**Exhibit10.16**

 

 

 

 

June 24, 2003

 

 

Mr. Timothy R. LaBeau

9705 Rocky Point

Clarence, NY 14031

 

Dear Tim:

 

This letter will confirman offer of employment to you by Duane Reade Inc.

 

Your initial assignmentwill be as Senior Vice President/Merchandising, reporting directly to Mr. TonyCuti, Chairman/ C.E.O.  You will bebased at our headquarters office located at 440 9th Avenue, NewYork, NY.  Your initial salary will be$385,000.00 per/year, ($14,807.70 Bi-Weekly). Future salary increases will be based on demonstrated jobperformance.  Your performance will bereviewed each year.  Future salaryadjustments will be in accordance to Company policy and practice.

 

You will be eligible tojoin the company’s executive benefit program upon beginning employment.  You will be eligible to join the Company’s401K program on the first of the month of the quarter following your ninety(90) day anniversary.  You will beeligible for three (3) weeks vacation each calendar year.  Please be aware that Duane Reade’s vacation policydoes not allow carryover from year to year. Therefore, if the three weeks are not taken they are forfeited eachyear.

 

It is committed that youwill join the company’s performance incentive plan at fifty percent (50 %) ofyour annual salary.  The program isbased on the attainment of company performance towards Earnings per Share (EPS)targets and can be increased to a maximum of one hundred percent (100%) ordecreased based on the actual company results. Actual incentive payments will be paid yearly, usually at the end of thefirst quarter of each year, after Board approval.  The Company will guarantee a minimum of a Seventy-Five Thousandpayout with first year incentive, ($75,000.00).

 

It was also committedthat you will be eligible to receive seventy-five thousand (75,000) shares ofDuane Reade stock options at a price equivalent to the average trading pricefor five (5) trading days prior to the first day of your employment.  Twenty percent (20%) of the shares will vestat the end of each anniversary of your employment with Duane Reade Inc.

 

Your employment with theCompany will be “at will,” meaning that either you or the Company will beentitled to terminate your employment at any time and for any reason, with orwithout cause.  Except as set forth inthe following sentence, in the event of termination other than for “cause,” youwill be paid severance equal to one year salary at your then currentsalary.  For purposes of this Agreement“cause” shall mean termination for: (1) a repeated refusal to comply with alawful directive of the Chief Executive Officer, (2) serious misconduct,dishonesty or disloyalty directly related to the performance of duties for theCompany, which results from a willful act or omission and which is materiallyinjurious to the operations, financial condition or business reputation of theCompany or any significant subsidiary thereof; (3) being convicted (or enteringinto a plea bargain admitting criminal guilt) in any criminal proceeding thatmay have an adverse impact on the Company’s reputation and standing in thecommunity; (4) willful and continued failure to substantially perform yourduties under this Agreement; or (5) any other material

 

----

 

breach of thisAgreement.  In the event of terminationfor cause, you will be entitled to any unpaid salary through the date oftermination, plus any earned and accrued unused vacation pay or deferredcompensation payments.  You will not beentitled to any other compensation from the Company, including, withoutlimitations, severance pay.

 

You will be reimbursedfor all normal business expenses in accordance to Company policy.  The Company will provide relocationassistance of up to $125,000.00 net for expenses related to relocation (ie:moving expense, closing costs etc.).  Itis committed that you and your family will endeavor to relocate to the New YorkCity metro vicinity within three (3) months of your start date.  The Company will provide temporary livingduring relocation for a period of three (3) months.

 

I believe this coverseverything.  We all look forward to youjoining our Executive team on Monday, July 21, 2003.  Please do not hesitate to call Tony, Gary or me if you have anyquestions.

 

 

Sincerely,
|            |
|-----------------|
| /s/ Jim Rizzo   |
| Jim Rizzo       |
| Vice President  |
| Human Resources |

 

 
| /s/ Timothy R. LaBeau  |                                                |
|------------------------|-----------------------------------------------------|
| Timothy R. LaBeau/Date |                                                |
|                   |
| CC:                    | Mr. Tony Cuti –  Chairman/C.E.O.               |
|                   | Mr. Gary Charboneau –  SVP/Sales and Marketing |
|                        |                                                     |  |

 

2

----