EXHIBIT 10.12
FORM OF NOMINATING AGREEMENT
THIS NOMINATING AGREEMENT (this "Agreement"), dated as of April __,
2005, is entered into by and between Citi Trends, Inc., a Delaware corporation
(the "Company"), and Hampshire Equity Partners II, L.P., a Delaware limited
partnership ("Hampshire").
WHEREAS, as of the date hereof and immediately prior to the
consummation of the Company's initial public offering of its common stock, par
value $.01 per share (the "Common Stock"), Hampshire owns in the aggregate
______________ shares (collectively, the "Shares") of Common Stock; and
WHEREAS, Hampshire and the Company wish to make certain agreements
with respect to the nomination of candidates for election to the board of
directors of the Company, upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and considerations herein set forth, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Board of Directors. The size of the Board of Directors of the
Company (the "Board") shall be established in accordance with the Certificate of
Incorporation and By-Laws of the Company. The members of the Board shall be
nominated and elected in accordance with the Certificate of Incorporation and
By-Laws of the Company, and the provisions of this Agreement. "Certificate of
Incorporation" shall mean the Second Amended and Restated Certificate of
Incorporation of the Company, as filed with the Secretary of State of the State
of Delaware and effective as of the date hereof, as the same may be amended from
time to time. "By-Laws" shall mean the Amended and Restated By-Laws of the
Company, effective as of the date hereof, as the same may be amended from time
to time.
2. Staggered Board. The Certificate of Incorporation and By-Laws of
the Company shall provide that the Board shall be divided into three classes, as
nearly equal in number as possible, as follows: (A) one class initially
consisting of one director ("Class I"), the initial term of which shall expire
at the first annual meeting of the stockholders to be held after the date
hereof; (B) a second class initially consisting of two directors ("Class II"),
the initial term of which shall expire at the second annual meeting of the
stockholders to be held after the date hereof and (C) a third class initially
consisting of two directors ("Class III"), the initial term of which shall
expire at the third annual meeting of the stockholders to be held after the date
hereof, with each class to hold office until its successors are elected and
qualified. At each annual meeting of the stockholders of the Company, the
successors of the members of the class of directors whose term expires at that
meeting shall be elected to hold office for a term expiring at the third
succeeding annual meeting of stockholders. On the date hereof, the Board shall
consist of: (i) _______________ in Class I, (ii) Xxxxx Xxxx and Xxxx Xxxx in
Class II and (iii) R. Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxx in Class III.
3. Designees. Upon expiration of the respective terms of the initial
Board members set forth in Section 2 above, and subject to the provisions of
Section 4 hereof, Hampshire shall have the right to designate individuals for
nomination for election to the Board as set forth below and the Company shall,
acting through its Nominating and Corporate Governance Committee, cause such
individuals to be nominated for election to the Board as set forth below;
provided that the Nominating and Corporate Governance Committee's obligations
under this Agreement are subject to the requirements of their fiduciary duties
as directors and the Delaware General Corporation Law.
(a) For so long as Hampshire (together with any of its
respective successors and permitted assigns) owns, in the aggregate, at least
forty percent (40%) of the Shares, Hampshire shall be entitled to designate two
persons for nomination for election to the Board; or
(b) For so long as Hampshire (together with any of its
respective successors and permitted assigns) owns, in the aggregate, less than
forty percent (40%), but at least fifteen percent (15%), of the Shares,
Hampshire shall be entitled to designate one person for nomination for election
to the Board.
4. Mechanics of Designation.
(a) In order to nominate an individual for election to the
Board, Hampshire must submit to the Company a prior written notice at least
ninety (90) days prior to the date of the next scheduled annual meeting of the
Company's stockholders in accordance with the notice provisions set forth in
Section 11 hereof, which notice shall include (i) the name of the designee, (ii)
a current resume and curriculum vitae of the designee, (iii) a statement
describing the designee's qualifications and (iv) contact information for
personal and professional references. At least one hundred and twenty (120) days
prior to the date of such annual meeting of the Company's stockholders, the
Company shall provide Hampshire with written notice of the expected date of such
meeting in accordance with the notice provisions set forth in Section 11 hereof.
(b) At each meeting of the Company's stockholders at which the
directors of the Company are to be elected, the Company agrees to recommend that
the stockholders elect to the Board each designee of Hampshire nominated for
election at such meeting in accordance with the provisions of Section 3 above.
5. Vacancies.
(a) At any time at which a vacancy shall be created on the
Board in any class as a result of the death, disability, retirement,
resignation, removal or otherwise of a designee of Hampshire and Hampshire
maintains the right to designate a person for nomination for election to the
Board, as specified in Section 3 above, Hampshire shall have the right to
designate for appointment by the remaining directors of the Company under the
Certificate of Incorporation an individual to fill such vacancy and to serve as
a director on the Board in such class.
(b) In connection with the foregoing, Hampshire must submit to
the Company written notice of such designee or designees in accordance with the
notice provisions set forth in
-2-
Section 11 hereof, which notice shall include (i) the name of the designee, (ii)
a current resume and curriculum vitae of the designee, (iii) a statement
describing the designee's qualifications and (iv) contact information for
personal and professional references. The Company agrees to take such actions as
will result in the appointment to the Board as soon as practicable of any
individual so designated by Hampshire.
6. Modification, Amendment, Waiver. No modification, amendment or
waiver of any provision of this Agreement shall be effective unless approved in
writing by the Company and Hampshire. The failure of any party at any time to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the rights of the party
thereafter to enforce the provisions of this Agreement in accordance with its
terms.
7. Invalid or Unenforceable Provisions. Whenever possible, each
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any term or provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
and this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision had never been contained
herein. The parties further agree that any court of competent jurisdiction is
expressly authorized to modify any such unenforceable provision of this
Agreement in lieu of severing such unenforceable provision from this Agreement
in its entirety, whether by rewriting the offending provision, deleting any or
all of the offending provision, adding additional language to this Agreement, or
by making such other modifications as it deems warranted to carry out the intent
and agreement of the parties as embodied herein to the maximum extent permitted
by law. The parties expressly agree that this Agreement as so modified by a
court of competent jurisdiction shall be binding upon and enforceable against
each of them.
8. Entire Agreement. Except as otherwise expressly set forth herein,
this document embodies the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter
hereof in any way.
9. Binding Effect; Assignment. All of the terms of this Agreement
shall inure to the benefit of and shall be binding upon the Company and
Hampshire and their respective successors and permitted assigns; provided,
however, that this Agreement may not be assigned without the prior written
consent of the other party hereto.
10. Remedies. The parties hereto will be entitled to enforce their
rights under this Agreement specifically (without posting a bond or other
security), to recover damages by reason of any material breach of any provision
of this Agreement and to exercise all other rights existing in their favor. The
parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that any party may
in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violation of the
-3-
provisions of this Agreement. In the event of any dispute involving the terms of
this Agreement, the prevailing party shall be entitled to collect reasonable
fees and expenses incurred by the prevailing party in connection with such
dispute from the other parties to such dispute.
11. Notices. Any notice or other communication in connection with
this Agreement or the Shares shall be deemed to be delivered and received if in
writing (or in the form of a telex or telecopy) addressed as provided below (a)
when actually delivered, in person, (b) if telexed or telecopied to said
address, when electronically confirmed, (c) when delivered if delivered by
overnight courier or (d) in the case of delivery by mail, five (5) business days
shall have elapsed after the same shall have been deposited in the United States
mails, postage prepaid and registered or certified:
If to the Company, to:
Citi Trends, Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: R. Xxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Hampshire, to:
Hampshire Equity Partners II, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Facsimile: (000) 000-0000
12. Term. The term of this Agreement shall terminate upon the
earlier to occur of: (i) the mutual consent in writing of the parties hereto or
(ii) the date on which Hampshire (together with any of its respective
successors and permitted assigns) owns, in the aggregate, less than fifteen
percent (15%) of the Shares.
13. Governing Law; Submission to Jurisdiction. All questions
concerning the construction, validity and interpretation of this Agreement will
be governed by the internal laws of the State of Delaware, without giving effect
to principles of conflicts of law. The parties hereby irrevocably and
unconditionally consent to submit to the exclusive jurisdiction of the courts of
the State of Delaware or the United States of America located in the State of
Delaware for any actions, suits or proceedings arising out of or relating to
this Agreement and the
-4-
transactions contemplated hereby (and the parties agree not to commence any
action, suit or proceeding relating hereto except in such courts), and further
agree that service of any process, summons, notice or documents by United States
registered mail to a party in accordance with Section 11 hereof shall be
effective service of process for any action, suit or proceeding brought against
such party in any such court and, absent any statute, rule or order to the
contrary, that each party shall have thirty (30) days from actual receipt of any
complaint to answer or otherwise plead with respect thereto. The parties hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of Delaware or the United States
of America located in the State of Delaware, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
14. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
15. Counterparts. This Agreement may be executed in separate
counterparts each of which will be an original and all of which taken together
will constitute one and the same agreement.
(Signature Pages Follow)
-5-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
COMPANY:
CITI TRENDS, INC., a Delaware corporation
By:
-------------------------------
Name: R. Xxxxxx Xxxxxxxx
Title: Chief Executive Officer
HAMPSHIRE:
HAMPSHIRE EQUITY PARTNERS II, L.P., a
Delaware limited partnership
By: Lexington Equity Partners II, L.P.,
its General Partner
By: Lexington Equity Partners Inc.,
its General Partner
By:
-------------------------------
Name:
Title:
[Nominating Agreement]
