EXHIBIT 10.1
HAMPSHIRE EQUITY PARTNERS
Tracey L. Rudd
Managing Partner
Mr. R. Edward Anderson
1920 Hunting Ridge Road
Raleigh, NC 27615
November 16, 2001
Dear Ed,
I am pleased to offer you the position of Chief Executive Officer ("CEO")
of Citi Trends, Inc. ("Citi Trends" or the "Company"). 'this letter will outline
the terms of your employment:
POSITION:
Chief Executive Officer
Member of the Board of Directors
BASE SALARY:
$300,000 annually
START DATE:
December 10, 2001 (or sooner if practical)
PERFORMANCE BONUS:
Target is a bonus of 50% of base Salary ($150,000) contingent on achieving
budgeted EBIT, as approved by the Board of Directors. The percentage bonus
earned will be determined according to the following table:
% Range % Range of Bonus
of Budget Target Bonus Dollars
- --------------------- ---------------- -------------------
80% 85% 20% 25% $ 30,000 $ 37,500
86% 90% 27% 37% $ 40,500 $ 55,500
91% 99% 40% 67% $ 60,000 $100,500
100% 110% 100% 120% $150,000 $180,000
110% 120% 120% 150% $180,000 $225,000
120% 130% 150% 200% $225,000 $300,000
Above 130% 200% $300,000
Note: EBIT budget would be adjusted to reflect any acquisition or capital
investment.
HIRING BONUS:
$75,000 paid January 1, 2002 (50%), and June 1, 2002 (50%).
BENEFITS:
Benefits consistent with the company's existing plans.
AUTOMOBILE:
Lease car - Lincoln Town Car or Buick Park Avenue.
RELOCATION:
Company will pay out of pocket moving expenses from Raleigh, NC to Savannah, GA
capped at $25,000. Company will pay for temporary lodging in Savannah for up to
90 days (Capped at $7,500).
520 Madison Avenue, New York, NY 10022
(212) 453-1706 - Fax (212) 750-2970
Email: trudd@hampep.com
PURCHASED EQUITY:
You will have the right until December 31, 2001 to purchase 3,500 common shares
at $10 per share as well as 35 shares of preferred stock at $1,000 per share. if
terminated, the purchased common and the purchased preferred will not be subject
to any par right by the holder or call right by the Company if terminated for
any reason but cause. If terminated for cause the Company will have the right to
purchase both the common and preferred for cost plus accrued dividends.
GRANTED OPTIONS:
You will be granted 16,800 (approximately 4% of the fully diluted ownership of
the Company) options that vest in equal amounts over four years on an annual
basis at an exercise price of $10.00 per share. However if the Company achieves
an EBITDA of $13 million or greater for any trailing twelve month period within
the next four years, 4,200 options of the remaining unvested options would
immediately vest at a strike price of $10.00 per share. Upon termination for a
reason besides cause, the vested options will be subject to the current
repurchase provisions which include a call at the Company's option at fair
market value (as determined by the Board of Directors). If you are terminated
for cause all vested options will be cancelled.
All unvested options will vest upon change of control but not an initial public
offering.
SEVERENCE:
Upon termination by the Company for a reason besides cause, you will receive
$150,000 to be paid over 6 months in arrears.
Would you please indicate your acceptance of this offer by November 19, 2001 by
returning a signed copy.
Sincerely,
/s/ Tracey L. Rudd
---------------------------------
Tracey L. Rudd
Managing Partner, Hampshire Equity Partners
On behalf of Greg Flynn
Chairman of the Board of Directors, Citi Trends, Inc.
November 16, 2001
/s/ R. Edward Anderson
----------------------------
As Agreed
R. Edward Anderson
November 16, 2001