EMPLOYMENT AGREEMENT

        THIS AGREEMENT,  made and entered into this 26th day of March,  1997, by
and between One Price Clothing  Stores,  Inc., a Delaware  corporation  with its
principal place of business in Spartanburg County,  South Carolina,  hereinafter
referred to as  "Employer",  and Larry Kelley,  a resident of Duxbury,  State of
Massachusetts, hereinafter referred to as "Employee".
                                                   W I T N E S S E T H:
        For and in  consideration  of the mutual  covenants  and promises of the
parties  hereto and the  benefits  inuring to the parties  hereto,  Employer and
Employee agree as follows:
        1.  EMPLOYMENT.  Subject to the terms and conditions of this  Agreement,
Employer  employs  Employee as its President and Chief  Executive  Officer,  and
Employee accepts such employment with Employer.  The employment  hereunder shall
commence on the day Employee  reports for work at Employer's  offices in Duncan,
South  Carolina  and  shall  continue  for six (6) years  from such date  unless
terminated as hereinafter provided.
        2. DUTIES OF EMPLOYEE.  Employee  shall serve  Employer as its President
and Chief Executive Officer  faithfully and to the best of his ability under the
direction of the Board of Directors of Employer.  Employee shall be elected as a
Director of the Company  immediately  following  execution of this agreement and
thereafter  nominated  annually  as  a  Director,  commencing  with  the  annual
shareholders  meeting  in June  1997,  so long as this  Agreement  is in effect.
Employee shall devote his full time and efforts to his duties as an


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employee of Employer. As Chief Executive Officer of the Company,  Employee shall
have the authority to hire and fire any and all other  officers and employees of
the Company, excluding the Chairman of the Board of Directors.
        3.  COMPENSATION AND BENEFITS.
                 (a) Salary.  For all services  rendered to Employer  under this
Agreement,  Employer shall pay Employee an annual base salary of $400,000, which
shall  automatically  increase to $450,000 twelve (12) months after commencement
of  employment  by Employee and shall  thereafter  be subject to annual  review,
payable in bi-weekly  installments in accordance with the usual payroll practice
of Employer,  less all legally required deductions.  In the event Employee shall
die  during  the term of this  Agreement,  his salary  shall be  continued  only
through the end of the bi-weekly pay period following his death.
                 (b) Bonus.  Employee shall be entitled to a first year bonus of
$150,000, payable $100,000 upon commencing employment and $50,000 at fiscal 1997
year end;  provided,  however,  if Employee  is not  employed by Employer on the
first day of fiscal 1998,  Employee shall  reimburse  Employer the $100,000 paid
upon commencement of employment and shall forfeit the $50,000 due at fiscal 1997
year end. Starting in fiscal 1998, Employee shall be entitled to receive a bonus
of up to 50% of his base salary if the  Employee's  personal  and the  Company's
goals are met in accordance with the Company's bonus program then in effect.
                 (c)  Special Stock Option.  The Board of Directors has
approved the granting to Employee of an option for 300,000 shares of
Employer's common stock at the market price on the date of grant,


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which  date shall be the  earlier  of the  execution  of this  Agreement  or the
commencement  date of employment.  Such option shall be exercisable  twenty five
(25%) percent on the date of employment and thereafter  exercisable equally over
a period of four (4) years at 18.75% annually commencing twelve (12) months from
the date of Employee's  employment.  Should  Employee die or become  permanently
disabled prior to the expiration of a twelve (12) month vesting period, he shall
be  considered  as employed at the end of such twelve (12) month  period  during
which he dies or becomes  permanently  disabled  for purposes of exercise of the
option  granted  hereunder.  The options  shall not be  transferrable  except to
members of Employee's  immediate family or a trust for the benefit of members of
his family,  shall have a ten (10) year term, contain typical  anti-dilution and
change in  capitalization  provisions,  a  commitment  to  register  the  shares
underlying the option on Form S-8 and appropriate provisions for exercise in the
event of death or disability.
                 (d) Retirement. So long as Employee is employed by Employer for
a minimum of six (6) years,  he shall be entitled at the end of six (6) years to
a  $600,000  retirement  sum  payable  over  ten (10)  years  in  equal  monthly
installments  following  his  retirement  from the  Company.  For each year that
Employee  remains  employed by Employer  beyond the initial six (6) year period,
his retirement sum shall be increased $100,000 and the aggregate  retirement sum
due  Employee  should he remain  employed  beyond six (6) years shall be payable
over ten (10) years in equal monthly installments  following his retirement from
the Company. If Employee does not remain employed for at least six (6) years, he
shall not be entitled to any retirement sum.
                 (e)  Other Benefits.

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                     (i)   During the term of his employment,
Employee  shall be  entitled  to  participate  in all  employee  benefits as are
customarily  provided to its officers by Employer,  and to  participate  in such
other employee benefits as may from time to time be approved by Employer's Board
of Directors.
                     (ii)  Employee shall be entitled to four (4)
weeks of vacation annually.
                    (iii)  Employee may serve as a director of a non-
competing company or otherwise participate in educational,  social, religious or
civic  organizations so long as such activity does not interfere with Employee's
duties hereunder.
                     (iv)  Employee shall also be entitled to reimbursement
of all reasonable  hotel,  travel,  entertainment  and other  business  expenses
actually incurred by Employee in the course of Employee's  employment  hereunder
and  in  accordance  with  such  policy  as may be  established  for  Employer's
Executives, upon submission to Employer of satisfactory documentation thereof.
                     (v)   Employee shall be indemnified by Employer
as an officer and director to the fullest extent permitted under
Delaware law.
                 (f)  Moving Expenses.  Employer shall reimburse Employee
for:
                          (i)  Air travel to the Spartanburg/Greenville area for
himself and his wife, which travel shall be limited to reimbursement for up to a
total of fifteen  (15) round trip coach plane  tickets for Employee and his wife
from Boston to Greenville/Spartanburg.
                          (ii) Employer shall obtain a competitive bid from an
independent moving company setting forth the cost of transportation of


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Employee's  family's  household  goods,  effects  and  two (2)  automobiles  and
Employee  shall be entitled to receive  such amount in cash  grossed up to cover
any applicable federal or state income taxation.
                          (iii)  Upon Employee's reporting for work, Employer
agrees  to  reimburse  Employee  for up to  three  (3)  months  for the  cost of
temporary lodging at a hotel or motel such as Residence Inn, such  reimbursement
to cover room only, and not food or other expenses.
                          (iv)   Reasonable closing costs associated with
buying  a home,  including  such  expenses  as  real  estate  commissions,  loan
origination fee, attorney's fees, etc., but excluding discount points,  prorated
taxes or insurance.  Payment will be made on a receipt  reimbursement or written
estimate basis.
                 (g)  Payments  Upon  Termination.  In  the  event  Employee  is
terminated by Employer without cause,  Employer shall continue Employee's annual
base salary following  Employee's  termination for twelve (12) additional months
at the rate of base  salary  in effect  at the date of  Employee's  termination,
payable in accordance  with  Employer's  usual payroll  practices.  In addition,
Employee shall be entitled to payments of such base salary for an additional six
(6) months if  unemployed  at the end of twelve (12) months,  provided that such
additional  salary payments shall be immediately  terminated upon his employment
during such additional six (6) month period.  In the event Employee  voluntarily
terminates his employment  with Employer or is terminated for cause, he shall be
entitled to no  additional  payment  upon such  termination  other than any then
accrued but unpaid salary,  vacation pay, or other normal  reimbursement  items.
Cause shall be defined to mean (a) the commission by Employee of any felony, (b)
the commission by Employee of any crime or other activity


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involving  dishonesty or moral turpitude,  (c) the engagement by Employee in any
act of fraud,  misappropriation  or similar  misfeasance,  (d) the engagement by
Employee in any activity in  contravention  of paragraph 4 of this  Agreement or
otherwise  resulting  in a material  adverse  effect to Employer or (e) repeated
non-attentiveness  by Employee  to his duties  under this  Agreement;  provided,
however,  that  prior to any  termination  based on  cause  as  herein  defined,
Employee  shall have  received  written  notice from the Board of  Directors  of
Employer  stating in reasonable  detail the basis therefor and shall be given an
opportunity  to meet with and address the Board  regarding  the grounds for such
termination.
        4.  CONFIDENTIAL  INFORMATION.  Employee  acknowledges  that  during his
employment  he will have access to  confidential  information  belonging  to the
Employer.  Such  confidential  information  shall  consist  of  all  information
disclosed to Employee as a result of employment by Employer not generally  known
in the  retail  business  in which  Employer  is engaged  including  information
concerning  Employer's suppliers,  including the costs,  quantities and types of
goods supplied,  and the identity of such suppliers;  information concerning the
Employer's  marketing  and/or sales strategy or plans;  real estate strategy and
expansion plans;  all pricing  information  relating to merchandise  offered for
sale by Employer;  customers' list and all  information  dealing with customers'
needs or preferences; all data processing information; all financial information
including financial statements,  financing plans and forecasts,  and any and all
information  designated  or marked  as  confidential.  Employee  will not use or
disclose,  or otherwise make  available,  such  confidential  information to any
other person or entity without prior express written consent of


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Employer,  either during or following the termination of Employee's  employment.
Upon  termination  of  employment,  Employee  shall  turn over to  Employer  all
property then in his  possession or custody  belonging to Employer and shall not
retain  any  copies or  reproductions  of  correspondence,  memoranda,  reports,
notebooks, drawings,  photographs, or other documents relating in any way to the
affairs of Employer.
        5.  NON-COMPETITION.  (a) Upon termination of Employee's employment with
Employer,  whether  voluntary or involuntary  and whether with or without cause,
Employee  will not for a period of two (2) years  from date of such  termination
conduct or engage in, directly or indirectly,  alone or jointly,  with any other
person  or  corporation  as agent,  consultant,  employee,  manager,  purchaser,
proprietor,  stockholder,  co-partner,  or otherwise,  any type of womens retail
apparel  business  involving  the general  retail price  range(s)  engaged in by
Employer at the time of termination of his employment.  This restriction applies
to the  continental  United  States and any other  country or  possession of the
United States in which Employer does business.
                 (b)  Employee  agrees not to employ or cause to be employed any
other  employee  of  Employer  for a period  of two (2) years  after  Employee's
termination  of  employment.  This  restriction  applies to any type of business
which Employee may be engaged in or is associated with.
        6.  NOTICES.  All notices, consents, changes of address and other
communications (hereinafter referred to as "Notice(s)") required or
permitted to be made under the terms of this Agreement shall be in
writing and shall be (I) personally delivered by an agent of the

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relevant Party, or (ii) transmitted by postage prepaid, certified or
registered mail:
        To Employer:    One Price Clothing Stores, Inc.
                        Post Office Box 2487
                        Spartanburg, South Carolina 29304

        To Employee:   Larry Kelley at such address as he
                       may provide to Employer in writing

                       cc: Theodore Wm. Tashlik
                           Tashlik Kreutzer & Goldwyn P.C.
                           833 Northern Boulevard
                           Great Neck, N.J. 11021-5308

        7.  WAIVER OF BREACH.  The waiver of Employer of a breach by
Employee of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by Employee.  No waiver
shall be valid unless in writing and signed by any authorized officer
of Employer.
        8. ASSIGNMENT. Employee acknowledges that the services to be rendered by
Employee are unique and  personal.  Accordingly,  Employee may not assign any of
Employee's rights or delegate any of Employee's duties or obligations under this
Agreement.  The rights and  obligations of Employer  under this Agreement  shall
inure to the benefit of and all be binding upon the Employer, and its successors
and assigns.
        9.  REPRESENTATIONS AND WARRANTIES.  Employee represents and warrants to
Employer  that he is under no  obligation  to or bound by any contract  with any
person, corporation or other entity which would prohibit or in any way interfere
with the  performance  of his  duties and  obligations  to  Employer  under this
Agreement.
        10.  SEVERABILITY.  If any provision of this Agreement as applied
to either party or to any circumstance shall be adjudged by a court to
be invalid or unenforceable, the same shall in no way affect any other


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provision of this Agreement, or the application of each provision to
any other fact or circumstances.
        11.  ENTIRE  AGREEMENT,   MODIFICATION  OR  AMENDMENT.   This  Agreement
constitutes  the entire  agreement  of the parties  with  respect to its subject
matter and supersedes all prior oral or written  agreements.  This Agreement may
be modified or amended from time to time by the mutual  agreement of the parties
hereto.  No  modification  or amendment of this Agreement  shall be binding upon
either  party  unless it is in writing and  executed  by the party  sought to be
charged.
        12.  COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one
instrument.
        13.  CAPTIONS.  The captions contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
        14.  GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of South  Carolina,  without giving effect
to South  Carolina's  rules of conflicts of law, and  regardless of the place or
places of its physical execution and performance.
        15.  ENFORCEMENT.  This  Agreement  may only be  enforced  in a court of
competent jurisdiction in Spartanburg County, South Carolina. Employee agrees to
submit to the  jurisdiction of a court of competent  jurisdiction in Spartanburg
County,  South  Carolina,  whether or not then residing in South  Carolina.  The
prevailing  party shall be entitled to recover  from the other party the cost of
any court action, including reasonable attorneys fees.

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        IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as
of the date first above written.
<TABLE>
<S>                                                         <C>
Witnesses:                                                   One Price Clothing Stores,
Inc.

/s/ Stephen A. Feldman                                       By: /s/ Henry D. Jacobs, Jr._(SEAL)
                                                                 Henry D. Jacobs, Jr.
/s/ Diane G. O'Bryant                                            Chairman of Board of Directors
As to Employer
                                                                           "EMPLOYER"


/s/ Joel Schmidt                                                 /s/ Larry Kelley________(SEAL)
/s/ Joseph Pratt                                                     Larry Kelley

As to Employee
                                                                            "EMPLOYEE"
</TABLE>

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