**Exhibit 10.8**

** **

**SEVERANCEAGREEMENT**

** **

This SEVERANCE AGREEMENT(this “Agreement”) made this 25th day of March 2009, is by andbetween Citi Trends, Inc., a Delaware corporation (the “Company”),and R. David Alexander, Jr., an individual (the “Executive”).

 

WHEREAS, the Company and theExecutive are also parties to an Employment Non-Compete, Non-Solicit andConfidentiality Agreement (the “Confidentiality Agreement”) and certainrestricted stock award and stock option agreements (collectively, the “EquityAgreements”) which are to remain in full force and effect;

 

NOW, THEREFORE, inconsideration of the mutual agreements set forth herein, the parties agree asfollows:

 

1.                                       **Termination Payments andBenefits.**  Regardless of the circumstances of theExecutive’s termination, Executive shall be entitled to payment when due of anyearned and unpaid base salary, expense reimbursements and vacation days accruedprior to the termination of Executive’s employment, and other unpaid vestedamounts or benefits under Company retirement and health benefit plans, and, asapplicable, under Equity Agreements in accordance with their terms, and to noother compensation or benefits.  If (i) theCompany terminates the Executive’s employment without Cause, or (ii) theExecutive terminates employment with the Company within twelve (12) monthsfollowing the occurrence of a Change in Control, provided that within suchperiod, either Executive’s job duties have been materially and permanentlydiminished or the Executive’s compensation has been materially decreased, then,in the case of either (i) or (ii) above, the Company will provide theExecutive with separation payments of twelve (12) months base salary atExecutive’s base salary rate at the time of Executive’s termination, to be paidin twenty-six (26) regular bi-weekly pay periods beginning on the first payperiod following the termination of the Executive and Executive’s execution ofthe Separation and General Release Agreement referenced below.

 

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

 

(1)                                  the acquisitionby any individual, entity or group (within the meaning of Section 13(d)(3) or14(d)(2) of the Securities Exchange Act of 1934, as amended (the “1934Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3promulgated under the 1934 Act) of 50% or more of the combined voting power ofthe then outstanding voting securities of the Company entitled to votegenerally in the election of directors (the “Outstanding Company VotingSecurities”); provided, however, that for purposes of this subsection (1),the following acquisitions shall not constitute a Change of Control: (i) anyacquisition by a Person who is on the date of this Agreement the beneficialowner of 50% or more of the Outstanding Company Voting Securities, (ii) anyacquisition directly from the Company, (iii) any acquisition by theCompany, (iv) any acquisition by any employee benefit plan (or relatedtrust) sponsored or maintained by the Company or any corporation controlled bythe Company, or (v) any acquisition by any corporation pursuant to atransaction which complies with clauses (i), (ii) and (iii) ofsubsection (3) of this definition; or

 

----

 

(2)                                  individualswho, as of the date of this Agreement, constitute the Board of Directors of theCompany (the “Incumbent Board”) cease for any reason to constitute atleast a majority of the Board of Directors of the Company; provided, however,that any individual becoming a director subsequent to the Effective Date whoseelection, or nomination for election by the Company’s shareholders, wasapproved by a vote of at least a majority of the directors then comprising theIncumbent Board shall be considered as though such individual were a member ofthe Incumbent Board, but excluding, for this purpose, any such individual whoseinitial assumption of office occurs as a result of an actual or threatenedelection contest with respect to the election or removal of directors or otheractual or threatened solicitation of proxies or consents by or on behalf of aPerson other than the Board of Directors of the Company; or

 

(3)                                  consummation ofa reorganization, merger, consolidation or share exchange or sale or otherdisposition of all or substantially all of the assets of the Company (a “BusinessCombination”), in each case, unless, following such Business Combination, (i) allor substantially all of the individuals and entities who were the beneficialowners of the Outstanding Company Voting Securities immediately prior to suchBusiness Combination beneficially own, directly or indirectly, more than 50% ofthe combined voting power of the then outstanding voting securities entitled tovote generally in the election of directors of the corporation resulting from suchBusiness Combination (including, without limitation, a corporation which as aresult of such transaction owns the Company or all or substantially all of theCompany’s assets either directly or through one or more subsidiaries) insubstantially the same proportions as their ownership, immediately prior tosuch Business Combination of the Outstanding Company Voting Securities, and (ii) noPerson (excluding any corporation resulting from such Business Combination orany employee benefit plan (or related trust) of the Company or such corporationresulting from such Business Combination) beneficially owns, directly orindirectly, 20% or more of the combined voting power of the then outstandingvoting securities of such corporation except to the extent that such ownershipexisted prior to the Business Combination, and (iii) at least a majorityof the members of the board of directors of the corporation resulting from suchBusiness Combination were members of the Incumbent Board at the time of theexecution of the initial agreement, or of the action of the Board, providingfor such Business Combination; or

 

(4)                                  approval by theshareholders of the Company of a complete liquidation or dissolution of theCompany.

 

These separation payments are conditioned upon Executiveexecuting a Separation and General Release Agreement at the time of terminationwhich releases and waives any and all claims against the Company and itsaffiliated persons and companies, and is acceptable to the Company.

 

In all other circumstances of separation, including ifthe Executive resigns, retires or is terminated for Cause, the Executive shallnot be entitled to receive any separation payments.  For purposes of this Agreement, “Cause”shall mean the Executive’s:

 

(1)                                  commission of an act of fraud ordishonesty, the purpose or effect of which, in the CEO and/or Board’s soledetermination, adversely affects the Company;

 

2

----

 

(2)                                  conviction of a felony or a crimeinvolving embezzlement, conversion of property or moral turpitude (whether byplea of nolo contendere or otherwise);

 

(3)                                  engaging in willful or recklessmisconduct or gross negligence in connection with any property or activity ofthe Company, the purpose or effect of which, in the CEO and/or Board’s soledetermination, adversely affects the Company;

 

(4)                                  material breach of any of the Executive’sobligations as an employee or stockholder as set forth in the Company’s Information Security Policiesand Code of Business Conduct, the Confidentiality Agreement or any otheragreement in effect between the Company and the Executive; provided that, inthe event such breach is susceptible to cure, the Executive has been givenwritten notice by the CEO and/or Board of such breach and 30 days from suchnotice fails to cure the breach; or

 

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

 

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

 

3.                                       **Amendment.** No provisions of this Agreement may be modified, waived, or dischargedexcept by a written document signed by a duly authorized Company officer andthe Executive.  A waiver of anyconditions or provisions of this Agreement in a given instance shall not bedeemed 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 thisAgreement shall be governed by the laws of the State of Georgia (excluding anythat mandate the use of another jurisdiction’s laws).  Any action to enforce or for breach of thisAgreement shall be brought exclusively in the state or federal courts of theCounty of Chatman, 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 orpledge this Agreement or any rights arising under it, except to the extentpermitted under the terms of the benefit plans in which Executiveparticipates.  Without the Executive’sconsent, the Company may assign this Agreement to any affiliate or to asuccessor to substantially all the business and assets of the Company.

 

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

 

3

----

 

7.                                       **Entire Agreement.** This Agreement and the Confidentiality Agreement between the partiesconstitute the entire agreement between the parties and supersede any and allprior contracts, agreements, or understandings between the parties which mayhave been entered into by Company and the Executive relating to the subjectmatter hereof.  This Agreement may not beamended or modified in any manner except by an instrument in writing signed byboth the Company and the Executive.  Thefailure of either party to enforce at any time any of the provisions of thisAgreement shall in no way be construed to be a waiver of any such provision orthe right of such party thereafter to enforce each and every suchprovision.  No waiver of any breach ofthis Agreement shall be held to be a waiver of any other or subsequentbreach.  All remedies are cumulative,including the right of either party to seek equitable relief in addition tomoney damages.

 

8.                                       **Employment At-WillRelationship. **Executive and the Company agree thatnothing in this Agreement alters the at-will nature of Executive’s employmentrelationship with the Company.

 

IN WITNESS WHEREOF, the parties hereto have set theirhands as of the day and year first written above.

 
|   | CITI TRENDS, INC.                |
|--------|----------------------------------|
|   |                             |   |
|   |                             |   |
|   | By:                              | /s/ R. Edward Anderson |
|   | Name:                            | R. Edward Anderson |
|   | Title:                           | Chairman and Chief Executive Officer |
|   |                             |   |
|   |                             |   |
|   | /s/ R. David Alexander, Jr. |
|   | R. David Alexander, Jr.     |

 

4

----