UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|x| Annual Report Pursuant To Section 13 or 15(d) Of The Securities Exchange
Act of 1934 (No Fee Required) For the fiscal year ended January 29, 2000
OR
| | Transition Report Pursuant To Section 13 or 15(d) Of The Securities Exchange
Act of 1934 (No Fee Required) For the transition period from
Commission file number 0-15385
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ONE PRICE CLOTHING STORES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 57-0779028
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(State or other jurisdiction of organization) (IRS Employer Identification No.)
1875 East Main Street
Highway 290, Commerce Park
Duncan, South Carolina 29334
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 433-8888
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $0.01 Par Value
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of April 14, 2000: common stock, $0.01 Par Value - $28,840,796
The number of shares outstanding of the issuer's classes of common stock as of
April 14, 2000: common stock, $0.01 Par Value - 10,499,091 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement to be filed with respect to the annual
shareholders meeting to be held June 7, 2000 are incorporated by reference into
Part III.
<PAGE>
PART I
ITEM 1. BUSINESS
General
One Price Clothing Stores, Inc. (the "Registrant" or the "Company") operates a
chain of off-price specialty retail stores offering a wide variety of first
quality, contemporary, in-season apparel and accessories for the entire family.
During fiscal 1997, the Company expanded its merchandise offerings to include
additional categories and styles of merchandise to be sold at price points other
than its previous uniform $7 price point. This merchandise mix expansion was
designed to meet customer demand for items that the Company could not profitably
offer for sale at a retail price of $7. The Company purchases merchandise at
heavily discounted prices in large quantities from a broad mix of manufacturers,
jobbers, importers and other suppliers. The Company is able to acquire such
merchandise at heavily discounted prices because of imbalances between supply
and demand, order cancellations and vendor needs for liquidity. The Company is
able to take advantage of these circumstances because of its willingness to
purchase large quantities and to buy goods later in the season than many other
retailers. This purchasing strategy allows the Company to obtain favorable
prices and to react quickly to seasonal fashion preferences and weather
conditions affecting consumer spending. It is the Company's policy to offer only
first quality apparel; the Company does not purchase "seconds" or irregular
merchandise from its suppliers.
Company History and Organization
The Company opened its first store in August 1984. On February 9, 1994, a
wholly-owned subsidiary of the Company, One Price Clothing of Puerto Rico, Inc.,
was incorporated in Puerto Rico. It commenced operations on May 28, 1994. On
January 31, 1997, a wholly-owned subsidiary of the Company, One Price Clothing
- -- U.S. Virgin Islands, Inc. was incorporated in the U. S. Virgin Islands. It
commenced operations on March 20, 1997. On June 11, 1997, a wholly-owned
subsidiary, One Price Realty, Inc., was incorporated in South Carolina, to own
the Company's corporate offices and distribution center facilities in Duncan,
South Carolina. As used herein, unless the context otherwise indicates, the
"Company" refers to (i) One Price Clothing Stores, Inc., a Delaware corporation,
(ii) the immediate predecessor of One Price Clothing Stores, Inc., a South
Carolina corporation of the same name, (iii) the South Carolina corporation's
predecessor, a North Carolina corporation organized in 1984 under the name J. K.
Apparel, Inc., (iv) One Price Clothing of Puerto Rico, Inc., (v) One Price
Clothing - U.S. Virgin Islands, Inc., and (vi) One Price Realty, Inc.
Industry Segments
The Company operates in only one industry segment. All of the Company's assets
and significant revenues and pre-tax earnings relate to retail sales of apparel
and accessories to the general public through Company-operated stores. Other
than operations in Puerto Rico and the U.S. Virgin Islands, the Company had no
operations outside the continental United States at the end of fiscal 1999 and
no export sales. Reference is hereby made to the consolidated financial
statements included in Part II for information about the Company's assets, net
sales and profitability.
Operations
The Company operates a chain of off-price specialty retail stores offering a
wide variety of first quality, contemporary, in-season apparel and accessories
for the entire family. Prior to fiscal 1997, this merchandise was offered at the
uniform retail price of $7. The Company currently offers most of its merchandise
at or below a base price of $8 and offers certain additional categories and
styles priced higher than $8 when the Company believes that such merchandise is
clearly desired by the Company's customers. Such higher priced merchandise --
including denim, dresses, coordinated sets, sweaters and heavier jackets -- is
offered primarily within the $10 to $15 price range. The Company currently
offers men's apparel in approximately 220 stores.
The Company registered the trademark "One Price" with the United States Patent
and Trademark Office in June 1990 for a ten-year period with the option to renew
prior to expiration. The Company has applied for renewal for this trademark.
This trademark was accorded incontestable status by the United States Patent and
Trademark Office. The Company registered the trademark "OPC Fashions" with the
United States Patent and Trademark Office in January 1999 for a ten-year period
with the option to renew prior to expiration. The Company considers the "One
Price" and "OPC Fashions" trademarks to be valuable and significant to the
conduct of its business. The Company has also registered "Ropa de Ninos a un
Precio" and "OPC" in the United States. In accordance with the Company's plans
to enter the New England market under a new name during fiscal 2000, the Company
has applied for registration of the "OPC BestPrice!," "BestPrice!" and
"BestPrice! Fashions" trademarks.
The One Price Store. The Company's typical store has approximately 3,400 square
feet, of which approximately 2,600 square feet is devoted to selling space. The
Company's current strategy is to open stores with a somewhat larger selling area
than this average and the Company expects to continue this approach. All of the
Company's stores are located in leased facilities with convenient access to
adequate parking or public transportation. At January 29, 2000, approximately
80% of the Company's stores were located in strip shopping centers and the
remaining stores were located in central business districts or malls. The
Company does not franchise its stores.
The Company's stores are typically located in communities with populations of at
least 40,000 people, as well as in large metropolitan areas. Most of the
Company's stores are open seven days a week and typical hours of operation are
from 10:00 a.m. until 7:00 p.m. or 9:00 p.m., Monday through Saturday, with
shorter hours on Sunday. A typical store employs a full-time manager, one or two
full-time assistant managers and up to ten additional part-time sales
associates.
The Company's stores are designed for customer convenience and for attractive
presentation of merchandise. All apparel is displayed on hangers and is
organized by classification, style and color, with in-store signage and graphics
that promote a pleasant shopping environment and customer convenience.
The Company's store operations department is headed by a Senior Vice President
of Stores who is assisted by regional and district sales managers. Each of the
six regional sales managers is responsible for approximately nine districts.
Each district sales manager is responsible for approximately 12 stores and
visits each store in his or her district on a regular basis to provide
assistance in promoting sales, training, store layout and merchandise
presentation, and to monitor adherence to the Company's operational and
management policies.
Store Locations and Expansion. At January 29, 2000, the Company operated 636
stores in 27 states, the District of Columbia, Puerto Rico and the U.S. Virgin
Islands. The Company opened 31 stores, relocated or expanded 20 stores and
closed 13 underperforming stores in fiscal 1999. The Company anticipates that it
will open approximately 50 new stores in fiscal 2000. The Company will continue
to monitor the individual performance of all stores. Currently, the Company
foresees that it will close approximately 15 underperforming stores in fiscal
2000.
Purchasing. The Company's practice is to offer value to its customers by selling
desirable, first quality apparel and accessories at considerably lower prices
than generally would be available from department stores and other specialty
retailers. The Company purchases its merchandise at heavily discounted prices
and on favorable terms from manufacturers, jobbers, importers and other vendors.
The Company typically is able to purchase merchandise from vendors at
substantially discounted prices as a result of the following circumstances: the
inability of a manufacturer or importer to dispose of merchandise through
regular channels, the discontinuance of merchandise because of changes in color
or style, over-production by manufacturers, cancellation of orders by
conventional retail stores, the need of catalog retailers to dispose of
inventories of unordered catalog merchandise, and manufacturers' need to utilize
excess capacity or import quota or need for liquidity. The Company's ability and
willingness to purchase in large quantities and its reputation for reliability
in the industry provide the Company with purchasing advantages. The Company buys
its merchandise opportunistically which includes the purchase of merchandise
close to and during each selling season, later than department stores and other
specialty retailers. This purchasing strategy permits the Company to react to
fashion trends and opportunistic developments during a selling season. The
Company also purchases selected merchandise in advance of a selling season.
During fiscal 1999, the Company purchased merchandise from approximately 850
vendors, including manufacturers, jobbers, importers and other vendors. No
vendor accounted for more than 10% of the Company's total purchases for the
fiscal year. The number of vendors in any particular fiscal year fluctuates due
to the Company's opportunistic buying strategy.
Although there can be no assurance that the Company will be able to continue to
acquire sufficient quantities of first quality merchandise at such low prices
and on favorable terms, the Company continues to add new vendors and believes
that adequate sources of first quality merchandise are available at appropriate
price levels. The Company does not maintain long-term or exclusive purchase
commitments or arrangements with any vendor.
Corporate Offices and Distribution Center. The Company's corporate offices and
distribution center are located in Duncan, South Carolina. With the exception of
functions performed by certain merchandise buyers (including those based in the
Company's New York City office), regional directors of real estate, district and
regional sales managers, loss prevention investigators and field audit personnel
and certain administrative functions performed in Puerto Rico, substantially all
purchasing, accounting and other administrative functions are centralized at the
corporate offices.
Merchandising. The Company's merchandising strategy emphasizes contemporary,
in-season apparel and accessories for juniors, misses, plus-sized women,
children and men. The Company currently offers men's merchandise in
approximately 220 stores. The Company's target customers are value- and
fashion-conscious women, primarily in lower- and middle-income brackets. The
Company offers only first quality merchandise and emphasizes the value of its
merchandise compared to similar merchandise sold elsewhere at higher prices.
Women's apparel sold by the Company includes contemporary sportswear such as
knit tops, blouses, shirts, pants, shorts, skirts, dresses, sweaters and
blazers. In fiscal 1997, the Company began offering additional categories of
merchandise such as outerwear, denim and better dresses. Over the last three
fiscal years, the proportions of most categories of merchandise the Company has
sold have remained consistent and are as follows: As a percentage of net sales,
plus-sized apparel sales were 21%; accessory sales (such as scarves, watches,
hair accessories, handbags, jewelry, fragrances and specialty gifts) were 12%;
and children's apparel sales were 8%. As a percentage of net sales, women's
(juniors and misses) apparel sales decreased to 57% in fiscal 1999 compared to
59% in both fiscal 1998 and fiscal 1997. Men's apparel sales, established during
the fourth quarter of fiscal 1998, comprised 2% of net sales in fiscal 1999.
Inventory Monitoring. The Company's management information systems, featuring
point-of-sale cash registers and a computerized inventory management system,
permit management to review each store's sales and inventory on a daily and
weekly basis, thereby enabling the Company to tailor its purchasing strategies
and merchandise shipments to stores based on customer demand.
Distribution Systems. Substantially all merchandise is shipped directly from
vendors to the Company's distribution center where the goods are inspected,
processed and sent to the Company's stores. Substantially all shipments to
stores are made by common carriers.
Change in Fiscal Year
In March 1996, the Company elected to change its fiscal year from the Saturday
nearest December 31 to the Saturday nearest January 31, beginning in fiscal
1996. This change was made to conform the Company's fiscal calendar to the
seasonal patterns it experiences, as well as to enhance comparability of its
fiscal quarterly and annual results with those of other retail companies. The
Company's tax year, however, ends on the Saturday nearest December 31.
Seasonality
The Company has historically produced higher sales and operating results in the
first quarter (February - April) and second quarter (May - July) compared to the
third quarter (August - October) and fourth quarter (November - January).
Management is unable to predict if this trend will continue in the future.
However, management is developing merchandise strategies designed to increase
sales volume in the third and fourth quarters.
Working Capital Requirements
The Company's revolving credit facility, which provides up to $37,500,000 of
borrowing capacity (including a letter of credit sub-facility of up to
$25,000,000), expires in March 2001. Borrowings under the facility are
collateralized by all assets owned by the Company during the term of the
agreement (other than the land, buildings, fixtures and improvements
collateralizing the mortgage loan discussed below). The Company's twenty-year
mortgage agreement with a commercial bank of $8,125,000 is secured by the land,
buildings, fixtures and improvements located at the Company's Duncan, South
Carolina corporate offices and distribution center. The Company also has an
agreement, as amended, with a commercial bank to provide a separate letter of
credit facility of up to $8,000,000 which expires on the earlier of June 2000 or
termination of the Company's revolving credit facility with its primary lender.
These lending agreements contain certain covenants and terms described in Items
7 and 8 of this report.
Merchandise inventories are typically purchased on credit or, for certain
merchandise inventories from foreign suppliers, by the use of letters of credit.
All such purchases are paid in United States dollars; thus, the Company is not
subject to foreign currency risks. As a result of the Company's opportunistic
buying strategy and to ensure that an adequate supply of merchandise is
available for shipment to its stores, the Company may, at times, invest a
significant amount of its working capital in merchandise inventories.
Revenues from retail sales are recognized at the time of the sale. The Company
accepts cash, checks and certain major credit cards. All stores offer a liberal
exchange and return policy. A reserve for estimated merchandise returns is
recorded in the period that the merchandise is sold.
Customers
No material part of the business of the Company is dependent upon a single
customer or a few customers.
Competition
The retail apparel industry is highly competitive. In order to compete
effectively, the Company is dependent upon its ability to purchase merchandise
at substantial discounts. The Company competes with department stores, specialty
stores, discount stores, other off-price retailers and manufacturer-owned outlet
stores, many of which are owned by large national or regional chains with
substantially greater resources than the Company. There can be no assurance that
other retailers with substantially greater financial resources than the Company
will not adopt a purchasing and marketing concept similar to that of the
Company. Management believes that the primary competitive factors in the retail
apparel industry are price, quality, fashion content, variety of merchandise,
site selection and cost of operation. The Company believes that it is well
positioned in all of these areas to compete in its markets.
Environmental Factors
The Company is not aware of any federal, state or local environmental
regulations that will materially affect its operations or competitive position
or require material capital expenditures.
Employees
At January 29, 2000, the Company had approximately 4,300 employees, of which
approximately 57% were full-time employees. The Company, like other retailers,
experiences a high turnover rate of full-time and part-time store employees but
has not experienced excessive difficulties in hiring qualified personnel. None
of the Company's employees are covered by a collective bargaining agreement and
management believes that the Company's relationship with its employees is good.
Private Securities Litigation Reform Act of 1995
See "Private Securities Litigation Reform Act of 1995" in Item 7.
<PAGE>
ITEM 2. PROPERTIES
The Company leases all of its store locations. At January 29, 2000, the Company
had 636 stores operating in 27 states, the District of Columbia, Puerto Rico and
the U. S. Virgin Islands. The Company leases its stores under operating leases
generally with initial terms of five years and with one to two renewal option
periods of five years each. Leases typically contain kickout provisions based on
an individual store's annual sales volume and/or the shopping center's
occupancy. The leases generally provide for increased rents resulting from
increases in operating costs and property taxes. Certain of the leases provide
contingent or percentage rentals based upon sales volume, and other stores are
leased on a month-to-month basis. To date, the Company has not experienced
difficulty in obtaining leases for suitable locations for its stores on
satisfactory terms. Approximately 132 existing store leases expire, or have
initial lease terms containing lessee renewal options that may be exercised,
during fiscal 2000. Management believes that the Company will not experience a
significant increase in lease expense as a result of exercising renewal options
or negotiating additional lease terms for such locations. The following is a
list of store locations as of January 29, 2000:
<TABLE>
<S> <C>
NUMBER OF
STATE STORES
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Alabama............................................................. 13
Arizona............................................................. 11
Arkansas............................................................ 5
California.......................................................... 57
Florida............................................................. 68
Georgia............................................................. 39
Illinois............................................................ 30
Indiana............................................................. 10
Kansas.............................................................. 3
Kentucky............................................................ 4
Louisiana........................................................... 18
Maryland............................................................ 16
Michigan............................................................ 17
Mississippi......................................................... 12
Missouri............................................................ 17
North Carolina...................................................... 31
New Jersey.......................................................... 10
New Mexico.......................................................... 5
New York............................................................ 13
Ohio................................................................ 16
Oklahoma............................................................ 7
Pennsylvania........................................................ 20
Puerto Rico......................................................... 30
South Carolina...................................................... 34
Tennessee........................................................... 21
Texas............................................................... 97
U.S. Virgin Islands................................................. 2
Virginia............................................................ 22
Washington, DC...................................................... 4
Wisconsin........................................................... 4
----
TOTAL STORES........................................................ 636
====
</TABLE>
The Company's corporate offices and distribution center, occupying approximately
500,000 square feet, are located in Duncan, South Carolina on approximately 75
acres which are owned by the Company. The Company's facilities are expected to
be able to support the Company's planned growth over the next several years. The
Company's borrowings under its mortgage loan facility are secured by the
Company's real property located at its corporate offices including land,
buildings, fixtures and improvements. Borrowings under the credit agreement with
the primary lender are collateralized by all assets owned by the Company during
the term of the agreement other than the land, buildings, fixtures and
improvements collateralizing the mortgage loan.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is a defendant in legal actions involving claims
arising in the normal course of its business. The Company believes that, as a
result of its legal defenses and insurance arrangements, none of these actions
presently pending, even if decided adversely, would have a material adverse
effect on its financial position, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the Company's fiscal year.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The Company's common stock is traded under the symbol ONPR in the National
Market System of NASDAQ. As of April 14, 2000, there were approximately 400
shareholders of record.
Since its inception, the Company has never paid cash dividends. The Company's
credit agreement contains covenants which, among other things, prohibit the
Company from paying dividends. Currently, the Board of Directors intends to
continue its policy of retaining earnings for operations, debt repayment and
expansion of the business.
The quarterly high and low sales prices of the Company's common stock as quoted
by NASDAQ are shown below.
Fiscal Year Ended Fiscal Year Ended
January 29, 2000 January 30, 1999
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High Low High Low
First 5 3/4 3 11/16 3 3/16 1 1/8
Second 5 9/16 3 5/8 4 1/2 2 7/16
Third 5 1/16 3 1/16 4 7/16 2 3/8
Fourth 3 31/32 2 5/32 5 3/4 3 7/8
<PAGE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected consolidated financial data for the
Company for each of the five fiscal years ended December 30, 1995 through
January 29, 2000, including the 5-week period ended February 3, 1996 ("the
Transition Period"), resulting from the Company's change in fiscal year end. The
selected consolidated financial data as of January 29, 2000 and January 30, 1999
and for the fiscal years ended January 29, 2000, January 30, 1999 and January
31, 1998, are extracted from the Company's audited consolidated financial
statements and should be read in conjunction with the consolidated financial
statements and the notes thereto included under Item 8 of this Form 10-K and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included under Item 7 of this Form 10-K. Selected consolidated
financial data as of and for all other periods were derived from audited
consolidated financial statements not contained within this Form 10-K.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Transition Fiscal Year
Fiscal Year Ended Period Ended Ended
--------------------------------------------------------------------------------
January 29, January 30, January 31, February 1, February 3, December 30,
2000 1999 1998 1997 1996 1995
------------ ----------- ----------- ----------- --------------- ---------------
Dollars in thousands except per share amounts
1 Net sales $ 336,847 328,059 302,285 298,986 15,022 294,692
2 Restructuring (credit) charge $ -- (385) 2,265 -- -- --
3 Income (loss) before income taxes and
cumulative effect of changes in
accounting principles $ 7,809 5,497 (13,493) (1,994) (9,091) (2,595)
4 Income (loss) before cumulative effect
of changes in accounting principles $ 7,074 4,383 (11,320) (1,267) (5,634) (1,304)
5 Cumulative effect on prior years of
changes in accounting principles $ -- -- -- -- (1,090) --
6 Net income (loss) $ 7,074 4,383 (11,320) (1,267) (6,724) (1,304)
7 Current assets $ 57,064 55,387 48,331 61,891 52,517 35,990
8 Long-term assets $ 38,891 37,440 39,781 39,076 41,663 43,374
9 Total assets $ 95,955 92,827 88,112 100,967 94,180 79,364
10 Current liabilities $ 40,921 44,741 44,080 48,722 40,669 18,594
11 Long-term debt $ 7,582 7,755 7,915 4,868 6,447 6,579
12 Deferred income tax liability $ 42 -- -- 718 818 1,482
13 Other noncurrent liabilities $ 2,809 2,914 3,095 2,317 1,089 828
14 Shareholders' equity $ 44,601 37,417 33,022 44,342 45,157 51,881
15 Stores opened (closed) during the
period, net # 18 (42) 15 (43) (13) 60
16 Stores operating at period-end # 636 618 660 645 688 701
17 Number of full and part-time employees
at period-end # 4,300 3,900 4,269 4,105 4,574 4,841
18 Weighted average number of common
shares (000) - diluted # 10,580 10,494 10,436 10,401 10,335 10,314
19 Number of common shares outstanding at
period-end (000) # 10,489 10,440 10,436 10,436 10,335 10,335
20 Diluted income (loss) per common share
before cumulative effect of changes
in accounting principles $ 0.67 0.42 (1.08) (0.12) (0.55) (0.13)
21 Cumulative effect on prior years per
common share of changes in
accounting principles $ -- -- -- -- (0.10) --
22 Diluted net income (loss) per common
share $ 0.67 0.42 (1.08) (0.12) (0.65) (0.13)
23 Cash dividends declared per common
share $ -- -- -- -- -- --
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL SUMMARY
The following table sets forth, for the three most recent fiscal years, certain
financial statement elements expressed as a percentage of net sales:
<TABLE>
<S> <C> <C> <C>
Fiscal Year Ended
-------------------------------------------------------------
January 29, 2000 January 30, 1999 January 31, 1998
--------------- --------------- ----------------
PERCENTAGE OF NET SALES
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 64.0% 64.6% 66.8%
----- ----- -----
Gross margin 36.0% 35.4% 33.2%
----- ----- -----
Selling, general and administrative expenses 23.3% 23.5% 25.8%
Restructuring (credit) charge 0.0% (0.1)% 0.7%
Store rent and related expenses 8.2% 8.1% 8.7%
Depreciation and amortization expense 1.6% 1.6% 1.7%
Interest expense 0.6% 0.6% 0.7%
----- ----- -----
33.7% 33.7% 37.6%
----- ----- -----
Income (loss) before income taxes 2.3% 1.7% (4.4)%
Provision for (benefit from) income taxes 0.2% 0.4% (0.7)%
----- ----- ------
Net income (loss) 2.1% 1.3% (3.7)%
===== ===== ======
Stores in operation at period-end 636 618 660
===== ===== ======
</TABLE>
FISCAL YEAR ENDED JANUARY 29, 2000 (FISCAL 1999) COMPARED TO FISCAL YEAR ENDED
JANUARY 30, 1999 (FISCAL 1998)
- ------------------------------
Net sales in fiscal 1999 increased 2.7% to $336.8 million compared to $328.1
million in fiscal 1998. In fiscal 1999, the Company achieved an increase in net
sales while operating an average of 10 fewer stores than in fiscal 1998. The
increase in net sales is primarily due to the Company's strategy of continuing
to offer high-quality, in-season fashionable merchandise, combined with
increasing marketing efforts, including signage, direct mail and other
advertising, as well as opening larger stores with more desirable locations. In
fiscal 1999, comparable store sales increased 2.5% for the year compared to
fiscal 1998. Comparable stores are those stores in operation at least 18 months
and there were 602 such stores at January 29, 2000.
During fiscal 1999, the Company opened 31 stores, relocated or expanded 20
stores and closed 13 underperforming stores. In accordance with a decision to
limit new store openings under the restructuring plan announced in the fourth
quarter of fiscal 1997, the Company opened 7 stores during fiscal 1998,
relocated 5 stores and closed 49 underperforming stores.
Gross margin as a percentage of net sales was 36.0% in fiscal 1999 compared to
35.4% in fiscal 1998. This increase in gross margin as a percentage of net sales
was primarily achieved through a combination of improved original markups and
the Company's merchandise management strategies which emphasized a more
profitable product mix. Distribution costs as a percentage of net sales remained
flat year-over-year due to higher levels of net sales and the Company
maintaining levels of efficiencies achieved in its distribution center.
Merchandising costs slightly increased as a percentage of net sales due to
adding resources consistent with the Company's strategy of matching merchandise
to regional customer preferences.
Selling, general and administrative ("SG&A") expenses decreased to 23.3% as a
percentage of net sales in fiscal 1999 from 23.5% in fiscal 1998. This decrease
in SG&A expenses as a percentage of net sales was primarily achieved through the
leverage provided by higher year-over-year net sales, as well as a favorable
fourth quarter 1999 adjustment to match the Company's workers' compensation
liability with annual actuarial estimates. Total SG&A expenses increased in
dollars year-over-year primarily due to increases in salaries and wages in the
Company's stores. These increases were due to an increase in the average hourly
wage rate, which was partially offset by a decrease in average store hours.
Store rent and related expenses increased to 8.2% of net sales in fiscal 1999
compared to 8.1% of net sales in fiscal 1998 due to the increase in the
Company's average store rent and related expenses. Average store rent and
related expenses increased by 5.6% in fiscal 1999 compared to fiscal 1998. The
increase in average store rent and related expenses is primarily due to the
Company's store expansion strategy of opening larger, higher volume stores which
typically are more costly sites with higher rents while closing older,
underperforming stores which generally have lower average rent costs.
Depreciation and amortization expense as a percentage of net sales was leveraged
at 1.6% of net sales in both fiscal 1999 and fiscal 1998 due to the increase in
year-over-year net sales. Depreciation and amortization expense in dollars
increased in fiscal 1999 when compared to fiscal 1998 due primarily to the
year-over-year increase in capital expenditures.
Interest expense was leveraged at 0.6% of net sales in both fiscal 1999 and
fiscal 1998. Interest expense in dollars decreased in fiscal 1999 when compared
to fiscal 1998. This decrease was primarily due to lower average borrowings and
lower average interest rates in fiscal 1999 versus fiscal 1998, which was
supported by the increase in cash flows from operating activities.
The effective income tax provision rate for fiscal 1999 was 9.4% compared to
20.3% in fiscal 1998. The decrease in the Company's effective income tax rate
was primarily attributable to the favorable adjustment of the remaining deferred
tax asset valuation allowance in fiscal 1999 compared to the smaller favorable
valuation allowance adjustment in fiscal 1998. Management estimates that the
Company's effective income tax rate will be approximately 39% in fiscal 2000.
OUTLOOK
During fiscal 2000, the Company will continue to focus its efforts on improving
sales in existing stores while maintaining its margin and cost-containment
targets. As part of this strategy, the Company plans to continue to monitor the
merchandise mix and demographic profiles of its stores. The Company also plans
to increase the size of certain highly productive stores. The Company plans to
open approximately 50 new stores in fiscal 2000, including approximately 15 to
20 stores in New England. As a new market for the Company, the Company plans to
operate under the name of "BestPrice! Fashions" in New England and any other new
market areas. During the first quarter of fiscal 2000, the Company has begun
tests of this new name in two existing markets. The Company also expects to
close approximately 15 underperforming stores in fiscal 2000.
Average store rent and related expenses are expected to increase in fiscal 2000
due to the location and the increase in the average square footage of stores
planned to open in fiscal 2000 and the closing of older, lower-volume stores.
Management will seek to leverage these increases through improved average store
sales volume. Also, the Company has approximately 132 existing leases that
expire or have initial lease terms containing lessee renewal options which may
be exercised in fiscal 2000. Management believes that the Company will not
experience a material increase in aggregate store rents as a result of renewal
options or negotiating new lease terms for such locations.
Net income per diluted share for fiscal 1999 was $0.67; however, the application
of a tax rate similar to that which the Company expects in fiscal 2000 would
have resulted in net income per diluted share of $0.46.
FISCAL YEAR ENDED JANUARY 30, 1999 (FISCAL 1998) COMPARED TO FISCAL YEAR ENDED
JANUARY 31, 1998 (FISCAL 1997)
- ------------------------------
Net sales in fiscal 1998 increased 8.5% to $328.1 million compared to $302.3
million in fiscal 1997. In fiscal 1998, the Company achieved an increase in net
sales while operating an average of 27 fewer stores than in fiscal 1997. The
increase in net sales was primarily due to merchandising and presentation
strategies implemented during the fourth quarter of fiscal 1997. These
strategies included (i) clarifying price points, (ii) increasing emphasis on
offering highly desirable, in-season fashionable merchandise and (iii) improving
merchandise displays, window graphics and in-store signage. In fiscal 1998,
comparable store sales increased 9.1% for the year compared to fiscal 1997.
Comparable stores are those stores in operation at least 18 months and there
were 571 such stores at January 30, 1999.
In accordance with a decision to limit new store openings under the
restructuring plan announced in the fourth quarter of fiscal 1997, the Company
opened 7 stores during fiscal 1998, relocated 5 stores and closed 49
underperforming stores. The Company opened 64 stores during fiscal 1997,
relocated 13 stores and closed 49 underperforming stores.
Gross margin as a percentage of net sales was 35.4% in fiscal 1998 compared to
33.2% in fiscal 1997. This increase in gross margin as a percentage of net sales
was primarily due to a significant decrease in the amount of markdowns taken in
fiscal 1998 versus fiscal 1997. The decrease in markdowns was the result of
improved sales at competitive original price points and better transition of
merchandise between selling seasons. The Company also lowered its distribution
and merchandising costs as a percentage of net sales when compared to fiscal
1997 through higher levels of sales and efficiencies achieved in its
distribution center.
Selling, general and administrative expenses decreased in dollars and as a
percentage of net sales in fiscal 1998 versus fiscal 1997. SG&A expenses were
23.5% of net sales in fiscal 1998 compared to 25.8% of net sales in fiscal 1997.
The significant decrease in SG&A expenses was primarily due to achieving
cost-containment goals, including reducing total payroll expense, established in
the Company's restructuring plan announced in the fourth quarter of fiscal 1997.
Although total payroll decreased, average salaries and wages in the Company's
stores increased slightly in fiscal 1998 compared to fiscal 1997. This increase,
affecting primarily part-time associates, was due to an increase in the average
hourly wage rate, which was partially offset by a decrease in average store
hours.
During the fourth quarter of fiscal 1997, the Company announced a restructuring
plan which identified 75 low-volume, underperforming stores for closing. A
substantial number of these stores were closed by January 30, 1999. Certain of
these stores were no longer under consideration for closing during fiscal 1998
due to a significant improvement in performance since the announcement of the
plan. As a result, during the fourth quarter of fiscal 1998, the Company
recorded a favorable adjustment to pre-tax income of $385,000 to reverse the
estimated cost, recorded in fiscal 1997, of closing these stores.
Store rent and related expenses were 8.1% of net sales in fiscal 1998 compared
to 8.7% in fiscal 1997. Store rent and related expenses for fiscal 1998
decreased as a percentage of net sales due to the leverage provided by higher
year-over-year sales as well as aggressively closing underperforming stores
during fiscal 1998. Average store rent and related expenses increased by 5% in
fiscal 1998 compared to fiscal 1997. The increase in average store rent and
related expenses was primarily due to the Company's store expansion strategy of
opening larger, higher volume stores, and thus leasing more costly sites with
higher rents while closing older, underperforming stores which generally have
lower average rent costs.
Depreciation and amortization expense as a percentage of net sales was 1.6% in
fiscal 1998 compared to 1.7% in fiscal 1997. The decrease in depreciation and
amortization expense was primarily due to the leverage provided by higher
year-over-year sales as well as a decrease in the number of stores open during
fiscal 1998 versus fiscal 1997.
Interest expense was 0.6% of net sales in fiscal 1998 compared to 0.7% of net
sales in fiscal 1997 due to the increase in net sales year over year. Interest
expense in dollars increased in fiscal 1998 when compared to fiscal 1997. This
increase was primarily due to higher average borrowings in fiscal 1998 versus
fiscal 1997 in order to maintain levels of inventory necessary to support the
increased sales.
The effective income tax provision rate for fiscal 1998 was 20.3% compared to
the effective income tax benefit rate of 16.1% in fiscal 1997. The change in the
Company's effective income tax rate was primarily attributable to a favorable
valuation allowance adjustment for fiscal 1998 compared to fiscal 1997. Because
management was not assured that certain net operating loss carryforwards, credit
carryforwards and net cumulative temporary differences for U.S. federal and
state income tax purposes would be fully utilized or realized, valuation
allowances were provided for a portion of the net deferred income tax asset.
INFLATION
During its three most recent fiscal years, the Company believes that the impact
of inflation has not been material to its financial condition or results of
operations. Occasionally, the Company may experience slight increases in the
average purchase price per unit of merchandise; however, such increases also
reflect the impact of an increase in the quality of goods purchased in addition
to minimal inflationary factors.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary needs for liquidity and capital have been to
fund its new store expansion and the related growth in merchandise inventories.
The Company has obtained credit facilities which, together with cash provided by
operations, are expected to meet the liquidity and capital needs during the
period of the agreements.
The Company's credit facilities consist of a revolving credit facility to meet
the Company's short-term liquidity needs, a mortgage loan collateralized by the
Company's corporate offices and distribution center and letter of credit
facilities to accommodate the Company's needs to purchase merchandise
inventories from foreign sources. Collectively, the Company's credit facilities
contain certain financial and non-financial covenants with which the Company was
in compliance at January 29, 2000. A summary of the Company's credit facilities
follows. Please refer to Note B to the Consolidated Financial Statements
contained within this Annual Report on Form 10-K for a more complete description
of the Company's credit facilities.
The Company has a $37,500,000 revolving credit facility (including a $25,000,000
letter of credit sub-facility) with its primary lender through March 2001.
Borrowings under the agreement are collateralized by all assets owned by the
Company during the term of the agreement (other than land, buildings, fixtures
and improvements collateralizing the mortgage loan discussed below). Maximum
borrowings under the revolving credit facility and utilization of the letter of
credit facility are based on a borrowing base formula determined with respect to
eligible inventory as defined in the agreement. At January 29, 2000, the Company
had approximately $10.4 million of excess availability under the borrowing base
formula.
The maximum and average amounts outstanding during fiscal 1999 and fiscal 1998
and amounts outstanding at the end of such periods for the revolving credit
facility are disclosed in Note B to the Consolidated Financial Statements in
Item 8 of this document.
The Company has a twenty-year mortgage loan agreement with a commercial bank
payable in 240 consecutive equal monthly installments through July 2017. At
January 29, 2000, the mortgage loan had an unpaid balance of $7,755,000. The
agreement is secured by the Company's real property located at its corporate
offices including land, buildings, fixtures and improvements.
The Company has an $8,000,000 letter of credit facility with a commercial bank
through the earlier of June 2000 or termination of the revolving credit facility
with the Company's primary lender. Letters of credit issued under the agreement
are collateralized by inventories purchased using such letters of credit.
The Company's weighted average interest rate for all borrowings was 8.2% and
8.6% in fiscal 1999 and fiscal 1998, respectively. The Company had outstanding
letters of credit for the purchase of merchandise inventories totaling
approximately $4,375,000 and $6,613,000 at January 29, 2000 and January 30,
1999, respectively.
Net cash provided by operating activities for fiscal 1999, 1998 and 1997 was
$8,477,000, $3,923,000 and $8,660,000, respectively. The increase in net cash
provided by operating activities in fiscal 1999 compared to fiscal 1998 is
primarily the result of an improvement in the Company's year-over-year results
of operations and a decrease in merchandise inventories. The decrease in net
cash provided by operating activities in fiscal 1998 compared to fiscal 1997 is
primarily the result of an increase in merchandise inventories, and a decrease
in noncash charges including deferred income taxes and costs associated with
disposal of property and equipment, and partially offset by an improvement in
the Company's year-over-year results of operations, including a favorable
adjustment in fiscal 1998 to the estimated costs of fiscal 1997's restructuring
plan.
At January 29, 2000, total merchandise inventories decreased 3% to $44,125,000
compared to $45,639,000 at January 30, 1999. The decrease in total merchandise
inventories was primarily attributable to lower levels of merchandise in-transit
to the Company's distribution center from its vendors, but was partially offset
by an increase in in-store inventories due to an increased number of stores at
January 29, 2000. Presently, the Company is relying more heavily on sourcing
inventory through opportunistic purchases from domestic vendors. In fiscal 1999,
import purchases (including freight and duty) were 9% of total purchases
compared to 13% in fiscal 1998. The level and source of inventories are subject
to fluctuations because of the Company's opportunistic buying strategy and
prevailing business conditions.
Net cash used in investing activities for fiscal 1999, 1998 and 1997 was
$6,981,000, $3,151,000 and $7,134,000, respectively, and was primarily used for
leasehold improvements and equipment for new stores opened each year, as well as
information technology expenditures including software and hardware upgrades.
Net cash of $1,376,000 was used in financing activities in fiscal 1999 primarily
as a result of the net repayments of the revolving credit facility and the
mortgage loan facility, as well as the payment of capital lease obligations. Net
cash of $181,000 was used in financing activities in fiscal 1998 primarily as a
result of the repayment of the Company's mortgage loan facility and the payment
of capital lease obligations which, combined, exceeded the net borrowings from
the Company's revolving credit facilities. Net cash of $2,256,000 was used in
financing activities in fiscal 1997 primarily as a result of a net repayment of
the Company's revolving credit facility which exceeded the net borrowings from
the Company's mortgage loan and term loan facilities.
In fiscal 2000, the Company plans to spend approximately $8.7 million on capital
expenditures, most of which will be used to open new stores, remodel,
re-fixture, expand and relocate existing stores, and invest in information
technology. The Company's liquidity requirements in the foreseeable future are
expected to be met principally through cash provided by operations and the use
of its credit facilities. If deemed by management to be in the best interest of
the Company, additional long-term debt, equity, capital leases or other
permanent financing may be considered.
MARKET RISK AND RISK MANAGEMENT POLICIES
The Company is exposed to market risk from changes in interest rates affecting
its credit arrangements, including a variable-rate revolving credit facility and
a fixed-rate mortgage loan agreement, which may adversely affect its results of
operations and cash flows. The Company seeks to minimize its interest rate risk
through its day-to-day operating and financing activities. The Company does not
engage in speculative or derivative financial or trading activities.
A hypothetical 100 basis point adverse change (increase) in interest rates
relating to the Company's revolving credit facility for fiscal 1999 and fiscal
1998 would have decreased pre-tax income by approximately $97,000 and $132,000
for the respective time periods. Due to the fixed-rate nature of the mortgage
loan agreement, a hypothetical 100 basis point adverse change (decrease) in
interest rates would have increased the estimated fair value of the Company's
mortgage loan agreement by approximately $543,000 and $627,000 at January 29,
2000 and January 30, 1999, respectively, but would have had no effect on the
Company's results of operations or cash flows for fiscal 1999 and fiscal 1998.
EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") 133, "Accounting for Derivative Instruments and
Hedging Activities," effective, as amended, for years beginning after June 15,
2000. This new standard requires recognition of all derivatives, including
certain derivative instruments embedded in other contracts, as either assets or
liabilities in the statement of financial position and measurement of those
instruments at fair value. The Company is in the process of reviewing the
effect, if any, that SFAS 133 will have on the Company's consolidated financial
statements and disclosures.
Private Securities Litigation Reform Act of 1995
All statements contained in this Annual Report on Form 10-K as to future
expectations and financial results including, but not limited to, statements
containing the words "believes," "anticipates," "expects," and similar
expressions, should be considered forward-looking statements subject to the safe
harbor created by the Private Securities Litigation Reform Act of 1995. The
Company cautions readers of this Annual Report on Form 10-K that a number of
important factors could cause the Company's actual results in fiscal 2000 and
beyond to differ materially from those expressed in such forward-looking
statements. These factors include, but are not limited to, general economic
conditions and consumer demand; consumer preferences; weather patterns;
competitive factors, including pricing and promotional activities of
competitors; the impact of excess retail capacity and the availability of
desirable store locations on suitable terms; whether or not the Company's
merchandising strategy to offer alternative categories of merchandise at
alternative price points will increase sales and operating results or increase
and attract new customers; whether or not offering for sale new categories of
merchandise including, but not limited to, menswear, will increase sales and
operating results; the availability, selection and purchasing of attractive
merchandise on favorable terms; credit availability, including adequate levels
of credit support provided to certain of the Company's vendors by factors and
insurance companies; import risks, including potential disruptions and duties,
tariffs and quotas on imported merchandise; regulatory matters, including
legislation affecting wage rates; whether or not the computer systems of the
Company and its major suppliers will continue to function without disruptions
due to the "Year 2000" issue; and other factors described in the Company's
filings with the Securities and Exchange Commission from time to time. The
Company does not undertake to publicly update or revise its forward-looking
statements even if experience or future changes make it clear that any projected
results expressed or implied therein will not be realized.
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See "Market Risk and Risk Management Policy" in Item 7.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
One Price Clothing Stores, Inc.
Duncan, South Carolina
We have audited the accompanying consolidated balance sheets of One Price
Clothing Stores, Inc. and subsidiaries (the "Company") as of January 29, 2000
and January 30, 1999, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the three fiscal years in the
period ended January 29, 2000. Our audits also included the financial statement
schedule listed in the Index at Item 14 (d). These financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of January 29, 2000
and January 30, 1999, and the results of its operations and its cash flows for
each of the three fiscal years in the period ended January 29, 2000, in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
March 7, 2000
<PAGE>
<TABLE>
<S> <C> <C>
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 29, January 30,
2000 1999
------------------ -----------------
Assets
CURRENT ASSETS
Cash and cash equivalents $ 2,538,000 $ 2,418,000
Miscellaneous receivables, net of allowance for doubtful accounts
of $94,000 (1999) and $80,000 (1998) 1,867,000 1,526,000
Merchandise inventories 44,125,000 45,639,000
Federal and state income taxes receivable 2,164,000 1,303,000
Prepaid expenses 4,744,000 3,733,000
Deferred income taxes 1,626,000 768,000
------------------ -------------------
TOTAL CURRENT ASSETS 57,064,000 55,387,000
PROPERTY AND EQUIPMENT, net 34,155,000 33,446,000
OTHER ASSETS 4,736,000 3,994,000
------------------ -------------------
$ 95,955,000 $ 92,827,000
================== ===================
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable $ 23,390,000 $ 24,750,000
Current portion of long-term debt and revolving credit facility 11,352,000 11,998,000
Accrued salaries and wages 2,056,000 3,118,000
Accrued employee benefits 1,861,000 2,338,000
Other accrued and sundry liabilities 2,262,000 2,537,000
------------------ -------------------
TOTAL CURRENT LIABILITIES 40,921,000 44,741,000
------------------ -------------------
LONG-TERM DEBT 7,582,000 7,755,000
------------------ -------------------
OTHER NONCURRENT LIABILITIES 2,851,000 2,914,000
------------------ -------------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, par value $0.01 - authorized and
unissued 500,000 shares
Common stock, par value $0.01 - authorized 35,000,000 shares;
issued and outstanding 10,489,091 (1999) and 10,439,531 (1998) shares 105,000 104,000
Additional paid-in capital 11,625,000 11,465,000
Retained earnings 32,922,000 25,848,000
Less: unearned compensation - restricted stock awards (51,000) --
------------------ ------------------
44,601,000 37,417,000
------------------ ------------------
$ 95,955,000 $ 92,827,000
================== ==================
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal Year Ended
--------------------------------------------------------------
January 29, January 30, January 31,
2000 1999 1998
----------------- ------------------ -----------------
NET SALES $ 336,847,000 $ 328,059,000 $ 302,285,000
Cost of goods sold 215,731,000 211,893,000 201,901,000
----------------- ------------------ -----------------
GROSS MARGIN 121,116,000 116,166,000 100,384,000
Selling, general and administrative expenses 78,361,000 77,158,000 78,077,000
Restructuring (credit) charge -- (385,000) 2,265,000
Store rent and related expenses 27,711,000 26,653,000 26,415,000
Depreciation and amortization expense 5,340,000 5,115,000 5,131,000
Interest expense 1,895,000 2,128,000 1,989,000
----------------- ------------------ -----------------
113,307,000 110,669,000 113,877,000
----------------- ------------------ -----------------
INCOME (LOSS) BEFORE INCOME TAXES 7,809,000 5,497,000 (13,493,000)
Provision for (benefit from) income taxes 735,000 1,114,000 (2,173,000)
----------------- ------------------ -----------------
NET INCOME (LOSS) $ 7,074,000 $ 4,383,000 $ (11,320,000)
================= ================== =================
NET INCOME (LOSS) PER COMMON SHARE -
BASIC $ 0.68 $ 0.42 $ (1.08)
================= ================== =================
NET INCOME (LOSS) PER COMMON SHARE -
DILUTED $ 0.67 $ 0.42 $ (1.08)
================= ================== =================
Weighted average number of common shares
outstanding - basic 10,461,925 10,437,102 10,435,531
================= ================== =================
Weighted average number of common shares
outstanding - diluted 10,579,852 10,493,816 10,435,531
================= ================== =================
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Restricted
Common Stock Additional Stock Awards-
-------------------- Paid-in Retained Unearned
Shares Amount Capital Earnings Compensation Total
------------ ---------- ------------ ------------ ----------- ------------
Balance at February 1, 1997 10,435,531 $104,000 $11,453,000 $32,785,000 -- $44,342,000
Net loss -- -- -- (11,320,000) -- (11,320,000)
------------ ---------- ------------ ------------ ----------- ------------
Balance at January 31, 1998 10,435,531 104,000 11,453,000 21,465,000 -- 33,022,000
Stock options exercised 4,000 -- 11,000 -- -- 11,000
Tax effect of options exercised -- -- 1,000 -- -- 1,000
Net income -- -- -- 4,383,000 -- 4,383,000
------------ --------- ------------ ------------ ----------- ------------
Balance at January 30, 1999 10,439,531 104,000 11,465,000 25,848,000 -- 37,417,000
Stock options exercised 29,560 1,000 80,000 -- -- 81,000
Tax effect of options exercised -- -- 20,000 -- -- 20,000
Awards of restricted stock 20,000 -- 60,000 -- $ (60,000) --
Amortization of restricted stock -- -- -- -- 9,000 9,000
Net income -- -- -- 7,074,000 -- 7,074,000
------------ --------- ------------ ------------ ----------- ------------
Balance at January 29, 2000 10,489,091 $105,000 $11,625,000 $32,922,000 $ (51,000) $44,601,000
============ ========= ============ ============ =========== ============
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended
---------------------------------------------------
January 29, January 30, January 31,
2000 1999 1998
---------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 7,074,000 $ 4,383,000 $ (11,320,000)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 5,340,000 5,115,000 5,131,000
Provision for supplemental post-retirement benefits 109,000 113,000 128,000
Deferred income taxes (816,000) (768,000) 1,217,000
Loss on disposal of property and equipment 547,000 52,000 2,325,000
Decrease in other noncurrent assets 59,000 276,000 382,000
(Decrease) increase in other noncurrent liabilities (10,000) 18,000 435,000
Changes in operating assets and liabilities:
(Increase) decrease in miscellaneous receivables and
prepaid expenses (1,281,000) 1,039,000 (1,460,000)
Decrease (increase) in merchandise inventories 1,514,000 (10,131,000) 12,863,000
(Increase) decrease in federal and state income taxes
receivable (841,000) 3,335,000 (400,000)
(Decrease) increase in accounts payable and other
liabilities (3,218,000) 491,000 (641,000)
---------------- -------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 8,477,000 3,923,000 8,660,000
---------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (5,981,000) (2,438,000) (6,346,000)
Purchases of other noncurrent assets (930,000) (782,000) (564,000)
(Issuance of) repayment of related party loans (70,000) 69,000 (224,000)
---------------- -------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (6,981,000) (3,151,000) (7,134,000)
---------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayment of) net borrowings from revolving credit facility (659,000) 321,000 (3,469,000)
Proceeds from long term debt borrowings -- -- 9,572,000
Repayment of long term debt (160,000) (147,000) (7,957,000)
Debt financing costs incurred (78,000) (42,000) (259,000)
Decrease in amount due to related parties (178,000) (98,000) (47,000)
Payment of capital lease obligations (382,000) (226,000) (96,000)
Proceeds from exercise of stock options 81,000 11,000 --
---------------- -------------- --------------
NET CASH USED IN FINANCING ACTIVITIES (1,376,000) (181,000) (2,256,000)
---------------- -------------- --------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 120,000 591,000 (730,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF FISCAL YEAR 2,418,000 1,827,000 2,557,000
---------------- -------------- --------------
CASH AND CASH EQUIVALENTS AT END OF FISCAL YEAR $ 2,538,000 $ 2,418,000 $ 1,827,000
================ ============== ==============
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 1,758,000 $ 2,121,000 $ 1,766,000
Income taxes paid 2,388,000 677,000 86,000
Noncash financing activities - capital leases 506,000 106,000 537,000
Issuance of restricted stock awards 60,000 -- --
See notes to consolidated financial statements
</TABLE>
<PAGE>
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 29, 2000
NOTE A - Operations and Summary of Significant Accounting Policies
Business: One Price Clothing Stores, Inc. and subsidiaries (the "Company")
operates a chain of off-price specialty retail stores offering a wide variety of
first quality, contemporary, in-season apparel and accessories for the entire
family. Accordingly, the Company operates in one business segment. Prior to
fiscal 1997, this merchandise was offered at the uniform retail price of $7. The
Company currently offers most of its merchandise at or below a base price of $8
and offers certain additional categories and styles at prices higher than $8
when such merchandise is clearly desired by the Company's customers. Such higher
priced merchandise is currently offered at prices up to $15. At January 29,
2000, the Company operated 636 stores in 27 states, the District of Columbia,
Puerto Rico and the U.S. Virgin Islands.
Fiscal Year: The Company's fiscal year ends on the Saturday nearest January 31.
All periods presented herein consist of 52 weeks.
Principles of Consolidation: The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Accounting Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Significant
estimates and assumptions made in the preparation of these financial statements
include the Company's allowance for doubtful accounts, reserves for inventory,
accrual for workers' compensation and accrual for group health insurance.
Comprehensive Income: The Company is required to disclose within the basic
financial statements items of comprehensive income, such as foreign currency
transactions and unrealized gains and losses on available-for-sale securities.
Because the Company has no items which qualify as comprehensive income, there
was no difference between comprehensive income (loss) and net income (loss) for
fiscal 1999, 1998 and 1997, respectively.
Fair Value of Financial Instruments: The estimated fair values of the Company's
financial instruments, including primarily cash and cash equivalents, accounts
receivable, accounts payable and the Company's revolving credit facility,
approximate their carrying values at January 29, 2000 and January 30, 1999, due
to their short-term nature or variable interest rates. The fair value of the
Company's mortgage loan (see Note B) at January 29, 2000 and January 30, 1999 is
calculated based on discounted cash flows using the estimated currently
available borrowing rate.
Cash and Cash Equivalents: The Company considers all highly liquid investments
with an original maturity of three months or less when purchased to be cash
equivalents.
Merchandise Inventories: Merchandise inventories are stated at the lower of cost
(computed using the first-in, first-out (FIFO) retail method) or market.
Depreciation: Depreciation is computed by the straight-line method, based on
estimated useful lives of 10 years for land improvements, 33 to 40 years for
buildings, 5 to 10 years for leasehold improvements and 3 to 15 years for
fixtures and equipment.
<PAGE>
Income Taxes: Deferred income tax assets and liabilities represent the future
income tax effect of temporary differences between the book and tax bases of the
Company's assets and liabilities, assuming they will be realized and settled at
the amount reported in the Company's financial statements. Valuation allowances
are established when necessary to reduce deferred tax assets to the amount
expected to be realized.
Purchased and Internally Developed Software: Purchased and internally developed
software is included in other assets and is amortized over its estimated
useful life of 5 years using the straight-line method.
Store Closing and Impairment Costs: At the time management commits to close a
store, a provision is made for any remaining store lease obligation after
closing or penalty, if any, to cancel the lease obligation. The Company
evaluates whether assets, largely store leasehold improvements and fixtures and
equipment, may be impaired based on store lease termination and renewal
decisions and estimated undiscounted future cash flows of the individual stores.
For stores which are determined to be impaired, leasehold improvements and
fixtures and equipment are written down based upon management's estimate of
recoverability.
Revenue Recognition: Revenues from retail sales are recognized at the time of
the sale. An estimate for merchandise returns is recorded in the period that the
merchandise is sold.
Store Preopening Costs: Costs associated with the opening of new stores are
expensed as incurred.
Advertising and Promotional Costs: Advertising and promotional costs are
expensed when incurred. Such expenses were $887,000, $623,000 and $592,000 in
fiscal 1999, 1998 and 1997, respectively.
Earnings Per Common Share: Basic earnings per common share are computed by
dividing earnings by the weighted average number of shares of common stock.
Diluted earnings per common share are computed by dividing earnings by the
weighted average number of shares of common stock and dilutive common stock
equivalent shares for stock options outstanding, unless antidilutive, during the
period. See Notes F and H.
Reclassifications: Certain amounts included in prior periods' financial
statements have been reclassified to conform to the fiscal 1999 presentation.
Effect of New Accounting Pronouncements: The Financial Accounting Standards
Board ("FASB") issued SFAS 133, "Accounting for Derivative Instruments and
Hedging Activities," effective, as amended, for years beginning after June 15,
2000. This new standard requires recognition of all derivatives, including
certain derivative instruments embedded in other contracts, as either assets or
liabilities in the statement of financial position and measurement of those
instruments at fair value. The Company is in the process of reviewing the
effect, if any, that SFAS 133 will have on the Company's consolidated financial
statements and disclosures.
NOTE B - Credit Facilities
The Company has a revolving credit facility of up to $37,500,000 (including a
letter of credit sub-facility of up to $25,000,000) with its primary lender
through March 2001. Borrowings under the credit agreement with the primary
lender are collateralized by all assets owned by the Company during the term of
the agreement (other than the land, buildings, fixtures and improvements
collateralizing the mortgage loan discussed below). Under the agreement, the
borrowings bear interest, at the Company's option (subject to certain
limitations in the agreement), at the Prime Rate plus 0.25% or the Adjusted
Eurodollar Rate, as defined, plus 2.0%. Maximum borrowings under the revolving
credit facility and utilization of the letter of credit facility are based on a
borrowing base formula determined with respect to eligible inventory as defined
in the agreement. Availability under the revolving credit facility fluctuates in
accordance with the Company's seasonal variations in inventory levels. At
January 29, 2000, the Company had approximately $10.4 million of excess
availability under the borrowing base formula. The lending formula may be
revised from time to time in response to changes in the composition of the
Company's inventory or other business conditions.
The Company's revolving credit agreement contains certain covenants which, among
other things, restrict the ability of the Company to incur other indebtedness,
or encumber or dispose of assets, and prohibit the Company from repurchasing its
common stock or paying dividends. The Company is required to maintain a
$5,000,000 minimum level of working capital and to maintain a minimum adjusted
net worth of $25,000,000 (both as defined in the revolving credit agreement).
<PAGE>
The maximum and average amounts outstanding during fiscal 1999 and 1998 and
amounts outstanding at the end of such periods for the revolving credit facility
are presented as follows:
Fiscal Year Ended
------------------------------------
January 29, January 30,
2000 1999
------------- --------------
Revolving Credit Facility:
Maximum amounts outstanding $19,456,000 $20,832,000
Average amounts outstanding 9,737,000 13,152,000
Outstanding at period end 11,179,000 11,838,000
The Company also has an agreement, as amended, with a commercial bank to provide
a separate letter of credit facility of up to $8,000,000 which expires on the
earlier of June 2000 or termination of the Company's revolving credit facility
with its primary lender. Letters of credit issued under the agreement are
collateralized by inventories purchased using such letters of credit. The
amended agreement sets the Company's minimum net worth requirement at the same
level as that required by the Company's primary lender under the revolving
credit agreement. The agreement, as amended, contains certain restrictive
covenants, which are substantially the same as those within the Company's
amended revolving credit facility discussed above.
The Company entered into a twenty-year mortgage agreement with a commercial bank
in June 1997. The agreement, which had an original balance of $8,125,000, is
secured by the Company's real property located at its corporate offices
including land, buildings, fixtures and improvements. Such secured real property
had a net book value of $13.7 million at January 29, 2000. The mortgage loan,
which had a balance of $7,755,000 at January 29, 2000, is payable in 240
consecutive equal monthly installments (including interest at the rate of 9.125%
per annum) through July 2017. Certain fees may be payable by the Company if the
mortgage loan is repaid prior to June 2014.
Annual maturities of the mortgage loan are as follows:
Fiscal Year Amount
----------- ---------
2000 $ 173,000
2001 192,000
2002 210,000
2003 231,000
2004 251,000
Thereafter 6,698,000
---------
Total $7,755,000
==========
The fair value of the Company's outstanding mortgage obligation at January 29,
2000 and January 30, 1999 was $7,851,000 and $8,458,000, respectively. Fair
value is determined based on discounted cash flows using the Company's estimated
currently available borrowing rate.
The Company's weighted average interest rate for all borrowings was 8.2% and
8.6% in fiscal 1999 and fiscal 1998, respectively. The Company had outstanding
letters of credit for the purchase of merchandise inventories totaling
approximately $4,375,000 and $6,613,000 at January 29, 2000 and January 30,
1999, respectively.
<PAGE>
<TABLE>
<S> <C> <C>
NOTE C - Property and Equipment
January 29, January 30,
2000 1999
---------------- ----------------
Land $ 914,000 $ 914,000
Land improvements 494,000 494,000
Buildings 16,061,000 16,061,000
Leasehold improvements 17,259,000 14,682,000
Fixtures and equipment 32,281,000 29,933,000
------------ ------------
67,009,000 62,084,000
Less accumulated depreciation (32,854,000) (28,638,000)
------------ ------------
$ 34,155,000 $ 33,446,000
============ ============
</TABLE>
NOTE D - Income Taxes
<TABLE>
<S> <C> <C> <C>
The provision for (benefit from) income taxes consists of the following:
Fiscal Year Ended
---------------------------------------------------
January 29, January 30, January 31,
2000 1999 1998
--------------- --------------- -----------------
Current:
Federal $ 1,107,000 $ 1,416,000 $(3,670,000)
State and local 283,000 371,000 280,000
Puerto Rico -- -- --
U.S. Virgin Islands 161,000 95,000 --
Deferred:
Federal 66,000 (684,000) 616,000
State and local (825,000) (84,000) 447,000
Puerto Rico (57,000) -- 154,000
------------ ------------ ------------
Total provision for (benefit from) income taxes $ 735,000 $ 1,114,000 $(2,173,000)
============ ============ ============
</TABLE>
<TABLE>
<S> <C> <C> <C>
A reconciliation of the statutory federal income tax rate to the annual
effective income tax rate follows:
Fiscal Year Ended
---------------------------------------------------------
January 29, January 30, January 31,
2000 1999 1998
----------------- ---------------- -----------------
Federal income tax (benefit) at statutory rate 35.0% 35.0% (35.0)%
State and local income tax (benefit), net of federal tax 2.7 4.4 (2.7)
Higher Puerto Rico / U.S. Virgin Islands tax rates 1.7 -- --
Puerto Rico net operating loss -- (2.3) --
Tax benefit from federal jobs credits (2.3) (3.9) (0.4)
Change in valuation allowance (28.0) (11.1) 20.8
Other, net 0.3 (1.8) 1.2
--------- --------- ----------
Effective income tax (benefit) rate 9.4% 20.3% (16.1)%
========= ========= ==========
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Presented below are the elements which comprise deferred income tax assets and
liabilities:
January 29, January 30,
2000 1999
---------------------------------------------------
Gross deferred income tax assets:
Accrued employee benefits deductible for tax
purposes when paid $ 782,000 $ 857,000
Excess of tax over financial statement basis of
inventory 145,000 346,000
Accrued retirement benefits deductible for tax
purposes when paid 509,000 536,000
Accrued store closing and restructuring costs
deductible for tax purposes when paid 273,000 299,000
State and local net operating loss and credit
carryforwards 711,000 779,000
Puerto Rico/U.S. Virgin Islands net operating loss
carryforwards 57,000 1,175,000
Other 328,000 540,000
--------------------- -------------------
Gross deferred income tax assets 2,805,000 4,532,000
Valuation allowance -- (2,188,000)
--------------------- -------------------
2,805,000 2,344,000
Gross deferred income tax liabilities:
Excess of financial statement over tax basis of
property and equipment (1,221,000) (1,576,000)
--------------------- --------------------
Net deferred income tax asset $ 1,584,000 $ 768,000
==================== =================
</TABLE>
As a result of operating losses in fiscal 1995 through 1997, the Company
established valuation allowances for all of its net deferred tax assets due to
the uncertainty of their realization. The valuation allowance was reduced by
$968,000 in fiscal 1998 as the Company had returned to profitable operations and
was able to utilize significant amounts of its net operating loss carryforwards
for income tax purposes in that year. As profitable operations have continued
through fiscal 1999, the Company reduced the valuation allowance by $2,188,000
as management believes that it is now more likely than not that the Company's
net deferred tax assets will be realized. As of January 29, 2000, no valuation
allowance remains.
At January 29, 2000 the Company had net operating loss and credit carryforwards
for state income tax purposes aggregating approximately $711,000 of income tax
(net operating losses of $5,672,000 and tax credits of $327,000) and Puerto Rico
net operating loss carryforwards aggregating $57,000 of income tax (net
operating losses of $146,000). The carryforwards expire at various times between
2002 and 2012.
<TABLE>
<S> <C> <C>
The net deferred income tax asset is recorded in the accompanying Consolidated
Balance Sheets as follows:
January 29, January 30,
2000 1999
-------------- -------------
Current deferred income tax asset $ 1,626,000 $ 768,000
Other noncurrent liabilities (42,000) --
-------------- -------------
Net deferred income tax asset $ 1,584,000 $ 768,000
============== =============
</TABLE>
NOTE E - Commitments and Contingencies
From time to time, the Company is a defendant in legal actions involving claims
arising in the normal course of its business. The Company believes that, as a
result of its legal defenses and insurance arrangements, none of these actions
presently pending, even if decided adversely, would have a material adverse
effect on its financial position, results of operations or cash flows.
Leases
The Company leases its stores under operating leases with initial terms of
typically five years with one to two renewal option periods of five years each.
The leases generally provide for increased payments resulting from increases in
operating costs, common area maintenance costs and property taxes. Substantially
all store leases also provide the Company with an option to terminate the
agreement without penalty if certain conditions are present. Certain of the
leases provide for contingent or percentage rentals based upon sales volume and
others are leased on a month-to-month basis.
In addition, the Company has operating leases for automobiles, trucks, trailers
and certain computer and other equipment with one to ten year terms.
<TABLE>
<S> <C> <C> <C>
Future minimum rental commitments as of January 29, 2000 for noncancellable
leases (including those which may qualify for early termination) are
approximately as follows:
Fiscal Year Stores Other Total
----------- ----------- -----------
2000 $22,647,000 $ 1,593,000 $24,240,000
2001 18,818,000 612,000 19,430,000
2002 15,532,000 244,000 15,776,000
2003 10,464,000 91,000 10,555,000
2004 7,122,000 38,000 7,160,000
Thereafter 12,793,000 24,000 12,817,000
----------- ----------- -----------
Total $87,376,000 $ 2,602,000 $89,978,000
=========== =========== ===========
</TABLE>
<TABLE>
<S> <C> <C> <C>
Total rental expense for operating leases was as follows:
Fiscal Year Ended
--------------------------------------------------------------
January 29, January 30, January 31,
2000 1999 1998
------------- ------------- ---------------
Minimum rentals $23,936,000 $23,060,000 $23,244,000
Contingent rentals 5,540,000 5,262,000 4,932,000
----------- ----------- -----------
$29,476,000 $28,322,000 $28,176,000
=========== =========== ===========
</TABLE>
The Company's capital leases for certain office equipment and computer software
were calculated using interest rates appropriate at the inception of each lease.
Gross amounts of such capital lease assets were $1,386,000 and $880,000 at
January 29, 2000 and January 30, 1999, respectively. Accumulated amortization
amounts of such capital lease assets were $571,000 and $285,000 at January 29,
2000 and January 30, 1999, respectively. The net amount of these capital lease
assets is included in other assets on the Consolidated Balance Sheets. Future
minimum lease payments for capitalized lease obligations as of January 29, 2000
were as follows:
Fiscal Year:
2000 $ 419,000
2001 268,000
2002 46,000
----------
Total minimum obligations 733,000
Less interest (61,000)
----------
Present value of net minimum obligations 672,000
Less current portion (262,000)
----------
Long-term obligation at January 29, 2000 $ 410,000
==========
The current portion of the capital lease obligation is included in other accrued
and sundry liabilities, and the long-term obligation is included in other
noncurrent liabilities on the Consolidated Balance Sheets.
NOTE F - Employee Benefits
Stock Option Plans: The Company has three stock option plans (the "1991 Plan,"
the "1988 Plan" and the "1987 Plan") which provide for grants to certain
officers and key employees of options to purchase shares of common stock of the
Company. Options granted under the three stock option plans expire ten years
from the date of grant and have been granted at prices not less than the fair
market value at the date of grant. All unissued options under the 1987 Plan and
1988 Plan have been retired. Options canceled under the 1991 Plan are available
for reissuance. Effective March 1999, the Company's Board of Directors amended
the 1991 Plan to increase the number of shares of common stock available for
issuance by 500,000. The amendment also provides for a reserve of up to 50,000
shares of restricted stock to be awarded from the total number of shares
issuable under the 1991 Plan. At January 29, 2000, a total of 428,000 shares of
common stock were reserved for issuance under the 1991 Plan.
The Company has a Non-Employee Director Stock Option Plan (the "1995 Plan")
which provides for annual grants to non-employee members of the Board of
Directors. Such grants are immediately exercisable on the date of grant and
expire ten years from the date of grant. Effective March 1999, the Company's
Board of Directors amended the 1995 Plan to increase the number of shares of
common stock available for issuance by 125,000. The amendment also provides for
a reserve of up to 75,000 shares of restricted stock from the total number of
shares issuable under the plan. At January 29, 2000, 95,000 shares of common
stock were reserved for issuance under the 1995 Plan.
Effective April 1997, the Company's Board of Directors approved a special stock
option grant for 300,000 shares at the exercise price of $4.13 per share (fair
market value at the time of grant) to its Chief Executive Officer. Twenty-five
percent of such grant was immediately exercisable on the date of the grant with
the remaining shares vesting ratably over four years. The options expire ten
years from the date of the grant.
Effective April 1998, the Company's Board of Directors approved a special stock
option grant for 80,000 shares at the exercise price of $1.77 per share (fair
market value at the time of grant) to its present Chairman of the Board of
Directors. One third of such grant was immediately exercisable on the date of
the grant with the remaining shares vesting ratably over two years. The options
expire ten years from the date of the grant.
Effective April 1999, the Company's Board of Directors approved a special stock
option grant for 40,000 shares at the exercise price of $4.47 per share (fair
market value at the time of grant) to its Senior Vice President and Chief
Financial Officer. The shares vest ratably over four years. The options expire
ten years from the date of the grant.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
A summary of the activity in the Company's stock options is presented below:
Fiscal 1999 Fiscal 1998 Fiscal 1997
--------------------------------------------------------------------------
Weighted Weighted Weighted
Number Average Number Average Number Average
of Exercise of Exercise of Exercise
Shares Price Shares Price Shares Price
---------- -------- ---------- -------- ---------- --------
Outstanding at beginning of period 1,115,173 $4.35 909,796 $5.47 555,845 $6.79
Options granted 300,050 $4.20 408,025 $2.88 510,250 $3.93
Options exercised (28,310) $2.66 (4,000) $2.75 -- --
Options cancelled (69,499) $3.76 (198,648) $6.47 (156,119) $5.13
---------- ---------- ----------
Outstanding at end of period 1,317,414 $4.38 1,115,173 $4.35 909,796 $5.47
========== ========== ==========
Exercisable at end of period 694,984 458,465 370,706
========== ========== ==========
Weighted average fair value of
options granted during the period
(see below) $1.97 $1.20 $1.94
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
The following table summarizes information about stock options outstanding at
January 29, 2000:
Options Outstanding Options Exercisable
-------------------------------------- ----------------------------
Weighted
Number Average Weighted Weighted
Range of of Remaining Average Number Average
Exercise Shares Contractual Exercise of Exercise
Prices Outstanding Life (Years) Price Shares Price
----------------------- ----------- ------------ ------------ --------- -------------
$ 1.56 to $ 3.56 397,900 8.2 $ 2.79 160,869 $ 2.58
$ 3.59 to $ 4.00 134,375 8.5 $ 3.83 84,976 $ 3.78
$ 4.13 402,940 7.1 $ 4.13 240,340 $ 4.13
$ 4.19 to $ 4.50 194,400 9.0 $ 4.41 65,600 $ 4.48
$ 4.59 to $ 14.92 169,799 3.3 $ 7.78 125,199 $ 8.77
$ 17.25 18,000 4.1 $ 17.25 18,000 $ 17.25
--------- --------
1,317,414 7.3 $ 4.38 694,984 $ 4.94
========= ========
</TABLE>
The Company applies the principles of Accounting Principles Board ("APB")
Opinion 25 in accounting for employee stock option plans. Accordingly, no
compensation cost has been recognized in the Company's financial statements. Had
compensation cost been determined on the basis of SFAS 123, "Accounting for
Stock-Based Compensation," compensation expense would have been recorded based
on the estimated fair value of stock options granted during the fiscal years
presented. The total fair value of stock options granted was estimated at
$592,000, $490,000 and $990,000 for the fiscal years ended January 29, 2000,
January 30, 1999 and January 31, 1998, respectively, based upon the
Black-Scholes option pricing model. The following assumptions were used in the
Black-Scholes option pricing model for stock options granted: risk-free interest
rates of approximately 5.2%, 5.4% and 6.0% for fiscal 1999, 1998 and 1997,
respectively; an expected life of approximately one year from the vest date for
fiscal 1999, 1998 and 1997; and 65%, 60% and 65% expected volatility for fiscal
1999, 1998 and 1997, respectively. The expected life of the stock options
granted and the stock price volatility during the expected life of the options
were estimated based upon historical experience and management's expectations.
Had compensation cost for the Company's stock option plans been determined based
on the estimated fair value at the grant dates for awards under those plans
consistent with the method of SFAS 123, the Company's net income (loss) and net
income (loss) per common share would have been impacted as indicated in the
proforma amounts below:
<TABLE>
<S> <C> <C> <C> <C>
Fiscal Year Ended
-----------------------------------------------------
January 29, January 30, January 31,
2000 1999 1998
------------ ------------ --------------
Net income (loss) Actual $7,074,000 $4,383,000 $(11,320,000)
=========== ========== =============
Proforma $6,793,000 $3,973,000 $(11,805,000)
=========== =========== =============
Net income (loss) per common share - diluted Actual $ 0.67 $ 0.42 $ (1.08)
=========== =========== =============
Proforma $ 0.64 $ 0.38 $ (1.13)
=========== =========== =============
</TABLE>
Restricted Stock Plans: Effective March 1999, the Company's Board of Directors
amended its 1991 Plan to provide for a reserve of up to 50,000 shares of
restricted stock to be awarded from the total number of shares available under
the plan. For the year ended January 29, 2000, the Company awarded 15,000 shares
of common stock which had a fair value at the date of the grant of $41,000. Sale
of the stock awarded is restricted for three years from the date of grant
contingent upon continuity of service. Compensation under the 1991 Plan is
charged to earnings over the restriction period and amounted to $2,000 in fiscal
1999. At January 29, 2000, 35,000 shares were available for issuance.
Effective March 1999, the Company's Board of Directors amended its 1995 Plan to
provide for a reserve of up to 75,000 shares of restricted stock to be awarded
from the total number of shares issuable under the 1995 Plan. For the year ended
January 29, 2000, the Company awarded 5,000 shares of common stock which had a
fair value at the date of grant of $19,000. Sale of the stock awarded is
restricted for eight months from the date of grant contingent upon continuity of
service. Compensation under the plan is charged to earnings over the restriction
period and amounted to $7,000 in fiscal 1999. At January 29, 2000, 70,000 shares
were available for issuance.
Retirement Plan: The Company has a 401(k) and profit-sharing plan, the One Price
Clothing Stores, Inc. Retirement Plan (the "Plan"). All employees in the United
States who are 21 years of age or older with at least one year of service are
eligible to participate in the Plan. The Company currently matches 50% of each
participant's contribution with a maximum match of 2.5% of the participant's
base compensation. In addition, the Company may make an annual discretionary
contribution on behalf of the participants; no such discretionary contributions
have been made by the Company. Employer matches (approximately $321,000,
$307,000 and $306,000 in fiscal 1999, 1998 and 1997, respectively) vest ratably
over five years.
Deferred Compensation Plans: Effective January 2000, the Company established a
Deferred Compensation Plan for employees that allows eligible participants, as
defined by the Plan, to enhance their retirement security by deferring
compensation in order to receive benefits at retirement, death, separation of
service, or as otherwise provided by the Plan. Eligible participants may elect
to defer an amount of up to 15% of the participant's compensation less the
participant's 401(k) contributions. The Company currently matches 50% of each
participant's contribution with a maximum match of 2.5% of the participant's
base compensation, less amounts matched under the 401(k) plan. Employer matches
vest ratably over five years, and no such matches have yet been made by the
Company.
Effective January 2000, the Company established a Deferred Compensation Plan for
Non-Employee Directors that allows eligible Directors, as defined by the Plan,
to enhance their retirement security by deferring compensation in order to
receive benefits at cessation of membership on the Company's Board of Directors,
death, or as otherwise provided by the Plan. Eligible Directors may each elect
to defer any percentage or amount of their Director's compensation not exceeding
$30,000.
Stock Purchase Plan: The Company has an employee Stock Purchase Plan that allows
participating employees to purchase, through payroll deductions, shares of the
Company's common stock at prevailing market prices. All full-time associates who
are 18 years of age or older with at least six months of service are eligible to
participate in the Stock Purchase Plan. The Stock Purchase Plan provides that
participants may authorize the Company to withhold from net earnings and deposit
such amounts with an independent custodian. The custodian purchases common stock
of the Company at prevailing market prices and distributes the shares purchased
to the participants upon request. The Company pays expenses associated with the
purchases of the common stock and administration of the Stock Purchase Plan.
Shareholders' Rights Plan: The Company has a Shareholders' Rights Plan which
expires in November 2004. Each shareholder is entitled to one Right (as defined)
for each share of common stock held on such date. Each Right entitles the
registered holder to purchase from the Company one half share of common stock at
a specified price. The Rights become exercisable only upon the occurrence of
certain conditions set forth in the Shareholders' Rights Plan relating to, among
other things, the acquisition of 20% or more of the outstanding shares of common
stock. There were no rights issued or outstanding under the Shareholders' Rights
Plan in fiscal 1999, fiscal 1998 and fiscal 1997, respectively.
NOTE G - Related Party Transactions
The Company has a deferred compensation agreement with its President and Chief
Executive Officer. The agreement provides for 120 consecutive monthly payments
of $5,000 (including interest) beginning upon the date of retirement, contingent
upon completion of at least six years of employment. Approximately $63,000,
$57,000 and $40,000 of the total present value of the obligation was charged to
selling, general and administrative expense in fiscal 1999, fiscal 1998 and
fiscal 1997, respectively. Approximately $160,000 and $97,000 is included in
other noncurrent liabilities at January 29, 2000 and January 30, 1999,
respectively. The remaining portion of the total present value of the
obligation, approximately $246,000 at January 29, 2000, will be fully accrued by
May 2003, six years after commencement of employment.
During fiscal 1997, the Company entered into a loan agreement of $225,000 with
its President and Chief Executive Officer. The terms of the loan required that
certain principal and interest payments be made to the Company during the term
of the loan, with the full amount of the loan plus accrued interest due by
December 2000. During fiscal 1998, the remaining repayment requirements of the
loan were waived by the Company's Board of Directors and the remaining balance
of $173,000 was written off.
During fiscal 1999, the Company entered into a loan agreement of $70,000 with
its Senior Vice President and Chief Financial Officer. The terms of the loan
require that the balance of the loan, including principal and the accrued
interest, be payable to the Company within 30 days after the sale of a certain
real property asset or by April 12, 2000, whichever occurs first. Approximately
$74,000 was included in accounts receivable at January 29, 2000 under this
agreement.
The Company also has a deferred compensation agreement with its former Chairman
of the Board of Directors. The agreement provides for 120 consecutive monthly
payments of $13,750 (including interest) beginning upon the earlier of the date
of retirement or death. When the Company entered into the agreement in fiscal
1996, the estimated present value of the obligation, $970,000, was charged to
selling, general and administrative expenses. Approximately $55,000 and $60,000
in interest was added to the net present value of the obligation and charged to
selling, general and administrative expenses in fiscal 1998 and fiscal 1997,
respectively. During the summer of fiscal 1998, the former Chairman of the Board
of Directors retired. Accordingly, $91,000 and $64,000 in interest, as part of
the monthly payments, was charged to selling, general and administrative
expenses in fiscal 1999 and fiscal 1998, respectively. Approximately $81,000 and
$883,000 is included in current liabilities and other noncurrent liabilities,
respectively, at January 29, 2000 for this deferred compensation liability.
Approximately $74,000 and $965,000 was included in current liabilities and other
noncurrent liabilities, respectively, at January 30, 1999.
In addition, the Company has a deferred compensation agreement with a former
executive officer who also served as a member of the Company's Board of
Directors through June 1999. The agreement provides for monthly payments of
$6,250 (including interest) through July 2002. Approximately $18,000, $23,000
and $27,000 in interest was charged to selling, general and administrative
expenses in fiscal 1999, fiscal 1998 and fiscal 1997, respectively.
Approximately $62,000 and $105,000 is included in current liabilities and other
noncurrent liabilities, respectively, at January 29, 2000 for this deferred
compensation liability. Approximately $57,000 and $167,000 was included in
current liabilities and other noncurrent liabilities, respectively, at January
30, 1999 for this deferred compensation liability.
NOTE H - Earnings per Share
In accordance with the principles of SFAS 128, "Earnings Per Share," the Company
presents "basic" and "diluted" earnings per share on the face of the income
statement. Basic earnings per share are computed based upon the weighted average
number of common shares outstanding. Diluted earnings per share are computed
based upon the weighted average number of common and common equivalent shares
outstanding. Common equivalent shares outstanding consist solely of shares under
option. A reconciliation of basic and diluted weighted average number of common
shares outstanding is presented below:
<TABLE>
<S> <C> <C> <C>
Fiscal Year Ended
---------------------------------------------------
January 29, January 30, January 31,
2000 1999 1998
--------------- --------------- --------------
Weighted average number of common shares
outstanding - basic 10,461,925 10,437,102 10,435,531
Net effect of dilutive stock options based on the treasury
stock method using the average market price 117,927 56,714 --
--------------- --------------- --------------
Weighted average number of common shares
outstanding - diluted 10,579,852 10,493,816 10,435,531
=============== =============== ==============
</TABLE>
Stock options of 715,028, 789,402 and 759,546 for the fiscal years ending
January 29, 2000, January 30, 1999 and January 31, 1998, respectively, were
excluded because such options were antidilutive.
NOTE I - Quarterly Results (Unaudited)
The following is a summary of quarterly (13 weeks) operations for the fiscal
years ended January 29, 2000 and January 30, 1999 (in thousands except per
share data).
<TABLE>
<S> <C> <C> <C> <C>
Fiscal 1999 Quarters Ended
----------------------------------------------------------------
May 1, July 31, October 30, January 29,
1999 1999 1999 2000
----------------------------------------------------------------
Net sales $87,113 $97,905 $70,428 $81,401
Gross margin 32,450 35,444 25,127 28,095
Net income (loss) 3,099 4,397 (1,168) 746
Net income (loss) per common share - diluted 0.29 0.41 (0.11) 0.07
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Fiscal 1998 Quarters Ended
----------------------------------------------------------------
May 2, August 1, October 31, January 30,
1998 1998 1998 1999
----------------------------------------------------------------
Net sales $82,513 $95,786 $69,732 $80,028
Gross margin 30,621 34,510 24,236 26,799
Net income (loss) 2,045 3,517 (1,716) 537
Net income (loss) per common share - diluted 0.20 0.33 (0.16) 0.05
</TABLE>
Net income in the third and fourth quarters of fiscal 1999 was increased by
$734,000 and $988,000, or $0.07 and $0.09 per diluted share, respectively, as
a result of adjustments to the estimated effective income tax rate used in
previous quarters within fiscal 1999. Net income in the fourth quarter of
fiscal 1999 was also increased by a $340,000 or $0.03 per diluted share
adjustment to match the Company's workers' compensation liability with the
annual actuarial estimate.
Net income in the fourth quarter of fiscal 1998 was increased by $968,000, or
$0.09 per diluted share, as a result of adjustments to the estimated effective
income tax rate used in previous quarters within fiscal 1998.
NOTE J - Effect of Restructuring
In response to lower than expected operating results, the Company announced a
restructuring plan during the fourth quarter of fiscal 1997. The plan
included initiatives designed to return the Company to profitability by
lowering operating costs, redeploying assets and curtailing the number of new
store openings until the Company's existing stores were operating profitably.
Under the plan, the Company estimated that it would close approximately 75
low-volume, underperforming stores and eliminate approximately 300 positions.
The Company recorded a one-time charge of $2,265,000 during the fourth
quarter of fiscal 1997 to cover costs associated with the plan. The total
charge included costs to close stores, such as the noncash write-off of fixed
assets and store supplies of $1,378,000, lease buyouts of approximately
$398,000, and employee severance costs, outplacement costs and other
miscellaneous expenses of approximately $489,000.
A substantial number of the stores identified for closing under the
restructuring plan were closed by January 30, 1999. Certain of these stores
were no longer under consideration for closing during fiscal 1998 due to a
significant improvement in performance since the announcement of the plan. As
a result, during the fourth quarter of fiscal 1998, the Company recorded a
favorable adjustment to pre-tax income of $385,000 to reverse the estimated
cost, recorded in fiscal 1997, of closing these stores.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Effective February 29, 2000, Warren Flick resigned his position as a member of
the Board of Directors of the Company for personal reasons and without
disagreement with the Company regarding the Company's operations, policies or
procedures.
Effective March 6, 2000, Renee M. Love was appointed to the Company's Board of
Directors.
The remaining information required under this item is incorporated herein by
reference to the sections entitled "Election of Directors" and "Executive
Officers of the Company" and "Section 16(a) Beneficial Ownership Reporting
Compliance" of the Company's definitive Proxy Statement (the "Proxy
Statement") filed with the Securities and Exchange Commission in connection
with the Annual Meeting of Shareholders scheduled to be held June 7, 2000.
ITEM 11. EXECUTIVE COMPENSATION
The information required under this item is incorporated herein by reference
to the sections entitled "Compensation Committee Interlocks and Insider
Participation," "Compensation of Executive Officers," "Employment Contracts
and Deferred Compensation Arrangements," "Compensation Committee Report on
Executive Compensation," "Performance Graph" and "Election of Directors -
Directors' Fees" of the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required under this item is incorporated herein by reference
to the sections entitled "Security Ownership of Certain Beneficial Owners,"
"Election of Directors" and "Security Ownership of Management" of the Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required in this item is incorporated herein by reference to
the sections entitled "Compensation Committee Interlocks and Insider
Participation" and "Employment Contracts and Deferred Compensation
Arrangements" of the Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following financial statements of One Price Clothing Stores, Inc.
are included in Part II, Item 8:
Independent Auditors' Report
Consolidated Balance Sheets as of January 29, 2000 and
January 30, 1999
Consolidated Statements of Operations for the fiscal years
ended January 29, 2000, January 30, 1999 and January 31,
1998
Consolidated Statements of Shareholders' Equity for the
fiscal years ended January 29, 2000, January 30, 1999 and
January 31, 1998
Consolidated Statements of Cash Flows for the fiscal years
ended January 29, 2000, January 30, 1999 and January 31,
1998
Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedule
The following financial statement schedule of One Price Clothing
Stores, Inc. is included in Item 14(d):
Schedule II -- Valuation and Qualifying Accounts.
Schedules not listed above have been omitted because they
are not applicable or the information is included in the
financial statements or notes thereto.
(a) 3. Exhibits, including those incorporated by reference (in accordance
with Item 601 of Regulation S-K)
Incorporated herein by reference to the list of Exhibits contained in
the Exhibit Index which begins on Page 35 of this Report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ONE PRICE CLOTHING STORES, INC.
Date: April 26, 2000 /s/ Larry I. Kelley
-------------------
Larry I. Kelley
President and Chief Executive Officer
(principal executive officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: April 26, 2000 /s/ Leonard M. Snyder
---------------------
Leonard M. Snyder
Chairman of the Board of Directors
Date: April 26, 2000 /s/ Larry I. Kelley
-------------------
Larry I. Kelley
President and Chief Executive Officer
(principal executive officer)
Date: April 26, 2000 /s/ H. Dane Reynolds
--------------------
H. Dane Reynolds
Senior Vice President and Chief
Financial Officer (principal
financial officer and principal
accounting officer)
Date: April 26, 2000 /s/ Laurie M. Shahon
--------------------
Laurie M. Shahon
Director
Date: April 26, 2000 /s/ Malcolm L. Sherman
----------------------
Malcolm L. Sherman
Director
Date: April 26, 2000 /s/ James M. Shoemaker, Jr.
---------------------------
James M. Shoemaker, Jr.
Director
Date: April 26, 2000 /s/ Allan Tofias
----------------
Allan Tofias
Director
Date: April 26, 2000 /s/ Renee M. Love
-----------------
Renee M. Love
Director
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
ONE PRICE CLOTHING STORES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
COL. A COL. B COL. C COL. D COL. E
------------------------- ---------------------- ------------------------------------------ ------------------- --------------
DESCRIPTION ADDITIONS
Balance at Charged to Charged Deduction - Balance
Beginning of Cost & to Other- Describe (1) at End of
Period Expenses Describe Period
------------------------- ---------------------- ------------------------------------------ ------------------- --------------
FISCAL YEAR ENDED
JANUARY 29, 2000
Allowance for
doubtful accounts $ 80,000 $ 248,000 $ 234,000 $ 94,000
=========== =========== =========== ===========
FISCAL YEAR ENDED
JANUARY 30, 1999
Allowance for
doubtful accounts $ 196,000 $ 130,000 $ 246,000 $ 80,000
=========== ============ =========== ===========
FISCAL YEAR ENDED
JANUARY 31, 1998
Allowance for
doubtful accounts $ 144,000 $ 432,000 $ 380,000 $ 196,000
=========== ============ =========== ===========
(1) Deductions pertain to write-offs charged against the allowance for returned customer checks.
</TABLE>
<PAGE>
ONE PRICE CLOTHING STORES, INC.
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit
Number Description
3(a) Certificate of Incorporation of the Registrant, as amended
through April 1987: Incorporated by reference to exhibit of
the same number to Registrant's Registration Statement on Form
S-1, filed April 10, 1987 (File No. 33-13321) ("the S-1").
3(a)(1) Certificate of Amendment of Certificate of Incorporation of the
Registrant: Incorporated by reference to exhibit of the same number to the
Registrant's Annual Report on Form 10-K for the year ended January 1, 1994
(File No. 0-15385).
3(b) Restated By-Laws of the Registrant, as of July 22, 1992 and
amended as of July 20, 1994, March 14, 1996 and April 29,
1998: Incorporated by reference to Exhibit 10(h) to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended May 2, 1998 (File No. 0-15385) ("the April 1998 Form
10-Q").
4(a) See Exhibits 3(a), 3(a)(1), and 3(b).
4(b) Specimen of Certificate of the Registrant's common stock: Incorporated by
reference to Exhibit 1 to the Registrant's Registration Statement on Form
8-A filed with the Securities and Exchange Commission on June 23, 1987
(File No. 0-15385).
4(c) Shareholder Rights Agreement by and between the Registrant and Wachovia
Bank of North Carolina, N. A. as Rights Agent dated November 3, 1994:
Incorporated by reference to Exhibit 2 to the Registrant's Form 8-K filed
November 10, 1994 (File No. 0-15385).
4(d) Loan and Security Agreement by and between Congress Financial Corporation
(Southern) as Lender and the Registrant and One Price Clothing of Puerto
Rico, Inc. as Borrowers dated March 25, 1996: Incorporated by reference to
exhibit of same number to the Registrant's Annual Report on Form 10-K for
the year ended December 30, 1995 (File No. 0-15385).
4(d)(1) Amendment Number One to the Loan and Security Agreement by and between
Congress Financial Corporation (Southern) as Lender and the Registrant, One
Price Clothing of Puerto Rico, Inc. and One Price Clothing - U.S. Virgin
Islands, Inc. as Borrowers dated May 16, 1997: Incorporated by reference to
Exhibit 10(a) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended May 3, 1997 (File No. 0-15385) ("the April 1997 Form 10-Q").
4(d)(2) Amendment Number Two to the Loan and Security Agreement by and between
Congress Financial Corporation (Southern) as Lender and the Registrant, One
Price Clothing of Puerto Rico, Inc. and One Price Clothing - U.S. Virgin
Islands, Inc. as Borrowers dated June 17, 1997: Incorporated by reference
to Exhibit 10(c) to the Registrant's Quarterly report on Form 10-Q for the
quarter ended August 2, 1997 (File No. 0-15385) ("the July 1997 Form
10-Q").
4(d)(3) Amendment Number Three to the Loan and Security Agreement by and between
Congress Financial Corporation (Southern) as Lender and the Registrant, One
Price Clothing of Puerto Rico, Inc. and One Price Clothing - U.S. Virgin
Islands, Inc. as Borrowers dated February 19, 1998: Incorporated by
reference to exhibit of the same number to the Registrant's Annual Report
on Form 10-K for the year ended January 31, 1998 (File No. 0-15385) ("the
1997 Form 10-K").
4(d)(4) Amendment Number Four to the Loan and Security Agreement by and between
Congress Financial Corporation (Southern) as Lender and the Registrant, One
Price Clothing Stores, Inc. of Puerto Rico and One Price Clothing Stores -
U.S. Virgin Islands, Inc. as Borrowers dated January 31, 1999: Incorporated
by reference to exhibit of the same number to the Registrant's Annual
Report on Form 10-K for the year ended January 30, 1999 (File No. 0-15385)
("the 1998 Form 10-K").
4(d)(5)+ Amendment Number Five to the Loan and Security Agreement by and between
Congress Financial Corporation (Southern) as Lender and the Registrant, One
Price Clothing Stores, Inc. of Puerto Rico and One Price Clothing - U.S.
Virgin Islands, Inc. as Borrowers dated February 23, 2000.
4(e) Mortgage and Security Agreement by and between First Union National Bank,
as Mortgagee and One Price Realty, Inc. as Mortgagor dated June 17, 1997:
Incorporated by reference to Exhibit 10(d) to the July 1997 Form 10-Q.
4(f) Promissory Note by and between First Union National Bank and One Price
Realty, Inc. dated June 17, 1997: Incorporated by reference to Exhibit
10(e) to the July 1997 Form 10-Q.
4(g) Continuing Commercial Credit Agreement by and between Carolina First Bank
as Lender and the Registrant, One Price Clothing of Puerto Rico, Inc. and
One Price Clothing - U.S. Virgin Islands, Inc. as Borrowers dated May 16,
1997: Incorporated by reference to Exhibit 10(b) to the April 1997 Form
10-Q.
4(g)(1) Amendment Number One to the Continuing Commercial Credit Agreement by
and between Carolina First Bank as Lender and the Registrant, One Price
Clothing of Puerto Rico, Inc. and One Price Clothing - U.S. Virgin Islands,
Inc. as Borrowers dated March 20, 1998: Incorporated by reference to
exhibit of the same number to the 1997 Form 10-K.
4(g)(2) Amendment Number Two to the Continuing Commercial Credit Agreement by
and between Carolina First Bank as Lender and the Registrant, One Price
Clothing of Puerto Rico, Inc. and One Price Clothing - U.S. Virgin Islands,
Inc. as Borrowers dated April 21, 1998: Incorporated by reference to
exhibit of the same number to the 1997 Form 10-K.
4(g)(3) Amendment Number Three to the Continuing Commercial Credit Agreement by
and between Carolina First Bank as Lender and the Registrant, One Price
Clothing of Puerto Rico, Inc. and One Price Clothing - U.S. Virgin Islands,
Inc. as Borrowers dated November 5, 1998: Incorporated by reference to
Exhibit 10(c) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended October 31, 1998 (File No. 0-15385).
4(g)(4) Amendment Number Four to the Continuing Commercial Credit Agreement by
and between Carolina First Bank as Lender and the Registrant, One Price
Clothing of Puerto Rico, Inc. and One Price Clothing - U.S. Virgin Islands,
Inc. as Borrowers dated March 31, 1999: Incorporated by reference to
exhibit of the same number to the 1998 Form 10-K.
4(g)(5)+ Amendment Number Five to the Continuing Commercial Credit Agreement by
and between Carolina First Bank as Lender and the Registrant, One Price
Clothing of Puerto Rico, Inc. and One Price Clothing - U.S. Virgin Islands,
Inc. as Borrowers dated February 23, 2000.
4(h) The Company hereby agrees to furnish to the Commission upon request of the
Commission a copy of any instrument with respect to long-term debt not
being registered in a principal amount less than 10% of the total assets of
the Company and its subsidiaries on a consolidated basis.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Material Contracts:
10(a)* Stock Option Plan of the Registrant dated February 20, 1987 and related
forms of Incentive and Non-qualified Stock Option Agreements: Incorporated
by reference to Exhibit 10(d) to the S-1.
10(b)* Stock Option Plan of the Registrant dated December 12, 1988 and related
forms of Incentive and Non-qualified Stock Option Agreements: Incorporated
by reference to Exhibit 10(a) to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1998 (File No. 0-15385) ("the 1988
Form 10-K").
10(c)* One Price Clothing Stores, Inc. 1991 Stock Option Plan: Incorporated by
reference to Exhibit 10(b) to the Registrant's Annual Report on Form 10-K
for the year ended December 28, 1991 (File No. 0-15385).
10(c)(1)* Amendment Number One to One Price Clothing Stores, Inc. 1991 Stock
Option Plan dated June 9, 1999: Incorporated by reference to Exhibit 10(a)
to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
July 31, 1999 (File No. 0-15385) ("the July 1999 Form 10-Q").
10(d)* Summary of Incentive Compensation Plan: Incorporated by reference to
exhibit of the same number to the 1998 Form 10-K.
10(e)* Form of Employment Agreement between Registrant and Henry D. Jacobs, Jr.:
Incorporated by reference to Exhibit 10(j) to the 1988 Form 10-K.
10(f)* Addendum to Employment Agreement dated March 6, 1997 between the
Registrant and Henry D. Jacobs, Jr.: Incorporated by reference to Exhibit
10(p) to the 1996 Form 10-K.
10(g)* Agreement dated June 24, 1992 between the Registrant and Raymond S.
Waters: Incorporated by reference to Exhibit 10(l) to the Registrant's
Annual Report on Form 10-K for the year ended January 2, 1993 (File No.
0-15385).
10(h)* Directors' Stock Option Plan effective April 19, 1995: Incorporated by
reference to Exhibit 10(m) in to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994 (File No. 0-15385).
10(h)(1)* Amendment Number One dated March 14, 1996 to One Price Clothing
Stores, Inc. Director Stock Option Plan: Incorporated by reference to
Exhibit 10(a) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended May 4, 1996 (File No. 0-15385).
10(h)(2)* Amendment Number Two dated June 9, 1999 to One Price Clothing Stores,
Inc. Director Stock Option Plan: Incorporated by reference to Exhibit 10(b)
to the July 1999 Form 10-Q.
10(i)* Agreement dated March 25, 1997 between the Registrant and Henry D.
Jacobs, Jr.: Incorporated by reference to Exhibit 10(n) to the Registrant's
Annual Report on Form 10-K for the year ended February 1, 1997 (File No.
0-15385) ("the 1996 Form 10-K").
10(j)* Stock Option Agreement dated March 26, 1997 between Registrant and Larry
I. Kelley: Incorporated by reference to Exhibit 10(c) to the April 1997
Form 10-Q.
10(k)* Letter of Understanding regarding Non-Executive Chairman of the
Board position and Consulting Agreement dated April 16, 1998
and Amendments to Letter of Understanding and Consulting
Agreement dated December 22, 1998 and October 8, 1999 between
the Registrant and Leonard Snyder: Incorporated by reference to
Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended October 30, 1999 (File No. 0-15385).
10(l)* Stock Option Agreement dated April 16, 1998 between the Registrant and
Leonard Snyder: Incorporated by reference to Exhibit 10(g) to the April
1998 Form 10-Q.
10(m)* Employment Agreement dated March 26, 1997 and Amendment to Employment
Agreement dated December 22, 1998 between the Registrant and Larry I.
Kelley: Incorporated by reference to Exhibit 10(n) to the 1998 Form 10-K.
10(n)* Employment Agreement dated March 30, 1992 and Amendment to Employment
Agreement dated February 4, 1997 and amended December 28, 1998 between the
Registrant and Ronald Swedin: Incorporated by reference to Exhibit 10(o) to
the 1998 Form 10-K.
10(o)* Employment Agreement dated November 10, 1997 and Amendments to Employment
Agreement dated April 16, 1998 and January 14, 1999 between the Registrant
and A. J. Nepa: Incorporated by reference to Exhibit 10(q) to the 1998 Form
10-K.
10(p)* Employment Agreement dated April 12, 1999 between the Registrant and H.
Dane Reynolds: Incorporated by reference to Exhibit 10(r) to the 1998 Form
10-K.
10(q)*+ One Price Clothing Stores, Inc. Deferred Compensation Plan effective
January 1, 2000 and the related Trust Agreement effective January 27, 2000,
between Carolina First Bank as Trustee and the Registrant.
10(r)*+ One Price Clothing Stores, Inc. Deferred Compensation Plan for
Non-Employee Directors effective January 1, 2000 and the
related Trust Agreement effective January 27, 2000, between
Carolina First Bank as Trustee and the Registrant.
10(s)* Lease Agreement by and between One Price Clothing Stores, Inc. as Tenant
and One Price Realty, Inc. as Landlord dated June 17, 1997: Incorporated by
reference to Exhibit 10(f) to the July 1997 Form 10-Q.
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
27 Financial Data Schedule (electronic filing only)
---------------------------------------
* Denotes a management contract or compensatory plan or agreement.
+ Filed herewith.
</TABLE>
(b) Reports on Form 8-K.
No reports on Form 8-K were required to be filed during the last
quarter of the period covered by this report.
(c) Exhibits.
The response to this portion of Item 14 is submitted as a separate
section of this report.
(d) Financial Statement Schedules.
The response to this portion of Item 14 is submitted as a separate
section of this report.
EXHIBIT 4(d)(5) Amendment Number Five to the Loan and Security Agreement by and
between Congress Financial Corporation (Southern) as Lender and the Registrant,
One Price Clothing, Inc. of Puerto Rico and One Price Clothing - U.S. Virgin
Islands, Inc. as Borrowers dated February 23, 2000.
AMENDMENT NO. 5 TO FINANCING AGREEMENTS
February 23, 2000
One Price Clothing Stores, Inc.
1875 East Main Street
Duncan, South Carolina 29334
One Price Clothing of Puerto Rico, Inc.
1875 East Main Street
Duncan, South Carolina 29334
Gentlemen:
Congress Financial Corporation (Southern) ("Lender"), One Price
Clothing Stores, Inc. ("One Price") and One Price Clothing of Puerto Rico, Inc.
("One Price PR"; and together with One Price, individually referred to as a
"Borrower" and collectively as the "Borrowers") have entered into certain
financing arrangements pursuant to the Loan and Security Agreement, dated March
25, 1996, between the Lender and Borrowers (the "Loan Agreement"), as amended by
Amendment No. 1 to Financing Agreements, dated May 16, 1997, Amendment No. 2 to
Financing Agreements, dated June 17, 1997, Amendment No. 3 to Financing
Agreements, dated February 19, 1998 and Amendment No. 4 to Financing Agreements,
dated January 31, 1999, together with various other agreements, documents and
instruments at any time executed and/or delivered in connection therewith or
related thereto (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, collectively, the
"Financing Agreements"). All capitalized terms used herein and not herein
defined have the meanings given to them in the Financing Agreements.
Borrowers have requested that Lender agree (a) to consent to an
increase in the line of credit provided to Borrower by Carolina First Bank and
(b) to increase the amount of purchase money indebtedness secured by Equipment
and Real Property permitted under the Loan Agreement. Lender is willing to do so
on the terms and conditions and to the extent set forth herein.
In consideration of the foregoing, the mutual agreements and covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
<PAGE>
1. Carolina First Bank.
(a) Subject to the terms and conditions set forth herein,
Lender hereby (i) consents to an increase in the line of credit available for
letters of credit issued for One Price's account under the Carolina Bank
Documents from $5,000,000 to $8,000,000 and (ii) amends clause (i) of Section
9.9(g) of the Loan Agreement by deleting the figure "$5,000,000" and
substituting the following therefor: "$8,000,000".
(b) Lender's consent pursuant to Section 1(a), shall, however,
be conditioned upon Lender's receipt, in form and substance satisfactory to
Lender, of the written agreements between One Price and Carolina Bank setting
forth the foregoing modifications, together with, if required by Lender, a
written confirmation by Carolina Bank of the continued effectiveness of the
Intercreditor Agreement, dated May 16, 1997, between Lender and Carolina Bank,
in form and substance satisfactory to Lender and accompanied by the written
agreement and acknowledgment of One Price.
2. Encumbrances. Section 9.8(e) of the Loan Agreement is hereby amended by
deleting the figure "$2,500,000" and substituting the following therefor:
"$5,000,000".
3. Conditions Precedent. The effectiveness of the amendments set forth
herein are further conditioned upon the satisfaction of each of the following
conditions precedent in a manner satisfactory to Lender:
(a) No Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred; and
(b) Lender shall have received an original of this Amendment,
duly authorized, executed and delivered by Borrowers and One Price VI.
4. Miscellaneous.
(a) This Amendment contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior or
contemporaneous term sheets, proposals, discussions, negotiations,
correspondence, commitments and communications between or among the parties
concerning the subject matter hereof. This Amendment may not be modified or any
provision waived, except in writing signed by the party against whom such
modification or waiver is sought to be enforced. Except for those provisions
specifically modified or waived pursuant hereto, subject, nevertheless to the
periods of effectiveness of the temporary waiver and temporary amendment set
forth, respectively, in Sections 1 and 2 hereof, the Financing Agreements are
hereby ratified, restated and confirmed by the parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Amendment and the Financing Agreements, the terms of this Amendment shall
control.
(b) This Amendment and the rights and obligations hereunder of
each of the parties hereto shall be governed by and interpreted and determined
in accordance with the internal laws of the State of Georgia, without regard to
principles of conflicts of law.
(c) This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
<PAGE>
(d) This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
By the signature hereto of each of their duly authorized officers, all
of the parties hereto mutually covenant and agree as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
(SOUTHERN)
By: /s/ Morris P. Holloway
Morris P. Holloway
Title: Senior Vice President
AGREED AND ACCEPTED:
ONE PRICE CLOTHING STORES, INC.
By: /s/ C. Burt Duren
C. Burt Duren
Title: Vice President & Treasurer
ONE PRICE CLOTHING OF PUERTO RICO, INC.
By: /s/ C. Burt Duren
C. Burt Duren
Title: Vice President & Treasurer
CONSENTED TO AND AGREED:
ONE PRICE CLOTHING - U.S. VIRGIN ISLANDS, INC.
By: /s/ C. Burt Duren
C. Burt Duren
Title: Vice President & Treasurer
EXHIBIT 4(g)(5) Amendment Number Five to the Continuing Commercial Credit
Agreement by and between Carolina First Bank as Lender and the Registrant, One
Price Clothing of Puerto Rico, Inc. and One Price Clothing - U.S. Virgin
Islands, Inc. as Borrowers dated February 23, 2000.
AMENDMENT NUMBER 5
TO
CONTINUING COMMERCIAL CREDIT AGREEMENT
February 23, 2000
One Price Clothing Stores, Inc.
1875 East Main Street
Duncan, South Carolina 29334
One Price Clothing of Puerto Rico, Inc.
1875 East Main Street
Duncan, South Carolina 29334
One Price Clothing - U.S. Virgin Islands, Inc.
1875 East Main Street
Duncan, South Carolina 29334
Gentlemen:
Carolina First Bank ("Bank"), One Price Clothing Stores, Inc. ("One
Price"), One Price Clothing of Puerto Rico, Inc. ("One Price, P.R."), and One
Price Clothing - U.S. Virgin Islands, Inc. ("One Price V.I.", and together with
One Price and One Price, P.R., individually referred to as a "Borrower" and
collectively as "Borrowers") have entered into certain financing arrangements
pursuant to the Continuing Commercial Credit Agreement, dated May 16, 1997,
between Bank and Borrowers, as amended by Amendment Number 1, dated March 20,
1998, Amendment Number 2, dated April 21, 1998, Amendment Number 3, dated
November 5, 1998, and Amendment Number 4, dated March 31, 1999 (the "Credit
Agreement"). All capitalized terms used herein and not herein defined shall have
the meanings given to them in the Credit Agreement.
Borrowers have requested that Bank increase the Maximum Credit of the
Credit Agreement, and Bank is willing to agree to this Amendment, subject to the
terms and conditions set forth herein.
In consideration of the foregoing, the mutual agreements and covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
1. Section 1.6 of the Credit Agreement is hereby amended by
deleting the figure "$3,000,000.00" appearing therein, and
substituting therefor, the figure "$8,000,000.00", effective
February 23, 2000.
2. Miscellaneous.
-------------
a. Entire Agreement; Ratification and Confirmation of
the Credit Agreement.
---------------------
This Amendment contains the entire agreement of the
parties with respect to the specific subject matter
hereof and supersedes all prior or contemporaneous
term sheets, proposals, discussions, negotiations,
correspondence, commitments, and communications
between or among the parties concerning the subject
matter hereof. This Amendment may not be modified or
any provision waived, except in writing, signed by
the party against whom such modification or waiver is
sought to be enforced. Except as specifically
modified herein, and as specifically modified in
Amendment Number 1, Amendment Number 2, and Amendment
Number 4, the Credit Agreement is hereby ratified,
restated, and confirmed by the parties hereto as of
the effective date hereof. To the extent of a
conflict between the terms of this Amendment Number
5, on the one hand, and the Credit Agreement and the
prior amendments, on the other hand, the terms of
this Amendment Number 5 shall control.
b. Governing Law.
-------------
This Amendment and the rights and the obligations
hereunder of each of the parties hereto shall be
governed by and interpreted and determined in
accordance with the internal laws of the state of
South Carolina, with regard to principals of
conflicts of law.
c. Binding Effect.
--------------
This Amendment shall be binding and ensure to the
benefit to each of the parties hereto and their
respective successors and assigns.
d. Counterparts.
------------
This Amendment may be executed in any number of
counterparts, but all of such counterparts shall
together constitute but one in the same agreement. In
making proof of this Amendment, it shall not be
necessary to produce or account for more than one
counterpart thereof signed by each of the parties
hereto. By the signature hereto of each of their duly
authorized officers, all of the parties hereto
mutually covenant and agree as set forth herein.
Yours very truly,
Carolina First Bank
By: /s/ James M. Eanes
James M. Eanes
Title: Vice President
AGREED AND ACCEPTED:
One Price Clothing Stores, Inc.
By: /s/ C. Burt Duren
C. Burt Duren
Title: Vice President & Treasurer
One Price Clothing of Puerto Rico, Inc.
By: /s/ C. Burt Duren
C. Burt Duren
Title: Vice President & Treasurer
One Price Clothing - U.S. Virgin Islands, Inc.
By: /s/ C. Burt Duren
C. Burt Duren
Title: Vice President & Treasurer
EXHIBIT 10(q) One Price Clothing Stores, Inc. Deferred Compensation Plan
effective January 1, 2000 and the related Trust Agreement effective January 27,
2000, between Carolina First Bank as Trustee and the Registrant.
One Price Clothing Stores, Inc.
Deferred Compensation Plan
One Price Clothing Stores, Inc., a Delaware corporation (the
"Company"), hereby establishes this Deferred Compensation Plan (the "Plan"),
effective January 1, 2000, to enable Participants covered under the Plan to
enhance their retirement security by permitting them to enter into agreements
with the Company to defer compensation and receive benefits at retirement,
death, separation from service, and as otherwise provided under the Plan.
ARTICLE 1
DEFINITIONS
1.1 Annual Deferral: shall mean the amount of Compensation, which the
Participant elects to defer under his or her Deferral Election pursuant to
Article 3 of the Plan.
1.2 Beneficiary: shall mean the person or persons or entity designated as such
in accordance with Article 10 of the Plan.
1.3 Change in Control: shall mean the occurrence of either of the following two
events:
1. A change in the Board of Directors of the Company, with the
result that 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 whose
appointment or election was supported by a majority of the
Incumbent Directors shall be considered an Incumbent Director
for purposes hereof; or
2. The occurrence of a Section 11(a)(ii) Event, as defined in the
Shareholders Rights Agreement, dated November 3, 1994, between
Wachovia Bank of North Carolina, N.A., as Rights Agent, and
the Company ("Rights Agreement") as amended.
1.4 Committee: shall mean the Committee appointed by the Company to administer
the Plan pursuant to Article 9 of the Plan.
1.5 Company: shall mean One Price Clothing Stores, Inc., and any successor(s)
in interest.
1.6 Compensation: shall mean a Participant's salary and bonuses, before
reductions for deferral.
1.7 Crediting Rate: shall mean the gain or loss on certain investment
alternatives designated by the Committee from time to time for determining
adjustments of amounts credited to the Deferral Accounts of Participants.
The Committee, in its sole discretion, will establish administrative rules
for applying the Crediting Rate.
1.8 Deferral Account: shall mean the bookkeeping device used by the Company to
measure and determine the amounts to be paid to a Participant under the
Plan. One Deferral Account will be established for amounts deferred by a
Participant under the Plan. No assets will actually be placed into this
account in the Participant's name.
1.9 Deferral Contribution Period: shall mean the period of one (1) Plan Year,
or such other period as the Committee may permit in its discretion, over
which the Participant has elected to defer Compensation pursuant to Article
3 of the Plan. A Plan Year shall be January 1 through December 31.
1.10 Deferral Commitment: shall mean a commitment made by a Participant to defer
Compensation pursuant to Articles 2 and 3 of the Plan for which a Deferral
Election Form has been submitted by the Participant.
1.11 Deferral Election Form: shall mean a written agreement between the Company
and the Participant, in the form attached as Exhibit A hereto, entered into
pursuant to Section 2.1 of the Plan, by which the Participant elects to
participate in the Plan and makes a Deferral Commitment. Participants must
state the percentage or dollar amount to be deferred, and elect how and
when the account will be distributed, pursuant to the Deferral Election
Form.
1.12 Disability: shall mean a physical or mental condition that prevents a
Participant from performing his or her normal duties of employment. A
Participant shall be presumed to be disabled if the Participant makes
application for, or is otherwise eligible for disability benefits under the
long term disability plan of the Employer and qualifies for such benefits.
If the Participant is not covered by an Employer sponsored long term
disability plan, then the Participant may be considered disabled if the
Committee so determines upon review of one or more medical opinions
acceptable to the Committee.
1.13 Eligible Employee: To be eligible, an employee must be a member of a
"select group of management or highly compensated employees" for purposes
of ERISA; shall be an employee of the Company or an affiliate of the
Company; shall have been determined to be eligible by the Committee to
participate in the Plan; shall meet the definition of "highly compensated
employee" as defined by the Internal Revenue Code at the time of employee's
eligibility; and must be a participant in and make the maximum allowable
contribution to the Company's 401(k) Savings Plan unless excluded from the
401 (k) Savings Plan for the sole reason that he has not met the one year
of service required to participate in such 401(k) Savings Plan.
1.14 Employer: shall mean the Company.
1.15 ERISA: shall mean the Employee Retirement Income Security Act of 1974, as
amended.
1.16 Hardship: shall mean an unforeseeable emergency, such as a sudden or
unexpected illness, accident, or loss of property due to casualty, as
determined in the Plan. An occurrence shall not be deemed to be an
unforeseeable emergency to the extent that the associated hardship may be
relieved by the liquidation of assets. Cash needs arising from foreseeable
events such as the purchase of a residence or education expenses for
children shall not, alone, be considered a Hardship.
1.17 Participant: shall mean an Eligible Employee, as defined in Section 1.13,
who is participating in the Plan as provided in Article 2
1.18 Plan: shall mean the One Price Clothing Stores, Inc. Deferred Compensation
Plan, as set forth in this document and as the same may be amended,
supplemented and/or restated from time to time and any successor plan.
1.19 Plan Year: shall mean the 12-month period from January 1 through December
31.
1.20 Retirement: shall mean the date of the cessation of the Participant's
employment with the Company, after the Participant attains normal
retirement (age 65), or an early retirement (age 50 - 64 with 5 years of
continuous service), or such other date as the Committee may determine in
its discretion.
1.21 Termination of Employment: shall mean the date of the cessation of the
Participant's employment with the Company for any reason whatsoever,
whether voluntary or involuntary, other than as a result of the
Participant's Retirement, or death.
<PAGE>
1.22 Valuation Date: shall mean the last day of each Plan Year calendar quarter,
or such other dates as the Committee may determine in its discretion, which
must be at least annually, for the valuation of a Participant's Deferral
Account.
ARTICLE 2
PARTICIPATION
2.1 Deferral Election Form. Any Eligible Employee may elect to participate in
the Plan and to make a Deferral Commitment by submitting a Deferral
Election Form, as defined in Section 1.11 herein, to the Committee prior to
the beginning of the Deferral Contribution Period. Except as otherwise
provided in this Plan, the Participant's Deferral Commitment shall be
irrevocable.
2.2 Continuation of Participation. A Participant who has elected to participate
in the Plan by making a Deferral Commitment shall continue as a Participant
in the Plan for purposes of such Deferral Commitment even though in any
Plan Year after such Deferral Commitment such Participant elects not to
make a new Deferral Commitment or ceases to be an Eligible Employee. A
Participant shall not be eligible to make a new Deferral Commitment unless
the Participant is an Eligible Employee with respect to the Plan Year for
which the election is made.
ARTICLE 3
FORM OF DEFERRAL COMMITMENTS
3.1 Deferral Commitment. Subject to Sections 3.2 and 3.3, a Participant may
elect in the Deferral Election Form to defer an amount of up to 15% of the
Participant's Compensation, as defined in Section 1.6, less the
Participant's 401(k) contribution, so long as the amount of Compensation
net of the amount deferred does not fall below any applicable thresholds
determined by the Committee in its sole discretion.
3.2 Minimum Deferral Commitment. A Participant may not elect to defer less than
$2,500 in any one Plan Year.
3.3 Maximum Deferral Commitment. The maximum Deferral Commitment allowed in any
Deferral Contribution Period shall be as set forth in Section 3.1;
provided, however, the Committee, in its sole discretion, may establish a
different maximum Deferral Commitment limit for the purpose of controlling
the Company's financial obligations under the Plan or for any other reason
deemed necessary.
3.4 Incomplete Deferral. Notwithstanding anything contained herein to the
contrary, if the Participant has not or will not actually defer the amount
specified in such Participant's Deferral Election Form during the Deferral
Contribution Period, the Participant shall, nevertheless, be permitted to
continue participation in the Plan. No new deferral will be accepted by the
Company until the previously incomplete deferral is fulfilled by the
Participant.
3.5 Withholding. The Committee shall make arrangements for satisfying any
federal, state or local income tax withholding requirements and Social
Security or other employee tax requirements applicable to deferral of
Compensation under the Plan.
ARTICLE 4
DEFERRAL ACCOUNTS
4.1 Deferral Accounts. A Deferral Account, as defined in Section 1.8 herein,
shall be established for each Participant. The Deferral Account shall be
credited with the applicable portion of the Annual Deferral as of the
approximate date such amounts would otherwise have been paid to the
Participant. Deferral Accounts shall, except as otherwise provided in the
Plan, be adjusted by the Crediting Rate in effect for each Plan Year, from
the approximate date such deferrals would have been paid through the
earlier of the Participant's date of death or the following Valuation Date.
Notwithstanding anything in this paragraph to the contrary, the Committee
may, in its sole discretion, establish administrative rules for the purpose
of crediting Deferral Accounts.
4.2 Statements of Account. The Committee shall provide periodically (but no
less frequently than annually) to each Participant a statement setting
forth the balance of the Deferral Account maintained for such Participant.
4.3 Vesting of Accounts & Company Contributions. Each Participant shall be one
hundred percent (100%) vested at all times in the portion of his Deferral
Account derived from Annual Deferrals and gains or losses actually credited
to such Participant's Deferral Account.
The Company may from time to time, in its discretion, credit additional
matching contributions to Participants which shall be allocated to
their Deferral Accounts. This "Company Match" is discretionary and is
determined annually by the Board of Directors. The Board of Directors,
in its sole discretion, may make changes in the Company Match and
Participants will be notified by the Plan Administrator of any such
changes.
The anticipated amount of the Company Match under this Plan, if any,
shall be 50% of the first 5% of the Participant's Compensation deferred
under this Plan and the Company's 401(k) plan less the amount of
Company Match actually made to the Company's 401(k). The combined
Company Match to both this Plan and the Company's 401(k), however,
shall not exceed the maximum Company Match that would otherwise be
available under the Company's 401(k) if the Participant could defer to
the Company's 401(k) plan the maximum amount allowed under Internal
Revenue Code Section 402(g) (e.g., $10,500 for Plan Year 2000).
The portion of the Participant's Deferral Account created by Company
Matches (including any earnings on the Participant's Company Match)
will vest at the rate of 20% per full year of vested service as
follows: less than 1 year - 0%; 1 year - 20%; 2 years - 40%; 3 years -
60%; 4 years - 80%; and 5 years or more - 100%.
In the event Participant dies while in service, incurs a Disability as
determined in Section 1.12 herein, the Plan is terminated, or the
Company experiences a Change in Control, the benefits calculated under
Articles 5 and 6 of the Plan shall assume that the Participant became
one hundred percent (100%) vested in any interest credited to his
Deferral Account, any balance created by Company Matches, and any
earnings on any Company Match, credited to his Deferral Account as of
the day prior to his date of death or Disability, or the date of Plan
termination or Change in Control.
ARTICLE 5
PAYMENT OF BENEFITS
5.1 Retirement Benefits. Upon Retirement, as defined in Section 1.20 herein,
the Company shall pay to the Participant a benefit in the form provided in
Section 5.2 of the Plan, based on the balance of the Participant's Deferral
Account.
5.2 Form of Benefit. The retirement benefit attributable to a Deferral Account
shall be paid in accordance with the Participant's direction as found on a
Deferral Election Form prescribed by the Committee for designation of form
of payment; such payment election shall be made at the time the Deferral
Commitment election is made, and may be changed up to 6 months prior to
Retirement. If no other election is made, the retired Participant will
receive 15 annual retirement distributions in January of each year
following Retirement. Alternate distribution options are as follows:
<PAGE>
(a) Lump Sum. A lump sum payment equal to the balance of the
applicable Deferral Account as of the Valuation Date
following Retirement. Payment will commence no earlier than
the first month following Retirement.
(b) Installment Payments. Annual installment payments in
substantially equal amounts over a period of five or ten
years. Installment payments shall be made in January of each
year following Retirement. Interest will be credited to the
unpaid balance in the Deferral Account at a rate in effect for
each Plan Year. The Committee, in its sole discretion, may
establish rules for making payments and crediting interest to
the unpaid Deferral Account balance.
5.3 Termination of Employment Benefits. Subject to the Retirement provisions in
Section 5.2, upon Termination of Employment prior to age 65, the Company
shall pay the Participant a benefit in the form of a lump sum payment equal
to the balance of the Participant's Deferral Account as of the date the
Participant terminated employment. Such payment shall be made as soon as
administratively possible after said termination date.
5.4 In-Service Distributions. A Participant can elect to receive a lump sum
payment of benefits created and generated by the contribution for a given
Plan Year without terminating employment. The benefit payment will be
received by January of a chosen year at least five (5) years after the end
of the Plan Year in which the contribution was made. This election must be
made at the time of deferral.
5.5 Small Benefit Exception. Notwithstanding any of the foregoing, in the event
the sum of all benefits payable to the Participant is less than or equal to
ten thousand dollars ($10,000), the Company may, in its sole discretion,
elect to pay such benefits in a single lump sum payment on the date such
benefits first become payable.
5.6 Constructive Receipt. In the event the Committee determines that amounts
deferred under the Plan have been constructively received by a Participant
and must be recognized as income for federal income tax purposes, such
amounts shall be distributed to the Participant. The determination of the
Committee under this Section 5.6 shall be binding and conclusive.
ARTICLE 6
SURVIVOR BENEFITS
6.1 Pre-Retirement Survivor Benefit. If a Participant dies prior to Retirement
or Termination of Employment, the Company shall pay to the Participant's
Beneficiary a lump sum benefit equal to the balance of the Participant's
Deferral Account as of the date of the Participant's last Valuation Date.
6.2 Post-Retirement Survivor Benefit. If a Participant dies after Retirement,
the Company shall pay to the Participant's Beneficiary the remaining
benefits payable to the Participant under the Plan for the remainder of the
benefit period that such benefits would have been paid to the Participant.
6.3 Small Benefit Exception. Notwithstanding any of the foregoing, in the event
the sum of all benefits payable to the Beneficiary is less than or equal to
ten thousand dollars ($10,000), the Company may, in its sole discretion,
elect to pay such benefits in a single lump sum payment on the date such
benefits first become payable.
ARTICLE 7
DISABILITY
If a Participant is determined to have a Disability, as defined in Section 1.12
of the Plan, the Participant shall, effective as of the date such Participant is
no longer paid his Compensation by the Company, cease deferrals under the Plan
except for any Deferral Commitment regarding any Compensation which is earned or
payable subsequent to the Disability. The Participant's Deferral Account shall
continue to be credited with interest at the Crediting Rate until such time as
the Participant's benefits under the Plan are distributed in accordance with the
Participant's election.
<PAGE>
ARTICLE 8
CONDITIONS RELATED TO BENEFITS
8.1 Nonassignability. The benefits provided under the Plan may not be
alienated, assigned, transferred, pledged or hypothecated by or to any
person or entity, at any time or in any manner whatsoever. These
benefits shall be exempt from the claims of creditors or other
claimants of any Participant and from all orders, decrees, levies,
garnishment or executions against any Participant to the fullest extent
allowed by law.
8.2 Hardship Distribution. Upon finding that the Participant or the
Beneficiary has suffered a Hardship, the Committee may, in its sole
discretion and upon written petition by the Participant or Beneficiary,
accelerate distributions of benefits under the Plan in the amount
reasonably necessary to alleviate such Hardship or as requested by the
Participant or the Beneficiary. If a distribution is to be made to a
Participant on account of Hardship, the Participant may not make
subsequent Deferral Commitments under the Plan for the balance of the
Plan Year and the following Plan Year. Any Deferral Commitment in
effect at the time such distribution is made under this section shall
be canceled.
8.3 No Right to Company Assets. The benefits paid under the Plan shall be
paid from the general funds of the Company, and the Participant and any
Beneficiary shall be no more than unsecured general creditors of the
Company with no special or prior right to any assets of the Company for
payment of any obligations hereunder. Subject to the preceding
sentence, the Company shall establish an irrevocable trust to
separately hold and maintain assets for the sole purpose of satisfying
the Company's obligations under the Plan. To enable the Company to
meets its financial commitment under the Plan, insurance may be
purchased on each Participant's life. This insurance is owned by and
payable to Company for the benefit of Plan participants. As a condition
of being eligible to participate, Participants agree to execute any
document and cooperate with the Company in obtaining insurance.
8.4 Protective Provisions. The Participant shall cooperate with the Company
by furnishing any and all information requested by the Committee in
order to facilitate the payment of benefits hereunder, taking such
physical examinations as the Committee may deem necessary, and taking
such other actions as may be requested by the Committee. If the
Participant refuses to cooperate or makes any material misstatement or
nondisclosure of information, then no benefits will be payable
hereunder to such Participant or his Beneficiary.
8.5 Withholding. The Participant or the Beneficiary shall make appropriate
arrangements with the Company for satisfaction of any federal, state or
local income tax withholding requirements and Social Security or other
employee tax requirements applicable to the payment of benefits under
the Plan. If no such arrangements are made, the Company may provide, at
its discretion, for such withholding and tax payments as may be
required.
8.6 Loans. Loans of account balances are not permitted under this Plan.
8.7 Unscheduled Withdrawal. At any time prior to commencement of payments,
the Participant may request a payment in a lump sum of all or a portion
of the balance of Participant's Deferral Account for any reason with a
ten percent (10%) penalty. If the Participant exercises this option,
the Participant may not participate in the Plan for the balance of the
Plan Year and the following Plan Year.
ARTICLE 9
ADMINISTRATION OF THE PLAN
The Committee shall administer the Plan and interpret, construe and apply its
provisions in accordance with its terms. The Committee shall determine in its
sole discretion those who are eligible to participate in the Plan and shall have
the right to set guidelines for participation under the Plan including, but not
limited to, the type, manner and level of Deferral Commitments. The Committee
shall further establish, adopt or revise such other rules and regulations as it
may deem necessary or advisable for the administration of the Plan. All
decisions of the Committee shall be final and binding. The individuals serving
on the Committee shall, except as prohibited by law, be indemnified and held
harmless by the Company from any and all liabilities, costs, and expenses
(including legal fees), to the extent not covered by liability insurance,
arising out of any action taken by any member of the Committee with respect to
the Plan, unless such liability arises from the individual's own gross
negligence or willful misconduct.
ARTICLE 10
BENEFICIARY DESIGNATION
10.1 Beneficiary Designation. The Participant must designate one or more
beneficiaries to receive any unpaid Plan benefits upon their death. The
Participant shall have the right, at any time, to designate any person
or persons as a Beneficiary (both primary and contingent) to whom
payment under the Plan shall be made in the event of the Participant's
death. The Beneficiary designation shall be effective when it is
submitted in writing and delivered to the Committee during the
Participant's lifetime on a form prescribed by the Committee.
10.2 New Beneficiary Designation. The Participant shall have the right to
change or revoke any such designation from time to time by filing a new
designation or notice of revocation with the Company, and no notice to
any Beneficiary or consent by any Beneficiary shall be required to
effect any such change or revocation.
10.3 Failure to Designate Beneficiary. If a Participant fails to designate a
Beneficiary before his death, the Beneficiary shall be the
Participant's surviving spouse. If no designated Beneficiary or spouse
survives the Participant, the Committee shall direct the Company to pay
the balance of the Participant's Deferral Account in a lump sum to the
executor or administrator for his estate; provided, however, if no
executor or administrator shall have been appointed, and actual notice
of the death was given to the Committee within sixty (60) days after
the Participant's death, and if his Deferral Account balance does not
exceed ten thousand dollars ($10,000), the Committee may direct the
Company to pay the Deferral Account balance to such person or persons
as the Committee determines may be entitled to it, and the Committee
may require such proof of right and/or identity of such person or
persons as the Committee may deem appropriate and necessary.
ARTICLE 11
AMENDMENT AND TERMINATION OF THE PLAN
11.1 Amendment of the Plan. The Company may at any time amend the Plan in
whole or in part, provided however, that such amendment (i) shall not
decrease the vested balance of the Participant's Deferral Account at
the time of such amendment and (ii) shall not retroactively decrease
the applicable Crediting Rates of the Plan prior to the time of such
amendment. The Company or Committee may amend the Crediting Rates of
the Plan prospectively.
11.2 Termination of the Plan. The Company may at any time terminate the
Plan as to all or any group of Participants. In the event of such
termination, the Company shall pay to the Participant the benefits
the Participant is entitled to receive as soon as administratively
possible following termination of the Plan. The Crediting Rate will
be applied to the Participant's Deferral Account until distribution
under this section.
ARTICLE 12
MISCELLANEOUS
12.1 Successors of the Company. The rights and obligations of the Company under
the Plan shall inure to the benefit of, and shall be binding upon, the
successors and assigns of the Company.
12.2 ERISA Plan. The Plan is intended to be an unfunded plan maintained
primarily to provide deferred compensation benefits for "a select group of
management or highly compensated employees" within the meaning of Sections
201, 301, and 401 of ERISA and therefore to be exempt from Parts 2, 3, and
4 of Title I of ERISA. Notwithstanding any provisions of this Plan to the
contrary, if any Participant is determined not to be a "member of a select
group of management or highly compensated employee" within the meaning of
ERISA or applicable regulations thereunder at the time a Deferral
Commitment is elected, such Participant will not be eligible to complete
such Deferral Commitment and shall receive an immediate lump sum payment
equal to the unpaid balance of the Deferral Account as of the most recent
Valuation Date. Upon such payment, no survivor benefit or other benefit
shall thereafter be payable under this Plan either to the Participant or
any Beneficiary of the Participant, with respect to said Deferral Account.
12.3 Employment Not Guaranteed. Nothing contained in the Plan nor any action
taken hereunder shall be construed as a contract of employment or as giving
any Participant any right to continued employment with the Company.
12.4 Gender, Singular and Plural. All pronouns and variations thereof shall be
deemed to refer to the masculine or feminine, as the identity of the person
or persons may require. As the context may require, the singular may be
read as the plural and the plural as the singular.
12.5 Captions. The captions of the articles and sections of the Plan are for
convenience only and shall not control or affect the meaning or
construction of any of its provisions.
12.6 Validity. In the event any provision of the Plan is held invalid, void or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provisions of the Plan.
12.7 Waiver of Breach. The waiver by the Company of any breach of any provision
of the Plan by the Participant shall not operate or be construed as a
waiver of any subsequent breach by the Participant.
12.8 Applicable Law. The Plan shall be governed and construed in accordance with
the laws of the State of South Carolina except where the laws of the State
of South Carolina are preempted by ERISA.
12.9 Notice. Any notice or filing required or permitted to be given to the
Company under the Plan shall be sufficient if in writing or hand delivered,
or sent by registered or certified mail, return receipt requested, to the
principal office of the Company, directed to the attention of the
Committee. Such notice shall be deemed given as of the date of delivery, or
if delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
12.10Arbitration. Any claim, dispute or other matter in question of any kind
relating to this Plan shall be settled by arbitration in accordance with
the Rules of the American Arbitration Association. Notice of demand for
arbitration shall be made in writing to the opposing party and to the
American Arbitration Association within a reasonable time after the claim,
dispute or other matter in question has arisen. In no event shall a demand
for arbitration be made after the date when the applicable statute of
limitations would bar the institution of a legal or equitable proceeding
based on such claim, dispute or other matter in question. The decision of
the arbitrators shall be final and may be enforced in any court of
competent jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed
this 23rd day of December, 1999, effective as of January 1, 2000.
ONE PRICE CLOTHING STORES, INC.
By: /s/ C. Burt Duren
C. Burt Duren
Title: Vice President & Treasurer
TRUST UNDER ONE PRICE CLOTHING STORES, INC.
DEFERRED COMPENSATION PLAN
This Trust Agreement made this 27th day of January, 2000 by and between One
Price Clothing Stores, Inc. (Company) and Carolina First Bank (Trustee);
WHEREAS, the Company has adopted the One Price Clothing Stores, Inc.
Deferred Compensation Plan ("Plan"), a nonqualified deferred compensation Plan;
and
WHEREAS, the Company has incurred or expects to incur liability under the
terms of the Plan with respect to the individuals participating in the Plan; and
WHEREAS, the Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of the Company's Insolvency, as herein defined, until paid
to Plan participants and their beneficiaries in such manner and at such times as
specified in the Plan; and
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
and
WHEREAS, it is the intention of the Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plan.
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held, and disposed of as follows:
Section 1. Definitions
(a) "Bankruptcy Code" means Title II of the United States Code,
as amended.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Insolvency" or "Insolvent" means the inability to pay debts
as they come due, or being subject to a pending proceeding as
a debtor under the Bankruptcy Code.
(d) "Participant" means an individual participating in the Plan.
(e) "Plan" means the One Price Clothing Stores, Inc. Deferred
Compensation Plan.
Section 2. Establishment of Trust
(a) The Company hereby deposits with the Trustee in trust the
assets listed in Exhibit A, which shall become the principal
of the Trust to be held, administered, and disposed of by the
Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which the
Company is the grantor, within the meaning of subpart E, part
I, subchapter J, chapter 1, subtitle A of the Internal Revenue
Code of 1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be
held separate and apart from other funds of the Company and
shall be used exclusively for the uses and purposes of
Participants and general creditors as herein set forth.
Participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets
of the Trust. Any rights created under the Plan and this Trust
Agreement shall be mere unsecured contractual rights of
Participants and their beneficiaries against the Company. Any
assets held by the Trust will be subject to the claims of the
Company's general creditors under federal and state law in the
event of Insolvency, as defined in Section 1(d) herein.
(e) The Company, in its sole discretion, may at any time, or from
time to time, make additional deposits of cash or other
property in trust with the Trustee to augment the principal to
be held, administered, and disposed of by the Trustee as
provided in this Trust Agreement. Neither the Trustee nor any
Participant or beneficiary shall have any right to compel such
additional deposits.
Section 3. Payments to Participants and Their Beneficiaries
(a) The Company shall deliver to the Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each
Participant (and his or her beneficiaries), that provides a formula or
other instructions acceptable to the Trustee for determining the amounts so
payable, the form in which such amount is to be paid (as provided for or
available under the Plan), and the time of commencement for payment of such
amounts. Except as otherwise provided herein, the Trustee shall make
payments to the Participants and their beneficiaries in accordance with
such Payment Schedule. The Trustee shall make provision for the reporting
and withholding of any federal, state, or local taxes that may be required
to be withheld with respect to the payment of benefits pursuant to the
terms of the Plan and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld,
and paid by the Company.
(b) The entitlement of a Participant or his or her beneficiaries to benefits
under the Plan shall be determined by the Company or such party as it shall
designate under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
(c) The Company may make payment of benefits directly to Participants or their
beneficiaries as they become due under the terms of the Plan. The Company
shall notify the Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to Participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with
the terms of the Plan, the Company shall make the balance of each such
payment as it falls due. The Trustee shall notify the Company where
principal and earnings are not sufficient.
Section 4. Trustee Responsibility Regarding Payments to Trust Beneficiary
When Company is Insolvent
(a) The Trustee shall cease payment of benefits to Participants and
their beneficiaries if the Company is Insolvent.
(b) At all times during the continuance of this Trust, as provided in
Section 2(d) hereof, the principal and income of the Trust shall
be subject to claims of general creditors of the Company under
federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive Officer of
the Company shall have the duty to inform the Trustee in
writing of the Company's Insolvency. If a person claiming
to be a creditor of the Company alleges in writing to the
Trustee that the Company has become Insolvent, the Trustee
shall determine whether the Company is Insolvent and,
pending such determination, the Trustee shall discontinue
payment of benefits to Participants or their
beneficiaries.
(2) Unless the Trustee has actual knowledge of the Company's
Insolvency, or has received notice from the Company or a
person claiming to be a creditor alleging that the Company
is Insolvent, the Trustee shall have no duty to inquire
whether the Company is Insolvent. The Trustee may in all
events rely on such evidence concerning the Company's
solvency as may be furnished to the Trustee and that
provides the Trustee with a reasonable basis for making a
determination concerning the Company's solvency.
(3) If at any time the Trustee has determined that the Company
is Insolvent, the Trustee shall discontinue payments to
Participants or their beneficiaries and shall hold the
assets of the Trust for the benefit of the Company's
general creditors. Nothing in this Trust Agreement shall
in any way diminish any Participant's rights as general
creditors of the Company with respect to benefits due
under the Plan or otherwise.
(4) The Trustee shall resume the payment of benefits to
Participants or their beneficiaries in accordance with
Section 3 of this Trust Agreement only after the Trustee
has determined that the Company is not Insolvent (or is no
longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 4(b) hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due to Participants or their
beneficiaries under the terms of the Plan for the period of such
discontinuance, less the aggregate amount of any payments made to
Participants or their beneficiaries by the Company in lieu of the
payments provided for hereunder during any such period
discontinuance.
Section 5. Payments to the Company
Except as provided in Section 4 hereof, after the Trust has become
irrevocable, the Company shall have no right or power to direct the
Trustee to return to the Company or to divert to others any of the Trust
assets before all payment of benefits have been made to Participants and
their beneficiaries pursuant to the terms of the Plan.
Section 6. Investment Authority
In addition to the powers conferred upon the Trustee either expressly
by, or by necessary implication of, the other provisions of this Trust
Agreement, the Trustee shall have all other powers, not inconsistent
with law or equity, as may be necessary and proper to attain the
objectives of this Trust Agreement. All rights associated with assets of
the Trust shall be exercised by the Trustee or the person designated by
the Trustee, and shall in no event be exercisable by or rest with
Participants.
By way of illustration, and not by way of limitation, the Trustee shall
have power:
(a) To invest and reinvest in, or exchange assets for, any
securities, insurance policies or other properties as directed by
the Company. In the absence of directions from the Company, the
Trustee, after ten (10) days advance written notice to the
Company, shall have power to invest and reinvest and exchange
assets as the Trustee deems advisable without being limited in
the selection of investments by any statutes, rules of law,
custom or usage.
(b) To have and possess any or all of the rights of an owner with
respect to any life insurance policy held in the Trust,
including, without limiting the generality of the foregoing, the
rights to receive or apply dividends or distributive shares of
surplus, disability benefits, surrender values or proceeds of
matured endowments; to obtain and receive from the issuing
insurance company such advances or loans on account of any such
policy as may be available; to sell, assign or pledge the policy;
to surrender the policy; and to exercise any option or privilege
granted in the policy.
Notwithstanding the foregoing, the Trustee shall have no power to
name a beneficiary of the policy other than the Trust, to assign
the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
(c) To sell or exchange any property at any time held by it, and any
sale may be made by a private contract or by public auction, and
for cash or upon credit, or partly for cash and partly upon
credit, as the Trustee may deem best, and no person dealing with
the Trustee shall be bound to see to the application of the
purchase money or inquire into the validity, expediency or
propriety of any such sale or other disposition.
(d) To give and execute powers of attorney for the cancellation of
any mortgages; to continue mortgages beyond and after maturity,
with or without renewal or extension, upon such terms as may seem
to the Trustee advisable; to foreclose, as an incident to
collection of any bond or note, any mortgage or pledge securing
such bond or note, and to purchase the mortgaged or pledged
property or acquire the same by conveyance without foreclosure;
and to retain any property bought in under foreclosure or taken
over without foreclosure for such time as to the Trustee shall
deem best.
(e) To manage, operate, repair, improve, partition, mortgage or lease
for any term or terms of years, whether within or beyond the
duration of the Trust, any real estate or any other property
whatsoever which may at any time be held by the Trustee upon such
terms and conditions as the Trustee deems advisable, using other
trust assets for any of such purposes, if deemed advisable; and
to grant and convey by lease or other instruments for terms
within or beyond the duration of the Trust, the right to explore
for and to produce and remove oil, gas, and minerals on, in or
from any lands at any time held by the Trustee, and to grant
perpetual easement or easements for terms within or beyond the
duration of the Trust on, over and with respect to any such
lands.
(f) To compromise, compound, arbitrate or otherwise adjust and settle
any debt or obligation due to or from it as Trustee hereunder to
reduce the rate of interest on, to extend or otherwise modify, or
to foreclose upon default or otherwise enforce any such
obligation.
(g) To execute any investment directions from the Company with
respect to investment fund elections under any variable
annuities, mutual funds or life insurance contracts held in the
Trust.
(h) To make, execute, acknowledge and deliver any and all deeds,
leases, assignments and any other instruments.
(i) To cause any investments from time to time held by it to be
registered in, or transferred into, its name as Trustee or the
name of its nominee or nominees or to retain them unregistered or
in form permitting transferability by delivery, but the books and
records of the Trustee shall at all times show that all such
investments are part of the Trust.
(j) To borrow or raise money for the purpose of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall
deem advisable; and for any sum so borrowed, to issue a
promissory note as Trustee, and to secure the repayment thereof
by pledging all, or any part, of the Trust assets; and no person
lending money to the Trustee shall be bound to see to the
application of the money lent or to inquire into the validity,
expediency, or propriety of any borrowing.
(k) To keep such portion of the Trust in cash or cash balances as the
Trustee may, from time to time, deem to be reasonable and in the
best interests of the Plan, without liability for interest
thereon.
(l) To accept and retain for such time as it may deem advisable any
securities or other property received or acquired by it as
Trustee hereunder, whether or not such securities or other
property would normally be purchased as investments hereunder.
(m) To do all acts whether or not expressly authorized herein which
it may deem necessary or proper for the protection of the
property held hereunder and to carry out the purposes of the
Plan.
Trust assets shall be invested as directed by the Company. The Trustee
shall not be liable if such directions result in a breach of any duty of
the Trustee to diversify, to maintain liquidity or to meet any other
investment standard. Absent direction from the Company, the Trustee
shall invest the Trust assets, as described above.
Section 7. Disposition of Income
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
Section 8. Accounting by the Trustee
(a) The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
the Company and the Trustee. Within forty-five (45) days following the
close of each calendar year and within thirty (30) days after the removal
or resignation of the Trustee, the Trustee shall deliver to the Company a
written account of its administration of the Trust during such year or
during the period from the close of the last preceding year to the date of
such removal or resignation, setting forth all investments, receipts,
disbursements, and other transactions effected by it, including a
description of all securities and investments purchased and sold with the
cost or net proceeds of such purchases or sales (accrued interest paid or
receivable being shown separately), and showing all cash, securities, and
other property held in the Trust at the end of such year or as of the date
of such removal or resignation, as the case may be.
(b) If no objection is made to a written account of the Trustee within ninety
(90) days after it is rendered, approval of the account shall be deemed to
have been given. In the event of the resignation or discharge of a Trustee,
the procedures outlined in this Section shall apply with respect to the
rendition by such Trustee of its account, and the approval thereof, for the
accounting period ending with the date of resignation or discharge. It is
provided, however, that this Section shall not be construed to give the
Company the power to alter, amend, revoke or terminate the Trust.
(c) Notwithstanding any provisions hereof, the Trustee shall have the right to
apply to a court of competent jurisdiction for the judicial settlement of
any such accounts and in such action or proceeding it shall be necessary to
join as parties thereto only the Trustee and the Company. Any judgment or
decree which may be entered in any such action or proceeding shall be
conclusive and binding upon all parties having or claiming to have any
interest in the Trust assets.
Section 9. Responsibility of Trustee
(a) The Trustee shall incur no liability to any person for any action
taken pursuant to a direction, request, or approval given by the
Company which is contemplated by, and in conformity with, the
terms of the Plan or this Trust and is given in writing by the
Company. In the event of a dispute between the Company and a
party, the Trustee may apply to a court of competent jurisdiction
to resolve the dispute.
(b) If the Trustee undertakes or defends any litigation arising in
connection with this Trust, the Company agrees to indemnify the
Trustee against the Trustee's costs, expenses, and liabilities
(including, without limitation, attorneys' fees and expenses)
relating thereto and to be primarily liable for such payments. If
the Company does not pay such costs, expenses, and liabilities in
a reasonably timely manner, the Trustee may obtain payment from
the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel
for the Company generally) with respect to any of its duties or
obligations hereunder.
(d) The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants, or other professionals to assist
it in performing any of its duties or obligations hereunder.
(e) The Trustee shall have, without exclusion, all powers conferred
on Trustees by applicable law, unless expressly provided
otherwise herein; provided, however, that if an insurance policy
is held as an asset of the Trust, the Trustee shall have no power
to name a beneficiary of the policy other than the Trust, to
assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or to applicable law, the Trustee shall not
have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom, within
the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
Section 10. Compensation and Expenses of Trustee
The Company shall pay all administrative and Trustee's fees and
expenses. If the administrative and Trustee's fees and expenses are not
paid within ninety (90) days after such payment is due, the expenses and
fees shall be paid from the Trust.
Section 11. Resignation and Removal of Trustee
(a) The Trustee may resign at any time by written notice to the
Company, which shall be effective thirty (30) days after receipt
of such notice unless the Company and the Trustee agree
otherwise.
(b) The Trustee may be removed by the Company on thirty (30) days
notice or upon shorter notice accepted by Trustee.
(c) Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred
to the successor Trustee. The transfer shall be completed within
thirty (30) days after receipt of notice of resignation, removal,
or transfer, unless the Company extends the time limit.
(d) If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 12 hereof, by the effective
date or resignation or removal under paragraphs (a) or (b) of
this section. If no such appointment has been made, the Trustee
may apply to a court of competent jurisdiction for appointment of
a successor or for instructions. All expenses of the Trustee in
connection with the proceeding shall be allowed as administrative
expenses of the Trust.
Section 12. Appointment of Successor
If the Trustee resigns or is removed in accordance with Section 11(a) or
(b) hereof, the Company may appoint any third party, such as a bank
trust department or other party that may be granted corporate trustee
powers under state law, as a successor to replace the Trustee upon
resignation or removal. The appointment shall be effective when accepted
in writing by the new Trustee, who shall have all of the rights and
powers of the former Trustee, including ownership rights in the Trust
assets. The former Trustee shall execute any instrument necessary or
reasonably requested by the Company or the successor Trustee to evidence
the transfer.
Section 13. Amendment or Termination
(a) This Trust Agreement may be amended by a written instrument
executed by the Trustee and the Company. Notwithstanding the
foregoing, no such amendment shall conflict with the terms of the
Plan or shall make the Trust revocable after it has become
irrevocable in accordance with Section 2(b) hereof.
(b) The Trust shall not terminate until the date on which
Participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan.
(c) Upon written approval of Participants or beneficiaries entitled
to payment of benefits pursuant to the terms of the Plan, the
Company may terminate this Trust prior to the time all benefit
payments under the Plan have been made. All assets in the Trust
at termination shall be returned to the Company.
Section 14. Miscellaneous
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof.
(b) Benefits payable to Participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at
law or in equity), alienated, pledged, or encumbered; or
subjected to attachment, garnishment, levy, execution, or other
legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of South Carolina to the extent not
governed by applicable federal law.
Section 15. Effective Date
The effective date of this Trust Agreement shall be January 27, 2000.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be executed by their duly authorized officers on the date and year first
written above.
COMPANY: TRUSTEE:
One Price Clothing Stores, Inc. Carolina First Bank
By: /s/ C. Burt Duren By: /s/ Marion W. Beacham, Jr.
----------------- --------------------------
C. Burt Duren Marion W. Beacham, Jr.
Title: Vice President & Treasurer Title: Vice President
EXHIBIT A
None
EXHIBIT 10(r) One Price Clothing Stores, Inc. Deferred Compensation Plan for
Non-Employee Directors effective January 1, 2000 and the related Trust Agreement
effective January 27, 2000, between Carolina First Bank as Trustee and the
Registrant.
One Price Clothing Stores, Inc.
Deferred Compensation Plan
for
Non-Employee Directors
One Price Clothing Stores, Inc., a Delaware corporation (the
"Company"), hereby establishes this Deferred Compensation Plan for Non-Employee
Directors (the "Plan"), effective January 1, 2000, to enable Participants
covered under the Plan to enhance their retirement security by permitting them
to enter into agreements with the Company to defer compensation and receive
benefits upon cessation of membership on the Company's board of directors,
death, and as otherwise provided under the Plan.
ARTICLE 1
DEFINITIONS
1.1 Annual Deferral: shall mean the amount of Compensation which the
Participant elects to defer under his or her Deferral Election pursuant to
Article 3 of the Plan.
1.2 Beneficiary: shall mean the person or persons or entity designated as such
in accordance with Article 10 of the Plan.
1.3 Committee: shall mean the Committee appointed by the Company to administer
the Plan pursuant to Article 9 of the Plan.
1.4 Company: shall mean One Price Clothing Stores, Inc., and any successor(s)
in interest.
1.5 Compensation: shall mean a Participant's fees received for services
rendered as a member of the board of directors of the Company.
1.6 Crediting Rate: shall mean the gain or loss on certain investment
alternatives designated by the Committee from time to time for determining
adjustments of amounts credited to the Deferral Accounts of Participants.
The Committee, in its sole discretion, will establish administrative rules
for applying the Crediting Rate.
1.7 Deferral Account: shall mean the bookkeeping device used by the Company to
measure and determine the amounts to be paid to a Participant under the
Plan. One Deferral Account will be established for amounts deferred by a
Participant under the Plan. No assets will actually be placed into this
account in the Participant's name.
1.8 Deferral Contribution Period: shall mean the period of one (1) Plan Year,
or such other period as the Committee may permit in its discretion, over
which the Participant has elected to defer Compensation pursuant to Article
3 of the Plan. A Plan Year shall be January 1 through December 31.
<PAGE>
1.9 Deferral Commitment: shall mean a commitment made by a Participant to defer
Compensation pursuant to Articles 2 and 3 of the Plan for which a Deferral
Election Form has been submitted by the Participant.
1.10 Deferral Election Form: shall mean a written agreement between the Company
and the Participant, in the form attached as Exhibit A hereto, entered into
pursuant to Section 2.1 of the Plan, by which the Participant elects to
participate in the Plan and makes a Deferral Commitment. Participants must
state the percentage or dollar amount to be deferred, and elect how and
when the account will be distributed, pursuant to the Deferral Election
Form.
1.11 Disability: shall mean a physical or mental condition that prevents a
Participant from performing his or her normal duties of employment. A
Participant shall be presumed to be disabled if the Participant makes
application for, or is otherwise eligible for disability benefits under
the long term disability plan of the Employer and qualifies for such
benefits. If the Participant is not covered by an Employer sponsored
long term disability plan, then the Participant may be considered
disabled if the Committee so determines upon review of one or more
medical opinions acceptable to the Committee.
1.12 Eligible Director: To be eligible, an individual must be a member of a
select group of management or highly compensated employees for purposes
of ERISA; must be a non-employee member of the board of directors of
the Company; and must have been determined to be eligible by the
Committee to participate in the Plan.
1.13 ERISA: shall mean the Employee Retirement Income Security Act of 1974, as
amended.
1.14 Hardship: shall mean an unforeseeable emergency, such as a sudden or
unexpected illness, accident, or loss of property due to casualty, as
determined in the Plan. An occurrence shall not be deemed to be an
unforeseeable emergency to the extent that the associated hardship may be
relieved by the liquidation of assets. Cash needs arising from foreseeable
events such as the purchase of a residence or education expenses for
children shall not, alone, be considered a Hardship.
1.15 Participant: shall mean an Eligible Director, as defined in Section 1.12,
who is participating in the Plan as provided in Article 2
1.16 Plan: shall mean the One Price Clothing Stores, Inc. Deferred Compensation
Plan for Non-Employee Directors, as set forth in this document and as the
same may be amended, supplemented and/or restated from time to time and any
successor plan.
1.17 Plan Year: shall mean the 12-month period from January 1 through December
31.
1.18 Termination: shall mean the date of the cessation of the Participant's
membership on the board of directors of the Company for any reason
whatsoever, whether voluntary or involuntary, other than as a result of the
Participant's death.
<PAGE>
1.19 Valuation Date: shall mean the last day of each calendar quarter, or such
other dates as the Committee may determine in its discretion, which must be
at least annually, for the valuation of a Participant's Deferral Account.
ARTICLE 2
PARTICIPATION
2.1 Deferral Election Form. Any Eligible Director may elect to participate
in the Plan and to make a Deferral Commitment by submitting a Deferral
Election Form, as defined in Section 1.10 herein, to the Committee
prior to the beginning of the Deferral Contribution Period. Except as
otherwise provided in this Plan, the Participant's Deferral Commitment
shall be irrevocable.
2.2 Continuation of Participation. A Participant who has elected to
participate in the Plan by making a Deferral Commitment shall continue
as a Participant in the Plan for purposes of such Deferral Commitment
even though in any Plan Year after such Deferral Commitment such
Participant elects not to make a new Deferral Commitment or ceases to
be an Eligible Director. A Participant shall not be eligible to make a
new Deferral Commitment unless the Participant is an Eligible Director
with respect to the Plan Year for which the election is made.
ARTICLE 3
FORM OF DEFERRAL COMMITMENTS
3.1 Deferral Commitment. Subject to Sections 3.2 and 3.3, a Participant may
elect in the Deferral Election Form to defer any percentage or whole
dollar amount of the Participant's Compensation, as defined in Section
1.5, not exceeding $30,000, so long as the amount of Compensation net
of the amount deferred does not fall below any applicable thresholds
determined by the Committee in its sole discretion.
3.2 Minimum Deferral Commitment. A Participant may not elect to defer less
than $2,500 in any one Plan Year.
3.3 Maximum Deferral Commitment. The maximum Deferral Commitment allowed in
any Deferral Contribution Period shall be as set forth in Section 3.1;
provided, however, the Committee, in its sole discretion, may establish
a different maximum Deferral Commitment limit for the purpose of
controlling the Company's financial obligations under the Plan or for
any other reason deemed necessary.
<PAGE>
3.4 Incomplete Deferral. Notwithstanding anything contained herein to the
contrary, if the Participant has not or will not actually defer the
amount specified in such Participant's Deferral Election Form during
the Deferral Contribution Period, the Participant shall, nevertheless,
be permitted to continue participation in the Plan. No new deferral
will be accepted by the Company until the previously incomplete
deferral is fulfilled by the Participant.
3.5 Withholding. The Committee shall make arrangements for satisfying any
federal, state or local income tax withholding requirements and Social
Security or other employee tax requirements applicable to deferral of
Compensation under the Plan.
ARTICLE 4
DEFERRAL ACCOUNTS
4.1 Deferral Accounts. A Deferral Account, as defined in Section 1.7
herein, shall be established for each Participant. The Deferral Account
shall be credited with the applicable portion of the Annual Deferral as
of the approximate date such amounts would otherwise have been paid to
the Participant. Deferral Accounts shall, except as otherwise provided
in the Plan, be adjusted by the Crediting Rate in effect for each Plan
Year, from the approximate date such deferrals would have been paid
through the earlier of the Participant's date of death or the following
Valuation Date. Notwithstanding anything in this paragraph to the
contrary, the Committee may, in its sole discretion, establish
administrative rules for the purpose of crediting Deferral Accounts.
4.2 Statements of Account. The Committee shall provide periodically (but no
less frequently than annually) to each Participant a statement setting
forth the balance of the Deferral Account maintained for such
Participant.
4.3 Vesting of Accounts. Each Participant shall be one hundred percent
(100%) vested at all times in the portion of his Deferral Account
derived from Annual Deferrals and gains or losses actually credited to
such Participant's Deferral Account.
<PAGE>
ARTICLE 5
PAYMENT OF BENEFITS
5.1 Termination Benefits. Upon Termination, as defined in Section 1.18 herein,
the Company shall pay to the Participant a benefit in the form provided in
Section 5.2 of the Plan, based on the balance of the Participant's Deferral
Account.
5.2 Form of Benefit. The Termination benefit attributable to a Deferral Account
shall be paid in accordance with the Participant's direction as found on a
Deferral Election Form prescribed by the Committee for designation of form
of payment. Such payment election shall be made at the time the Deferral
Commitment election is made, and may be changed up to 12 months prior to
Termination. If no other election is made, the terminated Participant will
receive 15 substantially equal annual termination distributions in January
of each year following Termination. Alternate distribution options are as
follows:
<PAGE>
(a) Lump Sum. A lump sum payment equal to the balance of the
Participant's Deferral Account as of the Valuation Date
following Termination. Payment will commence no earlier
than the first month following Termination.
(b) Installment Payments. Annual installment payments in
substantially equal amounts over a period of five or ten
years. Installment payments shall be made in January of each
year following Termination. Interest will be credited to the
unpaid balance in the Deferral Account at a rate in effect
for each Plan Year. The Committee, in its sole discretion,
may establish rules for making payments and crediting
interest to the unpaid Deferral Account balance.
5.3 In-Service Distributions. A Participant can elect to receive a lump sum
payment of benefits created and generated by the contribution for a
given Plan Year without terminating employment. The benefit payment
will be received by January of a chosen year at least five (5) years
after the end of the Plan Year in which the contribution was made. This
election must be made at the time of deferral.
5.4 Small Benefit Exception. Notwithstanding any of the foregoing, in the
event the sum of all benefits payable to the Participant is less than
or equal to ten thousand dollars ($10,000), the Company may, in its
sole discretion, elect to pay such benefits in a single lump sum
payment on the date such benefits first become payable.
5.5 Constructive Receipt. In the event the Committee determines that
amounts deferred under the Plan have been constructively received by a
Participant and must be recognized as income for federal income tax
purposes, such amounts shall be distributed to the Participant. The
determination of the Committee under this Section 5.5 shall be binding
and conclusive.
ARTICLE 6
SURVIVOR BENEFITS
6.1 Pre-Termination Survivor Benefit. If a Participant dies prior to
Termination, the Company shall pay to the Participant's Beneficiary a
lump sum benefit equal to the balance of the Participant's Deferral
Account as of the date of the Participant's last Valuation Date.
6.2 Post-Termination Survivor Benefit. If a Participant dies after
Termination, the Company shall pay to the Participant's Beneficiary the
remaining benefits payable to the Participant under the Plan for the
remainder of the benefit period that such benefits would have been paid
to the Participant.
6.3 Small Benefit Exception. Notwithstanding any of the foregoing, in the
event the sum of all benefits payable to the Beneficiary is less than
or equal to ten thousand dollars ($10,000), the Company may, in its
sole discretion, elect to pay such benefits in a single lump sum
payment on the date such benefits first become payable.
<PAGE>
ARTICLE 7
DISABILITY
If a Participant is determined to have a Disability, as defined in Section 1.11
of the Plan, the Participant shall, effective as of the date such Participant is
no longer paid his Compensation by the Company, cease deferrals under the Plan
except for any Deferral Commitment regarding any Compensation which is earned or
payable subsequent to the Disability. The Participant's Deferral Account shall
continue to be credited with interest at the Crediting Rate until such time as
the Participant's benefits under the Plan are distributed in accordance with the
Participant's election.
ARTICLE 8
CONDITIONS RELATED TO BENEFITS
8.1 Nonassignability. The benefits provided under the Plan may not be
alienated, assigned, transferred, pledged or hypothecated by or to any
person or entity, at any time or in any manner whatsoever. These
benefits shall be exempt from the claims of creditors or other
claimants of any Participant and from all orders, decrees, levies,
garnishment or executions against any Participant to the fullest extent
allowed by law.
8.2 Hardship Distribution. Upon finding that the Participant or the
Beneficiary has suffered a Hardship, the Committee may, in its sole
discretion and upon written petition by the Participant or Beneficiary,
accelerate distributions of benefits under the Plan in the amount
reasonably necessary to alleviate such Hardship or as requested by the
Participant or the Beneficiary. If a distribution is to be made to a
Participant on account of Hardship, the Participant may not make
subsequent Deferral Commitments under the Plan for the balance of the
Plan Year and the following Plan Year. Any Deferral Commitment in
effect at the time such distribution is made under this section shall
be canceled.
8.3 No Right to Company Assets. The benefits paid under the Plan shall be
paid from the general funds of the Company, and the Participant and any
Beneficiary shall be no more than unsecured general creditors of the
Company with no special or prior right to any assets of the Company for
payment of any obligations hereunder. Subject to the preceding
sentence, the Company shall establish an irrevocable trust to
separately hold and maintain assets for the sole purpose of satisfying
the Company's obligations under the Plan. To enable the Company to
meets its financial commitment under the Plan, insurance may be
purchased on each Participant's life. This insurance is owned by and
payable to Company for the benefit of Plan participants. As a condition
of being eligible to participate, Participants agree to execute any
document and cooperate with the Company in obtaining insurance.
8.4 Protective Provisions. The Participant shall cooperate with the Company
by furnishing any and all information requested by the Committee in
order to facilitate the payment of benefits hereunder, taking such
physical examinations as the Committee may deem necessary, and taking
such other actions as may be requested by the Committee. If the
Participant refuses to cooperate or makes any material misstatement or
nondisclosure of information, then no benefits will be payable
hereunder to such Participant or his Beneficiary.
8.5 Withholding. The Participant or the Beneficiary shall make appropriate
arrangements with the Company for satisfaction of any federal, state or
local income tax withholding requirements and Social Security or other
employee tax requirements applicable to the payment of benefits under
the Plan. If no such arrangements are made, the Company may provide, at
its discretion, for such withholding and tax payments as may be
required.
8.6 Loans. Loans of account balances are not permitted under this Plan.
8.7 Unscheduled Withdrawal. At any time prior to commencement of payments,
the Participant may request a payment in a lump sum of all or a portion
of the balance of Participant's Deferral Account for any reason with a
ten percent (10%) penalty. If the Participant exercises this option,
the Participant may not participate in the Plan for the balance of the
Plan Year and the following Plan Year.
ARTICLE 9
ADMINISTRATION OF THE PLAN
The Committee shall administer the Plan and interpret, construe and apply its
provisions in accordance with its terms. The Committee shall determine in its
sole discretion those who are eligible to participate in the Plan and shall have
the right to set guidelines for participation under the Plan including, but not
limited to, the type, manner and level of Deferral Commitments. The Committee
shall further establish, adopt or revise such other rules and regulations as it
may deem necessary or advisable for the administration of the Plan. All
decisions of the Committee shall be final and binding. The individuals serving
on the Committee shall, except as prohibited by law, be indemnified and held
harmless by the Company from any and all liabilities, costs, and expenses
(including legal fees), to the extent not covered by liability insurance,
arising out of any action taken by any member of the Committee with respect to
the Plan, unless such liability arises from the individual's own gross
negligence or willful misconduct.
ARTICLE 10
BENEFICIARY DESIGNATION
10.1 Beneficiary Designation. The Participant must designate one or more
beneficiaries to receive any unpaid Plan benefits upon their death. The
Participant shall have the right, at any time, to designate any person
or persons as a Beneficiary (both primary and contingent) to whom
payment under the Plan shall be made in the event of the Participant's
death. The Beneficiary designation shall be effective when it is
submitted in writing and delivered to the Committee during the
Participant's lifetime on a form prescribed by the Committee.
10.2 New Beneficiary Designation. The Participant shall have the right to
change or revoke any such designation from time to time by filing a new
designation or notice of revocation with the Company, and no notice to
any Beneficiary or consent by any Beneficiary shall be required to
effect any such change or revocation.
10.3 Failure to Designate Beneficiary. If a Participant fails to designate a
Beneficiary before his death, the Beneficiary shall be the
Participant's surviving spouse. If no designated Beneficiary or spouse
survives the Participant, the Committee shall direct the Company to pay
the balance of the Participant's Deferral Account in a lump sum to the
executor or administrator for his estate; provided, however, if no
executor or administrator shall have been appointed, and actual notice
of the death was given to the Committee within sixty (60) days after
the Participant's death, and if his Deferral Account balance does not
exceed ten thousand dollars ($10,000), the Committee may direct the
Company to pay the Deferral Account balance to such person or persons
as the Committee determines may be entitled to it, and the Committee
may require such proof of right and/or identity of such person or
persons as the Committee may deem appropriate and necessary.
ARTICLE 11
AMENDMENT AND TERMINATION OF THE PLAN
11.1 Amendment of the Plan. The Company may at any time amend the Plan in
whole or in part, provided however, that such amendment (i) shall not
decrease the vested balance of the Participant's Deferral Account at
the time of such amendment and (ii) shall not retroactively decrease
the applicable Crediting Rates of the Plan prior to the time of such
amendment. The Company or Committee may amend the Crediting Rates of
the Plan prospectively.
11.2 Termination of the Plan. The Company may at any time terminate the
Plan as to all or any group of Participants. In the event of such
termination, the Company shall pay to the Participant the benefits
the Participant is entitled to receive as soon as administratively
possible following termination of the Plan. The Crediting Rate will
be applied to the Participant's Deferral Account until distribution
under this section.
ARTICLE 12
MISCELLANEOUS
12.1 Successors of the Company. The rights and obligations of the Company under
the Plan shall inure to the benefit of, and shall be binding upon, the
successors and assigns of the Company.
12.2 ERISA Plan. The Plan is intended to be an unfunded plan maintained
primarily to provide deferred compensation benefits for "a select group of
management or highly compensated employees" within the meaning of Sections
201, 301, and 401 of ERISA and therefore to be exempt from Parts 2, 3, and
4 of Title I of ERISA. Notwithstanding any provisions of this Plan to the
contrary, if any Participant is determined not to be a "member of a select
group of management or highly compensated employee" within the meaning of
ERISA or applicable regulations thereunder at the time a Deferral
Commitment is elected, such Participant will not be eligible to complete
such Deferral Commitment and shall receive an immediate lump sum payment
equal to the unpaid balance of the Deferral Account as of the most recent
Valuation Date. Upon such payment, no survivor benefit or other benefit
shall thereafter be payable under this Plan either to the Participant or
any Beneficiary of the Participant, with respect to said Deferral Account.
<PAGE>
12.3 Gender, Singular and Plural. All pronouns and variations thereof shall be
deemed to refer to the masculine or feminine, as the identity of the person
or persons may require. As the context may require, the singular may be
read as the plural and the plural as the singular.
12.4 Captions. The captions of the articles and sections of the Plan are for
convenience only and shall not control or affect the meaning or
construction of any of its provisions.
12.5 Validity. In the event any provision of the Plan is held invalid, void or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provisions of the Plan.
12.6 Waiver of Breach. The waiver by the Company of any breach of any provision
of the Plan by the Participant shall not operate or be construed as a
waiver of any subsequent breach by the Participant.
12.7 Applicable Law. The Plan shall be governed and construed in accordance with
the laws of the State of South Carolina except where the laws of the State
of South Carolina are preempted by ERISA.
12.8 Notice. Any notice or filing required or permitted to be given to the
Company under the Plan shall be sufficient if in writing or hand delivered,
or sent by registered or certified mail, return receipt requested, to the
principal office of the Company, directed to the attention of the
Committee. Such notice shall be deemed given as of the date of delivery, or
if delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
12.9 Arbitration. Any claim, dispute or other matter in question of any kind
relating to this Plan shall be settled by arbitration in accordance with
the Rules of the American Arbitration Association. Notice of demand for
arbitration shall be made in writing to the opposing party and to the
American Arbitration Association within a reasonable time after the claim,
dispute or other matter in question has arisen. In no event shall a demand
for arbitration be made after the date when the applicable statute of
limitations would bar the institution of a legal or equitable proceeding
based on such claim, dispute or other matter in question. The decision of
the arbitrators shall be final and may be enforced in any court of
competent jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed
this 27th day of December, 1999, effective as of January 1, 2000.
ONE PRICE CLOTHING STORES, INC.
By: /s/ C. Burt Duren
C. Burt Duren
Title: Vice President & Treasurer
<PAGE>
TRUST UNDER ONE PRICE CLOTHING STORES, INC.
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
This Trust Agreement made this 27th day of January, 2000 by and between One
Price Clothing Stores, Inc. (Company) and Carolina First Bank (Trustee);
WHEREAS, the Company has adopted the One Price Clothing Stores, Inc.
Deferred Compensation Plan for Non-Employee Directors ("Plan"), a nonqualified
deferred compensation Plan; and
WHEREAS, the Company has incurred or expects to incur liability under the
terms of the Plan with respect to the individuals participating in the Plan; and
WHEREAS, the Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of the Company's Insolvency, as herein defined, until paid
to Plan participants and their beneficiaries in such manner and at such times as
specified in the Plan; and
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
and
WHEREAS, it is the intention of the Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plan.
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held, and disposed of as follows:
Section 1. Definitions
(a) "Bankruptcy Code" means Title II of the United States Code,
as amended.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Insolvency" or "Insolvent" means the inability to pay debts
as they come due, or being subject to a pending proceeding as
a debtor under the Bankruptcy Code.
(d) "Participant" means an individual participating in the Plan.
(e) "Plan" means the One Price Clothing Stores, Inc. Deferred
Compensation Plan for Non-Employee Directors.
Section 2. Establishment of Trust
(a) The Company hereby deposits with the Trustee in trust the
assets listed in Exhibit A, which shall become the principal
of the Trust to be held, administered, and disposed of by the
Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which the
Company is the grantor, within the meaning of subpart E, part
I, subchapter J, chapter 1, subtitle A of the Internal Revenue
Code of 1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be
held separate and apart from other funds of the Company and
shall be used exclusively for the uses and purposes of
Participants and general creditors as herein set forth.
Participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets
of the Trust. Any rights created under the Plan and this Trust
Agreement shall be mere unsecured contractual rights of
Participants and their beneficiaries against the Company. Any
assets held by the Trust will be subject to the claims of the
Company's general creditors under federal and state law in the
event of Insolvency, as defined in Section 1(d) herein.
(e) The Company, in its sole discretion, may at any time, or from
time to time, make additional deposits of cash or other
property in trust with the Trustee to augment the principal to
be held, administered, and disposed of by the Trustee as
provided in this Trust Agreement. Neither the Trustee nor any
Participant or beneficiary shall have any right to compel such
additional deposits.
Section 3. Payments to Participants and Their Beneficiaries
(a) The Company shall deliver to the Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each
Participant (and his or her beneficiaries), that provides a formula or
other instructions acceptable to the Trustee for determining the amounts so
payable, the form in which such amount is to be paid (as provided for or
available under the Plan), and the time of commencement for payment of such
amounts. Except as otherwise provided herein, the Trustee shall make
payments to the Participants and their beneficiaries in accordance with
such Payment Schedule. The Trustee shall make provision for the reporting
and withholding of any federal, state, or local taxes that may be required
to be withheld with respect to the payment of benefits pursuant to the
terms of the Plan and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld,
and paid by the Company.
(b) The entitlement of a Participant or his or her beneficiaries to benefits
under the Plan shall be determined by the Company or such party as it shall
designate under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
(c) The Company may make payment of benefits directly to Participants or their
beneficiaries as they become due under the terms of the Plan. The Company
shall notify the Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to Participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with
the terms of the Plan, the Company shall make the balance of each such
payment as it falls due. The Trustee shall notify the Company where
principal and earnings are not sufficient.
Section 4. Trustee Responsibility Regarding Payments to Trust Beneficiary
When Company is Insolvent
(a) The Trustee shall cease payment of benefits to Participants and
their beneficiaries if the Company is Insolvent.
(b) At all times during the continuance of this Trust, as provided in
Section 2(d) hereof, the principal and income of the Trust shall
be subject to claims of general creditors of the Company under
federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive Officer of
the Company shall have the duty to inform the Trustee in
writing of the Company's Insolvency. If a person claiming
to be a creditor of the Company alleges in writing to the
Trustee that the Company has become Insolvent, the Trustee
shall determine whether the Company is Insolvent and,
pending such determination, the Trustee shall discontinue
payment of benefits to Participants or their
beneficiaries.
(2) Unless the Trustee has actual knowledge of the Company's
Insolvency, or has received notice from the Company or a
person claiming to be a creditor alleging that the Company
is Insolvent, the Trustee shall have no duty to inquire
whether the Company is Insolvent. The Trustee may in all
events rely on such evidence concerning the Company's
solvency as may be furnished to the Trustee and that
provides the Trustee with a reasonable basis for making a
determination concerning the Company's solvency.
(3) If at any time the Trustee has determined that the Company
is Insolvent, the Trustee shall discontinue payments to
Participants or their beneficiaries and shall hold the
assets of the Trust for the benefit of the Company's
general creditors. Nothing in this Trust Agreement shall
in any way diminish any Participant's rights as general
creditors of the Company with respect to benefits due
under the Plan or otherwise.
(4) The Trustee shall resume the payment of benefits to
Participants or their beneficiaries in accordance with
Section 3 of this Trust Agreement only after the Trustee
has determined that the Company is not Insolvent (or is no
longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 4(b) hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due to Participants or their
beneficiaries under the terms of the Plan for the period of such
discontinuance, less the aggregate amount of any payments made to
Participants or their beneficiaries by the Company in lieu of the
payments provided for hereunder during any such period
discontinuance.
Section 5. Payments to the Company
Except as provided in Section 4 hereof, after the Trust has become
irrevocable, the Company shall have no right or power to direct the
Trustee to return to the Company or to divert to others any of the Trust
assets before all payment of benefits have been made to Participants and
their beneficiaries pursuant to the terms of the Plan.
Section 6. Investment Authority
In addition to the powers conferred upon the Trustee either expressly
by, or by necessary implication of, the other provisions of this Trust
Agreement, the Trustee shall have all other powers, not inconsistent
with law or equity, as may be necessary and proper to attain the
objectives of this Trust Agreement. All rights associated with assets of
the Trust shall be exercised by the Trustee or the person designated by
the Trustee, and shall in no event be exercisable by or rest with
Participants.
By way of illustration, and not by way of limitation, the Trustee shall
have power:
(a) To invest and reinvest in, or exchange assets for, any securities,
insurance policies or other properties as directed by the Company. In the
absence of directions from the Company, the Trustee, after ten (10) days
advance written notice to the Company, shall have power to invest and
reinvest and exchange assets as the Trustee deems advisable without being
limited in the selection of investments by any statutes, rules of law,
custom or usage.
(b) To have and possess any or all of the rights of an owner with respect to
any life insurance policy held in the Trust, including, without limiting
the generality of the foregoing, the rights to receive or apply dividends
or distributive shares of surplus, disability benefits, surrender values or
proceeds of matured endowments; to obtain and receive from the issuing
insurance company such advances or loans on account of any such policy as
may be available; to sell, assign or pledge the policy; to surrender the
policy; and to exercise any option or privilege granted in the policy.
Notwithstanding the foregoing, the Trustee shall have no power to name a
beneficiary of the policy other than the Trust, to assign the policy (as
distinct from conversion of the policy to a different form) other than to a
successor Trustee, or to loan to any person the proceeds of any borrowing
against such policy.
(c) To sell or exchange any property at any time held by it, and any sale may
be made by a private contract or by public auction, and for cash or upon
credit, or partly for cash and partly upon credit, as the Trustee may deem
best, and no person dealing with the Trustee shall be bound to see to the
application of the purchase money or inquire into the validity, expediency
or propriety of any such sale or other disposition.
(d) To give and execute powers of attorney for the cancellation of any
mortgages; to continue mortgages beyond and after maturity, with or without
renewal or extension, upon such terms as may seem to the Trustee advisable;
to foreclose, as an incident to collection of any bond or note, any
mortgage or pledge securing such bond or note, and to purchase the
mortgaged or pledged property or acquire the same by conveyance without
foreclosure; and to retain any property bought in under foreclosure or
taken over without foreclosure for such time as to the Trustee shall deem
best.
(e) To manage, operate, repair, improve, partition, mortgage or lease for any
term or terms of years, whether within or beyond the duration of the Trust,
any real estate or any other property whatsoever which may at any time be
held by the Trustee upon such terms and conditions as the Trustee deems
advisable, using other trust assets for any of such purposes, if deemed
advisable; and to grant and convey by lease or other instruments for terms
within or beyond the duration of the Trust, the right to explore for and to
produce and remove oil, gas, and minerals on, in or from any lands at any
time held by the Trustee, and to grant perpetual easement or easements for
terms within or beyond the duration of the Trust on, over and with respect
to any such lands.
(f) To compromise, compound, arbitrate or otherwise adjust and settle any debt
or obligation due to or from it as Trustee hereunder to reduce the rate of
interest on, to extend or otherwise modify, or to foreclose upon default or
otherwise enforce any such obligation.
(g) To execute any investment directions from the Company with respect to
investment fund elections under any variable annuities, mutual funds or
life insurance contracts held in the Trust.
(h) To make, execute, acknowledge and deliver any and all deeds, leases,
assignments and any other instruments.
(i) To cause any investments from time to time held by it to be registered in,
or transferred into, its name as Trustee or the name of its nominee or
nominees or to retain them unregistered or in form permitting
transferability by delivery, but the books and records of the Trustee shall
at all times show that all such investments are part of the Trust.
(j) To borrow or raise money for the purpose of the Plan in such amount, and
upon such terms and conditions, as the Trustee shall deem advisable; and
for any sum so borrowed, to issue a promissory note as Trustee, and to
secure the repayment thereof by pledging all, or any part, of the Trust
assets; and no person lending money to the Trustee shall be bound to see to
the application of the money lent or to inquire into the validity,
expediency, or propriety of any borrowing.
(k) To keep such portion of the Trust in cash or cash balances as the Trustee
may, from time to time, deem to be reasonable and in the best interests of
the Plan, without liability for interest thereon.
(l) To accept and retain for such time as it may deem advisable any
securities or other property received or acquired by it as
Trustee hereunder, whether or not such securities or other
property would normally be purchased as investments hereunder.
(m) To do all acts whether or not expressly authorized herein which
it may deem necessary or proper for the protection of the
property held hereunder and to carry out the purposes of the
Plan.
Trust assets shall be invested as directed by the Company. The Trustee
shall not be liable if such directions result in a breach of any duty of
the Trustee to diversify, to maintain liquidity or to meet any other
investment standard. Absent direction from the Company, the Trustee
shall invest the Trust assets, as described above.
Section 7. Disposition of Income
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
Section 8. Accounting by the Trustee
(a) The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
the Company and the Trustee. Within forty-five (45) days following the
close of each calendar year and within thirty (30) days after the removal
or resignation of the Trustee, the Trustee shall deliver to the Company a
written account of its administration of the Trust during such year or
during the period from the close of the last preceding year to the date of
such removal or resignation, setting forth all investments, receipts,
disbursements, and other transactions effected by it, including a
description of all securities and investments purchased and sold with the
cost or net proceeds of such purchases or sales (accrued interest paid or
receivable being shown separately), and showing all cash, securities, and
other property held in the Trust at the end of such year or as of the date
of such removal or resignation, as the case may be.
(b) If no objection is made to a written account of the Trustee within ninety
(90) days after it is rendered, approval of the account shall be deemed to
have been given. In the event of the resignation or discharge of a Trustee,
the procedures outlined in this Section shall apply with respect to the
rendition by such Trustee of its account, and the approval thereof, for the
accounting period ending with the date of resignation or discharge. It is
provided, however, that this Section shall not be construed to give the
Company the power to alter, amend, revoke or terminate the Trust.
(c) Notwithstanding any provisions hereof, the Trustee shall have the right to
apply to a court of competent jurisdiction for the judicial settlement of
any such accounts and in such action or proceeding it shall be necessary to
join as parties thereto only the Trustee and the Company. Any judgment or
decree which may be entered in any such action or proceeding shall be
conclusive and binding upon all parties having or claiming to have any
interest in the Trust assets.
Section 9. Responsibility of Trustee
(a) The Trustee shall incur no liability to any person for any action taken
pursuant to a direction, request, or approval given by the Company which is
contemplated by, and in conformity with, the terms of the Plan or this
Trust and is given in writing by the Company. In the event of a dispute
between the Company and a party, the Trustee may apply to a court of
competent jurisdiction to resolve the dispute.
(b) If the Trustee undertakes or defends any litigation arising in connection
with this Trust, the Company agrees to indemnify the Trustee against the
Trustee's costs, expenses, and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable
for such payments. If the Company does not pay such costs, expenses, and
liabilities in a reasonably timely manner, the Trustee may obtain payment
from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for the
Company generally) with respect to any of its duties or obligations
hereunder.
(d) The Trustee may hire agents, accountants, actuaries, investment advisors,
financial consultants, or other professionals to assist it in performing
any of its duties or obligations hereunder.
(e) The Trustee shall have, without exclusion, all powers conferred on Trustees
by applicable law, unless expressly provided otherwise herein; provided,
however, that if an insurance policy is held as an asset of the Trust, the
Trustee shall have no power to name a beneficiary of the policy other than
the Trust, to assign the policy (as distinct from conversion of the policy
to a different form) other than to a successor Trustee, or to loan to any
person the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee pursuant to this Trust
Agreement or to applicable law, the Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the
Internal Revenue Code.
Section 10. Compensation and Expenses of Trustee
The Company shall pay all administrative and Trustee's fees and
expenses. If the administrative and Trustee' fees and expenses are not
paid within ninety (90) days after such payment is due, the expenses and
fees shall be paid from the Trust.
Section 11. Resignation and Removal of Trustee
(a) The Trustee may resign at any time by written notice to the Company, which
shall be effective thirty (30) days after receipt of such notice unless the
Company and the Trustee agree otherwise.
(b) The Trustee may be removed by the Company on thirty (30) days notice or
upon shorter notice accepted by Trustee.
(c) Upon resignation or removal of the Trustee and appointment of a successor
Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within thirty (30) days after
receipt of notice of resignation, removal, or transfer, unless the Company
extends the time limit.
(d) If the Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section 12 hereof, by the effective date or resignation or
removal under paragraphs (a) or (b) of this section. If no such appointment
has been made, the Trustee may apply to a court of competent jurisdiction
for appointment of a successor or for instructions. All expenses of the
Trustee in connection with the proceeding shall be allowed as
administrative expenses of the Trust.
Section 12. Appointment of Successor
If the Trustee resigns or is removed in accordance with Section 11(a) or
(b) hereof, the Company may appoint any third party, such as a bank
trust department or other party that may be granted corporate trustee
powers under state law, as a successor to replace the Trustee upon
resignation or removal. The appointment shall be effective when accepted
in writing by the new Trustee, who shall have all of the rights and
powers of the former Trustee, including ownership rights in the Trust
assets. The former Trustee shall execute any instrument necessary or
reasonably requested by the Company or the successor Trustee to evidence
the transfer.
Section 13. Amendment or Termination
(a) This Trust Agreement may be amended by a written instrument executed by the
Trustee and the Company. Notwithstanding the foregoing, no such amendment
shall conflict with the terms of the Plan or shall make the Trust revocable
after it has become irrevocable in accordance with Section 2(b) hereof.
(b) The Trust shall not terminate until the date on which Participants and
their beneficiaries are no longer entitled to benefits pursuant to the
terms of the Plan.
(c) Upon written approval of Participants or beneficiaries entitled to payment
of benefits pursuant to the terms of the Plan, the Company may terminate
this Trust prior to the time all benefit payments under the Plan have been
made. All assets in the Trust at termination shall be returned to the
Company.
Section 14. Miscellaneous
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Participants and their beneficiaries under this Trust
Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, or encumbered; or subjected to attachment, garnishment,
levy, execution, or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in accordance with
the laws of South Carolina to the extent not governed by applicable federal
law.
Section 15. Effective Date
The effective date of this Trust Agreement shall be January 27, 2000.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be executed by their duly authorized officers on the date and year first
written above.
COMPANY: TRUSTEE:
One Price Clothing Stores, Inc. Carolina First Bank
By: /s/ C. Burt Duren By: /s/ Marion W. Beacham, Jr.
----------------- --------------------------
C. Burt Duren Marion W. Beacham, Jr.
Title: Vice President & Treasurer Title: Vice President
EXHIBIT A
None
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT
On February 9, 1994, a subsidiary of the Company, One Price Clothing of Puerto
Rico, Inc., was incorporated in Puerto Rico.
On January 31, 1997, a subsidiary of the Company, One Price Clothing - U.S.
Virgin Islands, Inc., was incorporated in the U.S. Virgin Islands.
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
EXHIBIT 23 - CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
No. 33-20529, 33-31623, 33-48091 and 33-61803 on Form S-8 pertaining to the
1987 Stock Option Plan, the 1988 Stock Option Plan, the 1991 Stock Option
Plan and the 1995 Non-Employee Director Stock Option Plan, respectively, of
One Price Clothing Stores, Inc. of our report dated March 7, 2000 appearing
in this Form 10-K of One Price Clothing Stores, Inc. for the year ended
January 29, 2000.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
April 26, 2000
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