**EXHIBIT 10.26**

 

**EMPLOYMENT AGREEMENT**

 

ThisEMPLOYMENT AGREEMENT (this “Agreement”) made this 5th day of December 2008, is by and betweenCiti Trends, Inc., a Delaware corporation (the “Company”), and DavidAlexander, an individual (the “Executive”).

 

WHEREAS, theCompany and the Executive are also parties to an Employment Non-Compete, Non-Solicitand Confidentiality Agreement (the “Confidentiality Agreement”) which isto remain in full force and effect; and

 

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

 

1.                                       **Term of Employment.** The Executive’s employment shall commence with the execution of this Agreementand the Confidentiality Agreement and shall continue, pursuant to the terms ofthis Agreement, on an at-will basis, until either the Executive or the Companyterminates the employment relationship for any or no reason, with or withoutCause (as defined in Section 4 below). If Executive terminates the Agreement, he agrees to provide the Companywith a minimum of thirty (30) days written notice.

 

2.                                       **Nature of Duties.  The Executiveshall, during his employment** hereunder, be the Company’s Presidentand Chief Operating Officer.  The Executive shall devote his fullbusiness time and effort to the performance of his duties to the Company.

 

3.                                       **Compensation.**

 

A.                                   TheCompany shall pay the Executive a base salary at an annual rate of $500,000, minuslegally required withholdings, which may be adjusted from time to time at thesole discretion of the Chief Executive Officer (“CEO”) and/or Board ofDirectors of the Company (the “Board”). The Executive’s base salary shall be paid in conformity with the Company’ssalary payment practices that are generally applicable to similarly situatedCompany executives.  The Executive willbe eligible for a performance compensation review in March 2010.

 

B.                                     TheExecutive shall be eligible for consideration of a discretionary bonus underthe Company’s Executive Management Level Bonus Plan, which is currently 100% ofbase salary with the opportunity to achieve up to 200% of the bonus planpercent.  The company will guarantee 20%(i.e., $100,000) of Executive’s first year bonus which covers FY2009.  This bonus is payable no later than April 2,2010.   The Executive must be employed withThe Company at the time the bonus is paid to be eligible for a payout.  The Company may revise or eliminate theExecutive Management Level Bonus Plan at any time without notice at its solediscretion.

 

C.                                     Uponthe Executive’s start date with the Company, the Executive will be awardedrestricted stock valued at $500,000, fully vested in four years at the rate of25% per year.

 

D.                                    The Executive willbe eligible for the following benefits as an executive management employee:

 

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·                                          401(k) profitsharing account;

 

·                                          EquityAwards: Consideration for Annual Restricted Stock Awards based on companyperformance and personal performance achievements;

 

·                                          Health,dental, life and disability insurance; and

 

·                                          Vacation:  4 weeks per year.

 

These benefits set forth in Section 3.D. are offered at theCompany’s sole discretion and may be modified or eliminated by the Company atany time without notice.

 

E.                                      TheExecutive will be reimbursed up to $150,000 in relocation costs.  Additionally, costs that are taxable will begrossed up for federal and state tax purposes. We estimate that the gross up will total approximately $80,000.  If Executive voluntarily terminates hisemployment for any reason within 24 months of his hire date, Executive mustimmediately pay back to the Company all reimbursed relocation costs.

 

4.                                       **Termination Payments and Benefits.**  Regardless of the circumstances of theExecutive’s termination, he shall be entitled to payment when due of any unpaidbase salary, expense reimbursements and vacation days accrued prior to thetermination of his employment, and other unpaid vested amounts or benefitsunder Company pension and health benefit plans, and to no other compensation orbenefits.  If the Company terminates theExecutive’s employment without Cause or as a result of a Change in Control, theCompany will provide the Executive with separation payments of twelve (12)months base salary, to be paid in Twenty-six (26) regular bi-weekly pay periodsbeginning on the first pay period following the termination of the Executive.  For purposes of this Agreement, “Change inControl” shall mean the acquisition by any person (as defined under section409A of the Code), or more than one person acting as a group (as defined undersection 409A of the Code), of stock of the Company that, together with thestock of the Company held by such person or group, constitutes more than fiftypercent (50%) of the total fair market value or total voting power of the stockof the Company and either Executive’s job duties have been materially andpermanently diminished or the Executive’s compensation has been materiallydecreased.  These separation payments areconditioned upon Executive executing a Separation and General Release Agreementat the time of termination which is acceptable to the Company and the Executive.

 

In all other circumstances, including if the Executiveresigns, retires or is terminated for Cause, the Executive shall not beentitled to receive such separation payments. For purposes of this Agreement, “Cause” shall mean the Executive’s:

 

(1)                                 commissionof a willful act of fraud or dishonesty, the purpose or effect of which, in theCEO and/or Board’s sole determination, materially and adversely affects theCompany;

 

(2)                                 convictionof a felony or a crime involving embezzlement, conversion of property or moralturpitude (whether by plea of nolo contendere or otherwise);

 

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(3)                                  engagingin willful or reckless misconduct or gross negligence in connection with anyproperty or activity of the Company, the purpose or effect of which, in the CEOand/or Board’s determination, materially and adversely affects the Company;

 

(4)                                  materialbreach of any of the Executive’s obligations as an employee or  stockholder as set forth in the Company’sInformation Security Policies and Code of Business Conduct; provided that theExecutive has been given written notice by the CEO and/or Board of such breachand 30 days from such notice fails to cure the breach; or

 

(5)                                  failureor refusal to perform any material duty or responsibility under this Agreementor a determination that the Executive has breached his fiduciary obligations tothe Company; provided that the Executive has been given written notice by the CEOand/or Board of such failure, refusal or breach and 30 days from such noticefails to cure such failure, refusal or breach.

 

5.                                       **Notice.**  The Executivewill send all communications to the Company in writing, to: Citi Trends, Inc.,104 Coleman 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.

 

6.                                       **Amendment.**  Noprovisions of this Agreement may be modified, waived, or discharged except by awritten document signed by a duly authorized Company officer and theExecutive.  A waiver of any conditions orprovisions of this Agreement in a given instance shall not be deemed a waiverof such conditions or provisions at any other time in the future.

 

7.                                       **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.

 

8.                                       **Successors.**  ThisAgreement shall be binding upon, and shall inure to the benefit of, theExecutive and his estate, but the Executive may not assign or pledge thisAgreement or any rights arising under it, except to the extent permitted underthe terms of the benefit plans in which he participates.  Without the Executive’s consent, the Companymay assign this Agreement to any affiliate or to a successor to substantiallyall the business and assets of the Company.

 

9.                                       **Validity.**  Theinvalidity or unenforceability of any provision of this Agreement shall notaffect the validity or enforceability of any other provision of this Agreement,which shall remain in full force and effect.

 

10.                                 **Counterparts.**  ThisAgreement may be executed in one or more counterparts, each of which shall bedeemed to be an original but all of which together shall constitute the sameinstrument.

 

11.                                 **Entire Agreement.**  ThisAgreement and the Confidentiality Agreement between the parties constitute theentire agreement between the parties and supersede any and all prior

 

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contracts, agreements, or understandings between theparties which may have been entered into by Company and the Executive relatingto the subject matter hereof.  ThisAgreement may not be amended or modified in any manner except by an instrumentin writing signed by both Company and the Executive.  The failure of either party to enforce at anytime any of the provisions of this Agreement shall in no way be construed to bea waiver of any such provision or the right of such party thereafter to enforceeach and every such provision.  No waiverof any breach of this Agreement shall be held to be a waiver of any other orsubsequent breach.  All remedies arecumulative, including the right of either party to seek equitable relief inaddition to money damages.

 

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/ David Alexander |
|   | DAVID ALEXANDER     |

 

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