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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 6, 2023
Citi Trends, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
|
000-51315 |
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52-2150697 |
(State or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(IRS Employer
Identification No.)
|
104 Coleman Boulevard
Savannah, Georgia 31408
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including
area code (912) 236-1561
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ |
Written communications pursuant to Rule 425 under
the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under
the Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange
on which registered |
Common stock, par value $0.01 |
|
CTRN |
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Nasdaq Stock Market |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
☐
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On December 6, 2023, the Board of Directors
(the “Board”) of Citi Trends, Inc., a Delaware corporation (the “Company”),
declared a dividend of one preferred share purchase right (a “Right”) for each of the Company’s issued
and outstanding shares of common stock, par value $0.01 per share (“Common Stock”). The dividend will be paid
to the stockholders of record at the close of business on December 18, 2023 (the “Record Time”). Each Right
entitles the registered holder, subject to the terms of the Rights Agreement (as defined below), to purchase from the Company one ten-thousandth
of a share of the Company’s Series A Junior Participating Preferred Stock, par value $0.01 per share (the “Preferred
Stock”), at a price of $120.00, subject to certain adjustments (as adjusted from time to time, the “Exercise
Price”). The description and terms of the Rights are set forth in the Stockholder Protection Rights Agreement, dated as
of December 6, 2023 (the “Rights Agreement”), by and between the Company and Equiniti Trust Company, LLC
(the “Rights Agent”).
Subject
to certain exceptions, the Rights will not be exercisable until the close of business on the earlier to occur of (i) the tenth business
day after a public announcement or filing that a person, or a group of affiliated or associated persons, has become an “Acquiring
Person,” which is generally defined as a person, or a group of affiliated or associated persons, who, at any time after
the date of the Rights Agreement, has acquired, or obtained the right to acquire, beneficial ownership of 16% (20% in the case of a Passive
Investor (as defined below)) or more of the Company’s outstanding shares of Common Stock, subject to certain exceptions, or (ii) the
tenth business day after the date on which any person, or group of affiliated or associated persons, commences a tender offer or exchange
offer, which, if consummated, would result in such person or group becoming an Acquiring Person (the earlier of such dates being called
the “Separation Time”).
The
Rights Agreement provides that an “Acquiring Person” shall not include any person, together with affiliates and associates
of such person, who or which is the beneficial owner of Common Stock representing less than 20% of the Common Stock then outstanding,
and is entitled to file, and files, a statement on Schedule 13G pursuant to Rule 13d-1(b) of the Securities Exchange
Act of 1934, as amended, and the general rules and regulations thereunder (the “Exchange Act”), with respect
to the Common Stock beneficially owned by such person (a “Passive Investor”), subject to certain limitations
as provided in the Rights Agreement.
The Rights Agreement provides that, until the
Separation Time (or the earlier expiration or redemption of the Rights), the Rights will be transferred with and only with the Common
Stock. Until the Separation Time (or the earlier expiration or redemption of the Rights), new Common Stock certificates issued after the
Record Time upon transfer or new issuances of Common Stock will contain a legend incorporating the Rights Agreement by reference, and
notice of such legend will be furnished to holders of book entry shares. Until the Separation Time (or the earlier expiration or redemption
of the Rights), the surrender for transfer of any certificates for shares of Common Stock (or book entry shares of Common Stock) outstanding
as of the Record Time will also constitute the transfer of the Rights associated with the shares of Common Stock represented by such certificate
or registered in book entry form. At or after the Separation Time, separate certificates evidencing the Rights (the “Rights
Certificates”) will be mailed to holders of record of the Common Stock as of the Separation Time, and such separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Separation
Time. The Rights will expire prior to the earliest of (i) the close of business on December 4, 2024; (ii) the time at which
the Rights are redeemed pursuant to the Rights Agreement; (iii) the time at which the Rights are exchanged pursuant to the Rights
Agreement; and (iv) upon the occurrence of certain transactions.
Each one ten-thousandth of a share of Preferred
Stock (i) will not be redeemable; (ii) will entitle holders of such one ten-thousandth of a share to quarterly dividend payments
of an amount equal to the dividend paid on one share of Common Stock and an amount per whole share of Preferred Stock equal to the excess
(if any) of $300.00 over the aggregate dividends paid per whole share of Preferred Stock during the quarterly period; (iii) will
entitle holders upon liquidation to receive an amount equal to the greater of $0.01 per one ten-thousandth of a share or an amount equal
to the payment made on one share of Common Stock, together with accrued dividends to such distribution or payment date; (iv) if shares
of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property via merger, consolidation,
statutory share exchange reclassification or a similar transaction, will entitle holders to receive an amount of such other stock or securities,
cash and/or any other property that a holder of one share of Common Stock would be entitled to receive; and (v) will entitle holders
to the same voting power as one share of Common Stock.
The Board shall have the right to adjust, among
other things, the Exercise Price, as well as the number of outstanding Rights, to prevent dilution that may occur from a stock dividend,
a stock split, a reclassification or other event affecting the outstanding Common Stock.
Prior to the Expiration Time, upon (i) the
first date of a public announcement by the Company or an Acquiring Person that a person or group of affiliated or associated persons has
become an Acquiring Person, or (ii) such later date and time as the Board may fix by resolution, each Right will constitute the right
to purchase from the Company, the number of shares of Common Stock having an aggregate market price (as determined in the Rights Agreement)
equal to twice the Exercise Price for an amount in cash equal to the Exercise Price. On such date, any Rights that are beneficially owned
by any Acquiring Person (and such Acquiring Person’s affiliates or associates and, in each case, any transferee thereof) will become
null and void.
Prior to the Expiration Time, if (i) there
exists an Acquiring Person that controls the Board or beneficially owns 90% or more of the Common Stock, and the Company is involved in
a merger, consolidation or statutory share exchange and either (a) any term of, or arrangement concerning, the treatment of shares
of capital stock in such merger, consolidation or share exchange relating to the Acquiring Person is not identical to the terms and arrangements
relating to other holders of the Common Stock, or (b) such transaction is with the Acquiring Person or any of its affiliates or associates,
or (ii) a sale or transfer to any person or to a group of associated or affiliated persons (other than the Company and its subsidiaries)
occurs of (x) more than 50% of the Company’s and its subsidiaries’ assets or (y) assets generating more than 50%
of the operating income or cash flow of the Company and its subsidiaries, and at the time of such sale or transfer, the Acquiring Person
controls the Board, each Right will constitute the right to purchase from the acquiring or other appropriate entity, as applicable, that
number of shares of common stock of such entity having an aggregate market price equal to twice the Exercise Price for an amount in cash
equal to the Exercise Price.
At any time after the Flip-in Date (as defined
in the Rights Agreement) and prior to the time that an Acquiring Person becomes the beneficial owner of more than 50% of the outstanding
shares of Common Stock, the Board may exchange all (but not less than all) of the Rights (other than Rights beneficially owned by such
Acquiring Person and certain transferees thereof which will have become null and void) for shares of Common Stock at an exchange ratio
of one share of Common Stock per Right.
At any time prior to the Flip-In Date, the Board
may redeem all (but not less than all) of the Rights at a redemption price of $0.01 per Right (the “Redemption Price”),
subject to adjustment as provided in the Rights Agreement, payable, at the option of the Company, in cash, shares of Common Stock or other
securities of the Company as the Board shall determine. Immediately upon the action of the Board ordering the redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised or exchanged, the holder
thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive
dividends.
Prior to the Flip-In Date, the Company and the
Rights Agent may from time to time supplement or amend the Rights Agreement in any respect without the approval of any holders of Rights.
At any time on or after the Flip-In Date, the Company and the Rights Agent may supplement or amend the Rights Agreement without the approval
of any holders of Rights to make any changes that the Company may deem necessary or desirable (i) that shall not materially adversely
affect the interests of the holders of Rights generally (other than the Acquiring Person or any affiliate or associate thereof), (ii) in
order to cure any ambiguity or to correct or supplement any provision of the Rights Agreement that may be inconsistent with any other
provisions of the Rights Agreement or otherwise be defective or (iii) in order to satisfy any applicable law, rule or regulation.
The Rights Agreement is attached hereto as Exhibit 4.1
and is incorporated herein by reference. The description of the Rights Agreement herein does not purport to be complete and is qualified
in its entirety by reference to Exhibit 4.1.
Item 3.03 Material Modification to Rights of
Security Holders.
The information set forth under Item 1.01 and
Item 5.03 of this Current Report on Form 8-K is incorporated into this Item 3.03 by reference.
Item 5.03 Amendments to Articles of Incorporation
or Bylaws; Change in Fiscal Year.
The information set forth under Item 1.01 of this
Current Report on Form 8-K is incorporated into this Item 5.03 by reference.
In connection with the adoption of the Rights
Agreement, the Company has adopted a Certificate of Designation of Series A Junior Participating Preferred Stock (the “Certificate
of Designation”). The Certificate of Designation was filed with the Secretary of State of the State of Delaware on December 6,
2023. See the description of the Rights Agreement in Item 1.01 of this Current Report on Form 8-K for a more complete description
of the rights and preferences of the Preferred Stock.
The Certificate of Designation is attached hereto
as Exhibit 3.1 and is incorporated herein by reference. The description of the Certificate of Designation herein does not purport
to be complete and is qualified in its entirety by reference to Exhibit 3.1.
Item 7.01 Regulation FD Disclosure.
On December 6, 2023, the Company issued a
press release announcing the adoption of the Rights Agreement and the declaration of the dividend of the Rights. A copy of the press release
is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information furnished pursuant to this Item
7.01, including Exhibit 99.1 furnished herewith, shall not be deemed “filed” for the purposes of Section 18 of the
Exchange Act or otherwise subject to the liabilities of that section, nor shall such information, including Exhibit 99.1, be deemed
incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly
set forth by specific reference in such filing. The contents of any URLs referenced in the press release are not incorporated into this
Current Report on Form 8-K or any other filings with the Securities and Exchange Commission.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
3.1 |
|
Certificate of Designation of Series A Junior Participating Preferred Stock of Citi Trends, Inc. |
|
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4.1 |
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Stockholder Protection Rights Agreement, dated as of December 6, 2023, between Citi Trends, Inc. and Equiniti Trust Company, LLC, as Rights Agent |
|
|
99.1 |
|
Press Release of Citi Trends, Inc., dated December 6, 2023 |
|
|
|
104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
CITI TRENDS, INC. |
|
|
|
Date: December 8, 2023 |
By: |
/s/ David N. Makuen |
|
Name: |
David N. Makuen |
|
Title: |
Chief Executive Officer |
Exhibit 3.1
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
OF
CITI TRENDS, INC.
Pursuant to Section 151
of the
General Corporation Law of the State of Delaware
Citi
Trends, Inc., a corporation organized under the laws of the State of Delaware (the “Corporation”), hereby
certifies that, pursuant to the authority conferred upon the Board of Directors of the Corporation (the “Board of Directors”)
by the Third Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”),
the Board of Directors on December 6, 2023, adopted the following resolution as a unanimous written consent creating a series of
shares of Preferred Stock designated as Series A Junior Participating Preferred Stock:
RESOLVED,
that pursuant to the authority granted to and vested in the Board of Directors in accordance with the provisions of the Certificate of
Incorporation, a series of Preferred Stock of the Corporation be, and it hereby is, created and that the designation and amount thereof
and the powers, preferences and rights of the shares of such series and the qualifications, limitations and restrictions thereon, are
hereby fixed as follows:
(i) The
distinctive serial designation of this series shall be “Series A Junior Participating Preferred Stock” (hereinafter called
“this Series”). Each share of this Series shall be identical in all respects with the other shares of this Series except
as to the dates from and after which dividends thereon shall be cumulative.
(ii) The
number of shares in this Series shall initially be 2,000, which number may from time to time be increased or decreased (but not below
the number then outstanding) by the Board of Directors. Shares of this Series purchased by the Corporation shall be cancelled and
shall revert to authorized but unissued shares of Preferred Stock undesignated as to series. Shares of this Series may be issued
in fractional shares which are whole number multiples of one ten-thousandth (1/10,000th) of a share, which fractional shares shall entitle
the holder, in proportion to such holder’s fractional share, to all rights of a holder of a whole share of this Series.
(iii) The
holders of full or fractional shares of this Series shall be entitled to receive, when and as declared by the Board of Directors,
but only out of funds legally available therefor, dividends, (A) on each date that dividends or other distributions (other than dividends
or distributions payable in Common Stock of the Corporation) are payable on or in respect of Common Stock comprising part of the Reference
Package (as defined below), in an amount per whole share of this Series equal to the aggregate amount of dividends or other distributions
(other than dividends or distributions payable in Common Stock of the Corporation) that would be payable on such date to a holder of the
Reference Package and (B) on the last day of March, June, September and December in each year, in an amount per whole share
of this Series equal to the excess (if any) of $300.00 over the aggregate dividends paid per whole share of this Series during
the three month period ending on such last day. Each such dividend shall be paid to the holders of record of shares of this Series on
the date, not exceeding sixty days preceding such dividend or distribution payment date, fixed for that purpose by the Board of Directors
in advance of payment of each particular dividend or distribution. Dividends on each full and each fractional share of this Series shall
be cumulative from the date such full or fractional share is originally issued; provided that any such full or fractional share
originally issued after a dividend record date and on or prior to the dividend payment date to which such record date relates shall not
be entitled to receive the dividend payable on such dividend payment date or any amount in respect of the period from such original issuance
to such dividend payment date.
The
term “Reference Package” shall initially mean ten thousand (10,000) shares of Common Stock, par value $0.01 per share
(“Common Stock”), of the Corporation. In the event the Corporation shall at any time after the close of business on
the Separation Time or the Flip-in Date (each, as defined in the Stockholder Protection Rights Agreement, effective as of December 6,
2023, as such may be amended from time to time) (A) declare or pay a dividend on any Common Stock payable in Common Stock, (B) subdivide
any Common Stock or (C) combine any Common Stock into a smaller number of shares, then, in each such case, the Reference Package
after such event shall be the Common Stock that a holder of the Reference Package immediately prior to such event would hold thereafter
as a result thereof.
Holders
of shares of this Series shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative
dividends, as herein provided on this Series.
So
long as any shares of this Series are outstanding, no dividend (other than a dividend payable in Common Stock or in any other stock
ranking junior to this Series as to dividends and upon liquidation) shall be declared or paid or set aside for payment or other distribution
declared or made upon the Common Stock or upon any other stock ranking junior to this Series as to dividends or upon liquidation,
unless the full cumulative dividends (including the dividend to be paid upon payment of such dividend or other distribution) on all outstanding
shares of this Series shall have been, or shall contemporaneously be, paid. When dividends are not paid in full upon this Series and
any other stock ranking on a parity as to dividends with this Series, all dividends declared upon shares of this Series and any other
stock ranking on a parity as to dividends shall be declared pro rata so that in all cases the amount of dividends declared per share on
this Series and such other stock shall bear to each other the same ratio that accumulated dividends per share on the shares of the
Series and such other stock bear to each other. Neither the Common Stock nor any other stock of the Corporation ranking junior to
or on a parity with this Series as to dividends or upon liquidation shall be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the Corporation ranking junior to this Series as to dividends and upon liquidation),
unless the full cumulative dividends (including the dividend to be paid upon payment of such dividend, distribution, redemption, purchase
or other acquisition) on all outstanding shares of this Series shall have been, or shall contemporaneously be, paid.
(iv) In
the event of any merger, consolidation, statutory share exchange reclassification or other transaction in which the shares of Common Stock
are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of this
Series shall at the same time be similarly exchanged or changed in an amount per whole share equal to the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may be, that a holder of the Reference Package would be entitled
to receive as a result of such transaction.
(v) In
the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the holders
of full and fractional shares of this Series shall be entitled, before any distribution or payment is made on any date to the holders
of the Common Stock or any other stock of the Corporation ranking junior to this Series upon liquidation, to be paid in full an amount
per whole share of this Series equal to the greater of (A) $0.01 or (B) the aggregate amount distributed or to be distributed
in connection with such liquidation, dissolution or winding up to a holder of the Reference Package, together with accrued dividends to
such distribution or payment date, whether or not earned or declared. If such payment shall have been made in full to all holders of shares
of this Series, the holders of shares of this Series as such shall have no right or claim to any of the remaining assets of the Corporation.
In
the event the assets of the Corporation available for distribution to the holders of shares of this Series upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to the first paragraph of this Section (v), no such distribution shall be made on account of any
shares of any other class or series of Preferred Stock ranking on a parity with the shares of this Series upon such liquidation,
dissolution or winding up unless proportionate distributive amounts shall be paid on account of the shares of this Series, ratably in
proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such liquidation,
dissolution or winding up.
Upon
the liquidation, dissolution or winding up of the Corporation, the holders of shares of this Series then outstanding shall be entitled
to be paid out of assets of the Corporation available for distribution to its stockholders all amounts to which such holders are entitled
pursuant to the first paragraph of this Section (v) before any payment shall be made to the holders of Common Stock or any other
stock of the Corporation ranking junior upon liquidation to this Series.
For
the purposes of this Section (v), the consolidation or merger of, or statutory share exchange by, the Corporation with any other
corporation shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation.
(vi) The
shares of this Series shall not be redeemable.
(vii) In
addition to any other vote or consent of stockholders required by law or by the Certificate of Incorporation, and except as otherwise
required by law, each share (or fraction thereof) of this Series shall, on any matter, vote as a class with any other capital stock
comprising part of the Reference Package and shall have the number of votes thereon that a holder of the Reference Package would have.
(viii) If
and whenever dividends payable on this Series and any other class or series of stock of the Corporation ranking on a parity with
this Series as to payment of dividends (any such class or series being herein referred to as “dividend parity stock”)
shall be in arrears in an aggregate amount equal to at least six quarterly dividends (whether or not consecutive), the number of directors
then constituting the Board of Directors shall be increased by two and the holders of shares of this Series, together with the holders
of all other affected classes and series of dividend parity stock similarly entitled to vote for the election of two additional directors,
voting separately as a single class, shall be entitled to elect the two additional directors at any annual meeting of stockholders or
any special meeting of the holders of shares of this Series and such dividend parity stock called as hereinafter provided. Whenever
all arrears in dividends on the shares of this Series and dividend parity stock then outstanding shall have been paid and dividends
thereon for the current quarterly dividend period shall have been paid or declared and set aside for payment, then the right of the holders
of shares of this Series and such dividend parity stock to elect such additional two directors shall cease (but subject always to
the same provisions for the vesting of such voting rights in the case of any similar future arrearages in dividends), and the terms of
office of all persons elected as directors by the holders of shares of this Series and such dividend parity stock shall immediately
terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting
power shall have been so vested in the holders of shares of this Series and such dividend parity stock, the Secretary of the Corporation
may, and upon the written request of any holder of shares of this Series (addressed to the Secretary at the principal office of the
Corporation) shall, call a special meeting of the holders of shares of this Series and such dividend parity stock for the election
of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the by-laws
for a special meeting of the stockholders or as required by law. If any such special meeting so required to be called shall not be called
by the Secretary within 20 days after receipt of any such request, then any holder of shares of this Series may (at the Corporation’s
expense) call such meeting, upon notice as herein provided, and for that purpose shall have access to the stock books of the Corporation.
The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders if such office shall
not have previously terminated as above provided. In case any vacancy shall occur among the directors elected by the holders of shares
of this Series and such dividend parity stock, a successor shall be elected by the Board of Directors to serve until the next annual
meeting of the stockholders upon the nomination of the then remaining director, if any, elected by the holders of shares of this Series and
such dividend parity stock or the successor, if any, of such remaining director. If the holders of shares of this Series become entitled
under the foregoing provisions to elect or participate in the election of two directors as a result of dividend arrearages, such entitlement
shall not affect the right of such holders to vote as stated in Section (vii), including the right to vote in the election of the
remaining directors.
(ix) This
Series shall rank as to the payment of dividends and distributions and amounts upon liquidation, dissolution and winding-up junior
to all other series or shares of Preferred Stock unless otherwise expressly provided in the terms of such series or shares of Preferred
Stock.
(x) In
the event that the Corporation or its agents determine that they are obligated to withhold or deduct any tax or other governmental charge
under any applicable law on actual or deemed payments or distributions to a holder of the shares of this Series, the Corporation or its
agents shall be entitled to (A) deduct and withhold such amount by withholding a portion or all of the cash, securities or other
property otherwise deliverable to, or by otherwise withholding or deducting any property that is owned by, such holder, or (B) in
lieu of such withholding, require any holder to make a payment to the Corporation or its agent, in each case in such amounts as they deem
necessary to meet their withholding obligations, and in the case of (A) above, shall also be entitled, but not obligated, to sell
all or a portion of such withheld securities or other property by public or private sale in such amounts and in such manner as they deem
necessary and practicable to pay such taxes and charges.
IN
WITNESS WHEREOF, the undersigned have signed and attested this certificate on the 6th day of December, 2023.
|
/s/ David N. Makuen |
|
Name: David N. Makuen |
|
Title: Chief Executive Officer |
|
Attest: |
/s/ Michael C. Buchsbaum |
|
Name: Michael C. Buchsbaum |
|
Title: Secretary |
|
Signature Page to
Certificate of Designation
Exhibit 4.1
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
December 6, 2023,
by and between
CITI TRENDS, INC.
and
Equiniti
Trust Company, LLC
as Rights Agent
STOCKHOLDER PROTECTION
RIGHTS AGREEMENT
Table of Contents
ARTICLE I CERTAIN DEFINITIONS |
1 |
1.1 |
Certain Definitions |
1 |
ARTICLE II THE RIGHTS |
9 |
2.1 |
Summary of Rights |
9 |
2.2 |
Issuance of Rights Certificates; Legend |
9 |
2.3 |
Exercise of Rights; Separation of Rights |
10 |
2.4 |
Adjustments to Exercise Price; Number of Rights |
12 |
2.5 |
Date on Which Exercise is Effective |
13 |
2.6 |
Execution, Authentication, Delivery and Dating of Rights Certificates |
14 |
2.7 |
Registration, Registration of Transfer and Exchange |
14 |
2.8 |
Mutilated, Destroyed, Lost and Stolen Rights Certificates |
15 |
2.9 |
Persons Deemed Owners |
16 |
2.10 |
Delivery and Cancellation of Certificates |
16 |
2.11 |
Agreement of Rights Holders |
16 |
ARTICLE III ADJUSTMENTS TO THE
RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS |
17 |
3.1 |
Flip-In |
17 |
3.2 |
Flip-Over |
20 |
ARTICLE IV THE RIGHTS AGENT |
20 |
4.1 |
General |
20 |
4.2 |
Merger or Consolidation or Change of Name of Rights Agent |
21 |
4.3 |
Duties of Rights Agent |
22 |
4.4 |
Change of Rights Agent |
24 |
ARTICLE V MISCELLANEOUS |
25 |
5.1 |
Redemption and Termination |
25 |
5.2 |
Expiration |
25 |
5.3 |
Issuance of New Rights Certificates |
25 |
5.4 |
Supplements and Amendments |
26 |
5.5 |
Fractional Shares |
26 |
5.6 |
Rights of Action |
27 |
5.7 |
Holder of Rights Not Deemed a Stockholder |
27 |
5.8 |
Notice of Proposed Actions |
27 |
5.9 |
Notices |
27 |
5.10 |
Suspension of Exercisability |
28 |
5.11 |
Successors |
28 |
5.12 |
Benefits of this Agreement |
28 |
5.13 |
Determination and Actions by the Board of Directors, etc. |
29 |
5.14 |
Descriptive Headings |
29 |
5.15 |
GOVERNING LAW; EXCLUSIVE JURISDICTION |
29 |
5.16 |
Counterparts |
30 |
5.17 |
Severability |
30 |
5.18 |
Customer Identification Program |
30 |
5.19 |
Withholding |
30 |
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
THIS STOCKHOLDER PROTECTION
RIGHTS AGREEMENT (as amended or restated from time to time, this “Agreement”) is made and entered into as of December 6,
2023, by and between Citi Trends, Inc., a Delaware corporation (the “Company”), and Equiniti Trust Company, LLC,
as rights agent (the “Rights Agent,” which term shall include any successor Rights Agent hereunder).
W I T N E S S E T H:
WHEREAS, on December 6,
2023, the Board of Directors of the Company (the “Board of Directors”) has (a) authorized and declared a dividend
of one right (“Right”) in respect of each share of Common Stock (as hereinafter defined) held of record as of the
Close of Business (as hereinafter defined) on December 18, 2023 (the “Record Time”), and (b) as provided
in Sections 2.2 and 2.4, authorized the issuance of one Right in respect of each share of Common Stock issued after the Record Time
and prior to the Separation Time (as hereinafter defined) and, to the extent provided in Section 5.3, each share of Common Stock
issued after the Separation Time;
WHEREAS, subject to
the terms and conditions hereof, each Right entitles the holder thereof, after the Separation Time, to purchase securities or assets
of the Company (or, in certain cases, securities of certain other entities) pursuant to the terms and subject to the conditions set forth
herein; and
WHEREAS, the Company
desires to appoint the Rights Agent to act on behalf of the Company, and the Rights Agent is willing so to act, in connection with the
issuance, transfer, exchange and replacement of Rights Certificates (as hereinafter defined), the exercise of Rights and other matters
referred to herein;
NOW THEREFORE, in
consideration of the premises and the respective agreements set forth herein, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain
Definitions. For purposes of this Agreement, the following terms have the meanings indicated:
“Acquiring Person”
shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 16%
or more of the shares of Common Stock then outstanding, but shall not include (x) an Exempt Person or (y) a Passive Investor,
so long as, in the case of this clause (y), such Person is not the Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding, but subject to the provisions in the definition of “Passive Investor”; provided, however,
that
(i) if the Board of
Directors determines that a Person who would otherwise be an “Acquiring Person” became the Beneficial Owner of a number of
shares of Common Stock such that the Person would otherwise qualify as an “Acquiring Person” inadvertently (including, without
limitation, because (A) such Person was unaware that it beneficially owned that number of shares of Common Stock that would otherwise
cause such Person to be an “Acquiring Person” or (B) such Person was aware of the extent of its Beneficial Ownership
of Common Stock but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement) and without any intention
of obtaining, changing or influencing control of the Company, then such Person shall not be deemed to be or to have become an “Acquiring
Person” for any purposes of this Agreement unless and until such Person shall have failed to divest itself, as soon as practicable
(as determined by the Board of Directors), of Beneficial Ownership of a sufficient number of shares of Common Stock so that such Person
would no longer otherwise qualify as an “Acquiring Person”;
(ii) if, as of the
date hereof or prior to the first public announcement of the adoption of this Agreement, any Person (together with its Affiliates and
Associates) is or becomes the Beneficial Owner of 16% (20% in the case of a Passive Investor) or more of the shares of Common Stock outstanding,
such Person shall not be deemed to be or to become an “Acquiring Person” unless and until such time as such Person shall,
after the first public announcement of the adoption of this Agreement, become the Beneficial Owner of any additional shares of Common
Stock (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Stock or pursuant to a
split or subdivision of the outstanding Common Stock) that would cause such Person’s Beneficial Ownership of the Common Stock outstanding
to exceed by any amount such Person’s Beneficial Ownership as of the date hereof (or the first public announcement of the adoption
of this Agreement, if later), in which case such Person will become an Acquiring Person;
(iii) no Person shall
become an “Acquiring Person” solely as a result of any unilateral grant of any security by the Company or through the exercise
of any options, warrants, rights or similar interests (including restricted stock) granted by the Company to its directors, officers
and employees; or
(iv) no Person shall
become an “Acquiring Person” solely as the result of an acquisition of shares of Common Stock by the Company which, by reducing
the number of shares of Common Stock outstanding, increases the proportion of the shares of Common Stock beneficially owned by such Person
to 16% (20% in the case of a Passive Investor) or more of the Common Stock then outstanding; provided, however, that if
a Person shall become the Beneficial Owner of 16% (20% in the case of a Passive Investor) or more of the shares of Common Stock then
outstanding by reason of such share acquisitions by the Company and shall thereafter become the Beneficial Owner of any additional shares
of Common Stock (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Stock or pursuant
to a split or subdivision of the outstanding Common Stock), then such Person shall be deemed to be an “Acquiring Person”
unless, upon becoming the Beneficial Owner of such additional shares of Common Stock, such Person does not beneficially own 16% (20%
in the case of a Passive Investor) or more of the shares of Common Stock then outstanding.
With respect to any Person,
for all purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of the outstanding shares of Common Stock of which any such Person is the Beneficial
Owner, shall include the number of shares of Common Stock not outstanding at the time of such calculation that such Person is otherwise
deemed to beneficially own for purposes of this Agreement, but the number of shares of Common Stock not outstanding that such Person
is otherwise deemed to beneficially own for purposes of this Agreement shall not be included for the purpose of computing the percentage
of the outstanding shares of Common Stock beneficially owned by any other Person (unless such other Person is also deemed to beneficially
own for purposes of this Agreement such shares of Common Stock not outstanding).
“Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Exchange Act,
as such Rule is in effect on the date of this Agreement.
“Agreement”
shall have the meaning set forth in the Preamble.
A Person shall be deemed
the “Beneficial Owner” of, and to have “Beneficial Ownership” of, and to “Beneficially
Own,”
(i) any securities
as to which such Person or any of such Person’s Affiliates or Associates is or may be deemed to be the beneficial owner, directly
or indirectly, pursuant to Rules 13d-3 and 13d-5 under the Exchange Act, and Regulations 13D and 13G thereunder, as such Rules are
in effect on the date of this Agreement;
(ii) any securities
as to which such Person or any of such Person’s Affiliates or Associates has the right to become the Beneficial Owner (whether
such right is exercisable immediately or only after the passage of time or the satisfaction of conditions), directly or indirectly, pursuant
to any agreement, arrangement or understanding (whether or not in writing and other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of securities), or upon the exercise of conversion rights, exchange
rights, other rights (other than the Rights), warrants or options, or otherwise;
(iii) any securities
which are Beneficially Owned, directly or indirectly, by any other Person or any of such other Person’s Affiliates or Associates
with which such first Person or any of such first Person’s Affiliates or Associates has any agreement, arrangement or understanding
(whether or not in writing and other than customary agreements with and between underwriters and selling group members with respect to
a bona fide public offering of securities), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described
in clause (B) below) or disposing of any voting securities of the Company, except that a Person will not be deemed to be the “Beneficial
Owner” of, or to have “Beneficial Ownership” of, or to “Beneficially Own,” any security pursuant to this
clause (iii) as a result of an agreement, arrangement or understanding (whether or not in writing and other than customary agreements
with and between underwriters and selling group members with respect to a bona fide public offering of securities) unless such agreement,
arrangement or understanding is then reportable by such Person on Schedule 13D under the Exchange Act (or any similar provision
of a comparable or successor report); provided, however, that a Person shall not be deemed the “Beneficial Owner”
of, or to have “Beneficial Ownership” of, or to “Beneficially Own,” any security (A) solely because such
security has been tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates
until such tendered security is accepted for payment or exchange or (B) solely because such Person or any of such Person’s
Affiliates or Associates has or shares the power to vote or direct the voting of such security pursuant to a revocable proxy given in
response to a public proxy or consent solicitation made to more than ten holders of shares of a class of stock of the Company registered
under Section 12 of the Exchange Act and pursuant to, and in accordance with, the applicable rules and regulations under the
Exchange Act, unless such power (or the arrangements relating thereto) is then reportable by such Person on Schedule 13D under the
Exchange Act (or any similar provision of a comparable or successor report); or
(iv) any securities
which are the subject of, or the reference securities for, or that underlie any derivative transaction entered into by such Person, or
derivative security (including options) acquired by such Person, which gives such Person the economic equivalent of ownership of an amount
of such securities due to the fact that the value of the derivative is directly or indirectly determined by reference to the price or
value of such securities, without regard to whether (A) the derivative is required to be, or capable of being, settled through delivery
of such securities, or (B) such Person may have entered into other transactions that hedge the economic effect of such derivative.
In determining the number
of shares of Common Stock deemed Beneficially Owned by virtue of the operation of this Section 1.1, the subject Person shall be
deemed to Beneficially Own (without duplication) the number of shares of Common Stock that are synthetically owned pursuant to such derivative
transactions or such derivative securities. The number of shares of Common Stock that are synthetically owned shall be the notional or
other number of shares of Common Stock in respect of such derivative transactions or securities that is specified in a filing by such
Person or any of such Person’s Affiliates or Associates with the Securities and Exchange Commission or in the documentation evidencing
such derivative transactions or securities, and in any case (or if no such number of shares of Common Stock is specified in any filing
or documentation), as determined by the Board of Directors in good faith to be the number of shares of Common Stock that are synthetically
owned pursuant to such derivative transactions or securities. Notwithstanding the foregoing, (A) no officer or director of the Company
shall be deemed to Beneficially Own any securities of any other Person by virtue of any actions such officer or director takes in such
capacity and (B) nothing in this definition shall cause a Person engaged in business as an underwriter of securities to be the “Beneficial
Owner” of, or to have “Beneficial Ownership” of, or to “Beneficially Own,” any securities acquired through
such Person’s participation in good faith in a firm commitment underwriting until the expiration of forty (40) days after the date
of such acquisition. For purposes of this Agreement, in determining the percentage of the outstanding shares of Common Stock with respect
to which a Person is the Beneficial Owner, all shares as to which such Person is deemed the Beneficial Owner shall be deemed outstanding;
provided, however, that the number of shares of Common Stock not outstanding that such Person is otherwise deemed to Beneficially
Own for purposes of this Agreement shall not be included for the purpose of computing the percentage of the outstanding shares of Common
Stock Beneficially Owned by any other Person (unless such other Person is also deemed to Beneficially Own, for purposes of this Agreement,
such shares of Common Stock not outstanding).
“Board of Directors”
shall have the meaning set forth in the Recitals.
“Business Day”
shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are generally authorized
or obligated by law or executive order to close.
“Close of Business”
on any given date shall mean 5:00 p.m., New York time, on such date (or, if such date is not a Business Day, 5:00 p.m. New York
time, on the next succeeding Business Day).
“Common Stock”
shall mean the shares of Common Stock, par value $0.01 per share, of the Company.
“Company”
shall have the meaning set forth in the Preamble.
“Customer Identification
Program” shall have the meaning set forth in Section 5.18.
“Election to Exercise”
shall have the meaning set forth in Section 2.3(d).
“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.
“Exchange Ratio”
shall have the meaning set forth in Section 3.1(c).
“Exchange Time”
shall mean the time at which the right to exercise the Rights shall terminate pursuant to Section 3.1(c).
“Exempt Person”
shall mean the Company or any Subsidiary of the Company, in each case including, without limitation, in its fiduciary capacity, or any
employee benefit plan of the Company or of any Subsidiary of the Company, or any entity or trustee holding (or acting in a fiduciary
capacity in respect of) Common Stock for or pursuant to the terms of any such plan or for the purpose of funding any such plan or funding
other employee benefits for employees of the Company or of any Subsidiary of the Company.
“Exercise Price”
shall mean, as of any date, the price at which a holder may purchase the securities issuable upon exercise of one whole Right. Until
adjustment thereof in accordance with the terms hereof, the Exercise Price shall equal $120.00.
“Expansion Factor”
shall have the meaning set forth in Section 2.4(a).
“Expiration Time”
shall mean the earliest of (i) the Exchange Time, (ii) the Redemption Time, (iii) 364 days after the date of this Agreement,
and (iv) immediately prior to the effective time of a consolidation, merger or statutory share exchange that does not constitute
a Flip-Over Transaction or Event in which the Common Stock is converted into, or into the right to receive, another security, cash or
other consideration.
“Flip-In Date”
shall mean any Stock Acquisition Date or such later date and time as the Board of Directors may from time to time fix by resolution adopted
prior to the Flip-In Date that would otherwise have occurred.
“Flip-Over Entity”
for purposes of Section 3.2, shall mean (i) in the case of a Flip-Over Transaction or Event described in clause (i) of
the definition thereof, the Person issuing any securities into which shares of Common Stock are being converted or exchanged and, if
no such securities are being issued, the Person that is a party to such Flip-Over Transaction or Event and (ii) in the case of a
Flip-Over Transaction or Event referred to in clause (ii) of the definition thereof, the Person receiving the greatest portion of
the (A) assets or, if (A) is not readily determinable, (B) operating income or cash flow being transferred in such Flip-Over
Transaction or Event; provided in all cases if such Person is a Subsidiary of another Person, the ultimate parent entity of such Person
shall be the Flip-Over Entity.
“Flip-Over Stock”
shall mean the capital stock (or similar equity interest) with the greatest voting power in respect of the election of directors (or
other Persons similarly responsible for the direction of the business and affairs) of the Flip-Over Entity.
“Flip-Over Transaction
or Event” shall mean a transaction or series of transactions, on or after a Flip-In Date, in which, directly or indirectly,
(i) the Company shall consolidate or merge or participate in a statutory share exchange with any other Person if, immediately prior
to the time of the consummation of the consolidation, merger or statutory share exchange or at the time the Company enters into any agreement
with respect to any such consolidation, merger or statutory share exchange, the Acquiring Person is the Beneficial Owner of 90% or more
of the outstanding shares of Common Stock or controls the Board of Directors and either (A) any term of or arrangement concerning
the treatment of shares of capital stock in such consolidation, merger or statutory share exchange relating to the Acquiring Person is
not identical to the terms and arrangements relating to other holders of the Common Stock or (B) the Person with whom the transaction
or series of transactions occurs is the Acquiring Person or an Affiliate or Associate of the Acquiring Person or (ii) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer) assets (A) aggregating more
than 50% of the assets (measured by either book value or fair market value) or (B) generating more than 50% of the operating income
or cash flow, of the Company and its Subsidiaries (taken as a whole) to any Person (other than the Company or one or more of its wholly
owned Subsidiaries) or to two or more such Persons that are Affiliates or Associates or otherwise acting in concert, if, at the time
of the entry by the Company (or any such Subsidiary) into an agreement with respect to such sale or transfer of assets, the Acquiring
Person or any of its Affiliates or Associates controls the Board of Directors. For purposes of the foregoing description, the term “Acquiring
Person” shall include any Acquiring Person and its Affiliates and Associates, counted together as a single Person. An Acquiring
Person shall be deemed to control the Board of Directors when, on or following a Stock Acquisition Date, the persons who were directors
of the Company (or persons nominated and/or appointed as directors by vote of a majority of such persons) before the Stock Acquisition
Date shall cease to constitute a majority of the Board of Directors.
“Market Price”
per share of any securities on any date shall mean the average of the daily closing prices per share of such securities (determined as
described below) on each of the 20 consecutive Trading Days through and including the Trading Day immediately preceding such date; provided,
however, that if any event described in Section 2.4, or any analogous event, shall have caused the closing prices used to
determine the Market Price on any Trading Days during such period of 20 Trading Days not to be fully comparable with the closing price
on such date, each such closing price so used shall be appropriately adjusted by the Board of Directors in order to make it fully comparable
with the closing price on such date. The closing price per share of any securities on any date shall be the last reported sale price,
regular way, of such security or, in case no such sale takes place or is quoted on such date, the average of the closing bid and asked
prices, regular way, for each share of such securities, in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed on the NYSE or, if the securities are not listed on the NYSE, as reported on the NASDAQ or,
if the securities are not listed on the NASDAQ, as reported in the principal consolidated transaction reporting system with respect to
the principal national securities exchange on which the securities are listed or admitted to trading or, if the securities are not listed
or admitted to trading on any national securities exchange, as reported by such other quotation system then in use or, if on any such
date the securities are not listed or admitted to trading on any national securities exchange or quoted by any such quotation system,
average of the closing bid and asked prices in the over-the-counter market as furnished by a professional market maker making a market
in the securities selected by the Board of Directors; provided, however, that if on any such date the securities
are not listed or admitted to trading on a national securities exchange or traded in the over-the-counter market, the closing price per
share of such securities on such date shall mean the fair value per share of such securities on such date as determined in good faith
by the Board of Directors, after consultation with a nationally recognized investment banking firm, and set forth in a certificate delivered
to the Rights Agent.
“NASDAQ”
shall mean The NASDAQ Stock Market LLC.
“NYSE”
shall mean the New York Stock Exchange.
“Passive Investor”
shall mean any Person who or which has reported or is required to report Beneficial Ownership of shares of Common Stock of the Company
on Schedule 13G under the Exchange Act (or any comparable or successor report), but only so long as (i) such Person is eligible
to report, and reports, such ownership on Schedule 13G pursuant to Rule 13d-1(b) of the Exchange Act (or any comparable or
successor report), and (ii) such Person has not reported and is not required to report such ownership on Schedule 13D pursuant to
Rule 13d-1(a), Rule 13d-1(c), 13d-1(e), 13d-1(f) or 13d-1(g) of the Exchange Act (or any comparable or successor
report) and such Person does not hold shares of Common Stock of the Company on behalf of any other Person who is required to report Beneficial
Ownership of shares of Common Stock of the Company on such Schedule 13D; provided that if a formerly Passive Investor should report
or become required to report Beneficial Ownership of shares of Common Stock of the Company on Schedule 13D, that formerly Passive Investor
will not be deemed to be or to have become an Acquiring Person if (A) at the time it reports or becomes required to report Beneficial
Ownership of shares of Common Stock of the Company on Schedule 13D, that formerly Passive Investor has Beneficial Ownership of less than
16% of the Common Stock then outstanding; or (B) (1) it divests as promptly as practicable (but in any event not later than
30 calendar days after becoming required to report on Schedule 13D) Beneficial Ownership of a sufficient number of shares of Common Stock
of the Company so that it would no longer be an “Acquiring Person,” as defined herein, and (2) prior to reducing its
Beneficial Ownership of shares of Common Stock of the Company then outstanding to below 16%, it does not increase its Beneficial Ownership
of the Common Stock then outstanding (other than by reason of share purchases by the Company) above such Person’s lowest Beneficial
Ownership of the Common Stock then outstanding at any time during such 30 calendar day period.
“Person”
shall mean any individual, firm, partnership, limited liability company, association, group (as such term is used in Rule 13d-5
under the Exchange Act, as such Rule is in effect on the date of this Agreement), corporation or other entity, and shall include
any successor (by merger or otherwise) thereof or thereto.
“Preferred Stock”
shall mean the Series A Junior Participating Preferred Stock, par value $0.01 per share, of the Company created by the Certificate
of Designation in substantially the form set forth in Exhibit B hereto, appropriately completed.
“Record Time”
shall have the meaning set forth in the Recitals.
“Redemption Price”
shall have the meaning set forth in Section 5.1(a).
“Redemption Time”
shall mean the time at which the right to exercise the Rights shall terminate pursuant to Section 5.1.
“Right”
shall have the meaning set forth in the Recitals.
“Rights Agent”
shall have the meaning set forth in the Preamble.
“Rights Certificate”
shall have the meaning set forth in Section 2.3(c).
“Rights Register”
shall have the meaning set forth in Section 2.7(a).
“Separation Time”
shall mean the Close of Business on the earlier of (i) the tenth Business Day (or such later date as the Board of Directors may
from time to time fix by resolution adopted prior to the Separation Time that would otherwise have occurred) after the date on which
any Person commences a tender or exchange offer which, if consummated, would result in such Person’s becoming an Acquiring Person
and (ii) the Flip-In Date; provided, that if the foregoing results in the Separation Time being prior to the Record Time,
the Separation Time shall be the Record Time and provided further, that if any tender or exchange offer referred to in clause
(i) of this paragraph is canceled, terminated or otherwise withdrawn prior to the Separation Time without the purchase of any shares
of Common Stock pursuant thereto, such offer shall be deemed, for purposes of this paragraph, never to have been made.
“Stock Acquisition
Date” shall mean the first date of public announcement (including, without limitation, the filing of any report pursuant to
Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that a Person has become an Acquiring Person, or such
earlier date as a majority of the Board of Directors shall become aware of the existence of an Acquiring Person.
“Subsidiary”
of any specified Person shall mean any corporation or other entity of which a majority of the voting power of the equity securities or
a majority of the equity or membership interests is Beneficially Owned, directly or indirectly, by such Person.
“Trading Day,”
when used with respect to any security, shall mean a day on which the principal national securities exchange on which the security is
listed or admitted to trading is open for the transaction of business or, if the security is not listed or admitted to trading on any
national securities exchange, a Business Day.
“Trust”
shall have the meaning set forth in Section 3.1(c).
“Trust Agreement”
shall have the meaning set forth in Section 3.1(c).
ARTICLE II
THE RIGHTS
2.1 Summary
of Rights. As soon as practicable after the Record Time, the Company will make a summary of the terms of the Rights available to
each holder of Rights who may so request from time to time prior to the Expiration Time.
2.2 Issuance
of Rights Certificates; Legend.
(a) Certificates
for the Common Stock issued on or after the Record Time but prior to the Separation Time shall evidence, in addition to the Common Stock
represented by such certificate, one Right for each share of Common Stock represented thereby and shall have impressed on, printed on,
written on or otherwise affixed to them a legend in substantially the following form:
“Until the Separation Time (as
defined in the Rights Agreement referred to below), this certificate also evidences and entitles the holder hereof to certain Rights
as set forth in a Stockholder Protection Rights Agreement, effective as of December 6, 2023 (as such may be amended from time to
time, the “Rights Agreement”), between Citi Trends, Inc. (the “Company”) and Equiniti Trust
Company, LLC, as Rights Agent, the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal
executive offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights may be terminated or
redeemed, may become exercisable for securities or assets of the Company or of another entity, may be exchanged for securities or assets
of the Company, may expire, may become null and void (including if they are “Beneficially Owned” by an “Acquiring Person”
or an “Affiliate” or “Associate” thereof, as such terms are defined in the Rights Agreement, or by any transferee
of any of the foregoing) or may be evidenced by separate certificates and may no longer be evidenced by this certificate. The Company
will mail or arrange for the mailing of a copy of the Rights Agreement to the holder of this certificate without charge promptly after
the receipt of a written request therefor.”
Certificates representing shares of Common Stock
that are issued and outstanding at the Record Time shall evidence, in addition to the Common Stock represented by such certificate, one
Right for each share of Common Stock evidenced thereby notwithstanding the absence of the foregoing legend. Notwithstanding the foregoing,
nether the omission of a legend nor the inclusion of a legend that makes reference to a rights agreement other than this Agreement shall
affect the enforceability of any part of this Agreement or the rights of any holder of Rights.
If the Common Stock issued after the Record Time
but prior to the Separation Time shall be uncertificated, the registration of such Common Stock on the stock transfer books of the Company
shall evidence one Right for each share of Common Stock represented thereby. The Company shall mail or arrange for the mailing of a copy
of this Agreement to any Person that holds Common Stock, as evidenced by the registration of the Common Stock in the name of such Person
on the stock transfer books of the Company, without charge after the receipt of a written request therefor, and the Company shall cause
the transfer agent for the Common Stock to include on each direct registration account statement with respect to the Common Stock issued
prior to the Separation Time an appropriate notation to reflect the issuance of the Rights.
(b) Subject
to Sections 2.4 and 5.3, one Right shall be issued in respect of (i) each share of Common Stock outstanding as of the Record Time
and (ii) each additional share of Common Stock that becomes outstanding (whether by original issuance or out of treasury, but other
than in a transaction contemplated by Section 2.4) after the Record Time but prior to the Separation Time. To the extent provided
in Section 5.3, Rights shall be issued by the Company in respect of shares of Common Stock that are issued or sold by the Company
after the Separation Time.
2.3 Exercise
of Rights; Separation of Rights.
(a) Subject
to the terms and conditions hereof and subject to adjustment as herein set forth, each Right will entitle the holder thereof, at or after
the Separation Time and prior to the Expiration Time, to purchase, for the Exercise Price, one ten-thousandth (1/10,000th) of a share
of Preferred Stock.
(b) Until
the Separation Time, (i) no Right may be exercised and (ii) each Right will be evidenced by the certificate for the associated
share of Common Stock (or, if the Common Stock shall be uncertificated, by the registration of the associated Common Stock on the stock
transfer books of the Company), and will be transferable only together with, and will be transferred by a transfer (whether with or without
such legend) of, such associated share of Common Stock, and the surrender for transfer of any certificates representing outstanding Common
Stock will also constitute the surrender for transfer of the Rights associated with the Common Stock represented by such certificate.
(c) Subject
to this Section 2.3 and to Sections 3.1, 5.1 and 5.10, at or after the Separation Time and prior to the Expiration Time, (i) the
Rights may be exercised pursuant to Section 2.3(d) below; (ii) the Rights will be transferred independently of shares
of Common Stock; and (iii) the Rights Agent will mail to each holder of record of Common Stock (provided that the Board of Directors
has not elected to exchange all of the then outstanding Rights pursuant to Section 3.1(c)) as of the Separation Time (other than
any Person whose Rights have become null and void pursuant to Section 3.1(b)), at such holder’s address as shown by the records
of the Company (the Company hereby agreeing to furnish copies of such records to the Rights Agent for this purpose), (x) a certificate
(a “Rights Certificate”) in substantially the form of Exhibit A hereto appropriately completed, representing
the number of Rights held by such holder at the Separation Time and having such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any national securities exchange or quotation system on which the Rights may from time to time be listed or traded, or
to conform to usage, and (y) a disclosure statement describing the Rights. Receipt of a Rights Certificate by any Person shall not
preclude a later determination that such Rights are void pursuant to Section 3.1(b). The Company may implement such procedures as
it deems appropriate, in its sole discretion, to minimize the possibility that Rights are received by Persons with respect to whom Rights
would be null and void under Section 3.1(b).
(d) Subject
to the terms and conditions hereof, Rights may be exercised on any Business Day at or after the Separation Time and prior to the Expiration
Time by submitting to the Rights Agent the Rights Certificate evidencing such Rights with an Election to Exercise (an “Election
to Exercise”) substantially in the form attached to the Rights Certificate, duly executed and properly completed, accompanied
by payment by certified or official bank check or money order payable to the order of the Company, of a sum equal to the Exercise Price
multiplied by the number of Rights being exercised and a sum sufficient to cover any transfer tax or charge that may be payable in respect
of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or delivery of certificates (or, if uncertificated,
the registration on the stock transfer books of the Company) for shares or depositary receipts (or both) in a name other than that of
the holder of the Rights being exercised.
(e) Upon
receipt of a Rights Certificate, with a properly completed and duly executed Election to Exercise accompanied by payment as set forth
in Section 2.3(d), and subject to the terms and conditions hereof, the Rights Agent will thereupon promptly (i)(A) requisition
from the Company’s transfer agent(s) stock certificates evidencing such number of shares or other securities to be purchased
or, in the case of uncertificated shares or other securities, requisition from a transfer agent a notice setting forth such number of
shares or other securities to be purchased for which registration will be made on the stock transfer books of the Company (the Company
hereby irrevocably authorizing its transfer agents to comply with all such requisitions) and (B) if the Company elects pursuant
to Section 5.5 not to issue certificates (or effect registrations on the stock transfer books of the Company) representing fractional
shares, requisition from the depositary selected by the Company depositary receipts representing the fractional shares to be purchased
(the Company hereby irrevocably authorizes each such depositary agent to comply with such requisitions) or requisition from the Company
the amount of cash to be paid in lieu of fractional shares in accordance with Section 5.5 and (ii) after receipt of such certificates,
depositary receipts and/or cash, deliver the same to or upon the order of the registered holder of such Rights Certificate, registered
(in the case of certificates or depositary receipts) in such name or names as may be designated by such holder. In the event that the
Company elects pursuant to Section 3.1(e) to issue other securities and/or assets of the Company upon exercise of the Rights,
the Company will make all arrangements necessary so that such other securities and/or assets of the Company are available for distribution
by the Rights Agent, if and when necessary to comply with this Agreement.
(f) In
case the holder of any Rights shall exercise less than all the Rights evidenced by such holder’s Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised will be issued by the Rights Agent to such holder or to such holder’s duly
authorized assigns.
(g) The
Company covenants and agrees that it will (i) take all such action as may be necessary to ensure that all shares delivered (or evidenced
by registration on the stock transfer books of the Company) upon exercise of Rights shall, at the time of delivery of the certificates
(or registration) for such shares (subject to payment of the Exercise Price), be duly and validly authorized, executed, issued and delivered
(or registered) and fully paid and non-assessable; (ii) take all such action as may be necessary to comply with any applicable requirements
of the Securities Act of 1933, as amended, or the Exchange Act, and the rules and regulations thereunder, and any other applicable
law, rule or regulation, in connection with the issuance of any shares upon exercise of Rights; and (iii) pay when due and
payable any and all federal and state transfer taxes and charges that may be payable in respect of the original issuance or delivery
of the Rights Certificates or of any shares issued upon the exercise of Rights, provided that the Company shall not be required
to pay any transfer tax or charge that may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates
or the issuance or delivery of certificates (or the registration) for shares in a name other than that of the holder of the Rights being
transferred or exercised.
(h) Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with
respect to the exercise or assignment of a Rights Certificate unless the registered holder of such Rights Certificate shall have (i) properly
completed and duly signed the certificate following the form of assignment or the form of election to exercise, as applicable, set forth
on the reverse side of the Rights Certificate surrendered for such exercise or assignment, (ii) provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) thereof and of the Rights evidenced thereby, and the Affiliates
and Associates of such Beneficial Owner or former Beneficial Owner, as the Company or the Rights Agent may reasonably request and (iii) paid
a sum sufficient to cover any tax or charge that may be imposed as required under Section 2.3(d).
2.4 Adjustments
to Exercise Price; Number of Rights.
(a) In
the event the Company shall at any time after the Record Time and prior to the Separation Time (i) declare or pay a dividend on
Common Stock payable in Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares of Common Stock, (x) the Exercise Price in effect after such adjustment will be equal to the
Exercise Price in effect immediately prior to such adjustment divided by the number of shares of Common Stock (the “Expansion
Factor”) that a holder of one share of Common Stock immediately prior to such dividend, subdivision or combination would hold
thereafter as a result thereof (assuming for such purpose that the Company would issue a fraction of a share of Common Stock, as applicable,
and without giving effect to any requirement that cash be paid in lieu of the issuance of any fractional share interest) and (y) each
Right held prior to such adjustment will become that number of Rights equal to the Expansion Factor, and the adjusted number of Rights
will be deemed to be distributed among the shares of Common Stock with respect to which the original Rights were associated (if they
remain outstanding) and the shares issued in respect of such dividend, subdivision or combination, so that each such share of Common
Stock will have exactly one Right associated with it. Each adjustment made pursuant to this paragraph shall be made as of the payment
or effective date for the applicable dividend, subdivision or combination.
In the event that the Company
shall at any time after the Record Time and prior to the Separation Time issue any shares of Common Stock otherwise than in a transaction
referenced in the preceding paragraph, each such share of Common Stock so issued shall automatically have one new Right associated with
it, which Right shall be evidenced by the certificate representing such share (or, if the Common Stock shall be uncertificated, such
Right shall be evidenced by the registration of such Common Stock on the stock transfer books of the Company and the confirmation thereof
provided for in Section 2.2). Rights shall be issued by the Company in respect of shares of Common Stock that are issued or sold
by the Company after the Separation Time only to the extent provided in Section 5.3.
(b) In
the event that the Company shall at any time after the Record Time and prior to the Separation Time issue or distribute any securities
or assets in respect of, in lieu of or in exchange for Common Stock (other than pursuant to a non-extraordinary periodic cash dividend
or a dividend paid solely in Common Stock) whether by dividend, in a reclassification or recapitalization (including any such transaction
involving a merger, consolidation or statutory share exchange), or otherwise, the Company shall make such adjustments, if any, in the
Exercise Price, number of Rights and/or securities or other property purchasable upon exercise of Rights as the Board of Directors, in
its sole discretion, may deem to be appropriate under the circumstances in order to adequately protect the interests of the holders of
Rights generally, and the Company and the Rights Agent shall amend this Agreement as necessary to provide for such adjustments.
(c) Each
adjustment to the Exercise Price made pursuant to this Section 2.4 shall be calculated to the nearest cent. Whenever an adjustment
to the Exercise Price is made pursuant to this Section 2.4, the Company shall (i) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such adjustment and (ii) promptly file with the Rights Agent and
with each transfer agent for the Common Stock a copy of such certificate. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein and shall not be deemed to have knowledge of any such adjustment unless and until it shall
have received such a certificate.
(d) Rights
Certificates shall represent the right to purchase the securities purchasable under the terms of this Agreement, including any adjustment
or change in the securities purchasable upon exercise of the Rights, even though such certificates may continue to express the right
to purchase the securities purchasable at the time of issuance of the initial Rights Certificates.
2.5 Date
on Which Exercise is Effective. Each Person in whose name any certificate for shares is issued (or registration on the stock transfer
books is effected) upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the shares represented
thereby at the Close of Business on the Business Day upon which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price for such Rights (and any applicable taxes and other governmental charges payable by the exercising holder
hereunder) was made; provided, however, that if the date of such surrender and payment is a date upon which the stock transfer
books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate
(or registration) shall be dated, the next succeeding Business Day on which the stock transfer books of the Company are open.
2.6 Execution,
Authentication, Delivery and Dating of Rights Certificates.
(a) The
Rights Certificates shall be executed on behalf of the Company by two authorized officers of the Company. The signature of any of these
officers on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing
the manual or facsimile signatures of individuals who were at the time of such signature the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the countersignature and
delivery of such Rights Certificates.
Promptly after the Separation
Time, the Company will notify the Rights Agent in writing of such Separation Time (and if such notification is initially given orally,
the Company shall confirm same in writing on or prior to the following Business Day) and will deliver Rights Certificates executed by
the Company to the Rights Agent for countersignature, and, subject to Section 3.1(b), an authorized signatory of the Rights Agent
shall manually countersign and deliver such Rights Certificates to the holders of the Rights pursuant to Section 2.3(c). Until the
written notice provided for in this Section 2.6 is received by the Rights Agent, the Rights Agent may presume conclusively for all
purposes that the Separation Time has not occurred. No Rights Certificate shall be valid for any purpose unless manually countersigned
by an authorized signatory of the Rights Agent.
(b) Each
Rights Certificate shall be dated the date of countersignature thereof.
2.7 Registration,
Registration of Transfer and Exchange.
(a) After
the Separation Time, the Company will cause to be kept a register (the “Rights Register”) in which, subject to
such reasonable regulations as it may prescribe, the Company will provide for the registration and transfer of Rights. The Rights Agent
is hereby appointed “Rights Registrar” for the purpose of maintaining the Rights Register for the Company and registering
Rights and transfers of Rights after the Separation Time as herein provided. In the event that the Rights Agent shall cease to be the
Rights Registrar, the Rights Agent will have the right to examine the Rights Register at all reasonable times after the Separation Time.
After the Separation Time
and prior to the Expiration Time, upon surrender for registration of transfer or exchange of any Rights Certificate, and subject to the
provisions of this Section 2.7(a) and Sections 2.7(c) and 2.7(d), the Company will execute and the Rights Agent will
countersign and deliver, in the name of the holder or the designated transferee or transferees, as required pursuant to the holder’s
instructions, one or more new Rights Certificates evidencing the same aggregate number of Rights as did the Rights Certificate so surrendered.
(b) Except
as otherwise provided in Section 3.1(b), all Rights issued upon any registration of transfer or exchange of Rights Certificates
shall be the valid obligations of the Company, and such Rights shall be entitled to the same benefits under this Agreement as the Rights
surrendered upon such registration of transfer or exchange.
(c) Every
Rights Certificate surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Company or the Rights Agent, as the case may be, duly executed by the holder thereof or such
holder’s attorney duly authorized in writing. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificates until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) thereof, or the Affiliates or Associates of such Beneficial
Owner (or former Beneficial Owner), as the Company shall reasonably request. As a condition to the issuance of any new Rights Certificate
under this Section 2.7, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto.
(d) The
Company shall not register the transfer or exchange of any Rights that have become null and void under Section 3.1(b), been exchanged
under Section 3.1(c) or been terminated or redeemed under Section 5.1.
2.8 Mutilated,
Destroyed, Lost and Stolen Rights Certificates.
(a) If
any mutilated Rights Certificate is surrendered to the Rights Agent prior to the Expiration Time, then, subject to Sections 3.1(b), 3.1(c) and
5.1, the Company shall execute and the Rights Agent shall countersign and deliver in exchange therefor a new Rights Certificate evidencing
the same number of Rights as did the Rights Certificate so surrendered.
(b) If
there shall be delivered to the Company and the Rights Agent prior to the Expiration Time (i) evidence to their satisfaction of
the destruction, loss or theft of any Rights Certificate and (ii) such security or indemnity as may be required by them to save
each of them and any of their agents harmless, then, subject to Sections 3.1(b), 3.1(c) and 5.1 and in the absence of notice to
the Company or the Rights Agent that such Rights Certificate has been acquired by a bona fide purchaser, the Company shall execute and
upon its request the Rights Agent shall countersign and deliver, in lieu of any such destroyed, lost or stolen Rights Certificate, a
new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so destroyed, lost or stolen.
(c) As
a condition to the issuance of any new Rights Certificate under this Section 2.8, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and
expenses of the Rights Agent) connected therewith. The Rights Agent shall have no duty or obligation to take any action under any Section of
this Agreement which requires the payment by a Rights holder of applicable taxes and/or charges unless and until it is satisfied that
all such taxes and/or governmental charges have been paid.
(d) Every
new Rights Certificate issued pursuant to this Section 2.8 in lieu of any destroyed, lost or stolen Rights Certificate shall evidence
an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Rights Certificate shall be
at any time enforceable by anyone, and, subject to Section 3.1(b), shall be entitled to all the benefits of this Agreement equally
and proportionately with any and all other Rights duly issued hereunder.
2.9 Persons
Deemed Owners. Prior to due presentment of a Rights Certificate (or, prior to the Separation Time, the associated Common Stock certificate
or confirmation of registration, if uncertificated), the Company, the Rights Agent and any agent of the Company or the Rights Agent may
deem and treat the Person in whose name such Rights Certificate (or, prior to the Separation Time, such Common Stock certificate or confirmation,
if uncertificated) is registered as the absolute owner thereof and of the Rights evidenced thereby for all purposes whatsoever, including
the payment of the Redemption Price, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary. As
used in this Agreement, unless the context otherwise requires, the term “holder” of any Rights shall mean the registered
holder of such Rights (or, prior to the Separation Time, the associated shares of Common Stock).
2.10 Delivery
and Cancellation of Certificates. All Rights Certificates surrendered upon exercise or for registration of transfer or exchange shall,
if surrendered to any Person other than the Rights Agent, be delivered to the Rights Agent and, in any case, shall be promptly canceled
by the Rights Agent. The Company may at any time deliver to the Rights Agent for cancellation any Rights Certificates previously countersigned
and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Rights Certificates so delivered shall
be promptly canceled by the Rights Agent. No Rights Certificates shall be countersigned in lieu of or in exchange for any Rights Certificates
canceled as provided in this Section 2.10, except as expressly permitted by this Agreement. The Rights Agent shall destroy all canceled
Rights Certificates and deliver a certificate of destruction to the Company.
2.11 Agreement
of Rights Holders. Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior
to the Separation Time, each Right will be transferable only together with, and will be transferred by a transfer of, the associated
share of Common Stock;
(b) after
the Separation Time, the Rights Certificates will be transferable only on the Rights Register as provided herein;
(c) prior
to due presentment of a Rights Certificate (or, prior to the Separation Time, the associated Common Stock certificate or Common Stock
registration, if uncertificated) for registration of transfer, the Company, the Rights Agent and any agent of the Company or the Rights
Agent may deem and treat the Person in whose name the Rights Certificate (or, prior to the Separation Time, the associated Common Stock
certificate or Common Stock registration, if uncertificated) is registered as the absolute owner thereof and of the Rights evidenced
thereby for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary;
(d) Rights
Beneficially Owned by certain Persons will, under the circumstances set forth in Section 3.1(b), become null and void;
(e) this
Agreement may be supplemented or amended from time to time pursuant to Section 2.4(b) or 5.4;
(f) notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as a result of the Rights Agent’s inability to perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, the Company
must use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible; and
(g) the
Board of Directors shall have the exclusive power and authority delegated to it pursuant to Section 5.13.
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-In.
(a) In
the event that prior to the Expiration Time a Flip-In Date shall occur, then except as otherwise provided in this Section 3.1, each
Right shall constitute the right to purchase from the Company, upon exercise thereof in accordance with the terms hereof (but subject
to Section 5.10), that number of shares of Common Stock having an aggregate Market Price on the Stock Acquisition Date that gave
rise to the Flip-In Date equal to twice the Exercise Price for an amount in cash equal to the Exercise Price (such right to be appropriately
adjusted in order to protect the interests of the holders of Rights generally in the event that on or after such Stock Acquisition Date
an event of a type analogous to any of the events described in Section 2.4(a) or (b) shall have occurred with respect
to the Common Stock).
(b) Notwithstanding
the foregoing, any Rights that are or were Beneficially Owned on or after the Stock Acquisition Date by an Acquiring Person or an Affiliate
or Associate thereof, or by any transferee, direct or indirect, of any of the foregoing shall become null and void and any holder of
such Rights (including transferees, whether direct or indirect, of any such Persons) shall thereafter have no right to exercise, transfer
or exchange such Rights under any provision of this Agreement. If any Rights Certificate is presented for assignment or exercise and
the Person presenting the same will not complete the certification set forth at the end of the form of assignment or notice of election
to exercise or, if requested, will not provide such additional evidence, including, without limitation, the identity of the Beneficial
Owners and their Affiliates and Associates (or former Beneficial Owners and their Affiliates and Associates) as the Company or the Board
of Directors shall reasonably request in order to determine if such Rights are null and void, then the Company shall be entitled conclusively
to deem the Rights to be Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof or a transferee of any of the
foregoing and accordingly will deem the Rights evidenced thereby to be null and void and not transferable, exercisable or exchangeable.
(c) The
Board of Directors may, at its option, at any time after a Flip-in Date and prior to the time that an Acquiring Person becomes the Beneficial
Owner of more than 50% of the outstanding shares of Common Stock, elect to exchange all (but not less than all) of the then outstanding
Rights (which shall not include Rights that have become null and void pursuant to the provisions of Section 3.1(b)) for shares of
Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted in order to protect the interests of
holders of Rights generally in the event that after the Separation Time any of the events described in Section 2.4(a) or (b),
or any analogous event, shall have occurred with respect to the Common Stock (such exchange ratio, as adjusted from time to time, being
hereinafter referred to as the “Exchange Ratio”).
Immediately upon the action
of the Board of Directors electing to exchange the Rights, without any further action and without any notice, the right to exercise the
Rights will terminate and each Right (other than Rights that have become null and void pursuant to Section 3.1(b)), whether or not
an Election to Exercise has been previously delivered, will thereafter represent only the right to receive a number of shares of Common
Stock equal to the Exchange Ratio. The exchange of the Rights by the Board of Directors may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion may establish. Promptly after the action of the Board of Directors
electing to exchange the Rights, the Company shall give written notice thereof (specifying the steps to be taken to receive shares of
Common Stock in exchange for Rights) to the Rights Agent and the holders of the Rights (other than Rights that have become null and void
pursuant to Section 3.1(b)) outstanding immediately prior thereto by mailing such notice in accordance with Section 5.9.
Before effecting an exchange
pursuant to this Section 3.1(c), the Board of Directors may direct the Company to enter into a Trust Agreement in such form and
with such terms as the Board of Directors shall then approve (the “Trust Agreement”). If the Board of Directors so
directs, the Company shall enter into the Trust Agreement and shall issue to the trust created by such agreement (the “Trust”)
all or some (as designated by the Board of Directors) of the shares of Common Stock (or other securities) issuable pursuant to the exchange,
and all or some (as designated by the Board of Directors) holders of Rights entitled to receive shares pursuant to the exchange shall
be entitled to receive such shares (and any dividends paid or distributions made thereon after the date on which such shares are deposited
in the Trust) only from the Trust and solely upon compliance with the relevant terms and provisions of the Trust Agreement. Prior to
effecting an exchange and registering shares of Common Stock (or other such securities) in any Person’s name, including any nominee
or transferee of a Person, the Company may require (or cause the trustee of the Trust to require), as a condition thereof, that any holder
of Rights provide evidence, including, without limitation, the identity of the Beneficial Owners thereof and their Affiliates and Associates
(or former Beneficial Owners thereof and their Affiliates and Associates) as the Company shall reasonably request in order to determine
if such Rights are null and void. If any Person shall fail to comply with such request, the Company shall be entitled conclusively to
deem the Rights formerly held by such Person to be null and void pursuant to Section 3.1(b) and not transferable or exercisable
or exchangeable in connection herewith.
Any shares of Common Stock
or other securities issued at the direction of the Board of Directors in connection herewith shall be validly issued, fully paid and
non-assessable shares of Common Stock or of such other securities (as the case may be), and the Company shall be deemed to have received
as consideration for such issuance a benefit having a value that is at least equal to the aggregate par value of the shares so issued.
Approval by the Board of Directors of the exchange shall constitute a determination by the Board of Directors that such consideration
is adequate.
Each Person in whose name
any certificate for shares is issued (or for whom any registration on the stock transfer books of the Company is made) upon the exchange
of Rights pursuant to this Section 3.1(c) or Section 3.1(d) shall for all purposes be deemed to have become the holder
of record of the shares represented thereby on, and such certificate (or registration on the stock transfer books of the Company) shall
be dated (or registered as of), the date upon which the Rights Certificate evidencing such Rights was duly exchanged or deemed exchanged
by the Company and payment of any applicable taxes and other governmental charges payable by the holder was made; provided, however,
that if the date of such surrender and payment is a date upon which the stock transfer books of the Company are closed, such Person shall
be deemed to have become the record holder of such shares on, and such Certificate (or registration on the stock transfer books of the
Company) shall be dated (or registered as of), the next succeeding Business Day on which the stock transfer books of the Company are
open.
(d) Whenever
the Company shall become obligated under Section 3.1(a) or (c) to issue shares of Common Stock upon exercise of or in
exchange for Rights, the Company, as determined by the Board of Directors, may substitute therefor shares of Preferred Stock, at a ratio
of one ten-thousandth (1/10,000th) of a share of Preferred Stock for each share of Common Stock so issuable, subject to adjustment.
(e) In
the event that there shall not be sufficient treasury shares or authorized but unissued shares of Common Stock or Preferred Stock of
the Company to permit the exercise or exchange in full of the Rights in accordance with Section 3.1(a), Section 3.1(c) or
Section 3.1(d), the Company shall either (i) call a meeting of stockholders seeking approval to cause sufficient additional
shares to be authorized (provided that if such approval is not obtained the Company will take the action specified in clause (ii) of
this sentence) or (ii) take such action as shall be necessary to ensure and provide, without exposing the directors to personal
liability (as determined by the Board of Directors), as and when to the maximum extent permitted by applicable law and any agreements
or instruments in effect prior to the time an Acquiring Person controls the Board of Directors (and remaining in effect) to which the
Company is a party, that each Right shall thereafter constitute the right to receive, (x) in the case of any exercise in accordance
with Section 3.1(a), at the Company’s option, either (A) in return for the Exercise Price, cash, debt or equity securities
or other assets (or a combination thereof) having a fair value equal to twice the Exercise Price, or (B) without payment of consideration
(except as may be required for the valid issuance of securities or otherwise required by applicable law), cash, debt or equity securities
or other assets (or a combination thereof) having a fair value equal to the Exercise Price, or (y) in the case of an exchange of
Rights in accordance with Section 3.1(c), debt or equity securities or other assets (or a combination thereof) having a fair value
equal to the product of the Market Price of a share of Common Stock on the Flip-In Date times the Exchange Ratio in effect on the Flip-In
Date, where in any case set forth in (x) or (y) above the fair value of such debt or equity securities or other assets shall
be as determined in good faith by the Board of Directors, after consultation with a nationally recognized investment banking firm.
3.2 Flip-Over.
(a) Prior
to the Expiration Time, the Company shall not enter into any agreement with respect to, consummate or permit to occur any Flip-Over Transaction
or Event unless and until it shall have entered into a supplemental agreement with the Flip-Over Entity, for the benefit of the holders
of the Rights (the terms of which shall be reflected in an amendment to this Agreement entered into with the Rights Agent), providing
that, upon consummation or occurrence of the Flip-Over Transaction or Event (i) each Right (other than holders of Rights that have
become void pursuant to Section 3.1(b)) shall thereafter constitute the right to purchase from the Flip-Over Entity, upon exercise
thereof in accordance with the terms hereof, that number of shares of Flip-Over Stock of the Flip-Over Entity having an aggregate Market
Price on the date of consummation or occurrence of such Flip-Over Transaction or Event equal to twice the Exercise Price for an amount
in cash equal to the Exercise Price (such right to be appropriately adjusted in order to protect the interests of the holders of Rights
generally in the event that after such date of consummation or occurrence any of the events described in Section 2.4(a) or
(b), or any analogous event, shall have occurred with respect to the Flip-Over Stock) and (ii) the Flip-Over Entity shall thereafter
be liable for, and shall assume, by virtue of such Flip-Over Transaction or Event and such supplemental agreement, all the obligations
and duties of the Company pursuant to this Agreement.
(b) Prior
to the Expiration Time, unless the Rights will be redeemed pursuant to Section 5.1 pursuant to an agreement entered into by the
Company prior to a Flip-In Date, the Company shall not enter into any agreement with respect to, consummate or permit to occur any Flip-Over
Transaction or Event if (i) at the time thereof there are any rights, warrants or securities outstanding or any other arrangements,
agreements or instruments that would eliminate or otherwise diminish in any material respect the benefits intended to be afforded by
this Rights Agreement to the holders of Rights upon consummation of such transaction, (ii) prior to, simultaneously with or immediately
after such Flip-Over Transaction or Event, the stockholders of the Person who constitutes, or would constitute, the Flip-Over Entity
shall have received a distribution of Rights previously owned by such Person or any of its Affiliates or Associates, or (iii) the
form or nature of organization of the Flip-Over Entity would preclude or limit the exercisability of the Rights.
(c) The
provisions of this Section 3.2 shall apply to successive Flip-Over Transactions or Events.
ARTICLE IV
THE RIGHTS AGENT
4.1 General.
(a) The
Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the express terms and conditions hereof (and
no implied terms or conditions), and the Rights Agent hereby accepts such appointment. The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, counsel fees and disbursements, and other disbursements incurred in the preparation, negotiation, delivery, amendment, administration
and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense (including, without limitation, the reasonable fees and expenses of legal counsel), incurred without gross negligence, bad faith
or willful misconduct on the part of the Rights Agent (each as determined by a final judgment of a court of competent jurisdiction),
for any action taken, suffered or omitted to be taken by the Rights Agent in connection with the acceptance, administration, exercise
and performance of its duties under this Agreement. The costs and expenses incurred in enforcing this right of indemnification shall
be paid by the Company. The provisions of this Section 4.1 and Section 4.3 below shall survive the termination of this Agreement,
the exercise or expiration of the Rights and the resignation, replacement or removal of the Rights Agent.
(b) The
Rights Agent shall be authorized and protected and shall incur no liability for or in respect of any action taken, suffered or omitted
to be taken by it in connection with its acceptance and administration of this Agreement or the exercise and performance of its duties
hereunder in reliance upon any certificate for securities (or registration on the stock transfer books of the Company) purchasable upon
exercise of Rights, Rights Certificate, certificate for other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed
by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons, or otherwise
upon the advice of counsel as set forth herein. The Rights Agent shall not be deemed to have knowledge of any event of which it was supposed
to receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing to take any
action in connection therewith, unless and until it has received such notice.
4.2 Merger
or Consolidation or Change of Name of Rights Agent.
(a) Any
Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting
from any merger or consolidation to which the Rights Agent or any successor Rights Agent is a party, or any Person succeeding to the
stockholder services business of the Rights Agent or any successor Rights Agent, will be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that
such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 4.4. In case at the time
such successor Rights Agent succeeds to the agency created by this Agreement any of the Rights Certificates have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights Certificates have not been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates will have the full force provided in the Rights Certificates and in this Agreement.
(b) In
case at any time the name of the Rights Agent is changed and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
4.3 Duties
of Rights Agent. The Rights Agent undertakes to perform only the duties and obligations expressly imposed by this Agreement (and
no implied duties) upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The
Rights Agent may consult with legal counsel (who may be legal counsel for the Company or an employee of the Rights Agent), and the advice
or opinion of such counsel will be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur
no liability for or in respect of any action taken, suffered or omitted to be taken by it in the absence of bad faith and in accordance
with such advice or opinion.
(b) Whenever
in the performance of its duties under this Agreement the Rights Agent deems it necessary or desirable that any fact or matter (including
without limitation, the identity of an Acquiring Person and the determination of the current per share market price of any security)
be proved or established by the Company prior to taking, suffering or omitting to take any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate
signed by a person believed by the Rights Agent to be the Chairman of the Board of Directors, the Chief Executive Officer, the President
or any Vice President and by the Chief Financial Officer, Treasurer or any Assistant Treasurer or the Corporate Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such certificate will be full and complete authorization and protection
to the Rights Agent and the Rights Agent shall incur no liability for any action taken, suffered or omitted to be taken in the absence
of bad faith by it under the provisions of this Agreement in reliance upon such certificate.
(c) The
Rights Agent will be liable hereunder to the Company and any other Person only for its own gross negligence, bad faith or willful misconduct
(each as determined by a final judgment of a court of competent jurisdiction). Anything to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including,
but not limited to, lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage. Any and all
liability of the Rights Agent under this Agreement will be limited to the amount of annual fees paid by the Company to the Rights Agent
pursuant to this Agreement.
(d) The
Rights Agent will not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the certificates,
if any, for securities purchasable upon exercise of Rights or the Rights Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and will be deemed to have been made by the Company only.
(e) The
Rights Agent will not have any liability for or be under any responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due authorization, execution and delivery hereof by the Rights Agent) or in respect of the validity or
execution of any certificate, if any, for securities purchasable upon exercise of Rights or Rights Certificate (except its countersignature
thereof); nor will it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor will it be responsible for any change in the exercisability or exchangeability of the Rights (including the Rights
becoming null and void pursuant to Section 3.1(b)) or any change or adjustment in the terms of the Rights (including any adjustment
required under Section 2.4, 3.1 or 3.2) or responsible for the manner, method or amount of any such adjustment or the ascertaining
of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights after receipt of the
certificate contemplated by Section 2.4 describing any such adjustment, upon which the Rights Agent may rely); nor will it by any
act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any securities purchasable upon
exercise of Rights or any Rights or as to whether any securities purchasable upon exercise of Rights will, when issued, be duly and validly
authorized, executed, issued and delivered and fully paid and non-assessable.
(f) The
Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The
Rights Agent is hereby authorized and directed to accept advice or written instructions with respect to the performance of its duties
hereunder from any person believed by the Rights Agent to be the Chairman of the Board of Directors, the Chief Executive Officer, the
President or any Vice President or the Corporate Secretary or any Assistant Secretary or the Chief Financial Officer, the Treasurer or
any Assistant Treasurer of the Company, and to apply to such persons for advice or instructions in connection with its duties, and such
instructions shall be full authorization and protection to the Rights Agent and the Rights Agent shall not be liable for or in respect
of any action taken, suffered or omitted to be taken by it in the absence of bad faith in accordance with instructions of any such person
or for any delay while acting or while waiting for those instructions. The Rights Agent shall be fully authorized and protected in relying
upon the most recent instructions received from any such person. In the event the Rights Agent believes any ambiguity or uncertainty
exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Rights Agent
hereunder, the Rights Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not
be liable in any way to the Company or any other Person for refraining from taking such action, if the Rights Agent shall have notified
the Company promptly of such belief in writing, and unless the Rights Agent shall receive written instructions executed by a person authorized
under this Section 4.3(g), which eliminates such ambiguity or uncertainty to the satisfaction of the Rights Agent.
(h) The
Rights Agent and any stockholder, affiliate, director, officer or employee of the Rights Agent may buy, sell or deal in Common Stock,
Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent or any such stockholder, affiliate, director, officer or employee from acting in any other
capacity for the Company or for any other Person.
(i) The
Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself (through
directors, officers and employees) or by or through its attorneys or agents, and the Rights Agent will not be answerable or accountable
for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company or any other Person resulting
from any such act, default, neglect or misconduct, absent gross negligence, bad faith or willful misconduct in the selection and continued
employment thereof (each as determined by a final judgment of a court having jurisdiction).
(j) No
provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its rights if it believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(k) If,
with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has not been completed, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first consulting with the Company.
4.4 Change
of Rights Agent. The Rights Agent may resign and be discharged from its duties under this Agreement upon 90 days’ notice (or
such lesser notice as is acceptable to the Company) in writing mailed to the Company and to each transfer agent of Common Stock by registered
or certified mail, and to the holders of the Rights in accordance with Section 5.9. In the event the transfer agency relationship
in effect between the Company and the Rights Agent terminates, the Rights Agent will be deemed to have resigned automatically and be
discharged from its duties under this Agreement as of the effective date of such termination, and the Company shall be responsible for
sending any required notice. The Company may remove the Rights Agent upon 30 days’ notice in writing, mailed to the Rights Agent
and to each transfer agent of the Common Stock by registered or certified mail, and to the holders of the Rights in accordance with Section 5.9.
If the Rights Agent should resign or be removed or otherwise become incapable of acting, the Company will appoint a successor to the
Rights Agent. If the Company fails to make such appointment within a period of 30 days after such removal or after it has been notified
in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of any Rights (which holder
shall, with such notice, submit such holder’s Rights Certificate for inspection by the Company), then the holder of any Rights
may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and doing business under the laws of the United States or
any state of the United States, in good standing, which is authorized under such laws to exercise the powers of the Rights Agent contemplated
by this Agreement and is subject to supervision or examination by federal or state authority and which has at the time of its appointment
as Rights Agent a combined capital and surplus of at least $100,000,000 or (b) an Affiliate of a corporation described in the immediately
preceding clause (a). After appointment, the successor Rights Agent will be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company will file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the Common Stock, and mail a notice thereof in writing to the
holders of the Rights. Failure to give any notice provided for in this Section 4.4, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case
may be.
ARTICLE V
MISCELLANEOUS
5.1 Redemption
and Termination.
(a) The
Board of Directors may, at its option, at any time prior to the Flip-In Date, elect to redeem all (but not less than all) of the then
outstanding Rights at a redemption price of $0.01 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being hereinafter referred to as the “Redemption Price”)
and the Company, at its option, may pay the Redemption Price either in cash or shares of Common Stock or other securities of the Company
deemed by the Board of Directors, in the exercise of its sole discretion, to be at least equivalent in value to the Redemption Price.
(b) Immediately
upon the action of the Board of Directors electing to redeem the Rights (or, if the resolution of the Board of Directors electing to
redeem the Rights states that the redemption will not be effective until the occurrence of a specified future time or event, upon the
occurrence of such future time or event), without any further action and without any notice, the right to exercise the Rights will terminate
and each Right, whether or not previously exercised, will thereafter represent only the right to receive the Redemption Price in cash
or securities, as determined by the Board of Directors. Promptly after the Rights are redeemed, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice in accordance with Section 5.9.
5.2 Expiration.
The Rights and this Agreement shall expire at the Expiration Time and no Person shall have any rights pursuant to this Agreement or any
Right after the Expiration Time, except, if the Rights have been exchanged or redeemed, as provided in Sections 3.1 or 5.1, respectively.
5.3 Issuance
of New Rights Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the number or kind or class of shares of stock purchasable upon exercise of Rights made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock by the Company following
the Separation Time and prior to the Expiration Time pursuant to the terms of securities convertible or redeemable into shares of Common
Stock or to options, warrants or other rights (other than any securities issued or issuable in connection with the exercise or exchange
of Rights), in each case issued or granted prior to, and outstanding at, the Separation Time, the Company shall issue to the holders
of such shares of Common Stock, Rights Certificates representing the appropriate number of Rights in connection with the issuance or
sale of such shares of Common Stock; provided, however, in each case, (i) no such Rights Certificate shall be issued,
if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or to the Person to whom such Rights Certificates would be issued, (ii) no such Rights Certificates
shall be issued if, and to the extent that, appropriate adjustment shall have otherwise been made in lieu of the issuance thereof, and
(iii) the Company shall have no obligation to distribute Rights Certificates to any Acquiring Person or Affiliate or Associate of
an Acquiring Person or any transferee of any of the foregoing.
5.4 Supplements
and Amendments. The Company and the Rights Agent may from time to time supplement or amend this Agreement without the approval of
any holders of Rights (i) prior to the Flip-in Date, in any respect, and (ii) on or after the Flip-in Date, to make any changes
that the Company may deem necessary or desirable (x) that shall not materially adversely affect the interests of the holders of
Rights generally (other than the Acquiring Person or any Affiliate or Associate thereof), (y) in order to cure any ambiguity or
to correct or supplement any provision contained herein which may be inconsistent with any other provisions herein or otherwise defective
or (z) in order to satisfy any applicable law, rule or regulation. The Rights Agent will duly execute and deliver any supplement
or amendment hereto requested by the Company in writing, provided, that the Company has delivered to the Rights Agent a certificate
from an appropriate officer of the Company that states that the proposed supplement or amendment complies with the terms of this Agreement,
provided, further, that any supplement or amendment (other than to Article IV or that affects the Rights Agent’s
rights, duties, obligations or immunities under this Agreement) shall become effective immediately upon execution by the Company, whether
or not also executed by the Rights Agent. Notwithstanding anything contained in this Agreement to the contrary, the Rights Agent may,
but shall not be obligated to, enter into any supplement or amendment that affects the Rights Agent’s own rights, duties, obligations
or immunities under this Agreement.
5.5 Fractional
Shares. If the Company elects not to issue certificates representing (or register on the stock transfer books of the Company) fractional
shares upon exercise, redemption or exchange of Rights, the Company shall, in lieu thereof, in the sole discretion of the Board of Directors,
either (a) evidence such fractional shares by depositary receipts issued pursuant to an appropriate agreement between the Company
and a depositary selected by it, providing that each holder of a depositary receipt shall have all of the rights, privileges and preferences
to which such holder would be entitled as a beneficial owner of such fractional share, or (b) pay to the registered holder of such
Rights the appropriate fraction of the Market Price per share in cash. Whenever a payment for fractional Rights or fractional shares
is to be made by the Rights Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting
forth in reasonable detail the facts related to such payments and the prices and/or formulas utilized in calculating such payments, and
(ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make such payments. The Rights Agent
shall be fully protected in relying upon such a certificate and shall have no duty with respect to, and shall not be deemed to have knowledge
of any obligation to pay for fractional Rights or fractional shares under any Section of this Agreement relating to payment for
fractional Rights or fractional shares unless and until the Rights Agent shall have received such a certificate and sufficient monies.
5.6 Rights
of Action. Subject to the terms of this Agreement (including Section 3.1(b)), rights of action in respect of this Agreement,
other than rights of action vested solely in the Rights Agent, the Board of Directors or the Company, are vested in the respective holders
of the Rights; and any holder of any Rights, without the consent of the Rights Agent or of the holder of any other Rights, may, on such
holder’s own behalf and for such holder’s own benefit and the benefit of other holders of Rights, enforce, and may institute
and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, such holder’s right
to exercise such holder’s Rights in the manner provided in such holder’s Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement.
5.7 Holder
of Rights Not Deemed a Stockholder. No holder, as such, of any Rights shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of shares or any other securities which may at any time be issuable on the exercise of such Rights, nor shall
anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 5.8), or to receive dividends or subscription rights, or otherwise, until such Rights
shall have been exercised or exchanged in accordance with the provisions of this Agreement.
5.8 Notice
of Proposed Actions. In case the Company shall propose at or after the Separation Time and prior to the Expiration Time (i) to
effect or permit any Flip-Over Transaction or Event or (ii) to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each holder of a Right, in accordance with Section 5.9, and to the Rights Agent
a written notice of such proposed action, which shall specify the date on which such Flip-Over Transaction or Event, liquidation, dissolution,
or winding up is to take place, and such notice shall be so given at least 20 Business Days prior to the date of the taking of such proposed
action.
5.9 Notices.
Notices or demands authorized or required by this Agreement to be given or made by the Rights Agent or by the holder of any Rights to
or on the Company shall be sufficiently given or made if sent by first-class or express United States mail, FedEx or United Parcel
Service or any other nationally recognized courier service, postage prepaid and properly addressed (until another address is filed in
writing by the Company with the Rights Agent) as follows:
Citi Trends, Inc.
104 Coleman Blvd.
Savannah, Georgia 31408
Attention: Chief Executive Officer
with a copy to:
Vinson & Elkins L.L.P.
1114 Avenue of the Americas, 32nd Floor
New York, NY 10036
Attention: Lawrence S. Elbaum
Any notice or demand authorized
or required by this Agreement to be given or made by the Company or by the holder of any Rights to or on the Rights Agent shall be sufficiently
given or made if sent by first-class or express United States mail, FedEx or United Parcel Service or any other nationally recognized
courier service, postage prepaid and properly addressed (until another address is filed in writing by the Rights Agent with the Company)
as follows:
Equiniti Trust Company, LLC
48 Wall Street, Floor 23
New York, NY 10005
Attention: Citi Trends, Inc. Client Contact
Notices or demands authorized
or required by this Agreement to be given or made by the Company or the Rights Agent to or on the holder of any Rights shall be sufficiently
given or made if sent by first-class or express United States mail, FedEx or United Parcel Service or any other nationally recognized
courier service, postage prepaid, addressed to such holder at the address of such holder as it appears upon the registry books of the
Rights Agent or, prior to the Separation Time, on the registry books of the transfer agent for the Common Stock. Any notice that is sent
in the manner herein provided shall be deemed given on the third Business Day after mailing, whether or not the holder receives the notice.
Failure to give a notice pursuant to the provisions of this Agreement shall not affect the validity of any action taken hereunder.
5.10 Suspension
of Exercisability. To the extent that the Board of Directors determines in good faith that some action will or need be taken pursuant
to, or in order to properly give effect to, Section 2.3, 3.1, 4.4 or otherwise to comply with federal or state laws, the Company
may suspend the exercisability or exchangeability of the Rights for a reasonable period of time sufficient to allow it to take such action
or comply with such laws. In the event of any such suspension, the Company shall issue as promptly as practicable a public announcement
(with prompt written notice to the Rights Agent) stating that the exercisability or exchangeability of the Rights has been temporarily
suspended. Notice thereof pursuant to Section 5.9 shall not be required. Upon such suspension, any rights of action vested in a
holder of Rights shall be similarly suspended. Failure to give a notice pursuant to the provisions of this Agreement shall not affect
the validity of any action taken hereunder.
5.11 Successors.
All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
5.12 Benefits
of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and
the holders of the Rights any legal or equitable right, remedy or claim under this Agreement and this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the holders of the Rights.
5.13 Determination
and Actions by the Board of Directors, etc. The Board of Directors (or any duly authorized committee thereof) shall have the
exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board of
Directors or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this Agreement and (ii) make all determinations and calculations deemed
necessary or advisable for the administration or implementation of this Agreement including, without limitation, the right to determine
the Rights to be null and void pursuant to Section 3.1, after taking into account the purpose of this Agreement and the Company’s
interest in maintaining an orderly trading market in the outstanding shares of Common Stock. All such actions, interpretations, calculations
and determinations done or made by the Board of Directors (including by a committee of the Board of Directors to the extent permitted
by applicable law), shall be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other
Persons. The Rights Agent shall always be entitled to assume that the Board of Directors of the Company acted in good faith and the Rights
Agent shall be fully protected and shall incur no liability in reliance thereon.
5.14 Descriptive
Headings. Descriptive headings appear herein for convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
5.15 GOVERNING
LAW; EXCLUSIVE JURISDICTION.
(a) THIS AGREEMENT,
EACH RIGHT AND EACH RIGHTS CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF DELAWARE
AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS ENTERED INTO,
MADE WITHIN, AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS
OR RULES THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE; PROVIDED, HOWEVER,
THAT ALL PROVISIONS REGARDING THE RIGHTS, DUTIES, LIABILITIES AND OBLIGATIONS OF THE RIGHTS AGENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED INTO, MADE WITHIN, AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE.
(b) (i) THE
COMPANY, THE RIGHTS AGENT AND EACH HOLDER OF RIGHTS HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURT OF CHANCERY
OF THE STATE OF DELAWARE, OR, IF SUCH COURT SHALL LACK SUBJECT MATTER JURISDICTION, THE UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF DELAWARE OVER ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. The Company, the Rights
Agent and each holder of Rights acknowledge that the forum designated by this paragraph (b) has a reasonable relation to this Agreement,
and to such Persons’ relationship with one another.
(ii) The
Company, the Rights Agent and each holder of Rights hereby waive, to the fullest extent permitted by applicable law, any objection which
they now or hereafter have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in any court
referred to in paragraph (b)(i). The Company, the Rights Agent and each holder of Rights undertake not to commence any action subject
to this Agreement in any forum other than the forum described in this paragraph (b). The Company, the Rights Agent and each holder of
Rights agree that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any such suit, action, or
proceeding brought in any such court shall be conclusive and binding upon such Persons.
5.16 Counterparts.
This Agreement may be executed in any number of counterparts (including by facsimile, PDF or other electronic means) and each of such
counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the
same instrument.
5.17 Severability.
If any term or provision of this Agreement or the application thereof to any circumstance shall, in any jurisdiction and to any extent,
be invalid or unenforceable, such term or provision shall be ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining terms and provisions hereof or the application of such
term or provision to circumstances other than those as to which it is held invalid or unenforceable.
5.18 Customer
Identification Program. The Company acknowledges that the Rights Agent is subject to the customer identification program (“Customer
Identification Program”) requirements under the USA PATRIOT Act and its implementing regulations, and that the Rights Agent
must obtain, verify and record information that allows the Rights Agent to identify the Company. Accordingly, prior to accepting an appointment
hereunder, the Rights Agent may request information from the Company that will help the Rights Agent to identify the Company, including
without limitation the Company’s physical address, tax identification number, organizational documents, certificate of good standing,
license to do business, or any other information that the Rights Agent deems necessary. The Company agrees that the Rights Agent cannot
accept an appointment hereunder unless and until the Rights Agent verifies the Company’s identity in accordance with the Customer
Identification Program requirements.
5.19 Withholding.
In the event that the Company, the Rights Agent or their agents determine that they are obligated to withhold or deduct any tax or other
charge under any applicable law on actual or deemed payments or distributions hereunder to a holder of the Rights, Common Stock or other
cash, securities or other property, the Company, the Rights Agent or their agents shall be entitled, but not obligated, to (i) deduct
and withhold such amount by withholding a portion or all of the cash, securities or other property otherwise deliverable to, or by otherwise
deducting or withholding any property (including, without limitation, Rights, Preferred Stock, Common Stock or cash) that is owned by,
such holder, or (ii) in lieu of such withholding, require any holder to make a payment to the Company, the Rights Agent or their
agents, in each case in such amounts as they deem necessary to meet their withholding obligations, and in the case of (i) above,
shall also be entitled, but not obligated, to sell all or a portion of such withheld securities or other property by public or private
sale in such amounts and in such manner as they deem necessary and practicable to pay such taxes and charges.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed as of the date first above written.
|
CITI TRENDS, INC. |
|
|
|
By: |
/s/
David N. Makuen |
|
|
Name: |
David N. Makuen |
|
|
Title: |
Chief Executive Officer |
|
|
|
Equiniti
Trust Company, LLC |
|
|
|
By: |
/s/
Paula Caroppoli |
|
|
Name: |
Paula Caroppoli |
|
|
Title: |
Senior Vice President, Director Relationship Management |
Signature Page to
Stockholder Protection Rights Agreement
Exhibit A
(Form of Rights Certificate)
Certificate No. R- |
_______
Rights |
THE RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY
EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT (AS DEFINED BELOW). RIGHTS BENEFICIALLY OWNED
BY ACQUIRING PERSONS OR AFFILIATES OR ASSOCIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR TRANSFEREES OF ANY OF
THE FOREGOING WILL BE NULL AND VOID.
Rights Certificate
CITI TRENDS, INC.
This certifies that _______________________,
or registered assigns, is the registered holder of the number of Rights set forth above, each of which entitles the registered holder
thereof, subject to the terms, provisions and conditions of the Stockholder Protection Rights Agreement, effective as of December 6,
2023 (as amended from time to time, the “Rights Agreement”), between Citi Trends, Inc., a Delaware corporation
(the “Company”), and Equiniti Trust Company, LLC, as rights agent (the “Rights Agent,” which term
shall include any successor rights agent under the Rights Agreement), to purchase from the Company at any time after the Separation Time
(as such term is defined in the Rights Agreement) and prior to the Expiration Time, one ten-thousandth (1/10,000th) of a fully paid share
of Series A Junior Participating Preferred Stock, par value $0.01 per share (the “Preferred Stock”), of the Company
(subject to adjustment as provided in the Rights Agreement) at the Exercise Price referred to below, upon presentation and surrender
of this Rights Certificate with the Form of Election to Exercise duly executed at the principal office of the Rights Agent. The
Exercise Price shall initially be $120.00 per Right and shall be subject to adjustment in certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights
Agreement, the Rights evidenced hereby may entitle the registered holder thereof to purchase securities of an entity other than the Company
or securities or assets of the Company other than Preferred Stock, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of
the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations
of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Rights Certificates.
Copies of the Rights Agreement are on file at the principal office of the Company and are available without cost upon written request.
Capitalized terms used in this Rights Certificate and not otherwise defined herein shall have the meanings ascribed to such terms in
the Rights Agreement.
This Rights Certificate, with or without other
Rights Certificates, upon surrender at the office of the Rights Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor evidencing an aggregate number of Rights equal to the aggregate number of Rights evidenced
by the Rights Certificate or Rights Certificates surrendered. If this Rights Certificate shall be exercised in part, the registered holder
shall be entitled to receive, upon surrender hereof, another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement,
each Right evidenced by this Certificate may be (a) terminated by the Company under certain circumstances, at its option, (b) exchanged
by the Company under certain circumstances, at its option, for one share of Common Stock or one ten-thousandth (1/10,000th) of a share
of Preferred Stock per Right (or, in certain cases, other securities or assets of the Company), subject in each case to adjustment in
certain circumstances as provided in the Rights Agreement, or (c) redeemed by the Company under certain circumstances at its option
in consideration for value equal to $0.01 per Right.
No holder of this Rights Certificate, as such,
shall be entitled to vote or receive dividends or be deemed for any purpose the holder of any securities which may at any time be issuable
on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof,
as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Rights evidenced by this Rights Certificate shall have been exercised or exchanged as provided in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the
proper officers of the Company.
Date: |
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ATTEST: |
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CITI TRENDS, INC. |
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By: |
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Secretary |
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Countersigned: |
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Equiniti Trust Company, LLC |
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[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED, _______________________________
hereby sells, assigns and transfers unto _________________________________________________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint ________________________ attorney-in-fact, to transfer
the within Rights Certificate on the books of the within-named company, with full power of substitution.
Dated: ___________________, _____.
Signature Guaranteed: |
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Signature |
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(Signature must correspond
to name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change
whatsoever) |
Signatures must be guaranteed by an eligible
guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 of the Exchange Act of 1934.
(To be completed if true)
The undersigned hereby represents, for the benefit
of the Company and all holders of Rights and shares of Common Stock, that the Rights evidenced by this Rights Certificate are not, and,
to the knowledge of the undersigned, have never been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).
NOTICE
In the event the certification set forth above
is not completed in connection with a purported assignment, the Company will deem the Beneficial Owner of the Rights evidenced by the
enclosed Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) or a
transferee of any of the foregoing and accordingly will deem the Rights evidenced by such Rights Certificate to be null and void and
not transferable or exercisable.
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to exercise
the Rights Certificate.)
The undersigned hereby irrevocably elects to
exercise _________________ whole Rights represented by the attached Rights Certificate to purchase the shares of Series A Junior
Participating Preferred Stock issuable upon the exercise of such Rights (or other such securities to be granted upon exercise of such
Rights pursuant to the Rights Agreement) and requests that certificates for such shares be issued in the name of and delivered to:
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Social Security or other Taxpayer ID No.: _________________________ |
If such number of Rights shall not be all the
Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights shall be registered in the name
of and delivered to:
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Social Security or other Taxpayer ID No.: _________________________ |
Dated: _________________, ______
Signature Guaranteed: |
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Signature |
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(Signature must correspond to name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever) |
Signatures must be guaranteed by an eligible
guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 of the Exchange Act of 1934.
(to be completed if true)
The undersigned hereby represents, for the benefit
of the Company and all holders of Rights and shares of Common Stock, that the Rights evidenced by this Rights Certificate are not, and,
to the knowledge of the undersigned, have never been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).
NOTICE
In the event the certification set forth above
is not completed in connection with a purported assignment, the Company will deem the Beneficial Owner of the Rights evidenced by the
enclosed Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) or a
transferee of any of the foregoing and accordingly will deem the Rights evidenced by such Rights Certificate to be null and void and
not transferable or exercisable.
Exhibit B
FORM OF CERTIFICATE
OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
CITI TRENDS, INC.
Pursuant to Section 151
of the
General Corporation Law of the State of Delaware
Citi
Trends, Inc., a corporation organized under the laws of the State of Delaware (the “Corporation”), hereby
certifies that, pursuant to the authority conferred upon the Board of Directors of the Corporation (the “Board of Directors”)
by the Third Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”),
the Board of Directors on December 6, 2023, adopted the following resolution by unanimous written consent creating a series of shares
of Preferred Stock designated as Series A Junior Participating Preferred Stock:
RESOLVED,
that pursuant to the authority granted to and vested in the Board of Directors in accordance with the provisions of the Certificate of
Incorporation, a series of Preferred Stock of the Corporation be, and it hereby is, created and that the designation and amount thereof
and the powers, preferences and rights of the shares of such series and the qualifications, limitations and restrictions thereon, are
hereby fixed as follows:
(i) The
distinctive serial designation of this series shall be “Series A Junior Participating Preferred Stock” (hereinafter
called “this Series”). Each share of this Series shall be identical in all respects with the other shares of
this Series except as to the dates from and after which dividends thereon shall be cumulative.
(ii) The
number of shares in this Series shall initially be 2,000, which number may from time to time be increased or decreased (but not
below the number then outstanding) by the Board of Directors. Shares of this Series purchased by the Corporation shall be cancelled
and shall revert to authorized but unissued shares of Preferred Stock undesignated as to series. Shares of this Series may be issued
in fractional shares which are whole number multiples of one ten-thousandth (1/10,000th) of a share, which fractional shares shall entitle
the holder, in proportion to such holder’s fractional share, to all rights of a holder of a whole share of this Series.
(iii) The
holders of full or fractional shares of this Series shall be entitled to receive, when and as declared by the Board of Directors,
but only out of funds legally available therefor, dividends, (A) on each date that dividends or other distributions (other than
dividends or distributions payable in Common Stock of the Corporation) are payable on or in respect of Common Stock comprising part of
the Reference Package (as defined below), in an amount per whole share of this Series equal to the aggregate amount of dividends
or other distributions (other than dividends or distributions payable in Common Stock of the Corporation) that would be payable on such
date to a holder of the Reference Package and (B) on the last day of March, June, September and December in each year,
in an amount per whole share of this Series equal to the excess (if any) of $300.00 over the aggregate dividends paid per whole
share of this Series during the three month period ending on such last day. Each such dividend shall be paid to the holders of record
of shares of this Series on the date, not exceeding sixty days preceding such dividend or distribution payment date, fixed for that
purpose by the Board of Directors in advance of payment of each particular dividend or distribution. Dividends on each full and each
fractional share of this Series shall be cumulative from the date such full or fractional share is originally issued; provided
that any such full or fractional share originally issued after a dividend record date and on or prior to the dividend payment date
to which such record date relates shall not be entitled to receive the dividend payable on such dividend payment date or any amount in
respect of the period from such original issuance to such dividend payment date.
The
term “Reference Package” shall initially mean ten thousand (10,000) shares of Common Stock, par value $0.01 per share
(“Common Stock”), of the Corporation. In the event the Corporation shall at any time after the close of business on
the Separation Time or the Flip-in Date (each, as defined in the Stockholder Protection Rights Agreement, effective as of December 6,
2023, as such may be amended from time to time) (A) declare or pay a dividend on any Common Stock payable in Common Stock, (B) subdivide
any Common Stock or (C) combine any Common Stock into a smaller number of shares, then, in each such case, the Reference Package
after such event shall be the Common Stock that a holder of the Reference Package immediately prior to such event would hold thereafter
as a result thereof.
Holders
of shares of this Series shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative
dividends, as herein provided on this Series.
So
long as any shares of this Series are outstanding, no dividend (other than a dividend payable in Common Stock or in any other stock
ranking junior to this Series as to dividends and upon liquidation) shall be declared or paid or set aside for payment or other
distribution declared or made upon the Common Stock or upon any other stock ranking junior to this Series as to dividends or upon
liquidation, unless the full cumulative dividends (including the dividend to be paid upon payment of such dividend or other distribution)
on all outstanding shares of this Series shall have been, or shall contemporaneously be, paid. When dividends are not paid in full
upon this Series and any other stock ranking on a parity as to dividends with this Series, all dividends declared upon shares of
this Series and any other stock ranking on a parity as to dividends shall be declared pro rata so that in all cases the amount of
dividends declared per share on this Series and such other stock shall bear to each other the same ratio that accumulated dividends
per share on the shares of the Series and such other stock bear to each other. Neither the Common Stock nor any other stock of the
Corporation ranking junior to or on a parity with this Series as to dividends or upon liquidation shall be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares
of any such stock) by the Corporation (except by conversion into or exchange for stock of the Corporation ranking junior to this Series as
to dividends and upon liquidation), unless the full cumulative dividends (including the dividend to be paid upon payment of such dividend,
distribution, redemption, purchase or other acquisition) on all outstanding shares of this Series shall have been, or shall contemporaneously
be, paid.
(iv) In
the event of any merger, consolidation, statutory share exchange reclassification or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of
this Series shall at the same time be similarly exchanged or changed in an amount per whole share equal to the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as the case may be, that a holder of the Reference Package would
be entitled to receive as a result of such transaction.
(v) In
the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the holders
of full and fractional shares of this Series shall be entitled, before any distribution or payment is made on any date to the holders
of the Common Stock or any other stock of the Corporation ranking junior to this Series upon liquidation, to be paid in full an
amount per whole share of this Series equal to the greater of (A) $0.01 or (B) the aggregate amount distributed or to
be distributed in connection with such liquidation, dissolution or winding up to a holder of the Reference Package, together with accrued
dividends to such distribution or payment date, whether or not earned or declared. If such payment shall have been made in full to all
holders of shares of this Series, the holders of shares of this Series as such shall have no right or claim to any of the remaining
assets of the Corporation.
In
the event the assets of the Corporation available for distribution to the holders of shares of this Series upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to the first paragraph of this Section (v), no such distribution shall be made on account of
any shares of any other class or series of Preferred Stock ranking on a parity with the shares of this Series upon such liquidation,
dissolution or winding up unless proportionate distributive amounts shall be paid on account of the shares of this Series, ratably in
proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such liquidation,
dissolution or winding up.
Upon
the liquidation, dissolution or winding up of the Corporation, the holders of shares of this Series then outstanding shall be entitled
to be paid out of assets of the Corporation available for distribution to its stockholders all amounts to which such holders are entitled
pursuant to the first paragraph of this Section (v) before any payment shall be made to the holders of Common Stock or any
other stock of the Corporation ranking junior upon liquidation to this Series.
For
the purposes of this Section (v), the consolidation or merger of, or statutory share exchange by, the Corporation with any other
corporation shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation.
(vi) The
shares of this Series shall not be redeemable.
(vii) In
addition to any other vote or consent of stockholders required by law or by the Certificate of Incorporation, and except as otherwise
required by law, each share (or fraction thereof) of this Series shall, on any matter, vote as a class with any other capital stock
comprising part of the Reference Package and shall have the number of votes thereon that a holder of the Reference Package would have.
(viii) If
and whenever dividends payable on this Series and any other class or series of stock of the Corporation ranking on a parity with
this Series as to payment of dividends (any such class or series being herein referred to as “dividend parity stock”)
shall be in arrears in an aggregate amount equal to at least six quarterly dividends (whether or not consecutive), the number of directors
then constituting the Board of Directors shall be increased by two and the holders of shares of this Series, together with the holders
of all other affected classes and series of dividend parity stock similarly entitled to vote for the election of two additional directors,
voting separately as a single class, shall be entitled to elect the two additional directors at any annual meeting of stockholders or
any special meeting of the holders of shares of this Series and such dividend parity stock called as hereinafter provided. Whenever
all arrears in dividends on the shares of this Series and dividend parity stock then outstanding shall have been paid and dividends
thereon for the current quarterly dividend period shall have been paid or declared and set aside for payment, then the right of the holders
of shares of this Series and such dividend parity stock to elect such additional two directors shall cease (but subject always to
the same provisions for the vesting of such voting rights in the case of any similar future arrearages in dividends), and the terms of
office of all persons elected as directors by the holders of shares of this Series and such dividend parity stock shall immediately
terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting
power shall have been so vested in the holders of shares of this Series and such dividend parity stock, the Secretary of the Corporation
may, and upon the written request of any holder of shares of this Series (addressed to the Secretary at the principal office of
the Corporation) shall, call a special meeting of the holders of shares of this Series and such dividend parity stock for the election
of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the by-laws
for a special meeting of the stockholders or as required by law. If any such special meeting so required to be called shall not be called
by the Secretary within 20 days after receipt of any such request, then any holder of shares of this Series may (at the Corporation’s
expense) call such meeting, upon notice as herein provided, and for that purpose shall have access to the stock books of the Corporation.
The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders if such office
shall not have previously terminated as above provided. In case any vacancy shall occur among the directors elected by the holders of
shares of this Series and such dividend parity stock, a successor shall be elected by the Board of Directors to serve until the
next annual meeting of the stockholders upon the nomination of the then remaining director, if any, elected by the holders of shares
of this Series and such dividend parity stock or the successor, if any, of such remaining director. If the holders of shares of
this Series become entitled under the foregoing provisions to elect or participate in the election of two directors as a result
of dividend arrearages, such entitlement shall not affect the right of such holders to vote as stated in Section (vii), including
the right to vote in the election of the remaining directors.
(ix) This
Series shall rank as to the payment of dividends and distributions and amounts upon liquidation, dissolution and winding-up junior
to all other series or shares of Preferred Stock unless otherwise expressly provided in the terms of such series or shares of Preferred
Stock.
(x) In
the event that the Corporation or its agents determine that they are obligated to withhold or deduct any tax or other governmental charge
under any applicable law on actual or deemed payments or distributions to a holder of the shares of this Series, the Corporation or its
agents shall be entitled to (A) deduct and withhold such amount by withholding a portion or all of the cash, securities or other
property otherwise deliverable to, or by otherwise withholding or deducting any property that is owned by, such holder, or (B) in
lieu of such withholding, require any holder to make a payment to the Corporation or its agent, in each case in such amounts as they
deem necessary to meet their withholding obligations, and in the case of (A) above, shall also be entitled, but not obligated, to
sell all or a portion of such withheld securities or other property by public or private sale in such amounts and in such manner as they
deem necessary and practicable to pay such taxes and charges.
IN
WITNESS WHEREOF, the undersigned have signed and attested this certificate on the day of , .
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Name: David N. Makuen |
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Title: Chief Executive Officer |
Attest:
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Name: Michael C. Buchsbaum |
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Title: Secretary |
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Exhibit 99.1
Citi Trends Adopts Limited Duration Stockholder Rights Plan
December 6, 2023
SAVANNAH, Ga.--(BUSINESS WIRE)--Dec. 6, 2023-- Citi Trends, Inc.
(NASDAQ: CTRN) (“Citi Trends” or the “Company”) today announced that its Board of Directors (the “Board”)
has unanimously adopted a limited duration stockholder rights plan (the “Rights Plan”).
The Rights Plan is intended to enable all stockholders to realize the
full value of their investment in Citi Trends and will reduce the likelihood that any entity, person or group gains control of the Company
through open-market accumulation without paying all stockholders an appropriate control premium. The Rights Plan is also intended to provide
the Board sufficient time to make informed judgments and take actions that are in the best interests of Citi Trends and all of its stockholders.
The Board adopted the Rights Plan in response to one of its stockholders
quickly accumulating a significant number of shares in the open market. The Rights Plan has not been adopted in response to any specific
takeover bid or other proposal to acquire control of the Company and is not intended to deter offers that are fair and otherwise in the
best interests of the Company and its stockholders.
The Rights Plan is similar to stockholder rights
plans adopted by other publicly held companies. Under the Rights Plan, the Rights generally would become exercisable only if any person
(or group) acquires 16% (or 20% for certain passive investors) or more of Citi Trends' outstanding common stock, except that any person
or group who currently owns the triggering percentage or more may continue to own such shares of common stock. However, any owner of
the relevant triggering percentage or more may not, subject to the terms of the Rights Plan, acquire any additional shares without triggering
the Rights Plan. The Rights Plan does not aggregate the ownership of stockholders “acting in concert” unless they have formed
a group, or the shares would otherwise be aggregated, under applicable securities laws.
The Rights Plan expires on December 4, 2024, unless earlier redeemed,
exchanged or amended. The Board intends to submit the Rights Plan to stockholders for ratification at the Company’s upcoming Annual
Meeting of Stockholders (the “Annual Meeting”) and to terminate the Rights Plan if the proposal to ratify the Rights Plan
is not approved at that meeting. The date of the upcoming Annual Meeting has not yet been announced. Further details of the Rights Plan
will be contained in a Form 8-K to be filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”).
Jefferies LLC is serving as financial advisor and Vinson &
Elkins L.L.P. is serving as legal advisor to Citi Trends.
Forward-Looking Statements
All statements other than historical facts
contained in this news release, including statements regarding the Company’s business plans and the objectives and
expectations of management, are forward-looking statements that are subject to material risks and uncertainties. The words
“believe,” “may,” “could,” “plans,” “estimate,” “expects,”
“continue,” “anticipate,” “intend,” “expect,” “upcoming,”
“trend” and similar expressions, as they relate to the Company, are intended to identify forward-looking statements,
although not all forward-looking statements contain such language. Investors are cautioned that any such forward-looking statements
are not guarantees of future performance and are inherently subject to risks and uncertainties, some of which cannot be predicted or
quantified. Actual results or developments may differ materially from those included in the forward-looking statements as a result
of various factors, which are discussed in our Annual Reports and Quarterly Reports on Forms 10 K and 10 Q, respectively, and any
amendments thereto, filed with the SEC. These risks and uncertainties include, but are not limited to, uncertainties relating to
general economic conditions, including inflation, energy and fuel costs, unemployment levels, and any deterioration whether caused
by acts of war, terrorism, political or social unrest (including any resulting store closures, damage or loss of inventory) or other
factors; changes in market interest rates and market levels of wages; natural disasters such as hurricanes; uncertainty and economic
impact of pandemics, epidemics or other public health emergencies such as the ongoing COVID-19 pandemic; transportation and
distribution delays or interruptions; changes in freight rates; the Company’s ability to attract and retain workers; the
Company’s ability to negotiate effectively the cost and purchase of merchandise inventory risks due to shifts in market
demand; the Company’s ability to gauge fashion trends and changing consumer preferences; changes in consumer confidence and
consumer spending patterns; competition within the industry; competition in our markets; the duration and extent of any economic
stimulus programs; changes in product mix; interruptions in suppliers’ businesses; the ongoing assessment and impact of the
cyber disruption we identified on January 14, 2023, including legal, reputational, financial and contractual risks resulting
from the disruption, and other risks related to cybersecurity, data privacy and intellectual property; temporary changes in demand
due to weather patterns; seasonality of the Company’s business; changes in market interest rates and market levels of wages;
the results of pending or threatened litigation; delays associated with building, remodeling, opening and operating new stores; and
delays associated with building and opening or expanding new or existing distribution centers. Any forward-looking statements by the
Company are intended to speak only as of the date such statements are made. Except as required by applicable law, including the
securities laws of the United States and the rules and regulations of the SEC, the Company does not undertake to publicly
update any forward-looking statements in this news release or with respect to matters described herein, whether as a result of any
new information, future events or otherwise.
About Citi Trends
Citi Trends, Inc. is a leading specialty
value retailer of apparel, accessories and home trends for way less spend primarily for African American and multicultural families in
the United States. The Company operates 606 stores located in 33 states. For more information, visit www.cititrends.com or your
local store.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231206598795/en/
Tom Filandro/Rachel Schacter
ICR, Inc.
CitiTrendsIR@icrinc.com
Source: Citi Trends, Inc.
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