Non-Prosecution Agreement with Carters Inc.

UNITED STATES OF AMERICA
 
SECURITIES AND EXCHANGE COMMISSION
 
NON-PROSECUTION AGREEMENT
 
1. In connection with an investigation relating to financial fraud at Carter's, Inc. that 
occurred between at least 2004 and 2009 ("Investigation"), the Division 
of Enforcement 
("Division") 
of the United States Securities and Exchange Commission ("Commission") 
and Carter's, Inc. ("Respondent") enter into their non-prosecution agreement 
("Agreement") on the following terms and conditions: 
COOPERATION 
2. The Respondent, a corporation organized and operating under the laws of 
Delaware, agrees to cooperate fully and truthfully in the Investigation and any other 
related enforcement litigation or proceeding to which the Commission is a party (the 
"Proceedings"), regardless 
ofthe time period in which the cooperation is required. In 
addition, the Respondent agrees to cooperate fully and truthfully, when directed by the 
Division's staff, in an official investigation or proceeding by any federal, state, or self­
regulatory organization ("Other Proceedings"). The full, truthful, and continuing 
cooperation 
of the Respondent shall include, but not be limited to: 
a. producing, in a responsive and prompt manner, all non-privileged 
documents, information, and other materials to the Commission as requested by the 
Division's staff, wherever located, in the possession, custody, or control 
of the 
Respondent; and 
b. using its best-efforts to secure the full, truthful, and continuing 
cooperation, as defined in Paragraph 3, 
of current and former directors, officers, 
employees and agents, .including making these persons available, when requested to do 
so 
by the Division's staff, at its expense, for interviews and the provision oftestimony in the 
investigation, trial and other judicial proceedings in connection with the Proceedings or 
Other Proceedings. 
3. The full, truthful, and continuing cooperation 
of each person described in 
Paragraph 2 above will be subject to the procedures and protections 
ofthis paragraph, 
and shall include, but not be limited to: 
a. producing all non-privileged documents and other materials as requested 
by the Division's staff; 
b. appearing for interviews, at such times and places, as requested by the 
Division's staff; 
c. responding to all inquiries, when requested to do so by the Division's 
staff, in connection 
with the Proceedings or Other Proceedings; and 
1 

d. testifying at trial and otherjudicial proceedings, when requested to do so 
by the Division's staff, in connection with the Proceedings 
or Other Proceedings. 
PUBLIC STATEMENTS 
4. After this Agreement is  executed, the Respondent agrees not to take any.action 
or 
to make or permit any public statement through present or future attorneys, employees, 
agents, or other persons authorized to speak for it, except in legal proceedings in which 
the Commission is not a party, denying, directly 
or indirectly, the factual basis of any 
aspect 
ofthis Agreement. This paragraph is not intended to apply to any statement made 
by an individual in the course 
ofany criminal, civil, or regulatory proceeding initiated by 
the government or self-regulatory organization against such individual, unless such 
individual is  speaking on behalf 
ofthe Respondent. If it is  determined by the 
Commission that a public statement by the Respondent 
or any related person contradicts 
in whole 
or in part this Agreement, at its sole discretion, the Commission may bring an 
enforcement action in accordance with Paragraphs 7 through 
9. 
5. Prior to issuing a press release concerning this Agreement, the Respondent agrees 
tohavethetext 
ofthereleaseapprovedbythe staffoftheDivision. 
SERVICE 
6. The Respondent agrees to serve by hand delivery 
or by next-day mail all written 
notices and correspondence required 
by or related to this Agreement to Stephen E. 
Donahue, Assistant Regional Director, 3475 Lenox Rd., Suite 500, Atlanta, Georgia 
30326, (404) 842-7618, unless otheIWise directed in writing by the staff
ofthe Division. 
VIOLA
nON OF AGREEMENT 
7. The Respondent understands and agrees that it shall be a violation ofthis 
Agreement 
if it knowingly provides false or misleading information or materials in 
cOlU1ection with the Proceedings or Other Proceedings. In the event of such misconduct, 
the Division will advise the Commission 
ofthe Respondent's misconduct and may make 
a criminal referral for providing false information (18 U.S.C. § 1001), contempt (18 
U.S.C. 
§§ 401-402) and/or obstructing justice (18 U.S.C. § 1503 et seq.). 
8. The Respondent understands and agrees that, should the Division detennine that 
the Respondent has failed to comply with any term 
or condition ofthis Agreement, the 
Division will notify the Respondent 
or its counsel ofthe fact and provide an opportunity 
for the Respondent to make a Wells submission pursuant to the Securities Act 
of 1933 
Release No. 5310. Under these circumstances, the Division may, 
in its sole discretion 
and not subject to judicial review, recommend to the Commission an enforcement action 
against the Respondent for any securities law violations, including, but not limited to, the 
substantive offenses relating to the Investigation. 
2 

9. The Respondent understands and agrees that in any future enforcement action 
resulting from its violation 
of the Agreement, any documents, statements, information, 
testimony, 
or evidence provided by it during the Proceedings or Other Proceedings, and 
any leads derived there from, may 
be used against it in future legal proceedings. 
10. The Respondent understands and agrees that any enforcement action brought by 
the Commission following the Respondent's violation 
of the Agreement that would not 
have been time-barred by the applicable statute 
of limitations if brought on the date of the 
execution 
of this Agreement, may be commenced against the Respondent, 
notwithstanding the expiration 
ofthe statute oflimitations betweenthe signing ofthis 
Agreement and the commencement 
of such action. 
COMPLIANCE WITH AGREEMENT 
II. Subject to the full, truthful, and continuing cooperation ofthe Respondent, as 
described in Paragraphs 2 and 3,  and compliance with all obligations in the Agreement, 
the Commission agrees not to bring any enforcement action or proceeding against the 
Respondent arising from the Investigation. This agreement should not, however, be 
deemed exoneration 
of the Respondent or be construed as a finding by the Commission 
that no violations 
of the federal securities laws have occurred. 
12. The Respondent understands and agrees that this Agreement does not bind other 
federal, state or self-regulatory organizations, but the Commission may, at its discretion, 
issue a letter to these organizations detailing the fact, manner, and extent 
ofits 
cooperation during the Proceedings or Other Proceedings, upon the written request 
ofthe 
Respondent. 
13. The Respondent understands and agrees that if it sells, merges, or transfers all or 
substantially all 
ofits business operations as they exist as ofthe date ofthis Agreement,. 
whether such a sale is structured as a stock 
or asset sale, merger, or transfer during the 
Deferred 
Period~ it shall include in any contract for sale, merger, or transfer a provision 
binding the purchasers 
or successors in interest to the obligations set forth in this 
Agreement. Furthermore, the protections arising from this Agreement will not apply to 
purchasers 
or successors in interest unless such purchasers or successors enter into a 
written agreement, on terms acceptable to the Division, agreeing to assume all the 
obligations set forth in this Agreement. 
14. The Respondent understands and agrees that the Agreement only provides 
protection against enforcement actions arising from the Investigation and does not relate 
to any other violations or any individual or entity other than the Respondent. 
3
 

VOLUNTARY AGREEMENT
 
15. The Respondent's decision to enter into this Agreement is freely and voluntarily 
made and is not the result 
offorce, threats, assurances, promises, or representations other 
than those contained in this Agreement. 
16. The Respondent read and understands this Agreement. Furthennore, the 
Respondent has reviewed all legal and factual aspects 
ofthis matter with its attorney and 
is  fully satisfied with its attorney's legal representation. The Respondent has thoroughly 
reviewed this Agreement with its attorney and has received satisfactory explanations 
concerning each paragraph 
of the Agreement. After conferring with its attorney and 
considering all available alternatives, the Respondent has made a knowing decision to 
enter into the Agreement. 
17. The Respondent represents that its Board of Directors has duly authorized, in a 
specific resolution attached hereto as Exhibit A, the execution and delivery 
of this 
Agreement, and that the person signing this Agreement has authority to bind the 
Respondent. 
ENTIRETY OF AGREEMENT 
18. This Agreement constitutes the entire agreement between the Commission and the 
Respondent, and supersedes all prior understandings, 
ifany, whether oral or written, 
relating to the subj ect matter herein. 
19. This Agreement cannot be modified except in writing, signed by the Respondent 
and a representative 
of the Commission. 
20. In the event an ambiguity 
or a question of intent or interpretation arises, this 
Agreement shall be construed as 
if drafted jointly by the parties hereto, and no 
preswnption 
or burden of proof shall arise favoring or disfavoring the Commission or the 
Respondent by virtue 
ofthe authorship ofanyofthe provisions ofthe Agreement. 
4
 

The signatories below acknowledge acceptance of the foregoing tenns and conditions. 
~~~-
Brendan M. Gibbons 
Senior Vice President Legal 
& Corporate 
Affairs, General Counsel and Secretary 
Carter's, Inc. 
On' ; 
I ,~ 2010. Brendan M. Gibbons, a person known to me, personally 
appeared before me and acknowledged executing the foregoing agreement with full 
authority to do so on behalf 
of Carter's, Inc. as its Senior Vice President Legal & 
Corporate Affairs, General Counsel and Secretary, and pursuant to the attached 
Resolution
ofthe Board ofDirectors. 
I (LmOJJQ. Q. 10ovxJ.1 
Notary Public 
State: 
GW 
TAMARA ADOWELL
Commission number: 
NOTNff PUBLIC 
Commission expiration: 
...,I~ 7/
1
~ 
HENRV COUNTY. GEORGAA 
MY COMMISSION EXPIRES 04127/2014 
RESPONDENT'S COUNSEL 
Approved as to form: 
__\_d -2.;2.-/ V 10 
~e 
Ropes 
& Gray LLP 
Prudential Tower, 800 Boylston Street 
Boston, Massachusetts 02199-3600 
(617) 951-7776 
SECURITIES AND EXCHANGE COMMISSION 
DIVISION OF ENFORCEMENT 
!dL I!!/J&
~Daie 
William P. Hicks 
Associate Regional Director 
Attachment: Exhibit A (Certificate of Corporate Resolution) 
5 
Randall . Bodner 

EXHIBIT A
 
CARTER'S, INC.
 
CERTIFICATE OF CORPORATE RESOLUTION
 

CARTER'S, INC. 
CERTIFICATE OF CORPORATE RESOLUTION 
I,  Brendan 
M. Gibbons, do hereby certify that I am the duly elected, qualified and acting 
Secretary 
ofCarter's, Inc. ("Carter's"), a children's apparel company, and that the following is a 
complete and accurate copy 
of a resolution adopted by the Board of Directors of Carter's at a 
meeting held on November 11,2010 at which a quorum was present and resolved as follows: 
RESOLVED: That Michael D. Casey, Chairman and Chief Executive Officer, and 
Brendan 
M. Gibbons, an Officer ofthis company, each be and hereby is authorized to act 
on behalf 
of the company, and in his sole discretion, to negotiate, approve, and execute 
the Non-Prosecution Agreement, attached hereto, with the United States Securities and 
Exchange Commission ("Commission") in connection with the investigation conducted 
by the Commission; in connection with this, each aforementioned Officer be and hereby 
is authorized to undertake such actions as he may deem necessary and advisable, 
including the execution 
ofsuch documentation as may be required by the Commission, in 
order to carry out the foregoing. 
I further certify that the aforesaid resolution has not been amended or revoked in any respect and 
remains in full force and effect. 
-
IN WITNESS WHEREOF, I have executed this Certificate as a sealed instrument this ~day 
ofNovember 2010. 
-~ ,? /:..' '// j
By:~.d4~ 
Brendan M. Gibbons /
 
Senior Vice President Legal 
& Corporate Affairs
 
General Counsel and Secretary
 
Carter's, Inc.
 
COMMONWEALTH OF MASSACHUSETTS } 
} 
SS: 
COUNTY OF SUFFOLK 
} 
The.ginsthnnent was acknowledged before me this 15"day ofNovember, 2010, by

'Br Q, l bhems who is personally known to me or who has produced a Georgia
 
driver's license as identification and who did take an oath.
 
Notary Public 
~--nt-.~
 
State of Massachusetts -­
Commission Number -+. -J-=-=--..,.....,..--_
 
Commission Expirati~ll _21 J~Q.J d-O tQ 

UNITED STATES OF AMERICA
 
SECURITIES AND EXCHANGE COMMISSION
 

NON-PROSECUTION AGREEMENT
 

1. In connection with an investigation relating to financial fraud at Carter's, Inc. that 
occurred between at least 2004 and 2009 ("Investigation"), the Division of Enforcement 
("Division") of the United States Securities and Exchange Commission ("Commission") 
and Carter's, Inc. ("Respondent") enter into their non-prosecution agreement 
("Agreement") on the following terms and conditions: 

COOPERATION 

2. The Respondent, a corporation organized and operating under the laws of 
Delaware, agrees to cooperate fully and truthfully in the Investigation and any other 
related enforcement litigation or proceeding to which the Commission is a party (the 
"Proceedings"), regardless of the time period in which the cooperation is required. In 
addition, the Respondent agrees to cooperate fully and truthfully, when directed by the 
Division's staff, in an official investigation or proceeding by any federal, state, or self­
regulatory organization ("Other Proceedings"). The full, truthful, and continuing 
cooperation of the Respondent shall include, but not be limited to: 

a. producing, in a responsive and prompt manner, all non-privileged 
documents, information, and other materials to the Commission as requested by the 
Division's staff, wherever located, in the possession, custody, or control of the 
Respondent; and 

b. using its best-efforts to secure the full, truthful, and continuing 
cooperation, as defined in Paragraph 3, of current and former directors, officers, 
employees and agents, .including making these persons available, when requested to do so 
by the Division's staff, at its expense, for interviews and the provision of testimony in the 
investigation, trial and other judicial proceedings in connection with the Proceedings or 
Other Proceedings. 

3. The full, truthful, and continuing cooperation of each person described in 
Paragraph 2 above will be subject to the procedures and protections of this paragraph, 
and shall include, but not be limited to: 

a. producing all non-privileged documents and other materials as requested 
by the Division's staff; 

b. appearing for interviews, at such times and places, as requested by the 
Division's staff; 

c. responding to all inquiries, when requested to do so by the Division's 
staff, in connection with the Proceedings or Other Proceedings; and 

1 



d. testifying at trial and other judicial proceedings, when requested to do so 
by the Division's staff, in connection with the Proceedings or Other Proceedings. 

PUBLIC STATEMENTS 

4. After this Agreement is executed, the Respondent agrees not to take any.action or 
to make or permit any public statement through present or future attorneys, employees, 
agents, or other persons authorized to speak for it, except in legal proceedings in which 
the Commission is not a party, denying, directly or indirectly, the factual basis of any 
aspect of this Agreement. This paragraph is not intended to apply to any statement made 
by an individual in the course of any criminal, civil, or regulatory proceeding initiated by 
the government or self-regulatory organization against such individual, unless such 
individual is speaking on behalf of the Respondent. If it is determined by the 
Commission that a public statement by the Respondent or any related person contradicts 
in whole or in part this Agreement, at its sole discretion, the Commission may bring an 
enforcement action in accordance with Paragraphs 7 through 9. 

5. Prior to issuing a press release concerning this Agreement, the Respondent agrees 
to have the text of the release approved by the staffofthe Division. 

SERVICE 

6. The Respondent agrees to serve by hand delivery or by next-day mail all written 
notices and correspondence required by or related to this Agreement to Stephen E. 
Donahue, Assistant Regional Director, 3475 Lenox Rd., Suite 500, Atlanta, Georgia 
30326, (404) 842-7618, unless otheIWise directed in writing by the staffofthe Division. 

VIOLAnON OF AGREEMENT 

7. The Respondent understands and agrees that it shall be a violation of this 
Agreement if it knowingly provides false or misleading information or materials in 
cOlU1ection with the Proceedings or Other Proceedings. In the event of such misconduct, 
the Division will advise the Commission of the Respondent's misconduct and may make 
a criminal referral for providing false information (18 U.S.C. § 1001), contempt (18 
U.S.C. §§ 401-402) and/or obstructing justice (18 U.S.C. § 1503 et seq.). 

8. The Respondent understands and agrees that, should the Division detennine that 
the Respondent has failed to comply with any term or condition of this Agreement, the 
Division will notify the Respondent or its counsel of the fact and provide an opportunity 
for the Respondent to make a Wells submission pursuant to the Securities Act of 1933 
Release No. 5310. Under these circumstances, the Division may, in its sole discretion 
and not subject to judicial review, recommend to the Commission an enforcement action 
against the Respondent for any securities law violations, including, but not limited to, the 
substantive offenses relating to the Investigation. 

2 



9. The Respondent understands and agrees that in any future enforcement action 
resulting from its violation of the Agreement, any documents, statements, information, 
testimony, or evidence provided by it during the Proceedings or Other Proceedings, and 
any leads derived there from, may be used against it in future legal proceedings. 

10. The Respondent understands and agrees that any enforcement action brought by 
the Commission following the Respondent's violation of the Agreement that would not 
have been time-barred by the applicable statute of limitations if brought on the date of the 
execution of this Agreement, may be commenced against the Respondent, 
notwithstanding the expiration of the statute of limitations between the signing of this 
Agreement and the commencement of such action. 

COMPLIANCE WITH AGREEMENT 

II. Subject to the full, truthful, and continuing cooperation of the Respondent, as 
described in Paragraphs 2 and 3, and compliance with all obligations in the Agreement, 
the Commission agrees not to bring any enforcement action or proceeding against the 
Respondent arising from the Investigation. This agreement should not, however, be 
deemed exoneration of the Respondent or be construed as a finding by the Commission 
that no violations of the federal securities laws have occurred. 

12. The Respondent understands and agrees that this Agreement does not bind other 
federal, state or self-regulatory organizations, but the Commission may, at its discretion, 
issue a letter to these organizations detailing the fact, manner, and extent of its 
cooperation during the Proceedings or Other Proceedings, upon the written request of the 
Respondent. 

13. The Respondent understands and agrees that if it sells, merges, or transfers all or 
substantially all of its business operations as they exist as of the date of this Agreement, . 
whether such a sale is structured as a stock or asset sale, merger, or transfer during the 
Deferred Period~ it shall include in any contract for sale, merger, or transfer a provision 
binding the purchasers or successors in interest to the obligations set forth in this 
Agreement. Furthermore, the protections arising from this Agreement will not apply to 
purchasers or successors in interest unless such purchasers or successors enter into a 
written agreement, on terms acceptable to the Division, agreeing to assume all the 
obligations set forth in this Agreement. 

14. The Respondent understands and agrees that the Agreement only provides 
protection against enforcement actions arising from the Investigation and does not relate 
to any other violations or any individual or entity other than the Respondent. 

3
 



VOLUNTARY AGREEMENT
 

15. The Respondent's decision to enter into this Agreement is freely and voluntarily 
made and is not the result of force, threats, assurances, promises, or representations other 
than those contained in this Agreement. 

16. The Respondent read and understands this Agreement. Furthennore, the 
Respondent has reviewed all legal and factual aspects of this matter with its attorney and 
is fully satisfied with its attorney's legal representation. The Respondent has thoroughly 
reviewed this Agreement with its attorney and has received satisfactory explanations 
concerning each paragraph of the Agreement. After conferring with its attorney and 
considering all available alternatives, the Respondent has made a knowing decision to 
enter into the Agreement. 

17. The Respondent represents that its Board of Directors has duly authorized, in a 
specific resolution attached hereto as Exhibit A, the execution and delivery of this 
Agreement, and that the person signing this Agreement has authority to bind the 
Respondent. 

ENTIRETY OF AGREEMENT 

18. This Agreement constitutes the entire agreement between the Commission and the 
Respondent, and supersedes all prior understandings, ifany, whether oral or written, 
relating to the subj ect matter herein. 

19. This Agreement cannot be modified except in writing, signed by the Respondent 
and a representative of the Commission. 

20. In the event an ambiguity or a question of intent or interpretation arises, this 
Agreement shall be construed as if drafted jointly by the parties hereto, and no 
preswnption or burden of proof shall arise favoring or disfavoring the Commission or the 
Respondent by virtue of the authorship ofany of the provisions of the Agreement. 

4
 



The signatories below acknowledge acceptance of the foregoing tenns and conditions. 

~~~-
Brendan M. Gibbons 
Senior Vice President Legal & Corporate 
Affairs, General Counsel and Secretary 
Carter's, Inc. 

On' ; I ,~ 2010. Brendan M. Gibbons, a person known to me, personally 
appeared before me and acknowledged executing the foregoing agreement with full 
authority to do so on behalf of Carter's, Inc. as its Senior Vice President Legal & 
Corporate Affairs, General Counsel and Secretary, and pursuant to the attached 
Resolution of the Board of Directors. 

I (LmOJJQ. Q. 10ovxJ.1 
Notary Public 
State: GW 

TAMARA ADOWELLCommission number: NOTNff PUBLIC 
Commission expiration: ...,I~ 7/1~ HENRV COUNTY. GEORGAA 

MY COMMISSION EXPIRES 04127/2014 

RESPONDENT'S COUNSEL 

Approved as to form: 

__\_d -2.;2.-/ V 10 

~e 
Ropes & Gray LLP 
Prudential Tower, 800 Boylston Street 
Boston, Massachusetts 02199-3600 
(617) 951-7776 

SECURITIES AND EXCHANGE COMMISSION 
DIVISION OF ENFORCEMENT 

!dL I! !/J&
~Daie William P. Hicks 

Associate Regional Director 

Attachment: Exhibit A (Certificate of Corporate Resolution) 

5 

Randall . Bodner 



EXHIBIT A
 

CARTER'S, INC.
 

CERTIFICATE OF CORPORATE RESOLUTION
 



CARTER'S, INC. 

CERTIFICATE OF CORPORATE RESOLUTION 

I, Brendan M. Gibbons, do hereby certify that I am the duly elected, qualified and acting 
Secretary of Carter's, Inc. ("Carter's"), a children's apparel company, and that the following is a 
complete and accurate copy of a resolution adopted by the Board of Directors of Carter's at a 
meeting held on November 11,2010 at which a quorum was present and resolved as follows: 

RESOLVED: That Michael D. Casey, Chairman and Chief Executive Officer, and 
Brendan M. Gibbons, an Officer of this company, each be and hereby is authorized to act 
on behalf of the company, and in his sole discretion, to negotiate, approve, and execute 
the Non-Prosecution Agreement, attached hereto, with the United States Securities and 
Exchange Commission ("Commission") in connection with the investigation conducted 
by the Commission; in connection with this, each aforementioned Officer be and hereby 
is authorized to undertake such actions as he may deem necessary and advisable, 
including the execution of such documentation as may be required by the Commission, in 
order to carry out the foregoing. 

I further certify that the aforesaid resolution has not been amended or revoked in any respect and 
remains in full force and effect. -IN WITNESS WHEREOF, I have executed this Certificate as a sealed instrument this ~day 
ofNovember 2010. 

-~ ,? /:..' '// j

By:~.d4~ 
Brendan M. Gibbons /
 
Senior Vice President Legal & Corporate Affairs
 
General Counsel and Secretary
 
Carter's, Inc.
 

COMMONWEALTH OF MASSACHUSETTS } 
} SS: 

COUNTY OF SUFFOLK } 

The.ginsthnnent was acknowledged before me this 15"day ofNovember, 2010, by

'Br Q, l bhems who is personally known to me or who has produced a Georgia
 
driver's license as identification and who did take an oath.
 

Notary Public ~--nt-.~
 
State of Massachusetts -­
Commission Number -+. -J-=-=--..,.....,..--_
 
Commission Expirati~ll _21 J~Q.J d-O tQ