**Exhibit 10.6**

 

**EMPLOYMENT NON-COMPETE, NON-SOLICIT AND CONFIDENTIALITYAGREEMENT**

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**THIS EMPLOYMENTNON-COMPETE, NON-SOLICIT AND CONFIDENTIALITY AGREEMENT (“AGREEMENT”) IS ENTEREDINTO BETWEEN CITI TRENDS, INC. (“COMPANY”), AND JAMES A. DUNN (“EMPLOYEE”), EFFECTIVEAS OF THE 25TH DAY OF MARCH, 2009.**

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For and in consideration of the mutual covenants andagreements contained herein and other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties agree:

 

1.             Employment; Scope ofServices.  Companyshall employ Employee, and Employee shall be employed by Company, as a SeniorVice President, Store Operations (“SVPOP”). Employee shall use his best efforts and shall devote his full time,attention, knowledge and skills to the faithful performance of his duties andresponsibilities as a Company employee. Employee shall have such authority and such other duties andresponsibilities as assigned by the President & Chief OperatingOfficer.  Employee shall comply with Company’spolicies and procedures, shall conduct himself as an ethical businessprofessional, and shall comply with federal, state and local laws.

 

2.             At-Will Employment.  Nothing in this Agreement alters the at-willemployment relationship between Employee and Company.  Employment with Company is “at-will” whichmeans that either Employee or Company may terminate the employment relationshipat any time, with or without notice, with or without cause. The date ofEmployee’s cessation of employment for any reason is the “Separation Date.”

 

3.             Confidentiality.

 

(a)           Employee acknowledges andagrees that (1) the retail sale of value-priced/off-price family apparelis an extremely competitive industry; (2) Company has an ongoing strategyfor expansion of its business in the United States; (3) Company’s majorcompetitors operate throughout the United States and some internationally; and (4) becauseof Employee’s position as SVPOP he will have access to, knowledge of, and beentrusted with, highly sensitive and competitive Confidential Information (asdefined in subsection (b) below) of Company, including without limitationinformation regarding sales margins, purchasing and pricing strategies,marketing strategies, vendors and suppliers, plans for expansion and placementof stores, and also specific information about Company’s districts and stores,such as staffing, budgets, profits and the financial success of individualdistricts and stores.

 

(b)           “Confidential Information”includes technical or sales data, formulas, patterns, compilations, programs,devices, methods, techniques, drawings, processes, financial data andstatements, financial plans and strategies, product plans, sales or advertisinginformation and plans, marketing information and plans, pricing information,the identity or lists of employees, vendors and suppliers of Company, andconfidential or proprietary information of such employees, vendors andsuppliers. Employee acknowledges and agrees that all Confidential Informationis confidential and remains the sole and exclusive property of Company.  Employee agrees that he shall (a) holdall Confidential Information in strictest confidence; (b) not disclose,reproduce, distribute or otherwise disseminate such Confidential Information,and shall protect such Confidential Information from disclosure by or toothers; and (c) make no use of such Confidential Information without theprior 

 

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writtenconsent of Company, except in connection with Employee’s employment withCompany. “Confidential Information” means any and all data and informationrelating to Company which (i) derive independent economic value, actual orpotential, from not being generally known or readily ascertainable by propermeans by other persons who may obtain economic value from their disclosure oruse; and (ii) are the subject of reasonable efforts under thecircumstances to maintain their secrecy.

 

(c)           In the event anyConfidential Information does not qualify for protection as “trade secrets” asdefined in Delaware’s Uniform Trade Secrets Act, then Employee acknowledges andagrees that the Confidential Information shall remain confidential and shallnot be disclosed by Employee during Employee’s employment with Company and fora period of two (2) years following the Separation Date, absent theexpress prior written consent of Company.  Trade secret information shall remain confidential so long as suchinformation qualifies as a trade secret under applicable law.

 

(d)           Employee acknowledges thatCompany has provided or will provide Employee with Company property, includingwithout limitation employee handbooks, policy manuals, price lists, financialreports, and vendor and supplier information,****amongother items. Upon the Separation Date, or upon the request of Company, Employeeshall immediately deliver to Company all property belonging to Company,including without limitation all Confidential Information and any propertyrelated to Company, whether in electronic or other format, as well as anycopies thereof, then in Employee’s custody, control or possession.  Upon the Separation Date, Employee shallprovide Company with a declaration certifying that all Confidential Informationand any other Company property have been returned to Company, that Employee hasnot kept any copies of such items or distributed such items to any third party,and that Employee has otherwise complied with the terms of Section 3 ofthis Agreement.

 

 4.            Covenant Not to Compete.  During Employee’s employment with Company andfor a period of one (1) year following the Separation Date, and regardlessof the reason for separation, Employee shall not compete with Company on behalfof a Competitor in the continental United States**,**orrendering services to such Competitor which are the same or substantiallysimilar to the Services****which Employeerendered to Company while employed by Company as SVPOP.  For purposes of this Section 4, the term“Competitor” shall mean only the following businesses whose primary business isthe sale of value-priced or off-price family apparel, commonly known as: Cato,TJX (including without limitation TJMAXX and Marshalls), and Ross Stores.

 

5.             Covenant Not to Solicit.   During Employee’s employment with Companyand for a period of two (2) years following the Separation Date, andregardless of the reason for separation, Employee agrees not to solicit anyperson or entity who has been a vendor or supplier of merchandise and/orinventory to Company during the two (2) years immediately preceding theSeparation Date or to whom Company is actively soliciting for the provision ofmerchandise and/or inventory (collectively referred to as “Merchandise Vendors”)and with whom Employee had material contact for the purpose of obtainingmerchandise and/or inventory on behalf of any of Company’s Competitors, asdefined in Section 4 of this Agreement. For purposes of this agreement “material contact” means that Employeeeither had access to confidential information regarding the Merchandise Vendor,or was directly involved in negotiations or retention of such MerchandiseVendor.

 

Employeespecifically acknowledges and agrees that, as SVPOP, his duties include,without limitation, establishing purchasing and pricing strategies andpolicies, managing sales margins, involvement in establishing and maintainingvendor relationships, and having contact with and 

 

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confidentialand/or proprietary information regarding Merchandise Vendors. Thenon-solicitation restrictions set forth in this Section 5 are specificallylimited to Merchandise Vendors with whom Employee had contact (whetherpersonally, telephonically, or through written or electronic correspondence)during his employment as SVPOP or about whom Employee had confidential orproprietary information because of his position with Company.

 

# 6.             Covenant Not to Recruit Personnel.  During Employee’semployment with Company and for a period of two (2) years following theSeparation Date, and regardless of the reason for separation, Employee will notrecruit or solicit to hire or assist others in recruiting or soliciting to hire,any employee of Company and will not cause or assist others in causing anyemployee of Company to terminate an employment relationship with Company.

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# 7.             Severability.  If any provision of this Agreement shall beheld invalid, illegal or otherwise unenforceable, in whole or in part, theremaining provisions, and any partially enforceable provisions to the extentenforceable, shall be binding and remain in full force and effect.  Further, each particular prohibition orrestriction set forth in any Section of this Agreement shall be deemed aseverable unit, and if any court of competent jurisdiction or arbitratordetermines that any portion of such prohibition or restriction is against thepolicy of the law in any respect, but such restraint, considered as a whole, isnot so clearly unreasonable and overreaching in its terms as to beunconscionable, the court or arbitrator shall enforce so much of such restraintas is determined by a preponderance of the evidence to be necessary to protectthe interests of Company.

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# 8.             Survival of Covenants.  All rights and covenants contained inSections 3, 4, 5, and 6 of this Agreement, and all remedies relating thereto,shall survive the termination of this Agreement for any reason.

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# 9.             Governing Law.  Citi Trends, Inc. is a Delawarecorporation.  The parties agree thatDelaware law applies in the event of any dispute between them arising out of orrelated to this Agreement.

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# 10.           Acknowledgment of Reasonableness/Remedies/Enforcement.

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# (a)           Employee acknowledges that (1) Company has validinterests to protect pursuant to Sections 3, 4, 5, and 6 of this Agreement; (2) hisbreach of the provisions of Sections 3, 4, 5,****or 6 of this Agreement would result in irreparable injury andpermanent damage to Company; and (3) such restrictions are reasonable andnecessary to protect the interests of Company, are critical to the success ofCompany’s business, and do not cause undue hardship on Employee.

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# (b)           Employee agrees that determining damages in the event of abreach of Sections 3, 4, 5, or 6 by Employee would be difficult and that moneydamages alone would be an inadequate remedy for the injuries and damages whichwould be suffered by Company from such breach. Employee further agrees that injunctive relief is an appropriate remedyfor such breach and that in the event of such breach Company, in addition toand without limiting any other remedies or rights which it may have, may applyto any court of competent jurisdiction and seek interim, provisional,injunctive, or other equitable relief until the arbitration award on such claim(see Section 10(c) below) is rendered or the claim is otherwiseresolved.  Employee may also seekinterim, provisional, injunctive, or other equitable relief for violations ofthis Agreement by Company until the arbitration award on such claim is renderedor the claim is otherwise resolved. Employee and Company waive any requirement that a bond or any othersecurity be posted.

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(c)           Company and Employee agreethat any controversy, dispute, or claim arising out of or related to thisAgreement, including without limitation its enforceability, interpretation,performance or non-performance by any party, or any breach thereof, shall beresolved exclusively through arbitration pursuant to the Employment ArbitrationRules and Mediation Procedures of the American Arbitration Association (“AAA”),Amended and Effective July 1, 2006 (“AAA Rules”).  Where the AAA Rules and this Agreementconflict or where the AAA Rules are silent, this Section 10(c) shallgovern, if applicable.  Company andEmployee agree that this Section 10(c) is an agreement to arbitratepursuant to the Federal Arbitration Act, 9 U.S.C. § 1 *et seq.*,or if that Act is inapplicable for any reason, the arbitration law of the Stateof Delaware.

 

(i)            Any arbitration proceedings pursuant to thisAgreement shall be resolved by a single arbitrator.  The location of any arbitration proceedingsshall be determined in accordance with the AAA Rules.  The arbitrator shall apply the law of theState of Delaware on the substantive claims asserted, and shall have theauthority to award the same remedies, damages, costs, expenses and any otherawards that a court could award.  Thearbitrator shall issue a written award explaining his/her decision, the reasonsfor the decision, and the calculation and reasoning behind any damagesawarded.  The arbitrator’s decision willbe final and binding.  The judgment onthe award rendered by the arbitrator may be entered in any court havingjurisdiction thereof.  Company will pay (a) AAAadministrative fees except that for arbitration claims originally assertedby Employee, Employee will pay to Company a fee that is comparable to thefiling fee being charged by the United States District Court for the Districtof Delaware for the filing of a civil action at the time Employeeinitiates arbitration; (b) the Arbitrator’s fee and reasonable travelexpenses; and (c) the cost of renting an arbitration hearing room, ifnecessary.  Each party shall pay its ownexperts’ and/or attorneys’ fees unless the arbitrator awards reasonable experts’and/or attorneys’ fees to Employee.

 

(ii)           Consistent with Section 7 of this Agreement,should a court of competent jurisdiction or arbitrator determine that the scopeof any provision of this Section 10(c) is too broad to be enforced aswritten, Company and Employee intend that the court or arbitrator reform theprovision to such narrower scope as is determined to be reasonable andenforceable.

 

(iii)          Should this Section 10(c) not be invokedby the parties or should an arbitrator or court of competent jurisdictiondetermine that the parties’ agreement to arbitrate is unenforceable,****then the parties agree that Delaware shall be the forum forany dispute arising out of or related to this Agreement.

 

# 11.           Miscellaneous.  This Agreement constitutes the entireagreement between the parties and supersedes any and all prior contracts,agreements, or understandings between the parties which may have been enteredinto by Company and Employee relating to the subject matter hereof.  ** **This Agreement may not be amendedor modified in any manner except by an instrument in writing signed by bothCompany and Employee.  The failure ofeither party to enforce at any time any of the provisions of this Agreementshall in no way be construed to be a waiver of any such provision or the rightof such party thereafter to enforce each and every such provision.  No waiver of any breach of this Agreementshall be held to be a waiver of any other or subsequent breach.  All remedies are cumulative, including theright of either party to seek equitable relief in addition to money damages.

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**EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE HAS CAREFULLY READTHIS AGREEMENT AND KNOWS AND UNDERSTANDS ITS CONTENTS, THAT HE ENTERS INTO THISAGREEMENT KNOWINGLY AND VOLUNTARILY, AND THAT HE INDICATES HIS CONSENT BYSIGNING THIS FINAL PAGE.**

 

# INWITNESS WHEREOF, the parties hereto have executed this Agreement under seal asof the day and year first above written.

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|   | Citi Trends, Inc.               |
|--------|--------------------------------------|
|   |                                 |
|   |                                 |
|   | By:                                  |  /s/ R. Edward Anderson |   |
|   | R. Edward Anderson                   |
|   | Chairman and Chief Executive Officer |
|   |                                 |
|   |                                 |
|   | /s/ James A. Dunn                    | (L.S.) |
|   | Employee Signature                   |
|   |                                 |
|   | Employee Residence  Address:         |
|   |                                 |
|   |                                 |

 

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