Exhibit 10.23

 

SEVERANCE AGREEMENT

 

This SEVERANCE AGREEMENT (“Agreement”) is entered into between Citi Trends,
Inc., a Delaware corporation, including its subsidiaries, affiliates, divisions,
successors, and related entities (the “Company”), and Charles Hynes, an
individual (the “Executive”), effective as of the date signed by Executive
below.

 

WHEREAS, the Company and the Executive are also parties to an Employment
Non-Compete, Non-Solicit and Confidentiality Agreement (the “Confidentiality
Agreement”) and certain restricted stock award and stock option agreements
(collectively, the “Equity Agreements”), which are to remain in full force and
effect;

 

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the
parties agree as follows:

 

1.           Termination Payments and Benefits. Regardless of the circumstances
of the Executive’s termination, Executive shall be entitled to payment when due
of any earned and unpaid base salary, expense reimbursements and vacation days
accrued prior to the termination of Executive’s employment, and other unpaid
vested amounts or benefits under Company retirement and health benefit plans,
and, as applicable, under Equity Agreements in accordance with their terms, and
to no other compensation or benefits.

 

(a)          If (i) the Company terminates the Executive’s employment without
Cause, or (ii) the Executive terminates employment with the Company within
twelve (12) months following the occurrence of a Change in Control, provided
that within such period, (a) either Executive’s job duties have been materially
and permanently diminished or the Executive’s compensation has been materially
decreased and (b) Executive provides written notice to the Company within ninety
(90) days of the occurrence of an aforementioned event and the Company fails to
cure the event within thirty (30) days following the Company’s receipt of the
Executive’s written notice, then, in the case of either (i) or (ii) above, the
Company will provide the Executive with separation payments of twelve (12)
months base salary at Executive’s base salary rate at the time of Executive’s
termination or if greater, the Executive’s base rate in effect on the Change of
Control Date; to be paid in twenty-six (26) regular bi-weekly pay periods
beginning on the first pay period occurring after the sixtieth (60th) day
following the Executive’s termination, provided the Executive executes and does
not subsequently revoke the Separation and General Release Agreement referenced
below within such sixty (60) day period.

 

(b)         For a period of twelve (12) months from the Executive’s separation
from service, the Company will pay to the Executive an amount, minus all
applicable taxes and withholdings, equal to the full monthly cost (including any
portion of the cost previously paid by the employee) to provide the same level
of group health benefits maintained by Executive as of Executive’s separation
from service, provided the Executive executes and does not subsequently revoke
the Separation and General Release Agreement referenced below within such sixty
(60) day period.

(c)          For purposes of this Agreement, “Change in Control” shall mean the
occurrence of any one of the following events:

 

(i)          the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the “1934 Act”)) (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of 50% or more of the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (1), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition by a Person who is on the date of this Agreement
the beneficial owner of 50% or more of the Outstanding Company Voting
Securities, (ii) any acquisition directly from the Company, (iii) any
acquisition by the Company, (iv)                                any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (v) any acquisition by
any corporation pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of subsection (3) of this definition; or

 

(ii)         individuals who, as of the date of this Agreement, constitute the
Board of Directors of the Company (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director subsequent to the
Effective Date whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of Directors of the
Company; or

 

(iii)        consummation of a reorganization, merger, consolidation or share
exchange or sale or other disposition of all or substantially all of the assets
of the Company (a “Business Combination”), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Voting Securities, and (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of

the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination, and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or

 

(iv)        approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

 

(d)         The separation payments and benefits described in Sections 1(a) and
1(b), above,

 

are conditioned upon Executive executing a Separation and General Release
Agreement at the time of termination, which releases and waives any and all
claims against the Company and its affiliated persons and companies, and is
acceptable to the Company.

 

(e)          In all other circumstances of separation, including if the
Executive resigns, retires or is terminated for Cause, the Executive shall not
be entitled to receive any separation payments or benefits. For purposes of this
Agreement, “Cause” shall mean the Executive’s:

 

(i)          commission of an act of fraud or dishonesty, the purpose or effect
of which, in the CEO and/or Board’s sole determination, adversely affects the
Company;

 

(ii)         conviction of a felony or a crime involving embezzlement,
conversion of property or moral turpitude (whether by plea of nolo contendere or
otherwise);

 

(iii)        engaging in willful or reckless misconduct or gross negligence in
connection with any property or activity of the Company, the purpose or effect
of which, in the CEO and/or Board’s sole determination, adversely affects the
Company;

 

(iv)        material breach of any of the Executive’s obligations as an employee
or stockholder as set forth in the Company’s Information Security Policies and
Code of Business Conduct, the Confidentiality Agreement or any other agreement
in effect between the Company and the Executive; provided that, in the event
such breach is susceptible to cure, the Executive has been given written notice
by the CEO and/or Board of such breach and 30 days from such notice fails to
cure the breach; or

 

(v)         failure or refusal to perform any material duty or responsibility
under this Agreement or a determination that the Executive has breached his
fiduciary obligations to the Company; provided that, in the event such failure,
refusal or breach is susceptible to cure, the Executive has been given written
notice by the CEO and/or Board of such failure, refusal or breach and 30 days
from such notice fails to cure such failure, refusal or breach.

2.           Notice. The Executive will send all communications to the Company
in writing, to: Executive Vice President of Human Resources, Citi Trends, Inc.,
104 Coleman Blvd., Savannah, Georgia 31408, Fax: (912) 443-3663. All
communications from the Company to the Executive relating to this Agreement
shall be sent to the Executive in writing at his office and home address as
reflected in the Company’s records.

 

3.           Amendment. No provisions of this Agreement may be modified, waived,
or discharged except by a written document signed by a duly authorized Company
officer and the Executive. A waiver of any conditions or provisions of this
Agreement in a given instance shall not be deemed a waiver of such conditions or
provisions at any other time in the future.

 

4.           Choice of Law and Venue. The validity, interpretation,
construction, and performance of this Agreement shall be governed by the laws of
the State of Georgia (excluding any that mandate the use of another
jurisdiction’s laws). Any action to enforce or for breach of this Agreement
shall be brought exclusively in the state or federal courts of the County of
Chatham, City of Savannah.

 

5.           Successors. This Agreement shall be binding upon, and shall inure
to the benefit of, the

 

Executive and Executive’s estate, but the Executive may not assign or pledge
this Agreement or any rights arising under it, except to the extent permitted
under the terms of the benefit plans in which Executive participates. Without
the Executive’s consent, the Company may assign this Agreement to any affiliate
or to a successor to substantially all the business and assets of the Company.

 

6.           Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute the same instrument.

 

7.           Entire Agreement. This Agreement and the Confidentiality Agreement
between the parties constitute the entire agreement between the parties and
supersede any and all prior contracts, agreements, or understandings between the
parties which may have been entered into by Company and the Executive relating
to the subject matter hereof (including, without limitation, the Prior Severance
Agreement), except for the Equity Agreements, which are to remain in full force
and effect. This Agreement may not be amended or modified in any manner except
by an instrument in writing signed by both the Company and the Executive. The
failure of either party to enforce at any time any of the provisions of this
Agreement shall in no way be construed to be a waiver of any such provision or
the right of such party thereafter to enforce each and every such provision. No
waiver of any breach of this Agreement shall be held to be a waiver of any other
or subsequent breach. All remedies are cumulative, including the right of either
party to seek equitable relief in addition to money damages.

 

8.           Employment At-Will Relationship. Executive and the Company agree
that nothing in this Agreement alters the at-will nature of Executive’s
employment relationship with the Company.

9.           Internal Revenue Code Section 409A. Notwithstanding anything in
this Agreement to the contrary, to the extent that any amount or benefit that
would constitute non-exempt “deferred compensation” for purposes of Section 409A
of the Internal Revenue Code (“Section 409A”) would otherwise be payable or
distributable hereunder by reason of a Participant’s termination of employment,
such amount or benefit will not be payable or distributable to the Participant
by reason of such circumstance unless the circumstances giving rise to such
termination of employment meet any description or definition of “separation from
service” in Section 409A of the Code and applicable regulations (without giving
effect to any elective provisions that may be available under such definition).
For purposes of Section 409A, each installment payable under Section 1(a) and
1(b) of this Agreement shall be deemed to be a separate payment.

 

IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and
year set forth below.

 

 

 

 

 

CITI TRENDS, INC.

 

 

 

 

By:

/s/ Bruce D. Smith

 

Name:

Bruce D. Smith

 

Title:

Chief Executive Officer

 

Dated:

10/25/2019

 

 

 

 

 

/s/ Charles Hynes

 

 

Employee Name

 

Dated:

10/25/2019