DOLLAR EXPRESS, INC.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
March 1, 1999
Xx. Xxxxx Xxxxxxxxx
c/o Dollar Express, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Dear Xx. Xxxxxxxxx:
In recognition of your contribution to the growth and success of Dollar
Express, Inc. and its related companies (the "Company"),we are pleased to offer
to you ("Executive") continued employment with the Company as Executive Vice
President-Dollar Express Merchandise, subject to the following terms of this
letter agreement (the "Agreement").
1. Term and Duties. Executive shall be employed for a term commencing
on the date hereof and expiring on the first anniversary of the date
hereof, unless earlier terminated pursuant to Section 6 hereof (the
"Term"). Thereafter, the Term shall continue for successive one (1)
year periods unless either the Company or Executive shall have given
the other at least ninety (90) days prior notice of a desire to
terminate and not renew Executive's employment at the expiration of the
then current period. During the Term, Executive shall devote his best
efforts and substantially all of his business time and services to the
Company to perform such duties as may be customarily incident to such
position and as may reasonably be assigned from time to time by the
Board of Directors (the "Board") of DE&S Holding Co. ("DE&S") (the
parent corporation of the Company).
2. Annual Salary. Executive xxxxxx agrees to accept, as compensation
for all services rendered by Executive in any capacity hereunder and
for the Restrictive Covenants made by Executive in Section 5 hereof, an
initial base salary at an annual rate of $134,000.00 (as the same may
hereafter be adjusted, the "Annual Salary") commencing on the date
hereof and continuing until expiration or termination of the Term. The
Annual Salary shall be reviewed by the Board and considered for
increase as of January 1, 2000 and annually thereafter. The Annual
Salary shall be inclusive of all applicable income, social security and
other taxes and charges which are required by law to be withheld by the
Company, and which shall be withheld and paid in accordance with the
Company's normal payroll practices from time to time in effect.
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March 1, 1999
Page 2
3. Bonuses. With respect to each fiscal year of the Company that ends
within the Term, the Executive will be entitled to receive an annual
bonus to be determined by the Board if the Company performs in
conformity with its Approved Budget. For purposes of this Agreement,
"Annual Budget" means the annual operating budget of the Company and
its related entities which is approved by the Board in accordance with
Article X of the Bylaws of DE&S. The Company may pay Executive such
other bonus or bonuses, if any, as the Board in its sole discretion,
shall determine.
4. Benefits.
4.1. Generally. Executive shall be entitled to the same
benefits (including as of the date hereof: medical insurance, 401(k)
Plan participation and a $250,000 term life insurance policy) as the
senior salaried officers of the Company, as determined by the Board, in
its absolute discretion (the "Benefits").
4.2. Expense Reimbursements. The Company shall reimburse
Executive, upon proper accounting, for reasonable expense and
disbursements incurred by him in the course of his performance of the
duties hereunder.
5. Non-Compete; Confidentiality; Intellectual Property.
5.1. Restrictive Covenants. Executive and the Company agree
that, because Executive has had and will continue to have access to the
Company's most confidential business and technical information and has
had and will continue to have responsibility for developing and
maintaining vendor relationships, the following covenants by the
Executive are reasonable and necessary for the protection of the
Company's legitimate business interests:
(a) Non-Compete. Executive shall not, during the Term
and for a period thereafter of one (1) year (the "Restricted
Period"), in the United States or any other place where the
Company, its subsidiaries or affiliates conduct business,
directly or indirectly (except in Executive's capacity as an
officer or director of the Company or its subsidiaries or
affiliates) do any of the following, directly or indirectly,
without the prior written consent of the Company:
(i) engage or participate in any business
activity which is in any way competitive with the
Company's business of operating
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March 1, 1999
Page 3
large format dollar stores or traditional card and
gift shops (a "Competing Business");
(ii) become interested in (as owner,
stockholder, lender, partner, co-venturer, director,
officer, employee, agent or consultant) any person,
firm, corporation, association or other entity
engaged in any Competing Business. Notwithstanding
the foregoing, Executive may hold up to one percent
(1%) of the outstanding securities of any class of
any publicly-traded securities of any company;
(iii) solicit or call on any supplier with
whom the Company shall have dealt at any time during
the two (2) year period immediately preceding the
termination of Executive's employment hereunder if
such solicitation or call could in any way adversely
impact the Company's (or any of the Company's
subsidiaries' or affiliates') relationship with that
supplier;
(iv) influence or attempt to influence any
supplier, service provider, partner or any other
person to terminate or modify any written or oral
agreement or course of dealing with the Company;
(v) influence or attempt to influence any
person to terminate or modify his employment,
consulting, agency or other arrangement with the
Company; or
(vi) employ or retain, or arrange to have
any other person employ or retain, any person who has
been employed or retained by the Company as an
employee, consultant or agent of the Company at any
time during the two year period immediately preceding
the termination of Executive's employment hereunder.
For purposes of this Agreement, the term "person" refers to not only
individuals, but also to any corporation, partnership, association, trust,
proprietorship or any other entity or organization.
(b) Confidentiality. Employee recognizes and
acknowledges that the Propriety Information (as hereinafter
defined) is a valuable, special and unique asset of the
Company's business. Accordingly, during and after the
Restricted Period, Executive shall keep secret and retain in
strictest confidence, and will not, for any reason divulge to
any third-party or use for his own benefit (without the prior
written consent of the Company) any
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March 1, 1999
Page 4
confidential, proprietary, business or technical information
or trade secrets of the Company or of any subsidiary or
affiliate of the Company ("Proprietary Information");
provided, however, that this paragraph will not restrict
Executive's ability to make such disclosures during the course
of his employment as may be necessary for the effective and
efficient discharge of the duties hereunder or as such
disclosures may be required by law. In the event that
Executive or any of its representatives becomes legally
compelled to disclose any of the Proprietary Information,
Executive will provide the Company with prompt written notice
so that the Company may seek a protective order or other
appropriate remedy. Failure by the Company to mark any of the
Proprietary Information as confidential or proprietary shall
not affect its status as Proprietary Information under the
terms of this Agreement.
(c) Property.
(i) All right, title and interest in and to
Proprietary Information shall be and remain the sole
and exclusive property of the Company. During the
Term, Executive shall not remove from the Company's
offices or premises any documents, records,
notebooks, files, correspondence, reports, memoranda
or similar materials of or containing Proprietary
Information, or other materials or property of any
kind belonging to the Company unless necessary or
appropriate in accordance with the duties and
responsibilities required by or appropriate for his
position. If any such materials or property are
removed, they shall be returned to their proper files
or places of safekeeping as promptly as possible
after the removal shall serve its specific purpose.
Executive shall not make, retain, remove and/or
distribute copies of such materials or property and
shall not divulge to any third person the nature of
and/or contents of such materials or property, except
as may be necessary or appropriate in the performance
of his duties. Upon the termination of Executive's
employment with the Company, Executive will return to
the Company all originals and copies of such
materials and property then in his possession,
whether prepared by Executive or by others.
(ii) Executive agrees that all the
Intellectual Property (as defined below) will be
considered "works made for hire" as that term is
defined in Sections 101 and 201 of the Copyright Act
(17 U.S.C. xx.xx. 101 and 201) and that all right,
title and interest in such Intellectual Property
(including, without limitation, any available
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March 1, 1999
Page 5
patents or copyrights) will be the sole and exclusive
property of the Company. To the extent that any of
the Intellectual Property may not by law be
considered a work made for hire, or to the extent
that, notwithstanding the foregoing, Employee retains
any interest in the Intellectual Property, Employee
hereby irrevocably assigns and transfers to the
Company any and all right, title, or interest that
Employee may have in the Intellectual Property under
patent, copyright, trade secret and trademark law, in
perpetuity or for the longest period otherwise
permitted by law, without the necessity of further
consideration. The Company will be entitled to obtain
and hold in its own name all copyrights, patents,
trade secrets, and trademarks with respect to such
Intellectual Property. Employee further agrees to
execute any and all documents and provide any further
cooperation or assistance reasonably required by the
Company to perfect, maintain or otherwise protect its
rights in the Intellectual Property. If the Company
is unable after reasonable efforts to secure
Employee's signature, cooperation or assistance in
accordance with the preceding sentence, whether
because of Employee's incapacity or any other reason
whatsoever, Employee hereby designates and appoints
the Company or its designee as Employee's agent and
attorney-in-fact, to act on his behalf, to execute
and file documents and to do all other lawfully
permitted acts necessary or desirable to perfect,
maintain or otherwise protect the Company's rights in
the Intellectual Property. Employee acknowledges and
agrees that such appointment is coupled with an
interest and is therefore irrevocable. For purposes
of this Agreement, "Intellectual Property" means any
technical information, inventions, developments,
discoveries, improvements, software, methods,
techniques, formulae, data, processes, systems,
documentation and work results (collectively, the
"Inventions") that are first discovered, developed,
fixed in a tangible medium or reduced to practice by
Employee: (i) in the course and within the scope of
his employment, (ii) at any time and place while
Employee is employed by the Company, provided that
such Invention is related to or used in connection
with the business of the Company, (iii) which is the
result of tasks assigned to Employee by the Company,
or (iii) which results from the use of premises or
personal property (whether tangible or intangible)
owned, leased or contracted for by the Company.
Xx. Xxxxx Xxxxxxxxx
March 1, 1999
Page 6
5.2. Rights and Remedies Upon Breach. If Executive breaches,
or threatens to commit a breach of, any of the provisions contained in
Section 5.1 (the "Restrictive Covenants"), the Company will have the
following rights and remedies, each of which rights and remedies shall
be independent of the others and severally enforceable, and each of
which is in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity:
(a) Special Enforcement. The Company will have the right
and remedy to have the Restrictive Covenants enforced by
injunction of any court of competent jurisdiction.
(b) Accounting and Restitution. The Company will have the
right and remedy to require Executive to account for and pay
over to the Company all compensation, profits, monies,
accruals, increments or other benefits derived or received by
Executive as the result of any breach of the Restrictive
Covenants.
(c) Extension of Restricted Period. If Executive breaches
any of the Restrictive Covenants, then the Restricted Period
shall be extended for a period of time equal to the period of
time that Executive was in breach of such restriction.
5.3. Acknowledgments. Executive acknowledges that the
Restrictive Covenants are included herein in order to induce the
Company to continue to employ Executive pursuant to the other terms of
this Agreement and that the Company would not have entered into this
Agreement in the absence of such restrictions. Executive also
acknowledges that any breach or threatened breach of the Restrictive
Covenants would cause irreparable injury to the Company, that money
damages would not provide an adequate remedy to the Company and that
the Company would be entitled to a temporary restraining order,
preliminary injunction, and/or permanent injunction to prevent any
breach or threatened breach of the Restrictive Covenants. Executive
agrees that he will not, in any action or proceeding to enforce any of
the provisions of this Agreement, assert the claim or defense that such
an adequate remedy at law exists. Executive further acknowledges that
the duration and geographic scope of Section 5.1 are reasonable given
the nature of this Agreement.
5.4. Judicial Modification. If any court determines that any
of the Restrictive Covenants, or any part thereof, is unenforceable
because of the duration or geographical scope of such provision, such
court shall have the power to modify such provision and, in its
modified form, such provision shall then be enforceable.
Xx. Xxxxx Xxxxxxxxx
March 1, 1999
Page 7
5.5. Disclosure of Restrictive Covenants. Executive agrees to
disclose the existence and terms of the Restrictive Covenants to any
employer that Executive may work for after the termination of
Executive's employment with the Company.
6. Termination. Executive's employment hereunder may be terminated
during or at the end of the Term as described below. Upon termination,
Executive shall be entitled only to such compensation and benefits as
described in this Section 6.
6.1. Termination for Absenteeism.
(a) Regular attendance at work or conducting work is an
essential element of the job for which Executive has been
hired. Without limiting the Company's right to terminate
Executive pursuant to Section 6.2 or 6.3 hereof, in the event
that Executive is absent from work for 120 consecutive days,
Executive's employment hereunder may be terminated by the
Company.
(b) In the event of a termination of Executive's employment
hereunder pursuant to Section 6.1(a), Executive will be
entitled to receive all accrued and unpaid Annual Salary and
Benefits through the date of such termination. Except as
specifically set forth in this Section 6.1(b), subject to the
terms of any benefits or compensation plans then in force and
applicable to Executive, the Company shall have no liability
or obligation to Executive for compensation or benefits
hereunder by reason of such termination.
6.2. Termination by Death. In the event that Executive dies
during the Term, Executive's employment hereunder shall be terminated
thereby and the Company shall pay to Executive's executors, legal
representatives or administrators an amount equal to all accrued and
unpaid Annual Salary and Benefits through the date of such termination.
Except as specifically set forth in this Section 6.2, the Company shall
have no liability or obligation hereunder to Executive's executors,
legal representatives, administrators, heirs or assigns or any other
person claiming under or through him by reason of Executive's death,
except that Executive's executors, legal representatives or
administrators will be entitled to receive the payment prescribed under
any death or disability benefits plan(s) in which he is a participant
as an employee of the Company, and to exercise any rights afforded
under any compensation or benefit plan(s) then in effect.
6.3. Cause. The Company shall have the right to terminate
Executive's employment under this Agreement for "Cause." In the event
of the termination of employment for Cause, all rights, benefits and
obligations of the parties under this Agreement (except for Executive's
obligations under Section 5) shall immediately terminate
Xx. Xxxxx Xxxxxxxxx
March 1, 1999
Page 8
except for benefits accrued to the date of termination. For purposes of
this Agreement, "Cause" shall mean the occurrence of any of the
following material violations: (i) alcohol abuse or use of controlled
drugs (other than in accordance with a physician's prescription); (ii)
refusal, failure or inability to perform any material obligation or
fulfill any duty to the Company (other than due to disability), which
failure, refusal or inability is not cured within ten (10) days after
delivery of notice thereof from the Board; (iii) gross negligence or
willful misconduct in the course of employment; (iv) other conduct
involving any type of disloyalty to the Company or any of its
affiliates or subsidiaries, including, without limitation, fraud,
embezzlement, theft or proven dishonesty; and (v) conviction of (or the
entry of a plea of guilty or nolo contendere to) a misdemeanor
involving moral turpitude or a felony.
6.4. Severance Event.
(a) For the purposes of this Agreement:
(i) "Severance Event" means (1) the
termination of Executive's employment prior to the
expiration of this Agreement: (a) by the Company
other than pursuant to Sections 6.1, 6.2 or 6.3, or
(b) by Executive for Good Reason; or (2) the
non-renewal of this Agreement by the Company pursuant
to Section 1 of this Agreement.
(ii) "Good Reason" means a material breach
by the Company or any material provision of this
Agreement, which breach is not remedied within thirty
(30) days after receipt by the Company of written
notice thereof from Executive.
(b) Upon the occurrence of a Severance Event:
(i) the Company shall pay to Executive an
amount equal to fifty percent (50%) of his Annual
Salary in the calendar year in which the Severance
Event occurred, which amount shall be paid (subject
to required withholdings) in six (6) equal
consecutive monthly installments commencing one (1)
month after the date of the Severance Event; and
(ii) subject to the terms of any insurance
policy funding any group health plan(s) maintained by
the Company and in which the Executive participated
immediately prior the Severance Event, the Company
will provide Executive with six (6) months of
continuation coverage under such group health plan(s)
at a cost to Executive equal
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March 1, 1999
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to the employee cost (if any) of such coverage
immediately prior to the Severance Event.
7. Miscellaneous.
7.1. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Company and Executive and their
respective successors, executors, administrators, heirs and/or
permitted assigns; provided, however, that neither Executive nor the
Company may make any assignments of this Agreement or any interest
herein, by operation of law or otherwise, without the prior written
consent of the other party, except that, without such consent, the
Company may assign this Agreement to any successor to all or
substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise.
7.2. Entire Agreement. This Agreement contains the entire
agreement and understanding of the parties hereto relating to the
subject matter hereof, and merges and supersedes all prior and
contemporaneous discussions, agreements and understandings of every
nature between the parties hereto relating to the employment of
Executive with the Company.
7.3. Amendments. This Agreement may not be changed or
modified, except by an Agreement in writing signed by each of the
parties hereto.
7.4. Waiver. Any waiver by either party of any breach of any
term or condition in this Agreement shall not operate as a waiver of
any other breach of such term or condition or of any other term or
condition, not shall nay failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof
or constitute, or be deemed a waiver or release of any other rights, in
law or in equity.
7.5. Governing Law. This Agreement shall be governed by, and
enforced in accordance with, the laws of the Commonwealth of
Pennsylvania without regard to conflicts of laws principals.
7.6. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and
valid under applicable law; provided, however, that if any provision of
this Agreement is held to be invalid, illegal or unenforceable in any
respect in a particular jurisdiction; (i) this Agreement will be
reformed, construed and enforced in that jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained
herein; and (ii) such invalidity, illegality or
Xx. Xxxxx Xxxxxxxxx
March 1, 1999
Page 10
unenforceability will not affect the effectiveness or validity of that
provision in any other jurisdiction.
8. Notice. Any notice or communication required or permitted under
this Agreement shall be made in writing and (i) sent by overnight
courier, (ii) mailed by certified or registered mail, return receipt
requested or (iii) sent by telecopier, addressed to the addresses of
the parties set forth herein, or to such other address as either party
may from time to time specify by notice given to the other party in the
manner specified above.
9. Survival of Provisions. The provisions of this Agreement set forth
in Sections 5 and 7 hereof will survive the termination of Executive's
employment hereunder or the expiration of this Agreement.
10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of
which together shall be deemed to be one and the same instrument.
Please indicate your acceptance of employment and your agreement to
render services to the Company subject to the terms set forth above by executing
and returning the enclosed copy of this letter.
Sincerely,
DOLLAR EXPRESS, INC.
By: /s/ Xxxxxxx Xxxxx
-------------------------------
Xxxxxxx Xxxxx
Chief Executive Officer
Accepted and Agreed to on this ____
day of March, 1999:
/s/ Xxxxx Xxxxxxxxx
-----------------------
Xxxxx Xxxxxxxxx
