EXHIBIT 10(n) Employment Agreement dated March 26, 1997 and Amendment to
Employment Agreement dated December 22, 1998 between the
Registrant and Xxxxx X. Xxxxxx
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 26th day of March, 1997, by
and between One Price Clothing Stores, Inc., a Delaware corporation with its
principal place of business in Spartanburg County, South Carolina, hereinafter
referred to as "Employer", and Xxxxx Xxxxxx, a resident of Duxbury, State of
Massachusetts, hereinafter referred to as "Employee".
W I T N E S S E T H:
For and in consideration of the mutual covenants and promises of the
parties hereto and the benefits inuring to the parties hereto, Employer and
Employee agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this Agreement,
Employer employs Employee as its President and Chief Executive Officer, and
Employee accepts such employment with Employer. The employment hereunder shall
commence on the day Employee reports for work at Employer's offices in Duncan,
South Carolina and shall continue for six (6) years from such date unless
terminated as hereinafter provided.
2. DUTIES OF EMPLOYEE. Employee shall serve Employer as its President
and Chief Executive Officer faithfully and to the best of his ability
under the direction of the Board of Directors of Employer. Employee shall
be elected as a Director of the Company immediately following execution of
this agreement and thereafter nominated annually as a Director, commencing
with the annual shareholders meeting in June 1997, so long as this
Agreement is in effect. Employee shall devote his full time and efforts to
his duties as an employee of Employer. As Chief Executive Officer of the
Company, Employee shall have the authority to hire and fire any and all
other officers and employees of the Company, excluding the Chairman of the
Board of Directors.
3. COMPENSATION AND BENEFITS.
(a) Salary. For all services rendered to Employer under this
Agreement, Employer shall pay Employee an annual base salary of $400,000,
which shall automatically increase to $450,000 twelve (12) months after
commencement of employment by Employee and shall thereafter be subject to
annual review, payable in bi-weekly installments in accordance with the usual
payroll practice of Employer, less all legally required deductions.
In the event Employee shall die during the term of this Agreement, his salary
shall be continued only through the end of the bi-weekly pay period
following his death.
(b) Bonus. Employee shall be entitled to a first
year bonus of $150,000, payable $100,000 upon commencing employment
and $50,000 at fiscal 1997 year end; provided, however, if Employee is
not employed by Employer on the first day of fiscal 1998, Employee
shall reimburse Employer the $100,000 paid upon commencement of
employment and shall forfeit the $50,000 due at fiscal 1997 year end.
Starting in fiscal 1998, Employee shall be entitled to receive a bonus
of up to 50% of his base salary if the Employee's personal and the
Company's goals are met in accordance with the Company's bonus program
then in effect.
(c) Special Stock Option. The Board of Directors has
approved the granting to Employee of an option for 300,000 shares of
Employer's common stock at the market price on the date of grant,
which date shall be the earlier of the execution of this Agreement or
the commencement date of employment. Such option shall be exercisable
twenty five (25%) percent on the date of employment and thereafter
exercisable equally over a period of four (4) years at 18.75% annually
commencing twelve (12) months from the date of Employee's employment.
Should Employee die or become permanently disabled prior to the
expiration of a twelve (12) month vesting period, he shall be
considered as employed at the end of such twelve (12) month period
during which he dies or becomes permanently disabled for purposes of
exercise of the option granted hereunder. The options shall not be
transferrable except to members of Employee's immediate family or a
trust for the benefit of members of his family, shall have a ten (10)
year term, contain typical anti-dilution and change in capitalization
provisions, a commitment to register the shares underlying the option
on Form S-8 and appropriate provisions for exercise in the event of
death or disability.
(d) Retirement. So long as Employee is employed
by Employer for a minimum of six (6) years, he shall be entitled at
the end of six (6) years to a $600,000 retirement sum payable over ten
(10) years in equal monthly installments following his retirement from
the Company. For each year that Employee remains employed by Employer
beyond the initial six (6) year period, his retirement sum shall be
increased $100,000 and the aggregate retirement sum due Employee
should he remain employed beyond six (6) years shall be payable over
ten (10) years in equal monthly installments following his retirement
from the Company. If Employee does not remain employed for at least
six (6) years, he shall not be entitled to any retirement sum.
(e)Other Benefits.(i) During the term of his employment, Employee
shall be entitled to participate in all employee benefits as are
customarily provided to its officers by Employer, and to participate
in such other employee benefits as may from time to time be approved
by Employer's Board of Directors.
(ii) Employee shall be entitled to four (4) weeks of
vacation annually.
(iii) Employee may serve as a director of a non-
competing company or otherwise participate in educational, social,
religious or civic organizations so long as such activity does not
interfere with Employee's duties hereunder.
(iv) Employee shall also
be entitled to reimbursement of all reasonable hotel, travel,
entertainment and other business expenses actually incurred by
Employee in the course of Employee's employment hereunder and in
accordance with such policy as may be established for Employer's
Executives, upon submission to Employer of satisfactory documentation
thereof.
(v)Employee shall be indemnified by Employer as an
officer and director to the fullest extent permitted under Delaware
law.
(f) Moving Expenses. Employer shall reimburse Employee for:
(i) Air travel to the Spartanburg/Greenville
area for himself and his wife, which
travel shall be limited to reimbursement for up to a total of fifteen
(15) round trip coach plane tickets for Employee and his wife from
Boston to Greenville/Spartanburg.
(ii) Employer shall obtain a
competitive bid from an independent moving company setting forth the
cost of transportation of Employee's family's household goods, effects
and two (2) automobiles and Employee shall be entitled to receive such
amount in cash grossed up to cover any applicable federal or state
income taxation.
(iii) Upon Employee's reporting for work, Employer
agrees to reimburse Employee for up to three (3) months for the cost
of temporary lodging at a hotel or motel such as Residence Inn, such
reimbursement to cover room only, and not food or other expenses.
(iv) Reasonable closing costs associated with buying a
home, including such expenses as real estate commissions, loan
origination fee, attorney's fees, etc., but excluding discount
points, prorated taxes or insurance. Payment will be made on a
receipt reimbursement or written estimate basis.
(g) Payments Upon Termination. In the event Employee
is terminated by Employer without cause, Employer shall continue
Employee's annual base salary following Employee's termination for
twelve (12) additional months at the rate of base salary in effect at
the date of Employee's termination, payable in accordance with
Employer's usual payroll practices. In addition, Employee shall be
entitled to payments of such base salary for an additional six (6)
months if unemployed at the end of twelve (12) months, provided that
such additional salary payments shall be immediately terminated upon
his employment during such additional six (6) month period. In the
event Employee voluntarily terminates his employment with Employer or
is terminated for cause, he shall be entitled to no additional payment
upon such termination other than any then accrued but unpaid salary,
vacation pay, or other normal reimbursement items. Cause shall be
defined to mean (a) the commission by Employee of any felony, (b) the
commission by Employee of any crime or other activity involving
dishonesty or moral turpitude, (c) the engagement by Employee in any
act of fraud, misappropriation or similar misfeasance, (d) the
engagement by Employee in any activity in contravention of paragraph 4
of this Agreement or otherwise resulting in a material adverse effect
to Employer or (e) repeated non-attentiveness by Employee to his
duties under this Agreement; provided, however, that prior to any
termination based on cause as herein defined, Employee shall have
received written notice from the Board of Directors of Employer
stating in reasonable detail the basis therefor and shall be given an
opportunity to meet with and address the Board regarding the grounds
for such termination.
4. CONFIDENTIAL INFORMATION. Employee
acknowledges that during his employment he will have access to
confidential information belonging to the Employer. Such confidential
information shall consist of all information disclosed to Employee as
a result of employment by Employer not generally known in the retail
business in which Employer is engaged including information concerning
Employer's suppliers, including the costs, quantities and types of
goods supplied, and the identity of such suppliers; information
concerning the Employer's marketing and/or sales strategy or plans;
real estate strategy and expansion plans; all pricing information
relating to merchandise offered for sale by Employer; customers' list
and all information dealing with customers' needs or preferences; all
data processing information; all financial information including
financial statements, financing plans and forecasts, and any and all
information designated or marked as confidential. Employee will not
use or disclose, or otherwise make available, such confidential
information to any other person or entity without prior express
written consent of Employer, either during or following the
termination of Employee's employment. Upon termination of employment,
Employee shall turn over to Employer all property then in his
possession or custody belonging to Employer and shall not retain any
copies or reproductions of correspondence, memoranda, reports,
notebooks, drawings, photographs, or other documents relating in any
way to the affairs of Employer.
5. NON-COMPETITION. (a) Upon
termination of Employee's employment with Employer, whether voluntary
or involuntary and whether with or without cause, Employee will not
for a period of two (2) years from date of such termination conduct or
engage in, directly or indirectly, alone or jointly, with any other
person or corporation as agent, consultant, employee, manager,
purchaser, proprietor, stockholder, co-partner, or otherwise, any type
of womens retail apparel business involving the general retail price
range(s) engaged in by Employer at the time of termination of his
employment. This restriction applies to the continental United States
and any other country or possession of the United States in which
Employer does business. (b) Employee agrees not to employ or cause to
be employed any other employee of Employer for a period of two (2)
years after Employee's termination of employment. This restriction
applies to any type of business which Employee may be engaged in or is
associated with.
6. NOTICES. All notices, consents, changes of address
and other communications (hereinafter referred to as "Notice(s)")
required or permitted to be made under the terms of this Agreement
shall be in writing and shall be (I) personally delivered by an agent
of the relevant Party, or (ii) transmitted by postage prepaid,
certified or registered mail: To Employer: One Price Clothing Stores,
Inc. Xxxx Xxxxxx Xxx 0000 Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
To Employee: Xxxxx Xxxxxx at such address as he
may provide to Employer in writing
cc: Xxxxxxxx Xx. Tashlik
Tashlik Xxxxxxxx & Xxxxxxx P.C.
000 Xxxxxxxx Xxxxxxxxx
Xxxxx Xxxx, X.X. 00000-0000
7. WAIVER OF BREACH. The waiver of Employer of a breach by Employee of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by Employee. No waiver shall be valid unless in writing
and signed by any authorized officer of Employer.
8. ASSIGNMENT. Employee acknowledges that the services to be rendered
by Employee are unique and personal. Accordingly, Employee may not assign any of
Employee's rights or delegate any of Employee's duties or obligations under this
Agreement. The rights and obligations of Employer under this Agreement shall
inure to the benefit of and all be binding upon the Employer, and its successors
and assigns.
9. REPRESENTATIONS AND WARRANTIES. Employee represents and warrants to
Employer that he is under no obligation to or bound by any contract with any
person, corporation or other entity which would prohibit or in any way interfere
with the performance of his duties and obligations to Employer under this
Agreement.
10. SEVERABILITY. If any provision of this Agreement as applied to
either party or to any circumstance shall be adjudged by a court to be invalid
or unenforceable, the same shall in no way affect any other provision of this
Agreement, or the application of each provision to any other fact or
circumstances.
11. ENTIRE AGREEMENT, MODIFICATION OR AMENDMENT. This Agreement
constitutes the entire agreement of the parties with respect to its subject
matter and supersedes all prior oral or written agreements. This Agreement may
be modified or amended from time to time by the mutual agreement of the parties
hereto. No modification or amendment of this Agreement shall be binding upon
either party unless it is in writing and executed by the party sought to be
charged.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
13. CAPTIONS. The captions contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina, without giving effect
to South Carolina's rules of conflicts of law, and regardless of the place or
places of its physical execution and performance.
15. ENFORCEMENT. This Agreement may only be enforced in a court of
competent jurisdiction in Spartanburg County, South Carolina. Employee agrees to
submit to the jurisdiction of a court of competent jurisdiction in Spartanburg
County, South Carolina, whether or not then residing in South Carolina. The
prevailing party shall be entitled to recover from the other party the cost of
any court action, including reasonable attorneys fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Witnesses: One Price Clothing Stores, Inc.
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxx, Xx.(SEAL)
Xxxxx X. Xxxxxx, Xx.
/s/ Xxxxx X. X'Xxxxxx Chairman of Board of Directors
As to Employer
"EMPLOYER"
__________________________ /s/ Xxxxx Kelley_____________(SEAL)
Xxxxx Xxxxxx
As to Employee
"EMPLOYEE"
Amendment to Employment
Agreement Dated as of March 26, 1997
Reference is made to the Employment Agreement dated as of March 26, 1997,
("Agreement") by and between One Price Clothing Stores, Inc. ("Employer") and
Xxxxx X. Xxxxxx ("Employee"). The Agreement is hereby amended to add the
following new provisions relating to termination of employment by Employee
following a "Change of Control" (as hereinafter defined).
1. The following new Section 3 (g) is added to the Agreement:
3. (g). Change of Control - In the event the Employee's employment with the
Company is terminated by the Employer without Cause, or for "Good Reason" by the
Employee, within 24 months after a "Change of Control" of Employer (an
"Employment Event"), then Employer shall pay to Employee, in one lump sum, an
amount equal to thirty-six (36) months severance pay, rather than the maximum of
eighteen (18) months severance pay currently provided for in the Agreement.
Termination for "Good Reason" shall be deemed to have occurred, and the Employee
shall be entitled to the benefits of this provision, provided that: x) the
Employee voluntarily terminates his employment after 30 days written notice to
Employer; y) a "Change of Control" has occurred; and, z) any one or more of the
following events has occurred: (i) the assignment to the Employee of any duties
inconsistent with the highest position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities attained by the
Employee during the period of his employment with the Employer or any action by
the Employer which results in a material diminishment in such position,
authority, duties or responsibilities as were in effect immediately prior to the
Change of Control; (ii) a decrease in the Employee's compensation (including
base salary, bonus or fringe benefits); (iii) relocation by Employer of the
Employee more than 50 miles outside of the Greenville /Spartanburg area of South
Carolina; or, (iv) failure of any successor of the Employer to comply with this
Agreement. In consideration for the benefits conferred to Employee under this
provision, in the absence of an Employment Event the Employee agrees to continue
his employment, following a Change of Control, for the term remaining under the
Agreement.
Should a Change of Control occur, all stock options granted by Employer to
Employee, and not yet expired as of the date of such Change of Control, shall
become immediately exercisable. In such event, the normal expiration date shall
apply to such options, provided, however, that Employee shall have 90 days to
exercise such option following an Employment Event.
In addition, upon the occurrence of an Employment Event, Employee's Loan
Agreement and the underlying Note, by and between Employee and Employer and
dated as of December 31, 1997, as amended effective July 6, 1998, shall be
immediately extinguished, along with any and all accrued interest and any
remaining principal.
Finally, should an Employment Event occur, the entire sum of Employee's
retirement benefits, which would have been otherwise payable at the end of his
six year term (the "Entitlement Date") in 120 consecutive monthly payments of
Five Thousand ($5,000.00) Dollars, shall be deemed immediately due and payable,
without deduction or off-set, provided, however, that in the event an Employment
Event shall occur prior to the Entitlement Date, Employee shall be entitled to
the present value of such deferred payments calculated as follows. The present
value shall be calculated using a discount rate of 8% p.a. and based upon the
period of time between the date of the Employment Event and the Entitlement
Date.
It is the intention of the parties that payments to Employee arising from an
Employment Event pursuant to the Agreement, as amended herein, shall constitute
reasonable compensation for Employee's services to Employer and shall not
constitute "excess parachute payments" within the meaning of Section 280 G of
the Internal Revenue Code of 1986, as amended, and any regulations thereunder.
In the event that the Employer's independent accountants, acting as auditors, on
the date of an Employment Event determine that payments provided for herein
constitute "excess parachute payments," then the compensation payable hereunder
shall be reduced to the point that such compensation shall no longer qualify as
"excess parachute payments." In the event that such "excess parachute payments"
are determined to exist by such auditors and the amount of any extinguishment of
Employee's loan is included in determining the amount of benefits received, then
the auditors shall, to the extent necessary, first reduce benefits attributable
to the extinguishment of Employee's loan with Employer, in order to maximize the
amount of cash to be received by Employee upon the occurrence of an Employment
Event.
For purposes hereof, a "Change of Control" shall be deemed to have occurred
following either of the following two events:
(i) A change in the Board of Directors of the Company, with the
result that the members of the Board, as elected by the
stockholders of the Company on June 10, 1998 ("Incumbent
Directors"), no longer constitute a majority of such Board,
provided that any person who becomes a director and whose
appointment or election was supported by a majority of the
Incumbent Directors shall be considered an Incumbent Director
for purposes hereof; or
(ii) The occurrence of a Section 11 (a) (ii) Event, as defined in
the Shareholder Rights Agreement, dated November 3, 1994,
between Wachovia Bank of North Carolina, N.A., as Rights Agent,
and Employer ("Rights Agreement"), provided however, that for
these purposes the applicable percentage for a Change in
Control to arise from a change in stock ownership shall be 40%
and not 20% as provided for in the Rights Agreement.
This Agreement shall be binding upon any successor to the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of this
22 day of December, 1998.
One Price Clothing Stores, Inc. Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
By: Xxxxxxx X. Xxxxxx "EMPLOYEE"
Its: Chairman of the Board
"EMPLOYER"
