<PAGE>


                              DOLLAR EXPRESS, INC.
                               1700 Tomlinson Road
                             Philadelphia, PA 19116



                                                  March 1, 1999

Mr. James Misterman
c/o Dollar Express, Inc.
1700 Tomlinson Road
Philadelphia, PA 19116


Dear Mr. Misterman:

         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 hereby 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.





<PAGE>


Mr. James Misterman
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




<PAGE>


Mr. James Misterman
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




<PAGE>


Mr. James Misterman
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. ss.ss. 101 and 201) and that all right,
                           title and interest in such Intellectual Property
                           (including, without limitation, any available




<PAGE>


Mr. James Misterman
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.





<PAGE>


Mr. James Misterman
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.





<PAGE>


Mr. James Misterman
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




<PAGE>


Mr. James Misterman
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




<PAGE>


Mr. James Misterman
March 1, 1999
Page 9

                           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




<PAGE>


Mr. James Misterman
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/ Bernard Spain
                                                 -------------------------------
                                                 Bernard Spain
                                                 Chief Executive Officer

Accepted and Agreed to on this ____
day of March, 1999:



/s/ James Misterman
-----------------------
James Misterman