Citi Trends,Inc. (NASDAQ:CTRN) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into Material Definitive Agreement
On April11, 2019, Citi Trends,Inc. (the “Company”) entered into a settlement agreement (the “Agreement”) with Macellum SPV III, LP, Macellum Management, LP, Macellum Advisors GP, LLC, and Jonathan Duskin (collectively, “Macellum”). Macellum beneficially owns approximately 3.8% of the outstanding shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”). The Agreement settles the Company’s election contest with Macellum in connection with the Company’s 2019 annual meeting of stockholders (the “2019 Annual Meeting”).
The Agreement provides that: (i)John S. Lupo, a member of the Board of Directors of the Company (the “Board”) and the current Chairman of the Board, will retire and not stand for re-election as a member of the Board at the 2019 Annual Meeting, (ii)the Company will nominate Peter R. Sachse for election to the Board at the 2019 Annual Meeting with a term expiring at the 2020 annual meeting of stockholders of the Company (the “2020 Annual Meeting”), (iii)the Company will take all such action as is necessary to increase the size of the Board by one member and to appoint an additional independent director (the “New Independent Director”) to fill the vacancy so created upon approval by a majority of the Board, with a term expiring at the 2020 Annual Meeting, no later than September30, 2019, and (iv)the Company will not nominate more than seven incumbent directors for re-election at the 2020 Annual Meeting and will take all such action as is necessary to decrease the size of the Board to seven members immediately following the 2020 Annual Meeting, unless the Board unanimously agrees that the Board should remain at eight directors following the 2020 Annual Meeting.
In addition, the Agreement provides that: (a)Macellum will withdraw its director nominations submitted to the Company in connection with the 2019 Annual Meeting, and will cease all solicitation efforts in connection with the 2019 Annual Meeting, (b)the Company will reimburse Macellum for its documented out-of-pocket costs, fees and expenses incurred and paid by Macellum in connection with its proxy solicitation activities in connection with the Company’s 2017 annual meeting of stockholders and the 2019 Annual Meeting in an amount not to exceed $500,000, (c)Macellum will not nominate any candidates for election to the Board, participate in any proxy solicitation or take certain other actions with respect to the Company at least until the completion of the 2020 Annual Meeting; provided, however, that if Mr.Duskin, Mr.Sachse (or any replacement thereof), or the New Independent Director is not nominated for election at the 2020 Annual Meeting, then such prohibitions shall terminate and will not be effective for the 2020 Annual Meeting (the “Standstill Period”), and (d)during the Standstill Period, and for so long as Macellum owns at least 3.0% of the outstanding Common Stock, in the event Mr.Sachse is unable or unwilling to serve as a director for any reason (other than on account of the failure of Mr.Sachse to be elected at the 2019 Annual Meeting), Macellum will have the right to select a replacement director, subject to such replacement director meeting certain minimum qualifications and being approved by a majority of the Board.
The forgoing description of the terms and conditions of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, a copy of which is filed as Exhibit10.1 to this Current Report on Form8-K and is incorporated into this Item 1.01 by reference.
A press release issued by the Company and Macellum announcing entry into the Agreement is filed as Exhibit99.1 to this Current Report on Form8-K and is incorporated into this Item 1.01 by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April11, 2019, Mr.Lupo informed the Board that he will retire from the Board effective as of the 2019 Annual Meeting and that he will not stand for re-election at such meeting. This was not the result of any disagreement with the Company.
Citi Trends Inc Exhibit
EX-10.1 2 a19-8207_1ex10d1.htm EX-10.1 Exhibit 10.1 SETTLEMENT AGREEMENT This SETTLEMENT AGREEMENT,…
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About Citi Trends,Inc. (NASDAQ:CTRN)
Citi Trends, Inc. is a retailer of urban fashion apparel and accessories. The Company’s segment is retail operations. The Company operates approximately 520 stores in both urban and rural markets in over 30 states. The Company offers products under its brands, such as Citi Steps and Red Ape. The Company’s merchandise includes apparel, accessories and home. Within apparel, the Company offers fashion sportswear for men, women and children, including offerings for newborns, infants, toddlers, boys and girls. Accessories include handbags, jewelry, footwear, belts, intimate apparel, scrubs and sleepwear. The Company’s home merchandise includes decorative home product, functional home product, beauty, books, toys and electronic accessories. The Company sources its merchandise from approximately 1,700 vendors, consisting of domestic manufacturers and importers.