretion, in any one or any combination of the following:
(A) cash; or
(B) with the prior approval of the Committee,
shares of restricted or unrestricted Stock owned by the
Grantee prior to such grant and valued at its Fair Market
Value on the business day immediately preceding the date
of payment;
provided, however, that, in the case of payment in shares of
restricted or unrestricted Stock, if the purchase price for
restricted Stock ("New Restricted Stock") is paid with shares of
restricted Stock ("Old Restricted Stock"), the restrictions
applicable to
13
the New Restricted Stock shall be the same as if the Grantee had
paid for the New Restricted Stock in cash unless, in the judgment
of the Committee, the Old Restricted Stock was subject to a
greater risk of forfeiture, in which case a number of shares of
New Restricted Stock equal to the number of shares of Old
Restricted Stock tendered in payment for New Restricted Stock
shall be subject to the same restrictions as the Old Restricted
Stock, determined immediately before such payment.
(iv) The Committee may, but need not, provide that all
or any portion of a Grantee's Award of restricted Stock shall be
forfeited:
(A) except as otherwise specified in the Award
Agreement, upon the Grantee's Termination of Employment
within a specified time period after the Grant Date; or
(B) if the Company or the Grantee does not achieve
specified performance goals within a specified time period
after the Grant Date and before the Grantee's Termination
of Employment; or
(C) upon failure to satisfy such other
restrictions as the Committee may specify in the Award
Agreement.
(v) If a share of restricted Stock is forfeited, then:
(A) the Grantee shall be deemed to have resold
such share of restricted Stock to the Company at the
lesser of (1) the purchase price paid by the Grantee (such
purchase price shall be deemed to be zero dollars ($0) if
no purchase price was paid) or (2) the Fair Market Value
of a share of Stock on the date of such forfeiture;
(B) the Company shall pay to the Grantee the
amount determined under clause (A) of this sentence, if
not zero, as soon as is administratively practicable, but
in any case within 90 days after forfeiture; and
(C) such share of restricted Stock shall cease to
be outstanding, and shall no longer confer on the Grantee
thereof any rights as a stockholder of the Company, from
and after the date of the Company's tender of the payment
specified in clause (B) of this sentence, whether or not
such tender is accepted by the Grantee, or the date the
restricted Stock is forfeited if no purchase price was
paid for the restricted Stock.
(vi) Any share of restricted Stock shall bear an
appropriate legend specifying that such share is non-transferable
and subject to the restrictions set forth in the Plan and the
Award Agreement. If any shares of restricted Stock become
nonforfeitable, the Company shall cause certificates for such
shares to be issued or reissued without such legend and delivered
to the Grantee or, at the request of the Grantee, shall cause
such shares to be credited to a brokerage account specified by
the Grantee.
(e) Grant of Performance Units and Performance Shares.
14
(i) The Committee may, in its discretion, grant
performance units or performance shares to any employee of the
Company eligible under Article 5 to receive Awards.
(ii) Before the grant of any performance unit or
performance share, the Committee shall:
(A) designate a period, of not less than one year
nor more than five years, for the measurement of the
extent to which performance goals are attained (the
"Measuring Period");
(B) determine performance goals applicable to such
grant; provided, however, that the performance goals with
respect to a Measuring Period shall be established in
writing by the Committee by the earlier of (x) the date on
which a quarter of the Measuring Period has elapsed or (y)
the date which is ninety (90) days after the commencement
of the Measuring Period, and in any event while the
performance relating to the performance goals remain
substantially uncertain; and
(C) assign a "Performance Percentage" to each
level of attainment of performance goals during the
Measuring Period, with the percentage applicable to
minimum attainment being zero percent (0%) and the
percentage applicable to optimum attainment to be
determined by the Committee from time to time.
(iii) The performance goals applicable to performance
units or performance shares shall, in the discretion of the
Committee, be based on stock price, earnings per share, operating
income, return on equity or assets, cash flow, EBITDA, revenues,
overall revenue or sales growth, expense reduction or management,
market position, total shareholder return, return on investment,
earnings before interest and taxes (EBIT), net income, return on
net assets, economic value added, shareholder value added, cash
flow return on investment, net operating profit, net operating
profit after tax, return on capital, and return on invested
capital, or any combination of the foregoing. Such performance
goals may be absolute or relative (to prior performance or to the
performance of one or more other entities or external indices)
and may be expressed in terms of a progression within a specified
range. At the time of the granting of performance units or
performance shares, or at any time thereafter, in either case to
the extent permitted under Section 162(m) of the Internal Revenue
Code and the regulations thereunder without adversely affecting
the treatment of the performance unit or performance share as
Performance-Based Compensation, the Committee may provide for the
manner in which performance will be measured against the
performance goals (or may adjust the performance goals) to
reflect the impact of specified corporate transactions, special
charges, foreign currency effects, accounting or tax law changes
and other extraordinary or nonrecurring events.
(iv) Prior to the vesting, payment, settlement or
lapsing of any restrictions with respect to any performance unit
or performance share that is intended to constitute
Performance-Based Compensation made to a Grantee who is subject
to
15
Section 162(m) of the Internal Revenue Code, the Committee shall
certify in writing that the applicable performance goals have
been satisfied.
(v) Unless otherwise expressly stated in the relevant
Award Agreement, each performance unit and performance share
granted under the Plan is intended to be Performance-Based
Compensation and the Committee shall interpret and administer the
applicable provisions of the Plan in a manner consistent
therewith. Any provisions inconsistent with such treatment shall
be inoperative and shall not adversely affect the treatment of
performance units or performance shares granted hereunder as
Performance-Based Compensation. The Committee shall not be
entitled to exercise any discretion otherwise authorized
hereunder with respect to such performance unit or performance
share if the ability to exercise such discretion or the exercise
of such discretion itself would cause the compensation
attributable to such performance unit or performance share to
fail to qualify as Performance-Based Compensation.
(f) Grant of Stock Appreciation Rights. The Committee may, in
its discretion, grant Stock Appreciation Rights to any employee who is
eligible under Article 5 to receive Awards as follows:
(i) Employee Stock Appreciation Rights. Stock
Appreciation Rights may be granted to any employee eligible under
Article 5 to receive Awards. No later than the Grant Date of any
Stock Appreciation Right, the Committee shall determine the
Exercise Price.
(ii) Nonemployee Director Stock Appreciation Rights.
(A) Discretionary Grants. Stock Appreciation
Rights may be granted to nonemployee directors of the
Company from time to time.
(B) Terms Applicable to all Nonemployee Director
Stock Appreciation Rights. Each Stock Appreciation Right
granted to a nonemployee director will be granted with an
Exercise Price not less than 100% of the Fair Market Value
of the Stock on the Grant Date, will become exercisable
with respect to one-third of the underlying shares on each
of the first, second and third anniversaries of the Grant
Date, and will have a term of not more than ten years. If
a nonemployee director ceases to serve as a director of
the Company for any reason, any Stock Appreciation Rights
granted to such nonemployee director shall be exercisable
during its remaining term, to the extent that such Stock
Appreciation Right was exercisable on the date such
nonemployee director ceased to be a director.
(g) Tandem Awards. The Committee may grant and identify any
Award with any other Award granted under the Plan ("Tandem Award"), on
terms and conditions determined by the Committee.
7. Non-transferability.
16
Unless set forth in the applicable Award Agreement with respect to
Awards other than Incentive Stock Options, no Award (other than an Award of
restricted Stock) granted hereunder shall by its terms be assignable or
transferable except by will or the laws of descent and distribution or, in the
case of an Option other than an Incentive Stock Option, pursuant to a domestic
relations order (within the meaning of Rule 16a-12 promulgated under the
Exchange Act). An Option may be exercised during the lifetime of a Grantee only
by the Grantee or his or her guardian or legal representatives or, except as
would cause an Incentive Stock Option to lose its status as such, by a
bankruptcy trustee. Notwithstanding the foregoing, the Committee may set forth
in the Award Agreement evidencing an Award (other than an Incentive Stock
Option) at the time of grant or thereafter, that the Award may be transferred to
members of the Grantee's immediate family, to trusts solely for the benefit of
such immediate family members and to partnerships in which such family members
and/or trusts are the only partners, and for purposes of this Plan, a transferee
of an Award shall be deemed to be the Grantee. For this purpose, immediate
family means the Grantee's spouse, parents, children, stepchildren and
grandchildren and the spouses of such parents, children, stepchildren and
grandchildren. The terms of an Award shall be final, binding and conclusive upon
the beneficiaries, executors, administrators, heirs and successors of the
Grantee. Each share of restricted Stock shall be non-transferable until such
share becomes nonforfeitable.
8. Exercise.
(a) Exercise of Options and Stock Appreciation Rights. Subject
to such terms and conditions as the Committee may impose, each Option or
Stock Appreciation Right shall be exercisable in one or more
installments commencing not earlier than the first anniversary of the
Grant Date of such Option or Stock Appreciation Right; provided,
however, that all Options or Stock Appreciation Rights held by each
Grantee shall become fully (100%) vested and exercisable upon the
occurrence of a Change of Control regardless of whether the acceleration
of the exercisability of such Options or Stock Appreciation Rights would
cause such Options to lose their eligibility for treatment as Incentive
Stock Options. Each Option or Stock Appreciation Right shall be
exercised by delivery to the Company of written notice of intent to
purchase a specific number of shares of Stock subject to the Option. The
Exercise Price of any shares of Stock as to which an Option or Stock
Appreciation Right shall be exercised shall be paid in full at the time
of the exercise. Payment may be made, as determined by the Committee in
its discretion with respect to Options or Stock Appreciation Rights
granted to eligible employees and in all cases with respect to Options
or Stock Appreciation Rights granted to nonemployee directors, in any
one or any combination of the following:
(i) cash,
(ii) shares of unrestricted Stock held by the Grantee
for at least six months (or such lesser period as may be
permitted by the Committee) prior to the exercise of the Option
or Stock Appreciation Right, and valued at its Fair Market Value
on the last business day immediately preceding the date of
exercise, or
(iii) through simultaneous sale through a broker of
shares of unrestricted Stock acquired on exercise, as permitted
under Regulation T of the Federal Reserve Board.
17
Shares of unrestricted Stock acquired by a Grantee on exercise of an
Option shall be delivered to the Grantee or, at the request of the Grantee,
shall be credited directly to a brokerage account specified by the Grantee.
(b) Exercise of Performance Units.
(i) Subject to such terms and conditions as the
Committee may impose, and unless otherwise provided in the
applicable Award Agreement, if, with respect to any performance
unit, the Committee has determined that the minimum performance
goals have been achieved during the applicable Measuring Period,
then such performance unit shall be deemed exercised on the date
on which it first becomes exercisable.
(ii) The benefit for each performance unit exercised
shall be an amount equal to the product of
(A) the Unit Value (as defined below), multiplied
by
(B) the Performance Percentage attained during the
Measuring Period for such performance unit.
(iii) The Unit Value shall be, as specified by the
Committee,
(A) a dollar amount,
(B) an amount equal to the Fair Market Value of a
share of Stock on the Grant Date,
(C) an amount equal to the Fair Market Value of a
share of Stock on the exercise date of the performance
unit, plus, if so provided in the Award Agreement, an
amount ("Dividend Equivalent Amount") equal to the Fair
Market Value of the number of shares of Stock that would
have been purchased if each dividend paid on a share of
Stock on or after the Grant Date and on or before the
exercise date were invested in shares of Stock at a
purchase price equal to its Fair Market Value on the
respective dividend payment date, or
(D) an amount equal to the Fair Market Value of a
share of Stock on the exercise date of the performance
unit (plus, if so specified in the Award Agreement, a
Dividend Equivalent Amount), reduced by the Fair Market
Value of a share of Stock on the Grant Date of the
performance unit.
(iv) The benefit upon the exercise of a performance unit
shall be payable as soon as is administratively practicable (but
in any event within 90 days) after the later of (A) the date the
Grantee is deemed to exercise such performance unit, or (B) the
date (or dates in the event of installment payments) as provided
in the applicable Award Agreement. Such benefit shall be payable
in cash or restricted Stock, except that the Committee, with
respect to any particular exercise, may, in its discretion, pay
benefits wholly or partly in Stock delivered to the Grantee or
credited to a brokerage
18
account specified by the Grantee. The number of shares of Stock
payable in lieu of cash shall be determined by valuing the Stock
at its Fair Market Value on the business day next preceding the
date such benefit is to be paid.
(c) Payment of Performance Shares. Subject to such terms and
conditions as the Committee may impose, and unless otherwise provided in
the applicable Award Agreement, if the Committee has determined in
accordance with Article 6(e)(iv) that the minimum performance goals with
respect to an Award of performance shares have been achieved during the
applicable Measuring Period, then the Company shall pay to the Grantee
of such Award (or, at the request of the Grantee, deliver to a brokerage
account specified by the Grantee) shares of restricted Stock or Stock
equal in number to the product of the number of performance shares
specified in the applicable Award Agreement multiplied by the
Performance Percentage achieved during such Measuring Period, except to
the extent that the Committee in its discretion determines that cash be
paid in lieu of some or all of such shares of Stock. The amount of cash
payable in lieu of a share of Stock shall be determined by valuing such
share at its Fair Market Value on the business day next preceding the
date such cash is to be paid. Payments pursuant to this Article 8(d)
shall be made as soon as administratively practicable (but in any event
within 90 days) after the end of the applicable Measuring Period. Any
performance shares with respect to which the performance goals have not
been achieved by the end of the applicable Measuring Period shall
expire.
(d) Exercise, Cancellation, Expiration or Forfeiture of Tandem
Awards. Upon the exercise, cancellation, expiration, forfeiture or
payment in respect of any Award which is identified with any Tandem
Award pursuant to Article 6(g), the Tandem Award shall automatically
terminate to the extent of the number of shares in respect of which the
Award is so exercised, cancelled, expired, forfeited or paid, unless
otherwise provided by the Committee at the time of grant of the Tandem
Award or thereafter.
9. Effect of Certain Transactions.
With respect to any Award which relates to Stock, in the event of (i)
the liquidation or dissolution of the Company or (ii) a merger or consolidation
of the Company (a "Transaction"), the Plan and the Awards issued hereunder shall
continue in effect in accordance with their respective terms, except that
following a Transaction either (i) each outstanding Award shall be treated as
provided for in the agreement entered into in connection with the Transaction
(the "Transaction Agreement") or (ii) if not so provided in the Transaction
Agreement, each Grantee shall be entitled to receive in respect of each share of
Stock subject to any outstanding Awards, upon the vesting, payment or exercise
of the Award (as the case may be), the same number and kind of stock,
securities, cash, property, or other consideration that each holder of a share
of Stock was entitled to receive in the Transaction in respect of a share of
Stock.
10. Mandatory Withholding Taxes.
The Company shall have the right to deduct from any distribution of cash
to any Grantee an amount equal to the federal, state and local income taxes and
other amounts as may be required by law to be withheld (the "Withholding Taxes")
with respect to any Award. If a Grantee is to experience a taxable event in
connection with (i) the receipt of an Award, (ii) the receipt of shares pursuant
to an Option exercise, (iii) the vesting or payment of another type of Award or
(iv) any other event in connection with the Plan (a "Taxable Event"), the
Grantee shall pay the Withholding
19
Taxes to the Company prior to the issuance, or release from escrow, of such
Award or shares or vesting or payment of such Award or occurrence of such event,
as applicable. Payment of the applicable Withholding Taxes may be made, as
determined by the Committee in its discretion, in any one or any combination of
(i) cash, (ii) shares of restricted or unrestricted Stock owned by the Grantee
prior to the Taxable Event and valued at its Fair Market Value on the business
day immediately preceding the date of exercise, or (iii) by making a Tax
Election (as described below). For purposes of this Article 11, the Committee
may provide in the Award Agreement at the time of grant, or at any time
thereafter, that the Grantee, in satisfaction of the obligation to pay
Withholding Taxes to the Company, may elect to have withheld a portion of the
shares then issuable to him or her having an aggregate Fair Market Value equal
to the Withholding Taxes.
11. Termination of Employment.
The Award Agreement pertaining to each Award shall set forth the terms
and conditions applicable to such Award upon a Termination of Employment of the
Grantee by the Company, a Subsidiary or an operating division or unit, which,
except for Awards granted to nonemployee directors, shall be as the Committee
may, in its discretion, determine at the time the Award is granted or
thereafter.
12. Securities Law Matters.
(a) If the Committee deems it necessary to comply with the
Securities Act of 1933, the Committee may require a written investment
intent representation by the Grantee and may require that a restrictive
legend be affixed to certificates for shares of Stock.
(b) If, based upon the opinion of counsel for the Company, the
Committee determines that the exercise or nonforfeitability of, or
delivery of benefits pursuant to, any Award would violate any applicable
provision of (i) federal or state securities law, (ii) the listing
requirements of any national securities exchange on which are listed any
of the Company's equity securities or (iii) any other law or regulation,
then the Committee may postpone any such exercise, nonforfeitability or
delivery, as the case may be, but the Company shall use its best
efforts, if applicable, to cause such exercise, nonforfeitability or
delivery to comply with all such provisions at the earliest practicable
date.
(c) Notwithstanding any provision of the Plan or any Award
Agreement to the contrary, no shares of Stock shall be issued to any
Grantee in respect of any Award prior to the time a registration
statement under the Securities Act of 1933 is effective with respect to
such shares.
13. No Funding Required.
Benefits payable under the Plan to any person shall be paid directly by
the Company. The Company shall not be required to fund, or otherwise segregate
assets to be used for payment of, benefits under the Plan.
14. No Employment Rights.
20
Neither the establishment of the Plan, nor the granting of any Award
shall be construed to (a) give any Grantee the right to remain employed by the
Company or to any benefits not specifically provided by the Plan or (b) in any
manner modify the right of the Company or any of its Subsidiaries to modify,
amend, or terminate any of its employee benefit plans.
15. Rights as a Stockholder.
A Grantee shall not, by reason of any Award (other than restricted
Stock), have any right as a stockholder of the Company with respect to the
shares of Stock which may be deliverable upon exercise or payment of such Award
until such shares have been delivered to him. Shares of restricted Stock held by
a Grantee or held in escrow by the Secretary of the Company shall confer on the
Grantee all rights of a stockholder of the Company, except as otherwise provided
in the Plan.
16. Nature of Payments.
Any and all grants, payments of cash, or deliveries of shares of Stock
hereunder shall constitute special incentive payments to the Grantee and shall
not be taken into account in computing the amount of salary or compensation of
the Grantee for the purposes of determining any pension, retirement, death or
other benefits under (a) any pension, retirement, profit-sharing, bonus, life
insurance or other employee benefit plan of the Company or any of its
Subsidiaries or (b) any agreement between the Company, on the one hand, and the
Grantee, on the other hand, except as such plan or agreement shall otherwise
expressly provide.
17. Non-Uniform Determinations.
Neither the Committee's nor the Board's determinations under the Plan
need be uniform and may be made by the Committee or the Board selectively among
persons who receive, or are eligible to receive, Awards (whether or not such
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, to enter into non-uniform and
selective Award Agreements as to (a) the identity of the Grantees, (b) the terms
and provisions of Awards, and (c) the treatment of Terminations of Employment.
18. Adjustments.
In the event of Change in Capitalization, the Committee shall, in its
sole discretion, make equitable adjustment of
(a) the aggregate number and class of shares of Stock or other
stock or securities available under Article 3,
(b) the number and class of shares of Stock or other stock or
securities covered by an Award and to be covered by Options or
Stock Appreciation Rights,
(c) the Exercise Price applicable to outstanding Options,
(d) the terms of performance unit and performance share grants
(to the extent permitted under Section 162(m)) of the Internal
Revenue Code and the regulations thereunder without adversely
affecting the treatment of the performance unit or performance
share as Performance-Based Compensation,
(e) the Fair Market Value of Stock to be used to determine the
amount of the benefit payable upon exercise of performance units
and performance shares,
21
(f) the maximum number and class of shares of Stock or other
securities with respect to which Awards may be granted to any
individual in any calendar year period.
19. Amendment of the Plan.
The Board may from time to time in its discretion amend or modify the
Plan without the approval of the stockholders of the Company, except as such
stockholder approval may be required (a) to retain Incentive Stock Option
treatment under Section 422 of the Internal Revenue Code, (b) to permit
transactions in Stock pursuant to the Plan to be exempt from potential liability
under Section 16(b) of the 1934 Act or (c) under the listing requirements of any
securities exchange on which any of the Company's equity securities are listed.
20. Termination of the Plan.
The Plan shall terminate on the tenth (10th) anniversary of the
Effective Date or at such earlier time as the Board may determine. Any
termination, whether in whole or in part, shall not affect any Award then
outstanding under the Plan.
21. No Illegal Transactions.
The Plan and all Awards granted pursuant to it are subject to all laws
and regulations of any governmental authority which may be applicable thereto;
and notwithstanding any provision of the Plan or any Award, Grantees shall not
be entitled to exercise Awards or receive the benefits thereof and the Company
shall not be obligated to deliver any Stock or pay any benefits to a Grantee if
such exercise, delivery, receipt or payment of benefits would constitute a
violation by the Grantee or the Company of any provision of any such law or
regulation or applicable court order.
22. Governing Law.
Except where preempted by federal law, the law of the State of Georgia
shall be controlling in all matters relating to the Plan, without giving effect
to the conflicts of law principles thereof.
23. Severability.
If all or any part of the Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of the Plan not declared to be unlawful or
invalid. Any Article or part of an Article so declared to be unlawful or invalid
shall, if possible, be construed in a manner which will give effect to the terms
of such Article or part of an Article to the fullest extent possible while
remaining lawful and valid.
24. Translations.
Any inconsistency between the terms of the Plan or any Award Agreement
and the corresponding translation thereof into a language other than English
shall be resolved by reference, solely, to the English language document.
22
Exhibit 2.2
ALLIED FASHION, INC. AMENDED AND RESTATED 1999 STOCK OPTION PLAN
----------------------------------------------------------------
EFFECTIVE 6-17-04
-----------------
1. Purpose
The purpose of this 1999 Stock Option Plan (the "Plan") is to aid Allied
Fashion, Inc. (the "Company", now known as Citi Trends, Inc.), and its direct
and indirect subsidiaries, in attracting and retaining key officers, managers,
employees, consultants and directors by providing a means to offer them
increased incentives to promote the well-being of the Company through ownership
of the Company's shares ("Shares") of Common Stock, par value $0.01 (the "Common
Stock").
2. Administration
(a) The Plan shall be administered by the Board of Directors (referred
to as the "Committee"). Subject to the limitations and conditions hereinafter
set forth, the Committee shall have all the powers vested in it by the terms of
the Plan, including exclusive authority to (i) designate the employees, classes
of employees or other persons eligible to participate in the Plan, select from
among those employees to be granted awards under the Plan; (ii) to determine the
size and terms of individual awards (which need not be identical) to be made to
each participant selected; (iii) to determine the time when awards will be
granted and to establish objectives and conditions (including, without
limitation, vesting and performance conditions), if any, for awards; and (iv) to
make any and all other determinations which it determines to be necessary or
advisable in the administration of the Plan. The Committee shall have full power
and authority to administer and interpret the Plan and to adopt, amend and
revoke such rules, regulations, agreements, guidelines and instruments for the
administration of the Plan and for the conduct of its business as the Committee
deems necessary or advisable. The Committee's interpretation of the Plan, and
all actions taken and determinations made by the Committee pursuant to the
powers vested in it hereunder, shall be conclusive and binding on all parties
concerned, including the Company, its stockholders, any participants in the Plan
and any other employee of the Company or any of its subsidiaries. Only employees
of the Company or any subsidiary of the Company shall be eligible recipients of
option awards hereunder. The granting of awards, if any, and the size of such
awards are purely discretionary, and no person shall have any right or privilege
to be considered as a participant in the Plan, and no participant shall have any
right or privilege, or be deemed to have an expectation of being recommended,
for an additional award, subject to the terms of this Plan.
(b) Only nonqualified stock options may be granted hereunder. Granted
stock options will not be exercisable until vested in accordance with the
provisions of Section 4 of this Plan.
3. Shares Subject to the Plan; Other Agreements
(a) The Shares to be sold or transferred pursuant to the exercise of
options granted under the Plan shall be authorized shares of Common Stock of the
Company, and may be newly issued shares or treasury shares. Subject to
adjustment as provides in Section 6 hereof, the aggregate number of Shares which
may be issued under the plan shall be 50,000 Shares (amended and increased to
75,000 shares on 1/18/2002). Subject to adjustment as provided in Section 6, the
stock option price per Share of Common Stock issuable upon exercise of stock
options granted under the Plan (the "Exercise Price"), shall be determined in
the discretion of the Committee.
(b) As a condition of stock options being issued or awarded under the
Plan, the recipient or holder of such stock option must execute, deliver and
enter into (i) a Stock Option Agreement substantially in the form of Exhibit 1,
modified, as necessary, by the Committee to reflect the terms of the specific
grant (the "Stock Option Agreement"), provided that no modification will be
inconsistent with the provisions of this Plan and (ii) the Company's Stockholder
Agreement (collectively, the "Company Agreements"), so that the Shares issuable
upon exercise of the stock options will be subject to the Company Agreements.
The terms and conditions of the Company Agreements are part of the Plan, are
incorporated herein by reference, and will be applicable to the Shares issuable
upon exercise of those stock options (but not the stock options themselves),
with the same force and effect as if part of the Plan.
(c) Stock options issued or awarded under the Plan will be evidenced by
such instruments, and will be subject to such further agreements, instruments,
documents and actions, as the Board shall determine, from time to time, provided
that they will not be inconsistent with the provisions of this Plan.
(d) Each stock option awarded under the Plan shall be a "nonqualified
stock option" for tax purposes. Each stock option shall expire on the earlier of
the date provided by the option terms or the date which is 10 years after the
date of grant.
4. Eligibility for Exercise; Vesting
(a) The provisions described in this Section 4 govern the ability of the
holder to exercise the stock options, and do not affect, or supersede, the
repurchase rights described in Section 7, and the transfer restrictions and
other provisions described in the Company Agreements which apply to the Shares
issuable upon exercise of the stock option if such exercise is permitted by this
Section 4.
(b) In connection with Section 4 and Section 7 hereof, the following
definitions are used:
(i) "Cause" shall mean a termination of the option holder by the
Company due to
A. Holder's conviction of, or plea of guilty or nolo
contendere to, a serious felony or crime involving
embezzlement, conversion of property or moral turpitude;
B. Holder's commission of fraud, embezzlement or conversion
of property, as reasonably determined by the Board of
Directors based upon credible evidence;
C. Holder's conviction of, or plea of guilty or nolo
contendere to, or an administrative or judicial
determination that the Holder committed a crime, fraud,
or any other material violation of law involving the
acquisition, use or expenditure of federal, state or
local government funds;
D. a finding by a majority of the Board of Director's of
Holder's knowing breach of any of his fiduciary duties
to the Company or the Company's stockholders or making
of a misrepresentation or
2
omission which breach, misrepresentation or omission
would reasonably be expected to materially adversely
affect the business, properties, assets, condition
(financial or other) or prospects of the Company;
provided, that the Holder has been given notice and 30
days from such notice fails to cure the breach,
misrepresentation or omission;
E. Holder's willful and continual neglect or failure (other
than by reason of death or Disability) to discharge his
material duties, responsibilities or obligations
prescribed any agreement between the Holder and company
in the Company; provided, that the Holder has been given
notice and 30 days from such notice fails to cure the
neglect or failure;
F. Holder's alcohol or substance abuse, which materially
interferes with Holder's ability to discharge his
duties, responsibilities and obligations; provided, that
Holder has been given notice and 30 days from such
notice fails to cure such abuse;
G. Holder's material violations, with the actual knowledge
of Holder, of any non-competition, confidentiality or
similar agreement with the Company;
H. any material violation, with the actual knowledge of
Holder, of any obligations imposed upon Holder,
personally, as opposed to upon the Company, whether as a
stockholder or otherwise, under this Agreement, the
Certificate of Incorporation of the Company provided,
that Holder has been given notice and 30 days from such
notice fails to cure such violation; or
I. Holder's personal (as opposed to the Company's) material
and knowing failure, to observe or comply with any
applicable governmental regulations whether as an
officer, stockholder or otherwise, in any material
respect or in any manner which would reasonably be
expected to have a material adverse effect in respect of
the Company's ongoing business, operations, conditions,
other business relationships or properties; provided,
that Holder has been given notice and 30 days from such
notice fails to cure the failure.
(ii) "Change of Control" shall mean any transfer of capital
stock of the Company after which any person not a shareholder of the
Company on the date hereof becomes the beneficial holder of greater than
50% of all outstanding voting capital stock of the Company, other than
in connection with the initial public offering of the capital stock of
the Company.
(iii) "Commencement Date" shall mean the date the option holder
commenced his employment with the Company or any of its subsidiaries,
but shall, in no event, be prior to April 13, 1999.
(iv) "Determination Period" shall mean the four full fiscal
quarters of the Company immediately preceding the termination of
employment of the option holder.
3
(v) "Disability" shall mean the inability of the option holder
to perform substantially his duties to the Company by reason of physical
or mental disability or infirmity that, in the reasonable judgment of
the Committee, is documented by medical evidence.
(vi) "Sale of the Company" means any (A) merger or
consolidation, (B) sale or transfer of all or substantially all of the
business, assets or properties, not in the ordinary course of business,
(C) sale or transfer of all or substantially all of the share or capital
stock (D) liquidation, dissolution or winding up, (E) recapitalization
or reclassification, or (F) any similar business combination or
transaction having the effect of the foregoing clauses (A) through (E),
in each case, of or involving the Company, in one or a series of
transactions, as a result of which, in the case of clauses (A) or (B),
the holders of voting securities (on a fully-diluted basis) having
ordinary voting power to elect a majority of the directors of the
Company immediately prior to such transaction(s) do not, immediately
after such transaction(s), hold voting securities (on a fully-diluted
basis) having ordinary voting power to elect a majority of the directors
(or similar authorities) of the surviving or resulting corporation,
purchaser or transferor, or other person acquiring the business of the
Company.
(vii) "Three Year Junior Notes" shall mean a promissory note of
the Company that has a three year term, has a fixed rate of interest at
the Prime Rate at the date of inception of the note, and has compounded
interest annually.
(viii) "Year" means the twelve months ending on each anniversary
of the date of the option grant.
(c) Stock options granted under the Plan in respect of any particular
Year may be exercised if, and only if, the provisions of the Stock Option
Agreement relating to vesting are satisfied.
(d) As a condition to the exercise of any stock option, in whole or in
part, the portion of the stock option to be exercised must be "vested". Vesting
will commence as of the first day (the "Vested Date") immediately following the
first anniversary of the date on which such stock options are granted. So long
as the holder of the stock option is continuously employed by the Company
through:
(i) the Vested Date, 25% of the stock option will "vest" on the
Vested Date;
(ii) the first anniversary of the Vested Date, another 25% of
the stock option will "vest on such date;
(iii) the second anniversary of the Vested Date, another 25% of
the stock option will "vest" on such date; and
(iv) the third anniversary of the Vested Date, the remaining 25%
of the stock option will "vest" on such date.
Any stock options which have not vested shall automatically vest upon
the consummation of a Sale of the Company or a Change of Control.
4
(e) Any unvested stock options held by any person who ceases to be
employed by the Company or its subsidiaries for any reason will automatically
terminate and expire, without any payment, and will be cancelled.
(f) Unless otherwise expressly provided in the Stock Option Agreement
governing a specific grant, an option holder (other than an outside director or
consultant) whose employment with the Company terminates for any reason other
than Cause, Disability, death, or voluntary termination may at any time within a
period of 45 days thereafter exercise his or her option to the extent that such
option was exercisable by him or her on the date his or her employment
terminated. Unless otherwise expressly provided in the Stock Option Agreement
governing a specific grant, in the event of the Disability of an option holder,
stock options exercisable by him or her at the time of Disability may be
exercised within 90 days thereafter. In the event of the death of a stock option
holder, stock options, if any, exercisable by him or her at the time of his or
her death may be exercised within 90 days thereafter by the person or persons to
whom the option holder's rights under the stock option, if any, shall pass by
will or by the applicable law of descent and distribution. In no event may any
stock option be exercised by anyone after the final date upon which the holder
of the stock option could have exercised it had such person continued in the
employment of the Company until such date.
(g) Unless otherwise expressly provided in the Stock Option Agreement
governing a specific grant, if the option holder's employment is terminated for
Cause at any time or voluntarily by the option holder all of such holder's stock
options will upon his or her termination be considered unvested, irrespective of
being previously vested, and the stock options of such holder will automatically
terminate and expire without any payment.
(h) Notwithstanding anything to the contrary in this Plan, the Company
may, as to any particular option holder, provide for more or less favorable
vesting requirements and provisions, from the perspective of the option holder,
than provided in this Section 4 and this Plan if and to the extent expressly
provided in any Stock Option Agreement herewith with such option holder.
5. Option Period
Each stock option granted under the Plan shall be exercisable only if
vested under Section 4, and all rights to purchase Shares shall cease as of the
date established by the Board of Directors at the time of the award in a manner
consistent with the Plan (not later than ten years from the date hereof, subject
to any earlier termination in accordance with the terms of the Plan).
6. Changes in Common Shares
The aggregate number of Shares for which stock options shall be granted
or exercised, the maximum number of Shares which at any time may be subject to
but not delivered under outstanding stock options granted to any option holder,
the number of Shares subject to each outstanding option and the stock option
prices per share which shall be granted to or exercised by any option holder,
shall be subject to appropriate adjustment by the Board to equitably reflect any
changes in the number of outstanding Shares resulting from recapitalization,
stock splits, stock dividends or other change in the corporate structure of the
Company, provided that no adjustments shall be made in respect of new Shares
issued by the Company or Shares issued to holders of any other class of
securities of the Company as a result of the conversion of such securities into
Shares. Such adjustments shall be conclusive and binding for all purposes of the
Plan. There are no pre-emptive rights associated with the stock options granted
pursuant to the Plan.
5
7. Repurchase Provisions
(a) With respect to each option granted, the Company, following the
termination of the employment of the option holder (other than an outside
director or consultant) for any reason other than Cause, shall have the right to
repurchase, at fair market value as determined by the Board of Directors of the
Company at the time of such repurchase, all or any portion of any Shares
purchased by the option holder upon the exercise of such option, whether
exercised prior to termination or subsequent to termination in accordance with
the provisions of Section 4(f) above. However, the right of the Company to
repurchase Shares shall not take effect with respect to any Share until the
option holder shall have held such Share for six (6) months. In the event that
circumstances involving Cause, as defined in Section 4 (as determined by the
Committee) existed prior to the termination of the option holder, the provisions
of Section 7(b) shall govern and take precedence over this Section 7(a). The
purchase price for the shares to be purchased pursuant to this Section 7 is
payable, at the option of the Company, in cash, Three Year Junior Notes or a
combination thereof.
(b) With respect to each option granted, following termination of the
employment of the option holder for Cause, the Company may repurchase all or any
portion of any Shares purchased by the option holder upon the exercise of such
option, at a price per share equal to the exercise price paid.
8. Transferability of Stock Options
The stock options granted are non-assignable and are not transferable
except by will or by the laws of descent and distribution.
9. Amendment and Discontinuance
The Board of Directors may, by majority vote of the members thereof,
alter, amend, suspend, or discontinue the Plan. No alteration, amendment,
suspension or discontinuance of the Plan may, without the consent of the holder
of any outstanding stock option, adversely affect the rights of such holder
under such option. Notwithstanding the foregoing, to the extent applicable law,
rule, regulation, procedure or listing agreement of any national securities
exchange or quotation system requires that any such amendment, suspension, or
discontinuance of the Plan be approved by the stockholders of the Company, no
such amendment, suspension or discontinuance shall be effective unless and until
it is approved by the stockholders in such manner and to such a degree as is
required.
10. Duration
The Plan is hereby adopted and effective as of the date indicated below,
subject to approval by the Company's shareholders within 12 months of the date
that the Plan is adopted. The Plan shall remain in effect until all awards made
under the Plan have either been satisfied by the issuance of shares of Common
Stock or been terminated in accordance with the terms of the Plan or the award.
11. Compliance with Applicable Law and Withholding
(a) Notwithstanding any other provision of the Plan, the Company shall
have no obligation to issue any shares of Common Stock under the Plan if such
issuance would violate any
6
applicable law or any applicable regulation or requirement of any securities
exchange or similar entity.
(b) Prior to the issuance of any shares of Common Stock under the Plan,
the Company may require a written statement that the recipient is acquiring the
shares for investment and not for the purpose or with the intention of
distributing the shares and will not dispose of them in violation of the
registration requirements of the Securities Act of 1933, as amended.
(c) If, at any time, the Company, in its reasonable discretion,
determines that the listing, registration or qualification (or any updating of
any such document), of any award, or the shares of Common Stock issuable
pursuant thereto, is necessary on any securities exchange or under any federal
or state securities or blue sky law, or that the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of, or in
connection with, any award or the issuance of shares of Common Stock pursuant to
any award, such award shall not be made and the shares of Common Stock shall not
be issued or such restrictions shall not be removed, as the case may be, in
whole or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company. The Company will use its best efforts to effect such
listing, registration, or qualification.
(d) A holder may exercise an option by giving written notice thereof
prior to the option's expiration date to the Secretary of the Company at the
principal executive offices of the Company. Contemporaneously with the delivery
of notice with respect to the exercise of an option, the full purchase price of
the Shares purchased pursuant to the exercise of the option, together with any
required state or federal withholding taxes, shall be paid in cash.
For purposes of the Plan, and except as otherwise determined by the
Board, the "Market Price" of a share of Common Stock as of any date shall be
equal to the closing sale price of a share of Common Stock as reported on the
NASDAQ National Market System (or if the Common Stock is not traded on the
NASDAQ National Market System, the closing sales price on the exchange on which
it is traded or as reported by an applicable automated quotation system) (the
"Composite Tape") on the applicable date or, if no sales of Common Stock are
reported on such date, the closing sale price of Common Stock on the date the
Common Stock was last reported on the Composite Tape (or such other exchange or
automated quotation system, if applicable), or, in all other cases, the fair
market value per share of Common Stock as determined by the Board of Directors
of the Company.
(e) All award and payments under the Plan which are made to employees of
the Company are subject to withholding of all applicable taxes and the Company
shall have the right to withhold from any such award under the Plan or to
collect as a condition of any payment under the Plan, as applicable, any taxes
required by law to be withheld. To the extent provided by the Committee, a
holder may elect to have any distribution otherwise required to be made under
the Plan to be withheld or to surrender to the Company shares of Common Stock
already owned by the holder to fulfill any tax withholding obligation.
12. No Continued Employment
The Plan does not constitute a contract of employment or continued
service, and does not otherwise alter or limit the Company's rights in respect
of modifying or terminated such employment or service. Participation in the Plan
will not give any holder the right to be retained in the employ of the Company
or the right to continue as a director of the Company or any right or
7
claim to any benefit under the Plan unless such right or claim has specifically
accrued under the terms of the Plan or the terms of any award under the Plan.
13. Treatment as a Stockholder
Any grant to a holder of stock options under the Plan shall not create
any rights in such holder as a stockholder of the Company until shares of Common
Stock have been issued in the name of the holder.
14. Other Agreements
All stock options, and shares of Common Stock issued in respect thereof,
will be subject to the Company Agreements.
15. Applicable Laws
The Plan shall be administered in accordance with the laws of the State
of Georgia to the extent that such laws are not preempted by the laws of the
United States of America.
16. Cost and Expenses
The costs and expenses of administering the Plan shall be borne by the
Company and not charged to any award nor to any employee receiving an award.
Exhibit 4.1
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CITI TRENDS, INC.
Citi Trends, Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, as amended (the "GCL"), DOES HEREBY CERTIFY as follows:
1. The name of the Corporation is Citi Trends, Inc. The Corporation was
originally incorporated under the name "Allied Fashion, Inc." and filed its
original Certificate of Incorporation with the Secretary of State of the State
of Delaware on March 3, 1999. The Corporation filed a restatement of its
Certificate of Incorporation with the Secretary of State of the State of
Delaware on April 12, 1999 and a Certificate of Amendment on June 26, 2001
changing its name from "Allied Fashion, Inc." to "Citi Trends, Inc."
2. In the manner prescribed by Sections 242 and 245 of the GCL,
resolutions were duly adopted by the Board of Directors and the stockholders of
the Corporation, respectively, duly adopting this Second Amended and Restated
Certificate of Incorporation and amending and restating the Amended and Restated
Certificate of Incorporation of the Corporation as herein provided.
3. The text of the Second Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") shall read in its entirety as
follows:
FIRST: The name of the corporation is Citi Trends, Inc. (the
"Corporation").
SECOND: The address of the Corporation's registered office in the State
of Delaware is c/o The Corporation Trust Company, 1209 Orange Street, in the
City of Wilmington, County of New Castle, Delaware 19801. The name of its
registered agent at such address is The Corporation Trust Company.
THIRD: The nature or purpose of the business to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware, as amended (the "GCL").
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 20,005,000 shares, consisting of:
(i) 20,000,000 shares of common stock, par value $0.01 per share (the
"Common Stock"); and
(ii) 5,000 shares of preferred stock, par value $0.01 per share (the
"Preferred Stock").
A statement of the powers, designations, preferences, and relative
participating, optional or other special rights and the qualifications,
limitations and restrictions of the Common Stock and the Preferred Stock is as
follows.
1. Common Stock.
(a) Dividends. Dividends may be declared and paid on the
Common Stock from funds lawfully available therefor as, if and when,
determined by the Board of Directors and subject to any preferential
dividend rights of any then outstanding shares of Preferred Stock.
(b) Liquidation Rights. In the event of a voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation,
the holders of shares of Common Stock shall be entitled, after payment
or provision for payment of the debts and other liabilities of the
Corporation, to share in the distribution of any remaining assets
available for distribution to its stockholders ratably, subject to any
preferential rights of any then outstanding Preferred Stock.
(c) Voting Rights. The holders of Common Stock shall be
entitled to one vote per share in voting or consenting to the election
of directors and for all other matters presented to the stockholders of
the Corporation for their action or consideration. Cumulative voting
for the election of directors is not permissible. Except as otherwise
required by law, the holders of the Common Stock shall vote together as
a single class on all matters submitted to the stockholders of the
Corporation.
2. Preferred Stock. The Board of Directors is authorized, subject to
limitations prescribed by law, to provide for the issuance of the Preferred
Stock in one or more series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof, as shall be stated in the
resolutions providing for the issuance of such series adopted by the Board of
Directors.
The authority of the Board of Directors with respect to each series of
Preferred Stock shall include, but not be limited to, determination of the
following:
(a) the number of shares constituting that series and the
distinctive designation of that series;
(b) the rate of dividend, and whether (and if so, on what
terms and conditions) dividends shall be cumulative (and if so, the
terms and conditions of such dividend policy and whether unpaid
dividends shall compound or accrue interest) or shall be payable in
preference or in any other relation to the dividends payable on any
other class or classes of stock or any other series of the Preferred
Stock;
(c) whether that series shall have voting rights in addition
to the voting rights provided by law and, if so, the terms and extent
of such voting rights;
-2-
(d) whether the shares must or may be redeemed and, if so, the
terms and conditions of such redemption (including, without limitation,
the dates upon or after which they must or may be redeemed and the
price or prices at which they must or may be redeemed, which price or
prices may vary under different circumstances or at different
redemption dates);
(e) whether the shares shall be issued with the privilege of
conversion or exchange and, if so, the terms and conditions of such
conversion or exchange (including without limitation the price or
prices or the rate or rates of conversion or exchange or any terms for
adjustment thereof);
(f) the amounts, if any, payable upon the shares in the event
of voluntary liquidation, dissolution or winding up of the Corporation
in preference of shares of any other class or series and whether the
shares shall be entitled to participate generally in distributions on
the Common Stock under such circumstances;
(g) the amounts, if any, payable upon the shares in the event
of involuntary liquidation, dissolution or winding up of the
Corporation in preference of shares of any other class or series and
whether the shares shall be entitled to participate generally in
distributions in the Common Stock under such circumstances;
(h) sinking fund provisions, if any, for the redemption or
purchase of the shares (the term "sinking fund" being understood to
include any similar fund, however designated) and, if so, the terms and
amount of such sinking fund; and
(i) any other relative rights, preferences, limitations and
powers of that series.
3. No Preemptive Rights. Except as expressly set forth in this
Certificate of Incorporation, any certificate of designation, any resolution or
resolutions providing for the issuance of a series of stock adopted by the Board
of Directors, or any agreement between the Corporation and its stockholders, the
holders of Common Stock or any series of Preferred Stock shall have no
preemptive right to subscribe to an additional issue of any shares of any class
of capital stock of the Corporation or any security convertible into such stock
whether now or hereafter authorized.
FIFTH:
1. Limits on Director Liability. Directors of the Corporation shall
have no personal liability to the Corporation or its stockholders for monetary
damages for breach of a fiduciary duty as a director; provided that nothing
contained in this Article FIFTH shall eliminate or limit the liability of a
director (i) for any breach of a director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the GCL or (iv) for any transaction from which a director derived
an improper personal benefit. If the GCL is amended to authorize corporate
action further eliminating or limiting the personal liability of directors, then
by virtue of this Article FIFTH the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the GCL, as so
amended.
-3-
2. Indemnification.
(a) The Corporation shall indemnify and hold harmless, in
accordance with the By-Laws of the Corporation and to the fullest
extent permitted from time to time by the GCL or any other applicable
laws as presently or hereafter in effect, any person who was or is made
a party or is threatened to be made a party to or is otherwise involved
in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, including,
without limitation, an action by or in the right of the Corporation, by
reason of the fact that he or she or a person of whom he or she is the
legal representative is or was a director or an officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer or trustee of another corporation, partnership, joint
venture, trust or other enterprise, including service with respect to
an employee benefit plan, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer or
trustee or in any other capacity while serving as a director, officer
or trustee, against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith; provided, however, the
Corporation shall be required to indemnify such person in connection
with an action, suit or proceeding (or part thereof) initiated by such
person only if such action, suit or proceeding (or part thereof) was
authorized by the Board of Directors. Furthermore, the Corporation may
only indemnify such person if he or she acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the
best interests of the Corporation, and, with respect to any criminal
action or proceeding had no reasonable cause to believe that his or her
conduct was unlawful; except that in the case of an action or suit by
or in the name of the Corporation to procure a judgment in its favor
(a) such indemnification shall be limited to expenses (including
attorneys' fees) actually and reasonably incurred by such person in the
defense or settlement of such action or suit; and (b) no
indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Delaware Court of
Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the
Delaware Court of Chancery or such other court shall deem proper. Such
indemnification is not exclusive of any other right to indemnification
provided by law or otherwise. The right to indemnification conferred by
this Section 2 of this Article FIFTH shall be deemed to be a contract
between the Corporation and each person referred to herein.
(b) If a claim under subdivision (a) of this Section 2 of this
Article FIFTH is not paid in full by the Corporation, the claimant may
at any time thereafter bring suit against the Corporation to recover
the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where any
undertaking required by subdivision (c) of this Section 2 of this
Article FIFTH has been tendered to the Corporation) that the claimant
has not met the standards of conduct which make it permissible under
the GCL and subdivision (a) of this Section 2 of this Article
-4-
FIFTH for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the
Corporation.
(c) Indemnification shall include payment by the Corporation
of expenses in defending an action or proceeding in advance of the
final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of the person indemnified to repay such
payment if it is ultimately determined that such person is not entitled
to indemnification under this Article FIFTH, which undertaking may be
accepted without reference to the financial ability of such person to
make such repayment.
3. Insurance. The Corporation shall have the power (but not the
obligation) to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss incurred by such person in any
such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
this Article FIFTH or the GCL.
4. Other Rights. The rights and authority conferred in this Article
FIFTH shall not be deemed exclusive of any other right which any person may
otherwise have or hereafter acquire under any statute, provision of this
Certificate of Incorporation, By-Laws of the Corporation, agreement, contract,
vote of stockholders or disinterested directors or otherwise.
5. Additional Indemnification. The Corporation may, by action of its
Board of Directors, provide additional indemnification to such of the directors,
officers, employees and agents of the Corporation to such extent and to such
effect as the Board of Directors shall determine to be appropriate and
authorized by the GCL. 6. Effect of Amendments. Neither the amendment, change,
alteration or repeal of this Article FIFTH, nor the adoption of any provision of
this Certificate of Incorporation or the By-Laws of the Corporation, nor, to the
fullest extent permitted by the GCL, any modification of law, shall eliminate or
reduce the effect of this Article FIFTH or the rights or any protection afforded
under this Article FIFTH in respect of any acts or omissions occurring prior to
such amendment, repeal, adoption or modification.
SIXTH: At all meetings of stockholders, each stockholder shall be
entitled to vote, in person or by proxy, the shares of voting stock owned by
such stockholders of record on the record date for the meeting. When a quorum is
present or represented at any meeting, the vote of the holders of a majority in
interest of the stockholders present in person or by proxy at such meeting and
entitled to vote thereon shall decide any question, matter or proposal brought
before such meeting unless the question is one upon which, by express provision
of law, this Certificate of Incorporation or the By-Laws of the Corporation
applicable thereto, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
SEVENTH:
1. Number of Directors. The number of directors of the Corporation
shall be fixed from time to time by the vote of a majority of the entire Board
of Directors, but such number shall
-5-
in no case be less than five (5) nor more than nine (9). Any such determination
made by the Board of Directors shall continue in effect unless and until changed
by the Board of Directors, but no such changes shall affect the term of any
directors then in office.
2. Classification of the Board of Directors. The Board of Directors
shall be divided into three classes, designated Classes I, II and III, which
shall be as nearly equal in number of directors per Class as possible.
3. Term of Office; Vacancies.
(i) Directors of Class I shall be elected to hold office for an
initial term expiring at the first annual meeting of
stockholders held after the date and time at which this
Certificate of Incorporation of the Corporation shall become
effective in accordance with Section 103(d) of the GCL (the
"Effective Time").
(ii) Directors of Class II shall be elected to hold office for an
initial term expiring at the second annual meeting of
stockholders held after the Effective Time.
(iii) Directors of Class III shall be elected to hold office for an
initial term expiring at the third annual meeting of
stockholders held after the Effective Time.
(iv) At each annual meeting of stockholders, the respective
successors of the directors whose terms are expiring shall be
elected for terms expiring at the annual meeting of
stockholders held in the third succeeding year.
(v) Vacancies in the Board of Directors and newly-created
directorships resulting from any increase in the authorized
number of directors may be filled as provided in the By-Laws
of the Corporation.
4. Removal. Subject to the By-Laws of the Corporation, a director may
only be removed for cause upon the affirmative vote of the holders of a majority
of the votes which could be cast by the holders of all outstanding shares of
capital stock entitled to vote for the election of directors, voting together as
a class, given at a duly called annual or special meeting of stockholders.
5. Nominations. Advance notice of nominations by stockholders for the
election of directors, and of stockholder proposals regarding action to be taken
at any meeting of stockholders, shall be given in the manner and to the extent
provided in the By-Laws of the Corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
(1) The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors.
-6-
(2) The Board of Directors shall be authorized to adopt, amend and
repeal the By-Laws of the Corporation, without a stockholder
vote, in any manner not inconsistent with the laws of the
State of Delaware, this Certificate of Incorporation and the
By-Laws of the Corporation as from time to time in effect,
subject to the power of the stockholders entitled to vote to
adopt, amend, alter, change, add to or repeal By-Laws made by
the Board of Directors as provided below in Section 3 of this
ARTICLE EIGHTH.
(3) Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the amendment, alteration or
repeal of the provisions of ARTICLES SEVENTH and NINTH and
this ARTICLE EIGHTH shall require the affirmative vote of the
holders of two-thirds (2/3) or more of the combined voting
power of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors, voting together as a class.
(4) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are
hereby empowered to exercise all such powers and do all such
acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the
GCL, this Certificate of Incorporation, and any By-Laws
adopted by the stockholders; provided, however, that no
By-Laws hereafter adopted by the stockholders shall invalidate
any prior act of the directors which would have been valid if
such By-Laws had not been adopted.
NINTH:
1. Stockholder Meetings; Keeping of Books and Records. Any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual or special meeting of such holders and may not
be effected by any consent in writing by such holders. Meetings of stockholders
may be held within or outside the State of Delaware as the By-Laws of the
Corporation may provide. The books of the Corporation may be kept (subject to
any provision contained in the GCL) outside the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors or in
the By-Laws of the Corporation.
2. Special Stockholders Meetings. Except as otherwise required by law,
special meetings of stockholders of the Corporation may be called only by:
(i) the Chairman of the Board of Directors of the Corporation;
(ii) the Board of Directors pursuant to a resolution approved by
the Board of Directors; or
(iii) the Board of Directors upon a request by holders of at least
50% in voting power of all outstanding shares entitled to vote
at such meeting.
-7-
3. No Written Ballot. Elections of directors need not be by written
ballot unless the By-Laws of the Corporation shall so provide.
4. Quorum at Stockholder Meetings. The holders of one-third in voting
power of the capital stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business, except that the
holders of a majority in voting power of the capital stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be required to constitute a quorum for:
(i) a vote for any director in a contested election;
(ii) the removal of a director; or
(iii) the filling of a vacancy on the Board of Directors by the
stockholders of the Corporation.
TENTH: The Corporation reserves the right to repeal, alter, change or
amend any provision contained in this Certificate of Incorporation in the manner
now or hereafter prescribed by statute and all rights conferred upon
stockholders herein are granted subject to this reservation. No repeal,
alteration or amendment of this Certificate of Incorporation shall be made
unless the same is first approved by the Board of Directors of the Corporation
pursuant to a resolution adopted by the directors then in office in accordance
with the By-Laws of the Corporation and applicable law and thereafter approved
by the stockholders.
ELEVENTH: The Corporation is subject to Section 203 of the GCL.
-8-
IN WITNESS WHEREOF, the undersigned has executed this Second Amended
and Restated Certificate of Incorporation this 11th day of May, 2005, and hereby
acknowledges that this Second Amended and Restated Certificate of Incorporation
is the act and deed of the Corporation and that the facts stated herein are
true.
CITI TRENDS, INC.
By /s/ R. Edward Anderson
----------------------
Name: R. Edward Anderson
Title: Chief Executive Officer
-9-
Exhibit 4.2
==============================================================
AMENDED AND RESTATED BY-LAWS
OF
CITI TRENDS, INC.
==============================================================
TABLE OF CONTENTS
Page
I. OFFICES...............................................................1
II. STOCKHOLDERS..........................................................1
Section 2.1 Annual Meetings...........................................1
Section 2.2 Time and Place of Special Meetings........................1
Section 2.3 Notice of Meetings........................................2
Section 2.4 Organization; Procedure...................................3
Section 2.5 Quorum....................................................3
Section 2.6 Record Date...............................................4
Section 2.7 Proxies...................................................4
Section 2.8 Voting....................................................5
Section 2.9 Voting by Ballot..........................................5
Section 2.10 Inspector of Elections...................................5
Section 2.11 No Stockholder Action by Written Consent.................6
Section 2.12 List of Stockholders Entitled to Vote....................6
Section 2.13 Notice of Stockholder Business and Nominations...........6
Section 2.14 Opening and Closing of Polls.............................9
Section 2.15 Confidential Voting......................................9
III. DIRECTORS.............................................................9
Section 3.1 General Powers............................................9
Section 3.2 Number and Election of Directors.........................10
Section 3.3 Classified Board; Election of Directors..................10
Section 3.4 Additional Directorships.................................10
Section 3.5 Place of Meetings........................................10
Section 3.6 Annual and Regular Meetings..............................10
Section 3.7 Special Meetings.........................................11
Section 3.8 Executive Session........................................11
Section 3.9 Quorum...................................................11
Section 3.10 Adjournment.............................................11
Section 3.11 Action without Meeting..................................12
Section 3.12 Regulations; Manner of Acting...........................12
Section 3.13 Attendance by Telephone.................................12
Section 3.14 Removal.................................................12
Section 3.15 Compensation of Directors...............................12
Section 3.16 Reliance on Accounts and Reports, etc...................12
IV. BOARD COMMITTEES.....................................................12
Section 4.1 How Constituted..........................................12
Section 4.2 Powers...................................................13
Section 4.3 Proceedings..............................................15
Section 4.4 Quorum and Manner of Acting..............................15
Section 4.5 Action by Telephonic Communications......................15
Section 4.6 Resignations.............................................15
Section 4.7 Removal..................................................16
Section 4.8 Vacancies................................................16
V. OFFICERS.............................................................16
-i-
TABLE OF CONTENTS
(continued)
Page
Section 5.1 Number...................................................16
Section 5.2 Election.................................................16
Section 5.3 Powers...................................................16
Section 5.4 Salaries.................................................16
Section 5.5 Removal and Resignation; Vacancies.......................16
Section 5.6 Chairman of the Board....................................17
Section 5.7 Chief Executive Officer..................................17
Section 5.8 Chief Financial Officer..................................17
Section 5.9 President................................................17
Section 5.10 Absence or Disability of the Chief Executive Officer....17
Section 5.11 Vice President..........................................18
Section 5.12 Secretary...............................................18
Section 5.13 Assistant Secretary.....................................18
Section 5.14 Treasurer...............................................18
Section 5.15 Assistant Treasurer.....................................18
Section 5.16 Other Officers..........................................18
VI. CERTIFICATES OF STOCK................................................19
Section 6.1 Certificates of Stock, Uncertificated Shares.............19
Section 6.2 Signatures; Facsimile....................................19
Section 6.3 Transfer.................................................19
Section 6.4 Replacement..............................................19
Section 6.5 Beneficial Owners........................................20
VII. INDEMNIFICATION OF DIRECTORS AND OFFICERS............................20
Section 7.1 Nature of Indemnity......................................20
Section 7.2 Advance Payment of Expenses..............................21
Section 7.3 Procedure for Indemnification............................21
Section 7.4 Preservation of Other Rights.............................22
Section 7.5 Insurance................................................22
Section 7.6 Employees and Agents.....................................22
Section 7.7 Survival.................................................22
VIII. GENERAL PROVISIONS...................................................22
Section 8.1 Fiscal Year..............................................22
Section 8.2 Corporate Seal...........................................22
Section 8.3 Dividends................................................22
Section 8.4 Reserves.................................................23
Section 8.5 Execution of Instruments.................................23
Section 8.6 Corporate Books..........................................23
Section 8.7 Corporate Indebtedness...................................23
Section 8.8 Deposits.................................................23
Section 8.9 Checks...................................................24
Section 8.10 Sale, Transfer, etc. of Securities......................24
Section 8.11 Voting as Stockholder...................................24
Section 8.12 Transactions with Interested Parties....................24
IX. AMENDMENTS...........................................................25
-ii-
TABLE OF CONTENTS
(continued)
Page
Section 9.1 Amendment................................................25
X. SUBJECT TO CERTIFICATE OF INCORPORATION..............................25
-iii-
AMENDED AND RESTATED BY-LAWS
OF
CITI TRENDS, INC.
- --------------------------------------------------------------------------------
PREAMBLE
These Amended and Restated By-Laws, as the same may be amended and
restated from time to time (the "By-Laws"), are subject to, and governed by, the
General Corporation Law of the State of Delaware (the "GCL") and the second
amended and restated certificate of incorporation, as the same may be amended
and restated from time to time, of Citi Trends, Inc., a Delaware corporation
(the "Corporation") then in effect (the "Certificate"). In the event of a direct
conflict between the provisions of these By-Laws and the mandatory provisions of
the GCL or the provisions of the Certificate, such provisions of the GCL or the
Certificate, as the case may be, will be controlling.
I.
OFFICES
The registered office of the Corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware and the name and address of
its registered agent is c/o The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801. The Corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the Corporation may require.
II.
STOCKHOLDERS
Section 2.1. Annual Meetings. The annual meeting of the stockholders of
the Corporation for the purpose of electing directors and for the transaction of
such other business as may properly be brought before such meeting shall be held
on such date, and at such time and place within or without the State of
Delaware, as may be designated from time to time by resolution of the Board of
Directors and set forth in the notice or waiver of notice of the meeting.
Section 2.2 Time and Place of Special Meetings. Unless otherwise
prescribed by law or by the Certificate, special meetings of stockholders of the
Corporation may be called only by (a) the Chairman of the Board of Directors of
the Corporation; (b) the Board of Directors pursuant to a resolution approved by
the Board of Directors; or (c) the Board of Directors upon a request by the
holders of at least fifty percent (50%) in voting power of all outstanding
shares of capital stock of the Corporation entitled to vote at such meeting.
Such request shall state the purpose of the proposed meeting.
-1-
All special meetings of the stockholders shall be held at such place,
within or without the State of Delaware, as shall be designated by the Board of
Directors. In the absence of any such designation by the Board of Directors,
each such meeting shall be held at the principal office of the Corporation.
Section 2.3 Notice of Meetings. The Secretary or any Assistant
Secretary shall cause written notice of the place, if any, date and hour of each
meeting of the stockholders and the means of remote communications, if any, by
which stockholders and proxy holders may be deemed to be present in person and
vote at such meeting and, in the case of a special meeting, the purpose or
purposes for which such meeting is called, to be given in the manner set forth
in the next paragraph, not less than ten (10) nor more than sixty (60) calendar
days prior to the meeting, to each stockholder of record entitled to vote at
such meeting. If a stockholder meeting is to be held via electronic
communications and stockholders will take action at such meeting, the notice of
such meeting must: (a) specify the means of remote communications, if any, by
which stockholders and proxy holders may be deemed to be present and vote at
such meeting; and (b) provide the information required to access the stockholder
list.
Notices are deemed given (i) if by mail, when deposited in the United
States mail, postage prepaid, directed to the stockholder at his or her address
as it appears on the record of stockholders of the Corporation, or, if he or she
shall have filed with the Secretary of the Corporation a written request that
notices to him or her be mailed to some other address, then directed to him or
her at such other address; (ii) if by facsimile, when faxed to a number where
the stockholder has consented to receive notice; (iii) if by electronic mail,
when mailed electronically to an electronic mail address at which the
stockholder consented to receive such notice; (iv) if by posting on an
electronic network (such as a website or chatroom) together with a separate
notice to the stockholder of such specific posting, upon the later to occur of
(A) such posting or (B) the giving of the separate notice of such posting; or
(v) if by any other form of electronic communication, when directed to the
stockholder in the manner consented to by the stockholder.
For notice given by electronic transmission to a stockholder to be
effective, such stockholder must consent to the Corporation's giving notice by
that particular form of electronic transmission. A stockholder may revoke
consent to receive notice by electronic transmission by written notice to the
Corporation. A stockholder's consent to notice by electronic transmission is
automatically revoked if the Corporation is unable to deliver two consecutive
electronic transmission notices and such inability becomes known to the
Secretary, Assistant Secretary, the transfer agent or other person responsible
for giving notice.
A written waiver of any such notice signed by the person entitled
thereto, or a waiver by electronic transmission by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of an individual at a meeting in person or by
proxy shall constitute a waiver of notice of such meeting, except when the
person attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Business transacted at any special meeting
of stockholders shall be limited to the purposes stated in the notice. Neither
the business to be transacted at, nor the purpose of, an annual or special
meeting of stockholders need be specified in any written waiver of notice.
-2-
Section 2.4 Organization; Procedure. The Chairman, or in the Chairman's
absence or at the Chairman's direction, any officer of the Corporation shall
call all meetings of the stockholders to order and shall act as chairman of such
meeting. The Secretary of the Corporation or, in such officer's absence, an
Assistant Secretary shall act as secretary of the meeting. If neither the
Secretary nor an Assistant Secretary is present, the chairman of the meeting
shall appoint a secretary of the meeting. The date and time of the opening and
the closing of the polls for each matter upon which the stockholders will vote
at a meeting shall be announced at the meeting by the person presiding over the
meeting. The Board of Directors may adopt by resolution such rules and
regulations for the conduct of the meeting of stockholders as it shall deem
appropriate. Except to the extent inconsistent with such rules and regulations
as adopted by the Board of Directors, the person presiding over any meeting of
stockholders shall have the right and authority to convene and to adjourn the
meeting, to prescribe such rules, regulations and procedures and to do all such
acts as, in the judgment of such presiding person, are appropriate for the
proper conduct of the meeting. Such rules, regulations or procedures, whether
adopted by the Board of Directors or prescribed by the presiding person of the
meeting, may include, without limitation, the following: (a) the establishment
of an agenda or order of business for the meeting; (b) rules and procedures for
maintaining order at the meeting and the safety of those present; (c)
limitations on attendance at or participation in the meeting to stockholders of
record of the Corporation, their duly authorized and constituted proxies or such
other persons as the presiding person of the meeting shall determine; (d)
restrictions on entry to the meeting after the time fixed for the commencement
thereof; and (e) limitations on the time allotted to questions or comments by
participants. The presiding person at any meeting of stockholders, in addition
to making any other determinations that may be appropriate to the conduct of the
meeting, shall, if the facts warrant, determine and declare to the meeting that
a matter or business was not properly brought before the meeting and if such
presiding person should so determine, such presiding person shall so declare to
the meeting and any such matter or business not properly brought before the
meeting shall not be transacted or considered. Unless and to the extent
determined by the Board of Directors or the person presiding over the meeting,
meetings of stockholders shall not be required to be held in accordance with the
rules of parliamentary procedure.
Section 2.5 Quorum. Except as otherwise provided by law, by the
Certificate or these By-Laws, the holders of one-third (1/3) in voting power of
the capital stock issued and outstanding and entitled to vote thereat, present
in person or represented by proxy, shall constitute a quorum at all meetings of
the stockholders for the transaction of business, except that the holders of a
majority in voting power of the capital stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
required to constitute a quorum for (a) a vote for any director in a contested
election; (b) the removal of a director; or (c) the filling of a vacancy on the
Board of Directors if the filling of such vacancy is submitted to a vote of the
stockholders. If a quorum is not present at any meeting of the stockholders, the
presiding officer shall have the power to adjourn any such meeting from time to
time until a quorum is present. Notice of any adjourned meeting of the
stockholders of the Corporation need not be given if the place, if any, date and
hour thereof, and the means of remote communications, if any, by which
stockholders and proxy holders may be deemed to be present in person and vote at
such meeting, are announced at the meeting at which the adjournment is taken;
provided, however, that if the adjournment is for more than thirty (30) calendar
days, or if after the adjournment a new record date for the adjourned meeting is
fixed pursuant to Section 2.6 of these By-Laws, a notice of the adjourned
meeting, conforming to the requirements of Section 2.3 of these By-Laws, shall
be given to each stockholder of record entitled
-3-
to vote at such meeting. At any adjourned meeting at which a quorum is present,
any business may be transacted that might have been transacted on the original
date of the meeting.
Section 2.6 Record Date. In order that the Corporation may determine
the stockholders (a) entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof; (b) entitled to receive payment of any
dividend or other distribution or allotment of any rights; or (c) entitled to
exercise any rights in respect of any change, conversion or exchange of capital
stock or for the purpose of any other lawful action, the Board of Directors may
fix a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date (i) in the case of clause (a) above, shall, unless otherwise
required by law, not be more than sixty (60) nor less than ten (10) calendar
days before the date of such meeting; and (ii) in the case of clause (b) above,
shall not be more than sixty (60) calendar days prior to such action. If for any
reason the Board of Directors shall not have fixed a record date for any such
purpose, the record date for such purpose shall be determined as provided by
law. A determination of the stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 2.7 Proxies. At all meetings of stockholders, any stockholder
entitled to vote thereat shall be entitled to vote in person or by proxy, but no
proxy shall be voted or acted upon after three years from its date, unless such
proxy provides for a longer period. Without limiting the manner in which a
stockholder may authorize another person or persons to act for such stockholder
as proxy pursuant to the GCL, the following shall constitute a valid means by
which a stockholder may grant such authority: (a) a stockholder may execute a
written instrument authorizing another person or persons to act for such
stockholder as proxy, and execution of the written instrument may be
accomplished by the stockholder or the stockholder's authorized officer,
director, employee, trustee or agent signing such writing or causing his or her
signature to be affixed to such writing by any reasonable means including, but
not limited to, by facsimile signature; or (b) a stockholder may authorize
another person or persons to act for such stockholder as proxy by transmitting
or authorizing the transmission of a telegram, cablegram or other means of
electronic transmission to the person who will be the holder of the proxy or to
a proxy solicitation firm, proxy support service organization or like agent duly
authorized by the person who will be the holder of the proxy to receive such
transmission, provided that any such telegram, cablegram or other means of
electronic transmission must either set forth or be submitted with information
from which it can be determined that the telegram, cablegram or electronic
transmission was authorized by the stockholder. If it is determined that such
telegrams, cablegrams or other electronic transmissions are valid, the
inspectors, or if there are no inspectors, such other persons making that
determination shall specify the information upon which they relied.
Any copy, facsimile telecommunication or other reliable reproduction of
the writing or transmission created pursuant to the preceding paragraph of this
Section 2.7 may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.
Proxies shall be filed with the Secretary of the meeting prior to or at
the commencement of the meeting to which they relate. A proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
-4-
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or by filing another duly executed proxy bearing a later date with the
Secretary.
Section 2.8 Voting. Unless otherwise required by law, the Certificate
or these By-Laws, any question brought before any meeting of stockholders shall
be decided by a majority of votes cast by holders of the Common Stock
represented and entitled to vote thereon, with each such holder having the
number of votes per share and voting as a member of such classes of stockholders
as may be provided in the Certificate, unless the question is one upon which, by
express provision of law or of the Certificate, a different vote is required, in
which case such express provision shall govern and control the decision of such
question.
Section 2.9 Voting by Ballot. No vote of the stockholders need be taken
by written ballot, or by a ballot submitted by electronic transmission, or
conducted by inspectors of elections unless otherwise required by law. Any vote
not required to be taken by ballot or by ballot submitted by electronic
transmission may be conducted in any manner approved by the presiding officer at
the meeting at which such vote is taken.
Section 2.10 Inspector of Elections. The Corporation may, and shall if
required by law, in advance of any meeting of stockholders, appoint one or more
inspectors of election, who may be employees of the Corporation, to act at the
meeting or any adjournment thereof and to make a written report thereof. The
Corporation may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. In the event that no inspector so appointed or
designated is able to act at a meeting of stockholders, the person presiding at
the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of his or her duties, shall take
and sign an oath to execute faithfully the duties of inspector with strict
impartiality and according to the best of his or her ability. The inspector or
inspectors so appointed or designated shall (a) ascertain the number of shares
of capital stock of the Corporation outstanding and the voting power of each
such share; (b) determine the shares of capital stock of the Corporation
represented at the meeting and the validity of proxies and ballots; (c) specify
the information relied upon to determine the validity of electronic
transmissions in accordance with Section 2.7 hereof; (d) count all votes and
ballots; (e) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors; and
(f) certify their determination of the number of shares of capital stock of the
Corporation represented at the meeting and such inspectors' count of all votes
and ballots. Such certification and report shall specify such other information
as may be required by law. No person who is a candidate for an office at an
election may serve as an inspector at such election.
When determining the shares of capital stock represented and the
validity of proxies and ballots, the inspector shall be limited to an
examination of the proxies, any envelopes submitted with those proxies, any
information provided in accordance with Section 2.7 of these By-Laws, ballots
and the regular books and records of the Corporation. The inspector may consider
other reliable information for the limited purpose of reconciling proxies and
ballots submitted by or on behalf of banks, brokers or their nominees or a
similar person which represent more votes than the holder of a proxy is
authorized by the record owner to cast or more votes than the stockholder holds
of record. If the inspector considers other reliable information as outlined in
this section, the inspector, at the time of his or her certification pursuant to
provision (f) of this Section 2.10 shall specify the precise information
considered, the person or persons from whom the information was obtained,
-5-
when this information was obtained, the means by which the information was
obtained, and the basis for the inspector's belief that such information is
accurate and reliable.
Section 2.11 No Stockholder Action by Written Consent. Any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual or special meeting of the stockholders of the
Corporation, and the ability of the stockholders to consent in writing to the
taking of any action is specifically denied.
Section 2.12 List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
and class of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
Section 2.13 Notice of Stockholder Business and Nominations.
(a) Annual Meetings of Stockholders.
(i) Nominations of persons for election to the Board of
Directors and the proposal of business to be considered by the stockholders at
an annual meeting of stockholders may be made only (A) by or at the direction of
the Board of Directors or the Chief Executive Officer; (B) by any stockholder of
the Corporation who is entitled to vote at the meeting, who complies with the
applicable requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder, and the
notice procedures set forth in clause (ii) of this Section 2.13(a) and who was a
stockholder of record at the time such notice is delivered to the Secretary of
the Corporation; or (C) pursuant to the Corporation's notice of meeting (or any
supplement thereto).
(ii) For nominations or other business to be properly brought
before an annual meeting by a stockholder, pursuant to clause (B) of paragraph
(a)(i) of this Section 2.13, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation and any such other
business other than nominations of persons for election to the Board of
Directors must otherwise be a proper matter for stockholder action. To be
timely, a stockholder's notice shall be delivered or mailed to the Secretary at
the principal executive offices of the Corporation and received not less than
ninety (90) calendar days, nor more than one hundred twenty (120) calendar days
prior to the first anniversary of the previous year's annual meeting; provided,
however, that in the event that no annual meeting was held in the previous year
or the date of the annual meeting was changed by more than thirty (30) calendar
days from the anniversary date of the previous year's annual meeting, notice by
the stockholder must be so received not less than ninety (90) calendar days nor
more than one hundred twenty (120) calendar days prior to such annual meeting or
ten (10) calendar days following the date on which public announcement of the
date of the meeting is first made by the Corporation or notice of such meeting
is given. In no event shall an adjournment or
-6-
postponement of an annual meeting (or the public announcement thereof) commence
a new time period (or extend any time period) for the giving of stockholder's
notice as described above. Such stockholder's notice shall set forth (A) as to
each person whom the stockholder proposes to nominate for election or reelection
as a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Exchange Act, and
Rule 14a-11 thereunder, including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director if elected; (B)
as to any other business that the stockholder proposes to bring before the
meeting, a brief description of the business desired to be brought before the
meeting (including the text of any resolutions proposed for consideration), the
reasons for conducting such business at the meeting and, in the event that such
business includes a proposal to amend either the Certificate or the By-Laws of
the Corporation, the language of the proposed amendment; (C) any material
interest in such business of such stockholder and of any beneficial owner on
whose behalf the proposal is made and, in the case of nominations, a description
of all arrangements or understandings between the stockholder and each nominee
and any other persons (naming them) pursuant to which the nominations are to be
made by the stockholder; (D) a representation that the stockholder is a holder
of record of capital stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by a qualified representative at the meeting
to propose such business; (E) a representation whether the stockholder or the
beneficial owner, if any, intends or is part of a group which intends (1) to
deliver a proxy statement and/or form of proxy to holders of at least the
percentage of the Corporation's outstanding capital stock required to approve or
adopt the proposal or elect the nominee and/or (2) otherwise to solicit proxies
from stockholders in support of such proposal or nomination; and (F) as to the
stockholder giving the notice and any beneficial owner on whose behalf the
nomination or proposal is made, (1) the name and address of such stockholder, as
it appears on the Corporation's books, and of such beneficial owner and (2) the
class and number of shares of capital stock of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner. If
such stockholder does not appear or send a qualified representative to present
such proposal at such annual meeting, the Corporation need not present such
proposal for a vote at such meeting, notwithstanding that proxies in respect of
such vote may have been received by the Corporation. The presiding officer of
any annual meeting of stockholders shall refuse to permit any business proposed
by a stockholder to be brought before such annual meeting without compliance
with the foregoing procedures or if the stockholder solicits proxies in support
of such stockholder's proposal without such stockholder having made the
representation required by clause (E) above. The foregoing notice requirements
shall be deemed satisfied by a stockholder if the stockholder has notified the
Corporation of his or her intention to present a proposal at an annual meeting
in compliance with Rule 14a-8 (or any successor thereof) promulgated under the
Exchange Act and such stockholder's proposal has been included in a proxy
statement that has been prepared by the Corporation to solicit proxies for such
annual meeting. The Corporation may require any proposed nominee to furnish such
other information as it may reasonably require to determine the eligibility of
such proposed nominee to serve as a director of the Corporation.
(iii) Notwithstanding anything in the second sentence of
paragraph (a)(ii) of this Section 2.13 to the contrary, in the event that the
number of directors to be elected to the Board of Directors at an annual meeting
is increased and there is no public announcement by the Corporation naming the
nominees for the additional directorships at least one hundred (100) calendar
days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this
-7-
Section 2.13 shall also be considered timely, but only with respect to nominees
for the additional directorships, if it shall be delivered to the Secretary at
the principal executive offices of the Corporation not later than the close of
business on the tenth day following the day on which such public announcement is
first made by the Corporation.
(b) Special Meetings of Stockholders.
(i) Only such business as shall have been brought before the
special meeting of the stockholders pursuant to the Corporation's notice of
meeting pursuant to Section 2.2 of these By-Laws shall be conducted at such
meeting.
(ii) In the event that directors are to be elected at a special
meeting of stockholders pursuant to the Corporation's notice of meeting,
nominations of persons for election to the Board of Directors may be made at
such special meeting of stockholders (A) by or at the direction of the Board of
Directors; or (B) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is entitled to vote at the meeting, who complies with the notice
procedures set forth in this Section 2.13 and who is a stockholder of record at
the time such notice is delivered to the Secretary of the Corporation.
Nominations by stockholders of persons for election to the Board of Directors
may be made at such special meeting of stockholders if the stockholder's notice
as required by paragraph (a)(ii) of this Section 2.13 shall be delivered to the
Secretary at the principal executive offices of the Corporation not more than
one hundred twenty (120) calendar days prior to such special meeting and not
less than ninety (90) calendar days prior to such special meeting or ten (10)
calendar days following the date on which a public announcement of the date of
the special meeting and of the nominees to be elected at such meeting is first
made or notice of such meeting is given. In no event shall the adjournment or
postponement of a special meeting (or the public announcement thereof) commence
a new time period (or extend any time period) for the giving of a stockholder's
notice as described above.
(c) General.
(i) Only persons who are nominated in accordance with the
procedures set forth in this Section 2.13 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 2.13. Except as otherwise provided by law, the
Certificate or these By-Laws, the presiding officer of the meeting shall have
the power and duty to determine whether a nomination or any business proposed to
be brought before the meeting was made or proposed in accordance with the
procedures set forth in this Section 2.13 (including whether the stockholder or
beneficial owner, if any, on whose behalf the nomination or proposal is made
solicited (or is part of a group which solicited) or did not so solicit, as the
case may be, proxies in support of such stockholder's representation as required
by clause (a)(ii)(E) of this Section 2.13) and, if any proposed nomination or
business is not in compliance with this Section 2.13, to declare that such
defective proposal or nomination shall be disregarded. Notwithstanding the
foregoing provisions of this Section 2.13, if the stockholder (or a qualified
representative of the stockholder) does not appear at the annual or special
meeting of stockholders of the Corporation to present a nomination or business,
such nomination shall be disregarded and such proposed business shall not be
transacted, notwithstanding that proxies in respect of such vote may have been
received by the Corporation.
-8-
(ii) For purposes of this Section 2.13, "public announcement"
shall include disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Section 13, 14, or 15(d) of the Exchange Act.
(iii) For purposes of this Section 2.13, no adjournment nor
notice of adjournment of any meeting shall be deemed to constitute a new notice
of such meeting for purposes of this Section 2.13 and in order for any
notification required to be delivered by a stockholder pursuant to this Section
2.13 to be timely, such notification must be delivered within the periods set
forth above with respect to the originally scheduled meeting.
(iv) Notwithstanding the foregoing provisions of this Section
2.13, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 2.13. Nothing in this Section 2.13 shall be
deemed to affect any rights of stockholders to request inclusion of proposals in
the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 2.14 Opening and Closing of Polls. The date and time for the
opening and the closing of the polls for the matters to be voted upon at a
stockholder meeting shall be announced at the meeting. The inspector of the
election shall be prohibited from accepting any ballots, proxies or votes or any
revocations thereof or changes thereto after the closing of the polls, unless
the Court of Chancery upon application by a stockholder shall determine
otherwise.
Section 2.15 Confidential Voting.
(a) Proxies and ballots that identify the votes of specific
stockholders shall be kept in confidence by the inspectors of election unless:
(i) there is an opposing solicitation with respect to the election or removal of
directors; (ii) disclosure is required by applicable law; (iii) a stockholder
expressly requests or otherwise authorizes disclosure in relation to such
stockholder's vote; or (iv) the Corporation concludes in good faith that a bona
fide dispute exists as to the authenticity of one or more proxies, ballots or
votes, or as to the accuracy of any tabulation of such proxies, ballots or
votes.
(b) The inspectors of election and any authorized agents or other
persons engaged in the receipt, count and tabulation of proxies and ballots
shall be advised of this Section 2.15 and instructed to comply herewith.
(c) The inspectors of election shall certify, to the best of their
knowledge based on due inquiry, that proxies and ballots have been kept in
confidence as required by this Section 2.15.
III.
DIRECTORS
Section 3.1 General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of a Board of Directors, which may
exercise all the powers of the Corporation and do all such lawful acts and
things as are not by law or by the Certificate or by these By-Laws directed or
required to be exercised or done by the stockholders.
-9-
Section 3.2 Number and Election of Directors. The number of directors
of the Corporation shall be fixed from time to time by resolution of the Board
of Directors adopted by the vote of a majority of the entire Board of Directors,
but such number shall in no case be less than five (5) nor more than nine (9).
The majority of the directors will be "independent" under the rules of the
Nasdaq National Market (the "Nasdaq") subject to the phase in rules for
companies listing on the Nasdaq in connection with an initial public offering
and the controlled company exception under the Nasdaq rules. Except as provided
in Section 3.3 of this Article, directors shall be elected by a plurality of the
votes cast at Annual Meetings of Stockholders. Any director may resign at any
time by submitting an electronic transmission or by delivering a written notice
of resignation, signed by such director, to the Chairman or the Secretary.
Unless otherwise specified therein, such resignation shall take effect upon
delivery. Directors need not be stockholders.
Section 3.3 Classified Board; Election of Directors. The Board of
Directors shall be divided into three classes, designated Classes I, II and III,
which shall be as nearly equal in number as possible. Directors of Class I shall
hold office for an initial term expiring at the first annual meeting of
stockholders to be held after the date hereof. Directors of Class II shall hold
office for an initial term expiring at the second annual meeting of stockholders
to be held after the date hereof. Directors of Class III shall hold office for
an initial term of office expiring at the third annual meeting of stockholders
to be held after the date hereof. Except as otherwise provided in Section 3.4 of
these By-Laws, at each annual meeting of stockholders of the Corporation, the
respective successors of the directors whose terms are expiring shall be elected
for terms expiring at the annual meeting of stockholders held in the third
succeeding year.
Section 3.4 Additional Directorships. Newly created directorships or
vacancies on the Board of Directors shall be filled by a majority of the
directors then in office, regardless of whether such directors fulfill quorum
requirements, or by a sole remaining director; and the newly created
directorships shall be distributed among the three classes of directors so that,
as nearly as possible, each class will consist of one-third (1/3) of the
Corporation's directors. Any director elected to fill any vacancy on the Board
of Directors not resulting from an increase in the number of directors shall be
of the same class as that of the director whose death, resignation, removal or
other event caused the vacancy and shall have the same remaining term as that of
his predecessor. A director elected to fill a vacancy or a newly created
directorship shall hold office until such director's successor has been elected
and qualified or until such director's earlier death, resignation or removal.
Any vacancy or newly created directorship may also be filled by the vote of the
holders of a majority in voting power of the capital stock issued and
outstanding and entitled to vote. Directors may be removed only for cause, and
only by the affirmative vote of at least a majority in voting power of all
outstanding capital stock of the Corporation entitled to vote generally in the
election of directors, voting as a single class.
Section 3.5 Place of Meetings. The Board of Directors may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 3.6 Annual and Regular Meetings. The annual meeting of the
Board of Directors for the purpose of electing officers and for the transaction
of such other business as may come before the meeting shall be held as soon as
practicable following adjournment of the annual meeting of the stockholders.
Notice of such annual meeting of the Board of Directors need not be given. The
Board of Directors from time to time may by resolution provide for the holding
of regular meetings and fix the place (which may be within or without the State
of Delaware) and the date and
-10-
hour of such meetings. Notice of regular meetings need not be given; provided,
however, that if the Board of Directors shall fix or change the time or place of
any regular meeting, notice of such action shall be mailed promptly, or sent by
telephone, including a voice messaging system or other system or technology
designed to record and communicate messages, telegraph, facsimile, electronic
mail or other electronic means, to each director who shall not have been present
at the meeting at which such action was taken, addressed or transmitted to him
or her at his or her usual place of business, or shall be delivered or
transmitted to him or her personally. Notice of such action need not be given to
any director who attends the first regular meeting after such action is taken
without protesting the lack of notice to him or her, prior to or at the
commencement of such meeting, or to any director who submits a signed waiver of
notice, whether before or after such meeting.
Section 3.7 Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman, any director or the
Chief Executive Officer (or, in the event of the Chief Executive Officer's
absence or disability, by any other officer) at such place (within or without
the State of Delaware), date and hour as may be specified in the respective
notices or waivers of notice of such meetings. Special meetings of the Board of
Directors may be called on twenty-four (24) hours' notice, if notice is given to
each director personally or by telephone, including a voice messaging system, or
other system or technology designed to record and communicate messages,
telegraph, facsimile, electronic mail or other electronic means, or on five (5)
calendar days' notice, if notice is mailed to each director, addressed or
transmitted to him or her at such director's usual place of business or other
designated location. Notice of any special meeting shall be deemed to have been
waived by any director who attends such meeting without protesting the lack of
notice to him or her, prior to or at the commencement of such meeting, or to any
director who submits a signed waiver of notice, whether before or after such
meeting, and any business may be transacted thereat.
Section 3.8 Executive Session. The independent members of the Board of
Directors shall meet regularly in executive sessions at such place (within or
without the State of Delaware), date and hour as may be specified in the
respective notices or waivers of notice of such sessions. Executive sessions of
the Board of Directors may be called on twenty-four (24) hours' notice, if
notice is given to each independent director personally or by telephone,
including a voice messaging system, or other system or technology designed to
record and communicate messages, telegraph, facsimile, electronic mail or other
electronic means, or on five (5) calendar days' notice, if notice is mailed to
each independent director, addressed or transmitted to him or her at such
independent director's usual place of business or other designated location.
Notice of any executive session shall be deemed to have been waived by any
independent director who attends such meeting without protesting the lack of
notice to him or her, prior to or at the commencement of such meeting, or to any
independent director who submits a signed waiver of notice, whether before or
after such meeting, and any business may be transacted thereat.
Section 3.9 Quorum. Except as may be otherwise specifically provided by
law, the Certificate or these By-Laws, at all meetings of the Board of
Directors, a majority of the entire Board of Directors shall constitute a quorum
for the transaction of business and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors.
Section 3.10 Adjournment. A majority of the directors present, whether
or not a quorum is present, may adjourn any meeting of the Board of Directors to
another time or place. No notice
-11-
need be given of any adjourned meeting unless the time and place of the
adjourned meeting are not announced at the time of adjournment, in which case
notice conforming to the requirements of Section 3.7 of these By-Laws shall be
given to each director.
Section 3.11 Action without Meeting. Unless otherwise restricted by the
Certificate or these By-Laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board of Directors or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board of Directors or committee.
Section 3.12 Regulations; Manner of Acting. To the extent consistent
with applicable law, the Certificate and these By-Laws, the Board of Directors
may adopt such rules and regulations for the conduct of meetings of the Board of
Directors and for the management of the property, affairs and business of the
Corporation as the Board of Directors may deem appropriate. The directors shall
act only as a Board, and the individual directors shall have no power to act on
behalf of the Board.
Section 3.13 Attendance by Telephone. Unless otherwise restricted by
the Certificate or these By-Laws, members of the Board of Directors, or of any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 3.14 Removal. Any director may be removed at any time, but only
for cause, upon the affirmative vote of the holders of a majority of the votes
which could be cast by the holders of all outstanding shares of capital stock
entitled to vote for the election of directors, voting together as a class,
given at a duly called annual or special meeting of stockholders.
Section 3.15 Compensation of Directors. The amount, if any, which each
director shall be entitled to receive as compensation for his or her services as
such shall be fixed from time to time by resolution of the Board of Directors.
Section 3.16 Reliance on Accounts and Reports, etc. A director, or a
member of any committee designated by the Board of Directors, shall, in the
performance of his or her duties, be fully protected in relying in good faith
upon the records of the Corporation and upon information, opinions, reports or
statements presented to the Corporation by any of the Corporation's officers or
employees, or committees designated by the Board of Directors, or by any other
person as to the matters the member reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.
IV.
BOARD COMMITTEES
Section 4.1 How Constituted. The Board of Directors may designate one
or more Committees, including, but not limited to, an Audit Committee, a
Compensation Committee and a Corporate Governance Committee, each such Committee
to consist of such number of directors as
-12-
from time to time may be fixed by the Board of Directors. The Board of Directors
may designate one or more directors as alternate members of any such Committee,
who may replace any absent or disqualified member or members at any meeting of
such Committee. Thereafter, members of each such Committee may be designated
from time to time by the Board of Directors. Any such Committee may be abolished
or re-designated from time to time by the Board of Directors. Each member (and
each alternate member) of any such Committee (whether designated at an annual
meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold
office until his or her successor shall have been designated or until he or she
shall cease to be a director, or until his or her earlier death, resignation or
removal.
Section 4.2 Powers.
(a) Audit Committee. The Audit Committee, except as otherwise may be
provided in any resolution of the Board of Directors or as may be required by
applicable law, shall have and may exercise the authority of the Board of
Directors to, among other things:
(i) have direct responsibility for the selection, compensation,
retention, replacement and oversight of the work of the Corporation's
independent auditors, including prescribing what services are allowable and
approve in advance all services provided by the auditors;
(ii) set clear hiring policies for employees or former employees
of the independent auditors;
(iii) review all proposed corporation hires formerly employed by
the independent auditors;
(iv) have direct responsibility for ensuring its receipt from
the independent auditors at least annually of a formal written statement
delineating all relationships between the auditor and the Corporation,
consistent with Independence Standards Board Standard No. 1;
(v) discuss with the independent directors any disclosed
relationships or services that may impact the objectivity and independence of
the auditor and for taking, or recommending that the full Board of Directors
take, appropriate action to oversee the independence of the independent auditor;
(vi) discuss with the internal auditors and the independent
auditors the overall scope and plans for their respective audits including the
adequacy of staffing, compensation and resources;
(vii) review, at least annually, the results and scope of the
audit and other services provided by the Corporation's independent auditors and
discuss any audit problems or difficulties and management's response;
(viii) review the Corporation's annual audited financial statement
and quarterly financial statements and discuss the statements with management
and the independent auditors;
(ix) review and discuss with management, the internal auditors
and the independent auditors the adequacy and effectiveness of the Corporation's
internal controls,
-13-
including the Corporation's ability to monitor and manage business risk, legal
and ethical compliance programs and financial reporting;
(x) review and discuss separately with the internal auditors
and the independent auditors, with and without management present, the results
of their examinations;
(xi) review the Corporation's compliance with legal and
regulatory independence;
(xii) review and discuss the Corporation's interim financial
statements and the earnings press releases prior to the filing of the
Corporation's report on Form 10-Q, as well as financial information and earnings
guidance provided to analysts and rating agencies;
(xiii) review and discuss the Corporation's risk assessment and
risk management policies;
(xiv) prepare an Audit Committee report required by the
Securities and Exchange Commission to be included in the Corporation's annual
proxy statement;
(xv) engage independent counsel and other advisors to assist the
audit committee in carrying out its duties;
(xvi) review and approve all related party transactions
consistent with the rules applied to companies listed on the Nasdaq National
Market; and
(xvii) establish procedures regarding complaints received by the
Corporation or the Corporation's employees regarding accounting, accounting
controls or accounting matters.
(b) Compensation Committee. The Compensation Committee, except as
otherwise may be provided in any resolution of the Board of Directors or as may
be required by applicable law, shall have and may exercise all the authority of
the Board of Directors with respect to compensation, benefits and personnel
administration of the employees of the Corporation to, among other things:
(i) review and approve corporate goals and objectives relevant
to our Chief Executive Officer's and the other named executive officers'
compensation;
(ii) evaluate the Chief Executive Officer's performance in light
of these corporate goals and objectives;
(iii) either as a committee, or together with the other
independent directors, determine and approve the compensation of the Chief
Executive Officer;
(iv) make recommendations to the Corporation's Board of
Directors regarding the salaries, incentive compensation plans and equity-based
plans for the employees of the Corporation; and
(v) produce a compensation committee report on executive
compensation as required by the Securities and Exchange Commission to be
included in the Corporation's annual proxy statement or annual
-14-
report on Form 10-K filed with the Securities and Exchange Commission.
(c) Corporate Governance Committee. The Corporate Governance Committee,
except as otherwise may be provided in any resolution of the Board of Directors
or as required by applicable law, shall, among other things:
(i) identify candidates qualified to become board members,
consistent with criteria approved by the Board of Directors;
(ii) recommend the candidates to be selected as nominees for the
next annual meeting of the stockholders;
(iii) develop and recommend to the Board of Directors a set of
corporate governance principles applicable to the Corporation; and
(iv) oversee the evaluation of the Board of Directors and
management.
(d) Other Committees. Each other Committee, except as otherwise
provided in this section, shall have and may exercise such powers of the Board
of Directors as may be provided by resolution or resolutions of the Board of
Directors.
Section 4.3 Proceedings. Each Committee may, subject to approval of the
Board of Directors, adopt a charter specifying its scope of responsibility and
may fix its own rules of procedure and may meet at such place (within or without
the State of Delaware), at such time and upon such notice, if any, as it shall
determine from time to time. Each Committee shall keep minutes of its
proceedings and shall report such proceedings to the Board of Directors at the
meeting of the Board of Directors next following any such proceedings.
Section 4.4 Quorum and Manner of Acting. Except as may be otherwise
provided in the resolution creating such Committee, at all meetings of any
Committee the presence of members (or alternate members) constituting a majority
of the total membership of such Committee shall constitute a quorum for the
transaction of business. The act of the majority of the members present at any
meeting at which a quorum is present shall be the act of such Committee. Any
action required or permitted to be taken at any meeting of any such Committee
may be taken without a meeting, if all members of such Committee shall consent
to such action in writing or by electronic transmission, and such writing or
writings or electronic transmission or transmissions are filed with the minutes
of the proceedings of the Committee. The members of any such Committee shall act
only as a Committee, and the individual members of such Committee shall have no
power as such.
Section 4.5 Action by Telephonic Communications. Members of any
Committee designated by the Board of Directors may participate in a meeting of
such Committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this provision shall
constitute presence in person at such meeting.
Section 4.6 Resignations. Any member of any Committee may resign at any
time by delivering a written notice of resignation, signed by such member, to
the Chairman or the Chief
-15-
Executive Officer. Unless otherwise specified therein, such resignation shall
take effect upon delivery.
Section 4.7 Removal. Any member (and any alternate member) of any
Committee may be removed from his or her position as a member of such Committee
at any time, either for or without cause, by resolution adopted by a majority of
the whole Board of Directors.
Section 4.8 Vacancies. If any vacancy shall occur in any Committee, by
reason of death, resignation, removal or otherwise, the remaining members (and
alternate members) shall continue to act, and any such vacancy may be filled by
resolution adopted by a majority of the whole Board of Directors.
V.
OFFICERS
Section 5.1 Number. The officers of the Corporation shall be elected by
the Board of Directors and may include a Chairman, a Chief Executive Officer, a
President, one or more Vice Presidents, a Chief Financial Officer, a Secretary
and a Treasurer. The Board of Directors may appoint such other officers as it
may deem appropriate; provided that officers of the rank of Vice President and
below may be appointed by the Compensation Committee. Such other officers shall
exercise such powers and perform such duties as may be determined from time to
time by the Board of Directors, the Chief Executive Officer or the President.
Any number of offices may be held by the same person. No officer, other than the
Chairman, need be a director of the Corporation.
Section 5.2 Election. Unless otherwise determined by the Board of
Directors, the officers of the Corporation shall be elected by the Board of
Directors at the annual meeting of the Board of Directors, and shall be elected
to hold office until the next succeeding annual meeting of the Board of
Directors. In the event of the failure to elect officers at such meeting,
officers may be elected at any regular or special meeting of the Board of
Directors. Officers of the rank of Vice President and below may be elected by
the Compensation Committee. Each officer shall hold office until such officer's
successor has been elected and qualified, or until such officer's earlier death,
resignation or removal.
Section 5.3 Powers. Each of the officers of the Corporation elected by
the Board of Directors or appointed by an officer in accordance with these
By-Laws shall have the powers and duties prescribed by law, by these By-Laws or
by the Board of Directors and, in the case of appointed officers, the powers and
duties prescribed by the appointing officer, and, unless otherwise prescribed by
these By-Laws or by the Board of Directors or such appointing officer, shall
have such further powers and duties as ordinarily pertain to that office.
Section 5.4 Salaries. Except as otherwise provided by Section 4.2
hereof, the salaries of all executive officers (as determined by the Board of
Directors) of the Corporation shall be fixed by the Board of Directors. The
Chief Executive Officer shall fix the salaries of all non-executive officers.
Section 5.5 Removal and Resignation; Vacancies. Any officer may be
removed for or without cause at any time by the Board of Directors. Any officer
may resign at any time by delivering notice of resignation, either in writing
signed by such officer or by electronic transmission,
-16-
to the Board of Directors or the Chief Executive Officer. Unless otherwise
specified therein, such resignation shall take effect upon delivery. Any vacancy
occurring in any office of the Corporation by death, resignation, removal or
otherwise, shall be filled by the Board of Directors.
Section 5.6 Chairman of the Board. The Chairman, if any, when elected,
shall have general supervision, direction and control of the business and
affairs of the Corporation, subject to the control of the Board of Directors,
shall preside at meetings of stockholders and shall have such other functions,
authority and duties as customarily appertain to the Chairman of a business
corporation or as may be prescribed by the Board of Directors. During the
absence or disability of the Chief Executive Officer, the Chairman shall
exercise all the powers and discharge all the duties of the Chief Executive
Officer. The Chairman shall also perform such other duties and may exercise such
other powers as from time to time may be assigned to him by these By-Laws.
Section 5.7 Chief Executive Officer. The Chief Executive Officer shall
have general control and supervision of the policies and operations of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The Chief Executive Officer shall be a U.S.
citizen. He or she shall manage and administer the Corporation's business and
affairs and shall also perform all duties and exercise all powers usually
pertaining to the office of a chief executive officer of a corporation. He or
she shall have the authority to sign, in the name and on behalf of the
Corporation, checks, orders, contracts, leases, notes, drafts and other
documents and instruments in connection with the business of the Corporation and
together with the Secretary, or any Assistant Secretary, conveyances of real
estate and other documents and instruments to which the seal of the Corporation
is affixed. He or she shall have the authority to cause the employment or
appointment of such employees and agents of the Corporation as the conduct of
the business of the Corporation may require, to fix their compensation, and to
remove or suspend any employee or agent elected or appointed by the Chief
Executive Officer or the Board of Directors. The Chief Executive Officer shall
perform such other duties and have such other powers as the Board of Directors
or the Chairman may from time to time prescribe.
Section 5.8 Chief Financial Officer. The Chief Financial Officer shall
be the principal financial officer of the Corporation and shall have
responsibility for the financial affairs of the Corporation and shall keep or
cause to be kept correct records of the business and transactions of the
Corporation. The Chief Financial Officer shall perform such other duties and
exercise such other powers as are normally incident to the office of chief
financial officer and as may be prescribed by the Board of Directors or the
Chief Executive Officer from time to time.
Section 5.9 President. The President shall perform such duties and have
such powers as the Board of Directors or the Chief Executive Officer may from
time to time prescribe.
Section 5.10 Absence or Disability of the Chief Executive Officer. In
the event of the absence of the Chief Executive Officer or in the event of the
Chief Executive Officer's inability to act, the officer, if any, designated by
resolution of the Board of Directors (or in the event there is more than one
such designated officer, then in the order of designation) shall perform the
duties of the Chief Executive Officer, and when so acting, shall have all the
powers and be subject to all the restrictions of the Chief Executive Officer.
Any such officer or officers acting in the absence or inability to act of the
Chief Executive Officer shall be U.S. citizens.
-17-
Section 5.11 Vice President. The Vice Presidents shall have such
designations and shall perform such duties and have such powers as the Board of
Directors or the Chief Executive Officer may from time to time prescribe.
Section 5.12 Secretary. The Secretary shall keep or cause to be kept a
record of all the proceedings of the meetings of the stockholders and of the
Board of Directors, and shall cause all notices to be duly given in accordance
with the provisions of these By-Laws and as required by law. The Secretary shall
be the custodian of the records and of the seal of the Corporation and cause
such seal (or a facsimile thereof) to be affixed to instruments when
appropriate. The Secretary shall perform, in general, all duties incident to the
office of secretary and such other duties as may be specified in these By-Laws
or as may be assigned to him or her from time to time by the Board of Directors
or the Chief Executive Officer.
Section 5.13 Assistant Secretary. The Assistant Secretary, or if there
be more than one, the Assistant Secretaries in the order determined by the Board
of Directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the Secretary or in the event of the
Secretary's inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties as may from time to
time be prescribed by the Board of Directors, the Chairman, the Chief Executive
Officer, the President or the Secretary.
Section 5.14 Treasurer. The Treasurer shall have charge and supervision
over and be responsible for the moneys, securities, receipts and disbursements
of the Corporation, and shall keep or cause to be kept full and accurate records
of all receipts of the Corporation, and shall cause the moneys and other
valuable effects of the Corporation to be deposited in the name and to the
credit of the Corporation. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, taking proper vouchers
for such disbursements, and shall render to the Chairman, the President and the
Board of Directors, at its regular meetings or when the Board of Directors so
requires, an account of all transactions as Treasurer and of the financial
condition of the Corporation. The Treasurer shall perform such other duties as
may from time to time be prescribed by the Board of Directors, the Chairman, the
Chief Executive Officer or the Chief Financial Officer.
Section 5.15 Assistant Treasurer. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the Treasurer or in the event of the
Treasurer's inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such other
powers as may from time to time be prescribed by the Board of Directors, the
Chairman, the Chief Executive Officer or the Chief Financial Officer.
Section 5.16 Other Officers. The Chief Executive Officer or Board of
Directors may appoint other officers and agents for any group, division or
department into which this Corporation may be divided by the Board of Directors,
with titles as the President or Board of Directors may from time to time deem
appropriate. All such officers and agents shall receive such compensation, have
such tenure and exercise such authority as the President or Board of Directors
may specify. All appointments made by the Chief Executive Officer hereunder and
all the terms and conditions thereof must be reported to the Board of Directors.
-18-
In no case shall an officer or agent of any one Group, Division or
Department have authority to bind another Group, Division or Department of the
Company or to bind the Corporation except as to the business and affairs of the
Group, Division or Department of which he or she is an officer or agent.
VI.
CERTIFICATES OF STOCK
Section 6.1 Certificates of Stock, Uncertificated Shares. The shares of
capital stock of the Corporation may be either represented by certificates or
uncertificated shares; provided that the Board of Directors may provide by
resolution or resolutions that some or all of any or all classes or series of
the capital stock of the Corporation shall be uncertificated shares. Any
resolution of the Board of Directors providing for uncertificated shares shall
not apply to shares represented by a certificate until such certificate is
surrendered to the Corporation. Subject to Section 6.4 below, notwithstanding
the adoption of such resolution by the Board of Directors, every holder of
capital stock represented by certificates and, upon request, every holder of
uncertificated shares shall be entitled to have a certificate signed by, or in
the name of, the Corporation, (a) by the Chairman, the Chief Executive Officer,
the President or a Vice President; and (b) by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, representing the number of
shares registered in certificate form. Such certificate shall be in such form as
the Board of Directors may determine, to the extent consistent with applicable
law, the Certificate and these By-Laws.
Section 6.2 Signatures; Facsimile. All signatures on the certificate
referred to in Section 6.1 of these By-Laws may be in facsimile, engraved or
printed form, to the extent permitted by law. In case any officer, transfer
agent or registrar who has signed, or whose facsimile, engraved or printed
signature has been placed upon a certificate representing shares of capital
stock of the Corporation shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if he or she were such officer, transfer agent or
registrar at the date of issue.
Section 6.3 Transfer. Except as otherwise established by rules or
regulations adopted by the Board of Directors, upon surrender to the Corporation
or the transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation to issue a new
certificate of stock or uncertificated shares in place of any certificate
therefor issued by the Corporation to the person entitled thereto, cancel the
old certificate and record the transaction on its books.
Section 6.4 Replacement. In case of the loss, destruction or theft of a
certificate for any stock of the Corporation, a new certificate of stock or
uncertificated shares in place of any certificate therefor issued by the
Corporation may be issued upon satisfactory proof of such loss, destruction or
theft and upon such terms as the Board of Directors may prescribe. The Board of
Directors may in its discretion require the owner of the lost, destroyed or
stolen certificate, or his legal representative, to give the Corporation a bond,
in such sum and in such form and with such surety or sureties as it may direct,
to indemnify the Corporation against any claim that may be made against it with
respect to a certificate alleged to have been lost, destroyed or stolen.
-19-
Section 6.5 Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law. The Corporation shall not be required to register any transfer of shares
made in violation of any agreement among a stockholder or investor in the
Corporation and the Corporation, or recognize as a holder of any such shares any
transferee in such a violative transaction.
VII.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by the laws of the State of Delaware:
Section 7.1 Nature of Indemnity. Each person who was or is made a party
or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"),
including, without limitation, an action by or in the right of the Corporation,
by reason of the fact that he or she or a person of whom he or she is the legal
representative is or was a director or an officer of the Corporation or is or
was serving at the request of the Corporation as a director, officer or trustee
of another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director, officer or trustee or in any other capacity
while serving as a director, officer or trustee, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the GCL, as the
same exists or may hereafter be amended, against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such indemnitee in connection therewith; provided, however, that, except as
provided in these By-Laws with respect to proceedings to enforce rights to
indemnification and "advancement of expenses" (as defined below), the
Corporation shall indemnify any such indemnitee in connection with an action,
suit or proceeding (or part thereof) initiated by such indemnitee only if such
action, suit or proceeding (or part thereof) was authorized by the Board of
Directors. Furthermore, the Corporation may only indemnify such person if he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding had no reasonable cause to believe that his or
her conduct was unlawful; except that in the case of an action or suit by or in
the name of the Corporation to procure a judgment in its favor (a) such
indemnification shall be limited to expenses (including attorneys' fees)
actually and reasonably incurred by such person in the defense or settlement of
such action or suit; and (b) no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper.
-20-
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
Section 7.2 Advance Payment of Expenses. In addition to the right to
indemnification conferred in this Article VII, an indemnitee shall also have the
right to be paid by the Corporation the expenses (including attorneys' fees)
incurred in defending any such action or proceeding in advance of the final
disposition of such action or proceeding (hereinafter an "advancement of
expenses") upon receipt of an undertaking by or on behalf of the person
indemnified to repay such payment if it is ultimately determined by final
judicial decision from which there is no further right to appeal (hereinafter a
"final adjudication") that such person is not entitled to indemnification
conferred in this Article VII or otherwise. Such expenses (including attorneys'
fees) incurred by former directors and officers shall be so paid upon such terms
and conditions, if any, as the Corporation deems appropriate. The Board of
Directors may authorize the Corporation's counsel to represent such director or
officer in any action, suit or proceeding, whether or not the Corporation is a
party to such action, suit or proceeding.
Section 7.3 Procedure for Indemnification. If, following final
disposition of a proceeding, a claim for indemnification under this Article VII
is not paid in full by the Corporation within sixty (60) calendar days after a
written claim has been received by the Corporation, or if, whether before or
after final disposition of a proceeding, a claim for an advancement of expenses
under this Article VII is not paid in full by the Corporation within twenty (20)
calendar days after a written claim has been received by the Corporation, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit,
including without limitation reasonable attorneys' fees. In any suit brought by
the indemnitee to enforce a right to indemnification hereunder (but not in a
suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that the indemnitee has not met any applicable standard
for indemnification set forth in the GCL. In any suit brought by the Corporation
to recover an advancement of expenses pursuant to the terms of an undertaking,
the Corporation shall be entitled to recover such expenses upon a final
adjudication that the indemnitee has not met any applicable standard for
indemnification set forth in the GCL. Neither the failure of the Corporation
(including its directors who are not parties to such action, a committee of such
directors, independent legal counsel, or its stockholders) to have made a
determination that indemnification of the indemnitee is proper in the
circumstances because the indemnitee has met the applicable standard of conduct
set forth in the GCL, nor an actual determination by the Corporation (including
its directors who are not parties to such action, a committee of such directors,
independent legal counsel, or its stockholders) that the indemnitee has not met
such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the
-21-
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article VII or otherwise shall be on the Corporation.
Section 7.4 Preservation of Other Rights. The rights to indemnification
and to the advancement of expenses conferred in this Article VII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, the Certificate, these By-Laws, agreement, vote of
stockholders or directors or otherwise.
Section 7.5 Insurance. The Corporation may purchase and maintain
insurance, at its expense, to protect itself and any director, officer, employee
or agent of the Corporation or any person who is serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the GCL.
Section 7.6 Employees and Agents. The Corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses to any employee or agent of
the Corporation to the fullest extent of the provisions of this Article VII with
respect to the indemnification and advancement of expenses of directors and
officers of the Corporation.
Section 7.7 Survival. The rights conferred upon indemnitees in this
Article VII shall be contract rights and such rights shall continue as to an
indemnitee who has ceased to be a director, officer or trustee and shall inure
to the benefit of the indemnitee's heirs, executors and administrators. Any
amendment, alteration or repeal of this Article VII that adversely affects any
right of an indemnitee or its successors shall be prospective only and shall not
limit or eliminate any such right with respect to any proceeding involving any
occurrence or alleged occurrence of any action or omission to act that took
place prior to such amendment, alteration or repeal.
VIII.
GENERAL PROVISIONS
Section 8.1 Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 8.2 Corporate Seal. The corporate seal shall be in such form as
may be approved from time to time by the Board of Directors. The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
Section 8.3 Dividends. Subject to any applicable provisions of law and
the Certificate or any resolution or resolutions adopted by the Board of
Directors pursuant to authority expressly vested in it by the Certificate and
Section 151 of the GCL, the Board of Directors may, at any regular or special
meeting of the Board of Directors, out of funds legally available therefor,
declare dividends upon the capital stock of the Corporation, and any such
dividend may be paid in cash, property, or shares of the Corporation's stock.
-22-
A member of the Board of Directors, or a member of any committee
designated by the Board of Directors, shall be fully protected in relying in
good faith upon the records of the Corporation and upon such information,
opinions, reports or statements presented to the Corporation by any of its
officers or employees, or committees of the Board of Directors, or by any other
person as to matters the director reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation, as to the value and amount
of the assets, liabilities and/or net profits of the Corporation, or any other
facts pertinent to the existence and amount of surplus or other funds from which
dividends might properly be declared and paid.
Section 8.4 Reserves. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, thinks proper as a reserve or
reserves to meet contingencies or for such other purpose as the Board of
Directors shall think conducive to the interests of the Corporation, and the
Board of Directors may similarly modify or abolish any such reserve.
Section 8.5 Execution of Instruments. The Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President, the Secretary or the
Treasurer may enter into any contract or execute and deliver any instrument in
the name and on behalf of the Corporation. The Board of Directors or the Chief
Executive Officer may authorize any other officer or agent to enter into any
contract or execute and deliver any instrument in the name and on behalf of the
Corporation. Any such authorization may be general or limited to specific
contracts or instruments.
Section 8.6 Corporate Books. The books of the Corporation may be kept
outside of the State of Delaware at such place or places as the Board of
Directors may from time to time determine.
Section 8.7 Corporate Indebtedness. No loan shall be contracted on
behalf of the Corporation, and no evidence of indebtedness shall be issued in
its name, unless authorized by the Board of Directors, the Chief Executive
Officer or the Chief Financial Officer. Such authorization may be general or
confined to specific instances. Loans so authorized may be effected at any time
for the Corporation from any bank, trust company or other institution, or from
any firm, corporation or individual. All bonds, debentures, notes and other
obligations or evidences of indebtedness of the Corporation issued for such
loans shall be made, executed and delivered as the Board of Directors, the Chief
Executive Officer or the Chief Financial Officer shall authorize. When so
authorized by the Board of Directors, the Chief Executive Officer or the Chief
Financial Officer, any part of or all the properties, including contract rights,
assets, business or goodwill of the Corporation, whether then owned or
thereafter acquired, may be mortgaged, pledged, hypothecated or conveyed or
assigned in trust as security for the payment of such bonds, debentures, notes
and other obligations or evidences of indebtedness of the Corporation, and of
the interest thereon, by instruments executed and delivered in the name of the
Corporation.
Section 8.8 Deposits. Any funds of the Corporation may be deposited
from time to time in such banks, trust companies or other depositaries as may be
determined by the Board of Directors, the Chief Executive Officer, the Chief
Financial Officer or the Treasurer or by such officers or agents as may be
authorized by the Board of Directors or the Chief Executive Officer, the
Treasurer or the Chief Financial Officer or the Treasurer to make such
determination.
-23-
Section 8.9 Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such agent or agents
of the Corporation, and in such manner, as the Board of Directors or the Chief
Executive Officer from time to time may determine.
Section 8.10 Sale, Transfer, etc. of Securities. To the extent
authorized by the Board of Directors or by the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President, the Secretary or the
Treasurer or any other officers designated by the Board of Directors or the
Chief Executive Officer may sell, transfer, endorse, and assign any shares of
stock, bonds or other securities owned by or held in the name of the
Corporation, and may make, execute and deliver in the name of the Corporation,
under its corporate seal (if required), any instruments that may be appropriate
to effect any such sale, transfer, endorsement or assignment.
Section 8.11 Voting as Stockholder. Unless otherwise determined by
resolution of the Board of Directors, the Chief Executive Officer, the President
or any Vice President shall have full power and authority on behalf of the
Corporation to attend any meeting of stockholders of any corporation in which
the Corporation may hold stock, and to act, vote (or execute proxies to vote)
and exercise in person or by proxy all other rights, powers and privileges
incident to the ownership of such stock. Such officers acting on behalf of the
Corporation shall have full power and authority to execute any instrument
expressing consent to or dissent from any action of any such corporation without
a meeting. The Board of Directors may by resolution from time to time confer
such power and authority upon any other person or persons.
Section 8.12 Transactions with Interested Parties. No contract or
transaction between the Corporation and one or more of the directors or
officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of the directors or
officers are directors, officers or employees, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board of
Directors or a committee of the Board of Directors which authorizes the contract
or transaction or solely because his or their votes are counted for such
purpose, if:
(a) the material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum;
(b) the material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(c) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
-24-
IX.
AMENDMENTS
Section 9.1 Amendment. Subject to the provisions of this Section 9.1
and the Certificate, these By-Laws (including this Article IX) may be amended,
altered or repealed:
(a) by resolution adopted by a majority of the Board of Directors
without a stockholder vote at any special or regular meeting of the Board of
Directors if, in the case of such special meeting only, notice of such
amendment, alteration or repeal is contained in the notice or waiver of notice
of such meeting; provided, however, that the amendment, alteration or repeal of
the provisions of Sections 2.2, 2.11, 3.2, 3.3, or 3.14 hereof or this Section
9.1 shall require the affirmative vote of the holders of two-thirds (2/3) or
more of the combined voting power of the outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors; or
(b) at any regular or special meeting of the stockholders upon the
affirmative vote of the holders of two-thirds (2/3) or more of the combined
voting power of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class, if, in the case of such special meeting only, notice of such
amendment, alteration or repeal is contained in the notice or waiver of notice
of such meeting.
X.
SUBJECT TO CERTIFICATE OF INCORPORATION
These By-Laws and the provisions hereof are subject to the terms and
conditions of the Certificate of the Corporation (including any certificates of
designations filed thereunder), and in the event of any conflict between these
By-Laws and the Certificate, the Certificate shall control.
Adopted: May 17, 2005
-25-
Exhibit 5.1
OPINION REGARDING LEGALITY
June 8, 2005
Citi Trends, Inc.
102 Fahm Street
Savannah, Georgia 31401
Re: Citi Trends, Inc. Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to Citi Trends, Inc., a Delaware
corporation (the "Company"), in connection with the filing by the Company of a
Registration Statement on Form S-8 (the "Registration Statement") relating to
1,300,000 shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), to be issued pursuant to the Citi Trends 2005 Long-term
Incentive Plan (the "Plan") and 1,817,594 shares of Common Stock to be issued
pursuant to the Citi Trends Amended and Restated 1999 Stock Option Plan (the
"Old Plan", together with the Plan, the "Plans").
In connection with this opinion, we have examined originals or
copies of such documents, resolutions, certificates and instruments of the
Company as we have deemed necessary to form a basis for the opinions hereinafter
expressed. In addition, we have reviewed certificates of public officials,
statutes, records and such other instruments and documents and have made such
investigations of law as we have deemed necessary to form a basis for the
opinion hereinafter expressed. In our examination of the foregoing, we have
assumed, without independent investigation, (i) the genuineness of all
signatures and the authority of all persons or entities signing all documents
examined by us, (ii) the authenticity of all documents submitted to us as
originals and the conformity to authentic original documents of all documents
submitted to us as certified, conformed or photostatic copies and (iii) the
authenticity of the originals of such latter documents. With regard to certain
factual matters, we have relied, without independent investigation or
verification, upon, and assumed the accuracy and completeness of, statements and
representations of representatives of the Company.
Based on the foregoing, we are of the opinion that the
authorized, but not previously issued, shares of Common Stock which may be
issued under the Plans have been duly authorized and when issued in accordance
with the terms of the Plans (including the payment of any exercise price) will
be validly issued, fully paid and non-assessable.
We are members of the Bar of the State of New York and,
accordingly, do not purport to be experts on or to be qualified to express any
opinion herein concerning the laws of any jurisdiction other than laws of the
State of New York and the Delaware General Corporation Law, including the
applicable provisions of the Delaware Constitution and the reported cases
interpreting those laws, as currently in effect.
-1-
This opinion letter deals only with the specified legal issues
expressly addressed herein, and you should not infer any opinion that is not
explicitly addressed herein from any matter stated in this letter.
We consent to the use of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not hereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, and the rules and regulations
thereunder. This opinion is rendered to you as of the date hereof and we assume
no obligation to advise you or any other person hereafter with regard to any
change after the date hereof in the circumstances or the law that may bear on
the matters set forth herein even though the change may affect the legal
analysis or a legal conclusion or other matters in this letter.
Very truly yours,
/s/ Paul, Hastings, Janofsky & Walker LLP
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Citi Trends, Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-8 of Citi Trends, Inc. of our reports, dated March 30, 2005, except as to
note 12(c) which is as of April 28, 2005 and note 12(d) which is as of May 11,
2005 with respect to the balance sheets of Citi Trends, Inc. as of January 29,
2005 and January 31, 2004, and the related statements of income, stockholders'
equity, and cash flows for the years ended January 29, 2005, January 31, 2004
and February 1, 2003, incorporated by reference herein.
Our report refers to the adoption of Statement of Financial Accounting Standards
No. 150, "Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity".
/s/ KPMG LLP
Jacksonville, Florida
June 6, 2005