As filed with the Securities and Exchange Commission on April 28, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DOLLAR TREE STORES, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 5331
(State or Other Jurisdiction of (Primary Standard Industrial
Incorporation or Organization) Classification Code Number)
54-1387365
(I.R.S. Employer
Identification No.)
500 VOLVO PARKWAY, CHESAPEAKE, VIRGINIA 23320, (757)321-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
FREDERICK C. COBLE, SENIOR VICE PRESIDENT - CHIEF FINANCIAL OFFICER
500 VOLVO PARKWAY, CHESAPEAKE, VIRGINIA 23320, (757) 321-5000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
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Copies to:
WILLIAM A. OLD, JR., ESQ.
JOHN S. MITCHELL, JR., ESQ.
HOFHEIMER NUSBAUM, P.C.
999 WATERSIDE DRIVE, SUITE 1700
NORFOLK, VIRGINIA 23510
TELEPHONE: (757) 629-0613
FACSIMILE: (757) 629-0660
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
<PAGE>
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
Proposed Proposed
Number of Shares Maximum Maximum
Title of Shares to Be Offering Price Aggregate Amount of
to Be Registered Registered per Share(1) Offering Price Registration Fee
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,800,000 $50.21875 $90,393,750 $23,863.95
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<FN>
(1) Estimated pursuant to paragraph (c) of Rule 457 solely for the purpose
of calculating the registration fee, based upon the average of the
reported high and low sales prices for a share of Common Stock on April
24, 2000, as reported on the Nasdaq National Market.
</FN>
</TABLE>
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The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereunder become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
EXPLANATORY NOTE:
This registration statement relates to the registration of 1,800,000
shares of our common stock which will be held by the selling shareholders
identified herein. These shareholders are to receive the shares in connection
with the merger of our wholly owned subsidiary into Dollar Express, Inc., a
Pennsylvania corporation, pursuant to the terms of a merger agreement included
as an exhibit to our Current Report on Form 8-K, filed with the Commission on
April 11, 2000. Such registration is required pursuant to a registration rights
agreement entered into by our company and those shareholders, which was also
filed as an exhibit to the same Current Report.
The requirements of the registration rights agreement call upon us to
register 1,800,000 shares for resale, but permit us to include an initial
prospectus for only 900,000 shares. We are required to file an amended
prospectus pursuant to Rule 424(b)(3) under the Securities Act no later than
October 15, 2000 to permit the sale of the entire 1,800,000 shares. For this
reason, this registration statement, as filed on April 28, 2000, contains a
prospectus covering the resale of only 900,000 shares.
<PAGE>
The information in this prospectus is not complete and may be changed without
notice. The selling shareholders may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and the
selling shareholders are not soliciting an offer to buy these securities in any
state jurisdiction where the offer or sale is not permitted.
Prospectus (Not Complete)
Issued April 28, 2000
900,000 Shares
Dollar Tree Stores, Inc.
Common Stock
This prospectus relates to the public offering, which is not being
underwritten, of 900,000 shares of our common stock which is held by some of our
current shareholders.
The prices at which such shareholders may sell the shares will be
determined by the prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
shares.
Our common stock is quoted on the Nasdaq National Market under the
symbol "DLTR" On April 24, 2000, the average of the high and low price for the
common stock was $50.8125.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 4.
-------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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=========================================================================
The date of this prospectus is April , 2000.
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CERTAIN INTRODUCTORY MATTERS
Dollar Tree(R), 98 CENTS Clearance Centers(R), Only $One(R), Dollar
Express(R) and the related logos are our registered trademarks. Other trademarks
referred to in this prospectus are trademarks of their legal owners.
This prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any securities offered hereby by anyone in any jurisdiction
in which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person to
whom it is unlawful to make such offer or solicitation.
References to "we," "our" and "the company" generally refer to Dollar
Tree Stores, Inc. and its direct and indirect subsidiaries on a consolidated
basis.
WARNING ABOUT FORWARD-LOOKING STATEMENTS
This prospectus and the documents referred to in this prospectus
contain "forward-looking statements" as that term is used in the Private
Securities Litigation Reform Act of 1995. Forward-looking statements -- which
typically use words such as believe, anticipate, expect, intend, plan or
estimate -- address future events, developments or results. For example, our
forward-looking statements include statements regarding:
o our anticipated comparable store net sales and growth plans;
o the integration of Dollar Express into our business and the
effect of Dollar Express on our operating results;
o our future operating costs, such as merchandise and shipping
costs, wages and rents;
o the reliability of our sources of supply in the future,
particularly China;
o the capacity and performance of our existing and planned
distribution centers, including opening and expansion
schedules; and
o our expectations regarding competition.
These forward-looking statements are subject to numerous risks and
uncertainties which may affect us, including:
o possible difficulties in meeting our expansion goals and
anticipated comparable store net sales;
o possible delays, costs and other difficulties in integrating
Dollar Express with our business;
o possible increases in merchandise costs, shipping rates, wage
levels, inflation and competition and other adverse economic
factors;
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o our vulnerability to changes in our foreign trade relations
and import tariffs and restrictions, particularly those
affecting China; and
o the capacity and the performance of our distribution system
and our ability to expand its capacity in time to support our
net sales growth.
For additional discussion of the factors that could affect our actual
results, performance or actions, see "Risk Factors" on page 4 of this prospectus
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" in the documents incorporated by reference into this
prospectus.
Our forward-looking statements could be wrong in light of these and
other risks, uncertainties and assumptions. The future events, developments or
results described in this prospectus or in the documents incorporated by
reference into this prospectus could turn out to be materially different from
those we discuss or imply. We have no obligation to publicly update or revise
our forward-looking statements after the date on the front cover of this
prospectus and you should not expect us to do so.
-------------------------------------------------------
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. You should also be aware
that while we do, from time to time, communicate with securities analysts, it is
against our policy to disclose to them any material nonpublic information or
other confidential commercial information. Accordingly, you should not assume
that we agree with any statement or report issued by any analyst regardless of
the content of the statement or report. We also have a policy against issuing
financial forecasts or projections or confirming those issued by others. Thus,
to the extent that reports issued by securities analysts contain any
projections, forecasts or opinions, such reports are not our responsibility. You
should assume that the information appearing in this prospectus is accurate only
as of the date on the front cover of this prospectus. Our business, financial
condition, results of operations and prospects may have changed since that date.
Information on our web site or in our promotional literature is not incorporated
into this prospectus and you should not rely on that information.
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THE COMPANY
Dollar Tree's principal executive offices are located at 500 Volvo
Parkway, Chesapeake, Virginia 23320. Dollar Tree's telephone number is (757)
321-5000.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the specific risk factors listed below, together with
all other information included or incorporated in this prospectus before you
decide to invest in our common stock. If any of the following risks, or other
risks not presently known to us or that we currently believe not to be
significant, develop into actual events, then our business, financial condition,
results of operations or prospects could be adversely affected in a material
way. If that happens, the market price of our common stock would likely decline,
and you could lose all or part of your investment.
We may not be able to meet our aggressive expansion goals
Our net sales growth will be jeopardized if we cannot continue to add
stores and store support systems in a profitable, timely and efficient manner.
As a single price point retailer, we cannot increase our sales price. We rely on
new and larger stores to increase sales. Not including our merger with Dollar
Express in May 2000, we expect to add 225 to 235 stores during 2000 and expand
total square footage of our stores by approximately 23% to 25%. We have also
added 106 single-price point stores and 25 multi-price point stores in the
merger. (For a discussion of the Dollar Express merger, see "We may experience
difficulties..." and "Costs associated with the Dollar Express merger..." on the
following page.) Management believes that we are well positioned to add new
stores and support systems. However, we may not achieve our targets for opening
new stores, and we may not expand profitably and efficiently. Any of these
events could have a material adverse effect on our business and results of
operations.
Managing our growth has become more complex because we are now
operating in 35 states from coast to coast. We may not anticipate all the
challenges that our expanding operations will impose on our systems and
personnel. Our growth depends in part on whether we can:
o supply an increasing number of stores with the proper mix and
amount of merchandise;
o successfully add and operate larger stores, with which we have
less experience;
o hire, train and retain an increasing number of qualified
employees -- including associates, managers, and executives --
at affordable rates of compensation;
o find, sign leases for, build-out improvements for and open
suitable store sites on a timely basis and on favorable
economic terms, including in new geographic markets, where we
have no or limited experience, and in our established
geographic markets, where new stores may draw sales away from
our existing stores; and
o expand and upgrade distribution centers and internal store
support systems in an efficient, timely and economical manner
without materially slowing our rate of growth.
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We may experience difficulties in integrating Dollar Express with our operations
The anticipated benefits of the merger with Dollar Express will not be
achieved unless we can combine our operations in an efficient and effective
manner. We may experience delays, unexpected costs and other difficulties in
integrating Dollar Express. These difficulties may have a material adverse
effect on the business and operating results of the combined company. The Dollar
Express merger requires the integration of Dollar Express's merchandise
purchasing, store operations, shipping and receiving operations, real estate
leasing functions, and management team with those of Dollar Tree. We believe
that the continued employment of Dollar Express's operations personnel and
certain members of Dollar Express's management team is critical to the
successful integration and operation of the combined company. We may not be able
to retain these employees. Moreover, full integration of the two organizations
will require considerable time and effort on the part of Dollar Tree's
management.
Costs associated with the Dollar Express merger will reduce our net income
We anticipate that the costs associated with the Dollar Express merger
and integration will be approximately $6.0 to $7.0 million. These costs will
have a material adverse effect on the operating results of the combined company,
especially in the second quarter of 2000 when they will be charged to
operations. Moreover, we may not have anticipated all of the costs that will be
generated by the merger and integration process. We expect that the merger will
be accretive to our net income per share in 2000 before consideration of
one-time costs associated with the merger and integration. However, because we
believe such costs will exceed the financial synergies we realize in 2000, we
expect the merger to be dilutive in 2000 when we include such costs. To achieve
these synergies, we must improve the quality and decrease the cost of Dollar
Express's merchandise as well as identify and eliminate redundant operations. We
may experience delays in, or be unable to achieve, our expected financial
synergies.
We could encounter unforeseen disruptions or costs in receiving merchandise in
our distribution centers and shipping it to our stores
Our future success depends on our ability to obtain merchandise from
suppliers and ship it to our stores in a timely and cost efficient manner. There
is little excess capacity in our current distribution system and our rapid
growth, including the stores we added in the Dollar Express merger, places
significant pressure on this critical function. Moreover, we may experience
higher than expected costs and disruptions in integrating the Dollar Express
distribution system with our own. We may not be able to anticipate or respond to
all the changing demands of our expanding operations and some of these demands
may be beyond our ability to control. Disruptions, delays or costs relating to
our receiving and distribution systems could have a material adverse effect on
our business or results of operations.
We currently operate distribution centers in Chesapeake, Virginia;
Olive Branch, Mississippi; Chicago, Illinois; Stockton, California; and
Philadelphia, Pennsylvania. We plan to open a distribution center in Savannah,
Georgia in the first quarter of 2001. Some of the factors that could have an
adverse effect on our distribution and receiving systems, business and results
of operations are:
o Dollar Express distribution system. Dollar Express ships
inventory to its stores more frequently than Dollar Tree.
Within a short time-frame, we must understand Dollar
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Express's challenging distribution requirements, manage their
distribution network, and integrate the Dollar Express
distribution system with our own. We expect this will require
a significant commitment from our management team. Among other
things, we must modify our inventory management system to cope
with Dollar Express's demands and improve the performance
of Dollar Express's distribution system to Dollar Tree's
standards. Dollar Express's existing distribution system is
not adequate to support the future operation of their stores.
o Expansion, replacement and addition of distribution centers.
We must expand, replace and build new distribution centers on
a tight and demanding time schedule in order to accommodate
our aggressive growth plans.
o Continuing costs associated with replaced distribution
centers. In 1998, we replaced our Memphis, Tennessee
distribution center with our fully automated distribution
center located in Mississippi. In January 2000, we replaced
our Sacramento, California distribution center with our new
facility located in Stockton, California. We will remain
liable for rent and pass-through costs under the Memphis lease
until September 2005 and the Sacramento lease until June 2008.
The lease for the main Philadelphia distribution center does
not expire until December 31, 2002. We may not be able to
secure an acceptable long-term sublease for these sites or
other leased sites we may replace in the future.
o Natural or man-made disasters. A fire, explosion, hurricane,
tornado, flood, earthquake or other disaster at any of our
distribution facilities could result in a significant
disruption in our distribution system, particularly because
there will be little excess capacity in our system for the
foreseeable future. The facilities in California and
Mississippi are susceptible to earthquakes. The facilities in
Mississippi, Virginia and Georgia are susceptible to
hurricanes.
Economic conditions such as inflation could adversely affect our business
Our future success depends on our ability to manage the effect of
future changes in economic conditions in the United States -- where we both buy
and sell merchandise -- and in China and Asia -- where we buy a large portion of
our merchandise. Inflation, particularly in the areas of operating, labor and
merchandise costs, affects our business significantly. Past increases in minimum
wage and trans-Pacific ocean shipping rates have had an important effect on our
results of operations. Any future increases are also expected to have an impact
on our results of operations. As a fixed price point retailer, we cannot raise
the price of our merchandise to offset cost increases. Instead, we attempt to
offset a cost increase in one area by finding cost savings or operating
efficiencies in another area. We may not realize future cost savings or
operating efficiencies that will offset future cost increases. Our failure to
realize offsetting cost savings or operating efficiencies could have a material
adverse effect on our business and results of operations.
We rely on imported merchandise, especially from China
Our future success depends on whether we can import an increasing
quantity of merchandise at
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favorable costs. Merchandise imported directly from overseas manufacturers and
agents accounts for approximately 40% to 45% of total purchases at retail. In
addition, our management believes that a small portion of the non-consumable
goods that we purchase from domestic vendors is imported. China is the primary
source of our imports. While we do not expect to significantly increase imports
as a percentage of our merchandise, imported goods are less expensive than
domestic goods and have contributed significantly to our historically favorable
profit margins.
In the event Chinese or other imported merchandise becomes more
expensive or unavailable, we believe we could find alternative sources of
supply. However, the transition to alternative sources may not occur in time to
meet our demands. Products from alternative sources could also be of lesser
quality and more expensive than those we currently import. As a result, a
disruption in the flow of imported merchandise or an increase in the cost of
those goods could have a material adverse effect on our business and results of
operations. Imported goods present significant risks including:
o disruptions in the flow of imported goods because of factors
such as:
o material shortages, work stoppages, strikes and
political unrest;
o economic crises, such as those experienced by the
countries of Southeast Asia beginning in 1998;
o shipping container shortages;
o international disputes, such as tensions resulting
from China's claims to sovereignty over Taiwan and
NATO's bombing of China's embassy in Yugoslavia; and
o increases in the cost of purchasing or shipping foreign
merchandise, resulting from
o failure to renew normal trade relations with China,
formerly known as "most favored nation" trading
status;
o import duties, import quotas and other trade
sanctions;
o shipping rate increases imposed by the trans-Pacific
shipping cartel; and
o poor compliance by certain foreign manufacturers with U.S.
laws governing the design, manufacture, packaging and labeling
of products.
Chinese goods imported into the United States currently enjoy favorable
duties because the United States grants China normal trade relations. China's
favorable trade status is reviewed on an annual basis and is currently extended
through July 2, 2000. In November 1999, the United States and China finalized an
agreement concerning China's future membership in the World Trade Organization.
In conjunction with this process, President Clinton has asked Congress to remove
normal trade relations with China from annual review. However, there continues
to be significant political opposition to the permanent extension of normal
trade relations with China. Failure to renew normal trade relations could have a
material adverse effect on our business and results of operations. For example,
administration
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officials testified in June 1999 that ending normal trade relations with China
would raise tariffs on Chinese products from their current overall
trade-weighted average of 4% to an estimated 44%. Even if normal trade relations
with China become permanent, the United States could impose punitive trade
sanctions on Chinese goods for a variety of reasons. In 1995, the United States
threatened to impose punitive trade tariffs on certain categories of Chinese
goods in response to China's failure to protect the intellectual property of
U.S. businesses. Although no punitive import duties are currently imposed, these
duties could equal as much as 100% of the cost of certain Chinese goods.
Depending on the goods affected, an increase in tariffs or the imposition of
trade restrictions could impose significantly higher purchasing costs on our
company.
Our operating results, including comparable store net sales, could fluctuate
significantly
We have experienced fluctuations in our net sales growth, comparable
store net sales, operating income and net income, and we expect those
fluctuations to continue. Changes in our quarterly and annual operating results,
including comparable store net sales, could cause the price of our common stock
to fluctuate substantially. We experience a disproportionately large amount of
our net sales and a substantial majority of our income during the Christmas and
Easter seasons. If for any reason our net sales were below seasonal norms during
the Christmas or Easter season, our operating results would be materially
adversely affected. Our results of operations, including comparable store net
sales, fluctuate for a variety of reasons, including:
o shifts in the timing of certain holidays;
o the timing of new store openings;
o the net sales contributed by new and expanded stores;
o changes in our merchandise mix;
o competition; and
o economic and weather conditions.
Over the past few years annual comparable store net sales have
increased at least 5% each year. We believe that future comparable store net
sales increases, if any, will be lower than those experienced in the past. Our
business plan calls for a two to three percent increase in comparable store net
sales in 2000. In any quarter, however, comparable store net sales may be lower
than our annual average.
We may have difficulty obtaining enough quality, low-cost merchandise to sell
profitably at our fixed $1.00 price point
Our future success depends on our ability to buy larger quantities of
quality merchandise at low prices. We cannot maintain our gross profit margins
if the cost of our merchandise increases significantly because we sell only at
the fixed $1.00 price point at substantially all of our stores. Any disruptions
in the availability of quality, low-cost merchandise in sufficient quantities to
maintain our growth could have a material adverse effect on our business and
results of operations. Quality, low-cost merchandise may not be available in the
future, or it may not be available in the quantities necessary for
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our expansion. We do not have long term or continuing contracts for the purchase
of merchandise and must continuously seek out buying opportunities from both our
existing suppliers and new sources, for which we compete with other retailers
including wholesalers, discount chains, mass merchandisers, food markets, drug
chains and club stores.
We expect to encounter increasing competition in the future
The retail industry is highly competitive. Our competitors include mass
merchandisers (such as Wal-Mart), discount stores (such as Dollar General),
closeout stores (such as Odd Lots and Big Lots) and other variety stores. In
past years, other single-price point retailers have not been significant
competitors. However, we expect that our expansion plans as well as the
expansion plans of other single-price point retailers such as 99 Cents Only
Stores based in Southern California will bring us increasingly into direct
competition. Moreover, there are no significant economic barriers to other
companies becoming single-price point retailers. Increased competition may have
a material adverse effect on our business, comparable store net sales and
results of operations.
The substantial number of shares that are eligible for public sale resulting
from this offering may adversely affect our stock price
There are relatively few restrictions on the resale of our common
stock, and a large number of shares of common stock are eligible for public
sale. Sales of substantial amounts of these shares in the public market, or the
perception that such sales could occur, could have a material adverse impact on
the market price for our common stock. Significant sources of future public
sales of our common stock include:
o Option shares. As of April 26, 2000, there were outstanding
options under our stock option plans for the purchase of up to
approximately 4.1 million shares. About 1.9 million of these
option shares have vested and could be purchased.
Substantially all of the shares issuable under our stock
option plans have been registered under the Securities Act,
and the vast majority of these shares are freely tradable
without restriction.
o Warrant shares. Before we went public in 1995, we issued
warrants for the purchase of up to 5,584,900 shares. These
warrants can be exercised at any time. Upon exercise, these
warrant shares will be restricted.
o Restricted shares. As of April 26, 2000, approximately 11.7
million shares of our common stock were held by persons who
acquired them through private transactions that were not
registered under the Securities Act. In addition, up to 6
million additional restricted shares will be issued in
connection with our Dollar Express merger. This prospectus is
part of a registration statement registering 1.8 million of
these shares for ongoing resale.
The holders of our restricted shares, including warrant shares, can generally
require that the company register their shares for resale, subject to certain
limitations. Even when shares are not registered for resale, the SEC permits the
holder of common stock who has held shares for one year to sell the stock into
the public market subject to certain volume and other limitations and allows a
person who has held shares for two years to sell without limitation. However,
our affiliates are always subject to the volume limit.
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Our common stock price may be volatile, which could result in substantial losses
to investors in our common stock
The trading price of our common stock has been and is likely to
continue to be highly volatile and subject to wide fluctuations in response to a
variety of internal and external factors, some of which are beyond our control,
including:
o trade and political relations with China;
o the inflation rate, interest rates, shipping rates, increase
in the minimum wage and general economic conditions;
o quarterly variations in our operating results, including those
which may result from our merger with Dollar Express;
o sale of shares of our option shares, warrant shares, and
restricted shares into the public market; and
o changes in financial estimates by securities analysts.
Shareholders may not be able to resell their common stock at or above the public
offering price as a result of a possible decline in price after this offering.
Moreover, the stock market has experienced significant price and volume
fluctuations over the past several years that have often been unrelated or
disproportionate to the operating performance of particular companies. The
trading prices of many companies' stocks, including ours, are at or near
historical highs. These trading prices may not be sustained.
Our articles of incorporation and by-laws could delay or discourage an
acquisition or sale of Dollar Tree
Our articles of incorporation and by-laws contain provisions that may
delay or discourage a takeover attempt that a shareholder might consider in his
best interest. These provisions, among other things:
o classify our board of directors into three classes, each of
which serves for different three- year periods;
o provide that only the board of directors, chairman or
president may call special meetings of the shareholders;
o establish certain advance notice procedures for nominations of
candidates for election as directors and for shareholder
proposals to be considered at shareholders' meetings;
o require a vote of the holders of more than two-thirds of the
shares entitled to vote in order to remove a director or amend
the foregoing and certain other provisions of the articles of
incorporation and bylaws; and
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o permit the board of directors, without further action of the
shareholders, to issue and fix the terms of preferred stock,
which may have rights senior to those of the common stock.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of common stock
in this offering.
PLAN OF DISTRIBUTION
We are registering 1,800,000 shares of Dollar Tree common stock, $.01
per share, on behalf of certain selling shareholders. All of the shares were
issued by us in connection with our acquisition of Dollar Express, Inc. to the
former shareholders of Dollar Express. Pursuant to a registration rights
agreement between us and those shareholders, we are required to register
1,800,000 shares for resale, with an initial prospectus that will cover the
resale of only 900,000 shares. We are required to file an amended prospectus
pursuant to Rule 424(b)(3) under the Securities Act no later than October 15,
2000 to permit the sale of the entire 1,800,000 shares. For this reason, this
prospectus covers the resale of only 900,000 shares. We will receive no proceeds
from this offering.
The selling shareholders are those persons named in the table below or
certain permitted donees, transferees or successors-in-interest selling shares
received from a named selling security holder after the date of this prospectus.
The selling shareholders may sell the shares from time to time and will act
independently of Dollar Tree in making decisions with respect to the timing,
manner and size of each sale. The sales may be made from time to time in one or
more types of transactions on one or more exchanges or in the over-the-counter
market or otherwise, at prices and at terms then prevailing or at prices related
to the then current market price, or in negotiated transactions. The sales may
involve broker-dealers but are not required to. The shares may be sold by one or
more of, or a combination of, the following:
o cross trades or block trades in which a broker-dealer may
attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the
transaction or any other transactions permitted by an
applicable exchange;
o purchases by a broker-dealer as principal and resale by a
broker-dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of an
applicable exchange;
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers, which may include long or short
sales;
o "at the market" to or through market makers or into an
existing market for the shares;
o through transactions in options or swaps or other derivatives
(whether exchange-listed or not);
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o in other ways, not involving market makers or established
trading markets including sales effected through agents; and
o in privately negotiated transactions, including but not
limited to exchange trusts or similar exchange vehicles.
To the extent required, this prospectus may be amended or supplemented
from time to time to describe a specific plan of distribution. In effecting
sales, broker-dealers engaged by the selling shareholders may arrange for other
broker-dealers to participate in the resales.
The selling shareholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with selling shareholders. The
selling shareholders also may sell shares short and redeliver the shares to
close out such short positions. The selling shareholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The selling shareholders also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default the broker-dealer may sell the pledged
shares pursuant to this prospectus.
In effecting sales, broker-dealers engaged by the selling shareholders
may arrange for other broker-dealers to participate. Broker-dealers or agents
may receive compensation in the form of commissions, discounts or concessions
from selling shareholders. Broker-dealers or agents may also receive
compensation from the purchasers of the shares for whom they act as agents or to
whom they sell as principals, or both. Compensation as to a particular
broker-dealer may be in excess of customary commissions and will be in amounts
to be negotiated in connection with the sale. Broker-dealers or agents and any
other participating broker-dealers or the selling shareholders may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act in
connection with sales of the shares. Accordingly, any such commission, discount
or concession received by them and any profit on the resale of the shares
purchased by them may be deemed to be underwriting discounts or commissions
under the Securities Act. Because selling shareholders may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, the
selling shareholders will be subject to the prospectus delivery requirements of
the Securities Act. In addition, any securities covered by this prospectus which
qualify for sale pursuant to Rule 144 promulgated under the Securities Act may
be sold under Rule 144 rather than pursuant to this prospectus. The selling
shareholders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities. There is no underwriter or coordinating broker
acting in connection with the proposed sale of shares by selling shareholders.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
12
<PAGE>
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the shares may not simultaneously engage
in market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, each
selling shareholder will be subject to applicable provisions of the Exchange Act
and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling shareholders. We will make copies of
this prospectus available to the selling shareholders and have informed them of
the need for delivery of copies of this prospectus to purchasers at or prior to
the time of any sale of the shares.
We will file a supplement to this prospectus, if required, pursuant to
Rule 424(b) under the Securities Act upon being notified by a selling
shareholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer. The supplement will disclose:
o the name of each such selling shareholder and of the
participating broker-dealer(s);
o the number of shares involved;
o the price at which such shares were sold;
o the commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any investigation
to verify the information set out or incorporated by reference
in this prospectus; and
o other facts material to the transaction.
In addition, upon being notified by a selling shareholder that certain
permitted donees, transferees or successors-in-interest intend to sell more than
500 shares, we will file a supplement to this prospectus.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling shareholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. We have agreed
to indemnify each selling shareholder against certain liabilities, including
certain liabilities arising under the Securities Act. The selling shareholders
may agree to indemnify any broker-dealer or agent that participates in
transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act. The selling shareholders
have agreed to indemnify us and certain persons, including broker-dealers and
agents, against certain liabilities in connection with the offering of the
shares, including liabilities arising under the Securities Act.
13
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth the number of shares owned by each of
the selling shareholders. None of the selling shareholders has had a material
relationship with Dollar Tree within the past three years other than as a result
of the ownership of the shares or other securities of Dollar Tree. No estimate
can be given as to the amount of shares that will be held by the selling
shareholders after completion of this offering because the selling shareholders
may offer all or some of the shares and because there currently are no
agreements, arrangements or understandings with respect to the sale of any of
the shares. The shares offered by this prospectus may be offered from time to
time by the selling shareholders named below.
<TABLE>
<CAPTION>
Number of
Number of Shares Percent of Shares
Beneficially Outstanding Offered
Name of Selling Shareholder Owned (1) Shares (2) Hereby (1)(3)
--------------------------- ---------- ---------- -------------
<S> <C> <C> <C>
Bernard Spain 1,675,039(8) 2.5 257,377
Murray Spain 1,882,537(9) 2.8 255,414
Bernard Spain Family Limited Partnership(4) 220,551(10) * 33,943
Murray Spain Family Limited Partnership(5) 231,098(11) * 35,566
Global Private Equity III Limited Partnership(6) 1,663,847(12) 2.4 256,066
Advent PGGM Global Limited Partnership(6) 254,964(13) * 39,239
Advent Partners GPE III Limited Partnership(6) 25,122 (14) * 3,866
Advent Partners Limited Partnership(6) 10,920(15) * 1,681
Advent Partners (NA) GPE III Limited Partnership(6) 7,431(16) * 1,144
Guayacan Private Equity Fund Limited Partnership(7) 58,977(17) * 9,077
Dollar Express Investment LLC 43,061(18) * 6,627
-------------------- -- -----------
TOTAL 5,852,996 8.6 900,000
<FN>
* Represents beneficial ownership of less than 1%.
(1) For each selling shareholder, beneficial ownership includes a number of
shares ("Merger Shares") to be received at the closing on the merger of
Dollar Tree with Dollar Express. The aggregate Merger Shares include
292,398 of shares ("Escrow Shares") contributed on behalf of each
selling shareholder to State Street Bank & Trust as escrow agent under
an escrow agreement with Dollar Tree which the selling shareholders
will enter into in connection with the merger with Dollar Express. The
selling shareholders have the ability to direct the disposition of such
Escrow Shares, including by sale under this prospectus, but the
proceeds shall remain in escrow until it is terminated pursuant to the
terms of the escrow agreement.
(2) Based on 68,223,891 shares outstanding, of which 62,375,945 were
outstanding as of March 31, 2000, and an additional 5,847,946 Merger
Shares to be acquired by the selling shareholders in the merger of
Dollar Tree with Dollar Express.
(3) This registration statement also shall cover any additional shares of
common stock which become issuable in connection with the shares
registered for sale hereby by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without
the receipt of consideration which results in an increase in the number
of Dollar Tree's outstanding shares of common stock.
(4) This shareholder is a family limited partnership of which Mr. Murray
Spain is a general partner. Mr. Spain disclaims beneficial
14
<PAGE>
ownership of any shares held by this shareholder.
(5) This shareholder is a family limited partnership of which Mr. Stephen
Greenfield is a general partner. Mr. Greenfield disclaims beneficial
ownership of any shares held by this shareholder.
(6) This shareholder is a limited partnership the general partner of which
is Advent International Corporation, which may be deemed to
beneficially own the shares held of record by this shareholder.
(7) This shareholder is a limited partnership the general partner of which
is Advent-Morro Equity Partners, which may be deemed to beneficially
own the shares held of record by this shareholder.
(8) Includes 2,675 shares in addition to Merger Shares. Merger Shares
include 83,618 Escrow Shares.
(9) Includes 2,375 shares in addition to Merger Shares, and also includes
the 220,551 Merger Shares owned by Bernard Spain Family Limited
Partnership of which Mr. Murray Spain is a general partner. See notes 4
and 10. Mr. Murray's Merger Shares include 82,981 Escrow Shares.
(10) Includes 11,028 Escrow Shares.
(11) Includes 11,555 Escrow Shares.
(12) Includes 83,192 Escrow Shares.
(13) Includes 12,748 Escrow Shares.
(14) Includes 1,256 Escrow Shares.
(15) Includes 546 Escrow Shares.
(16) Includes 372 Escrow Shares.
(17) Includes 2,949 Escrow Shares.
(18) Includes 2,153 Escrow Shares.
</FN>
</TABLE>
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
Dollar Tree by Hofheimer Nusbaum, P.C., Norfolk, Virginia.
EXPERTS
The consolidated financial statements of Dollar Tree Stores, Inc. and
subsidiaries as of December 31, 1999 and 1998 and for each of the years in the
three-year period ended December 31, 1999 have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, incorporated by reference herein
and upon the authority of said firm as experts in accounting and auditing.
15
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from our web site at http://www.dollartree.com or at the SEC's web site at
http://www.sec.gov.
We have filed a registration statement and related exhibits with the
SEC under the Securities Act. The registration statement contains additional
information about us and our common stock. You may inspect the registration
statement and exhibits without charge at the office of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, and you may obtain copies from the SEC at
prescribed rates.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed.
o Our Annual Report on Form 10-K for the year ended December 31,
1999, filed March 17, 2000, including certain information in
our definitive Proxy Statement in connection with our 1999
Annual Meeting of Shareholders and certain information in our
Annual Report to Shareholders for the fiscal year ended
December 31, 1999;
o Our Current Reports on Form 8-K filed on April 11 and April
27, 2000; and
o The description of our common stock contained in its
registration statement on Form 8- A filed February 28, 1995,
including any amendments or reports filed for the purpose of
updating such descriptions.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Dollar Tree Stores, Inc.
Shareholder Services
500 Volvo Parkway
Chesapeake, Virginia 23320
(757) 321-5000
16
<PAGE>
=================================== ===================================
900,000 Shares
- -------------------------------
TABLE OF CONTENTS Dollar Tree Stores, Inc.
- -------------------------------
Page
---- Common Stock
Certain Introductory Matters 2
------------
A Warning about Forward-Looking
Statements 3 PROSPECTUS
The Company 4 ------------
Risk Factors 4
Use of Proceeds 11 April , 2000
Plan of Distribution 11
Selling Shareholders 14
Legal Matters 15
Experts 15
Where You Can Find More Information 16
=================================== ===================================
17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by Dollar Tree in connection
with the sale of common stock being registered. All amounts are estimates except
the SEC registration fee.
SEC Registration fee $24,000
Legal fees and expenses 45,000
Accounting fees and expenses 25,000
Printing Fees --
Transfer Agent Fees --
Miscellaneous --
---------
Total $94,000
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the full extent permitted by the Virginia Stock Corporation Act, the
Articles of Incorporation require Dollar Tree to indemnify its officers and
directors. Article V of the Articles of Incorporation provides that any director
or officer who was or is a party to any proceeding shall be indemnified by
Dollar Tree against any liability incurred by him in connection with such
proceeding unless he engaged in willful misconduct or a knowing violation of the
criminal law. Dollar Tree is also required to promptly pay for or reimburse all
reasonable expenses, including attorneys' fees, incurred by a director or
officer in advance of final disposition of the proceeding if the director or
officer furnishes Dollar Tree with a written statement of his good faith belief
that he has met the standard of conduct that is a prerequisite to his
entitlement to indemnification and agrees to repay the advance if it is
ultimately determined that he did not meet such standard of conduct. Dollar Tree
is authorized to purchase and maintain insurance to insure Dollar Tree against
its indemnification obligation, or insure any person who is or was a director,
officer, employee, or agent of Dollar Tree against any liability asserted
against or incurred by him in any such capacity or arising from his status as
such, whether or not Dollar Tree has the power to indemnify him against such
liability. Dollar Tree has directors and officers liability insurance. Dollar
Tree is also empowered, by a majority vote of a quorum of disinterested
directors, to enter into a contract to indemnify any director or officer against
liability, whether occurring before or after the execution of the contract.
Except to the extent contrary to the Articles of Incorporation or Virginia Stock
Corporation Act, Dollar Tree is not prevented or restricted from making or
providing for indemnities in addition to those provided in the Articles of
Incorporation.
II-1
<PAGE>
ITEM 16. EXHIBITS
Exhibit
Number Exhibit Title
------- ----------
2.1 Merger Agreement by and among Dollar Tree Stores, Inc., DT
Keystone, Inc., Dollar Express, Inc. ("DLRX") and the
Shareholders of DLRX ("Shareholders") dated April 5, 2000
(incorporated by reference from Dollar Tree's Current Report
on Form 8-K, filed April 11, 2000)
5.1 Opinion of Hofheimer Nusbaum, P.C.
10.1 Form of Escrow Agreement by and among Dollar Tree Stores,
Inc., State Street Bank & Trust, Bernard Spain, William Woo,
and the Shareholders
10.2 Registration Rights Agreement by and among Dollar Tree Stores,
Inc. and the Shareholders dated April 5, 2000 (incorporated by
reference from Dollar Tree's Current Report on Form 8-K, filed
April 11, 2000)
23.1 Consent of KPMG LLP
23.2 Consent of Hofheimer Nusbaum, P.C. (included in the Opinion of
Hofheimer Nusbaum, P.C. filed as Exhibit 5.1 hereto)
24.1 Power of Attorney (included on page II-4 of this registration
statement)
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement, or the most
recent post-effective amendment thereof, which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and therefore is unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act, and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act, that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chesapeake, Commonwealth of Virginia, on the 28th day
of April, 2000.
DOLLAR TREE STORES, INC.
By /s/ Macon F. Brock, Jr.
-----------------------------------------
Macon F. Brock, Jr.
President and Chief Executive Officer
The registrant and each person whose signature appears below
constitutes and appoints Macon F. Brock, Jr. and H. Ray Compton, and any agent
for service named in this registration statement and each of them, his, her or
its true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him, her or it and in his, her, or its
name, place and stead, in any and all capacities, to sign and file (i) any and
all amendments (including post-effective amendments) to this registration
statement and (ii) any registration statement relating to the offering covered
by this registration statement deemed effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933 and any and all amendments (including
post-effective amendments) thereto, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he, she, or it might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
_______________________ Chairman of the Board; April __, 2000
J. Douglas Perry Director
/s/ Macon F. Brock, Jr. President and Chief Executive April 27, 2000
- ----------------------- Officer; Director (principal
Macon F. Brock, Jr. executive officer)
/s/ H. Ray Compton Executive Vice President; April 27, 2000
- ----------------------- Director
H. Ray Compton
/s/ Frederick C. Coble Senior Vice President - Chief April 27, 2000
- ----------------------- Financial Officer (principal
Frederick C. Coble financial and accounting officer)
II-4
<PAGE>
/s/ John F. Megrue Vice Chairman; Director April 27, 2000
- -----------------------
John F. Megrue
/s/ Richard G. Lesser Director April 27, 2000
- -----------------------
Richard G. Lesser
_______________________ Director April __, 2000
Thomas A. Saunders, III
/s/ Alan L. Wurtzel Director April 27, 2000
- -----------------------
Alan L. Wurtzel
/s/ Frank Doczi Director April 27, 2000
- -----------------------
Frank Doczi
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit Title
------- ----------
2.1 Merger Agreement by and among Dollar Tree Stores, Inc., DT
Keystone, Inc., Dollar Express, Inc. ("DLRX") and the
Shareholders of DLRX ("Shareholders") dated April 5, 2000
(incorporated by reference from Dollar Tree's Current Report
on Form 8-K, filed April 11, 2000)
5.1 Opinion of Hofheimer Nusbaum, P.C.
10.1 Form of Escrow Agreement by and among Dollar Tree Stores,
Inc., State Street Bank & Trust, Bernard Spain, William Woo,
and the Shareholders
10.2 Registration Rights Agreement by and among Dollar Tree Stores,
Inc. and the Shareholders dated April 5, 2000 (incorporated by
reference from Dollar Tree's Current Report on Form 8-K, filed
April 11, 2000)
23.1 Consent of KPMG LLP
23.2 Consent of Hofheimer Nusbaum, P.C. (included in the Opinion of
Hofheimer Nusbaum, P.C. filed as Exhibit 5.1 hereto)
24.1 Power of Attorney (included on page II-4 of this registration
statement)
II-6
Exhibit 5.1
Hofheimer Nusbaum, P.C.
Attorneys and Counselors at Law
999 Waterside Drive
1700 Dominion Tower
Norfolk, Virginia 23510
April 28, 2000
Dollar Tree Stores, Inc.
500 Volvo Parkway
Virginia Beach, VA 23320
Re: Public Offering
Ladies and Gentlemen:
We have acted as counsel to you in connection with the filing of a
Registration Statement on Form S-3 on the date hereof (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Act"), with
respect to the registration of 1,800,000 shares of Common Stock of Dollar Tree
Stores, Inc., a Virginia corporation (the "Shares") to be issued pursuant to
that certain Merger Agreement (the "Merger Agreement") dated April 5, 200 among
the Company, Dollar Express, Inc., the shareholders of Dollar Express, Inc., and
DT Keystone, Inc. in the event the transactions contemplated therein are
consummated. A copy of the Merger Agreement was filed by the Company as Exhibit
2.1 to its Form 8-K filed April 11, 2000 with the Securities and Exchange
Commission.
We have examined such documents, records, and matters of law as we have
deemed necessary for purposes of this opinion and, based thereon, we are of the
opinion that the Merger Shares, when converted in the manner described in the
Merger Agreement (including all exhibits thereto) and in compliance with the Act
and applicable state Blue Sky laws, will be duly and validly authorized, issued,
fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to our name under the heading "Legal Matters" in
the Prospectus. In giving such consent, we do not hereby admit that we come
within the category of persons whose consent is required under Section 7 of the
Act or the Rules and Regulations of the Securities and Exchange Commission
promulgated under the Act.
Very truly yours,
/s/ HOFHEIMER NUSBAUM, P.C.
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of _______________, 2000 (the "Escrow
Agreement"), by and among DOLLAR TREE STORES, INC., a Virginia corporation
("Parent"); THE SHAREHOLDERS IDENTIFIED ON SCHEDULE 1 HERETO, (each a
"Shareholder" and, collectively, the "Shareholders"); BERNARD SPAIN and WILLIAM
WOO, as representatives of the Shareholders (collectively, the "Shareholder
Representatives"); and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
banking corporation acting solely as escrow agent hereunder and not in its
individual capacity ("Escrow Agent"). The Parent and the Shareholders are
sometimes referred to herein as the "Interested Parties." Capitalized terms used
but not otherwise defined herein shall have the meanings ascribed to such terms
in the Merger Agreement (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, pursuant to a certain Merger Agreement, dated as of April 5,
2000 (the "Merger Agreement") by and among Parent, DT Keystone, Inc., a
Pennsylvania corporation and wholly-owned subsidiary of Parent ("Sub") and
Dollar Express, Inc., a Pennsylvania corporation (the "Company"), the capital
stock of the Company owned by the Shareholders has been (simultaneously with the
execution hereof) converted into the right to receive shares of Parent Common
Stock;
WHEREAS, pursuant to Article 10 of the Merger Agreement, the
Shareholders have agreed to indemnify Parent and its subsidiaries and Affiliates
(including DT Keystone, Inc., Dollar Express, Inc., and the surviving
corporation in the Merger), each of their respective officers, directors,
employees, agents and representatives and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "Parent
Indemnified Parties") for Parent Losses;
WHEREAS, as security for the Shareholders' obligations under the Merger
Agreement but without limiting the other remedies of the Parent Indemnified
Parties thereunder, the Merger Agreement also contemplates a surrender of Escrow
Shares (as defined below) and related funds to the extent Parent Indemnified
Parties suffer Parent Losses;
1
<PAGE>
WHEREAS, pursuant to Section 8.5 of the Merger Agreement, the
Shareholders have appointed the Shareholder Representatives to act on their
behalf with respect to the performance on behalf of such Shareholder under the
terms and provisions of this Escrow Agreement; and
WHEREAS, Escrow Agent is willing to act as escrow agent hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual
promises, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
1 Delivery of Escrow Shares.
1.1 Subject and pursuant to the Merger Agreement, Escrow Shares
shall be delivered to the Escrow Agent on behalf of the Shareholders, in the
proportion specified on Schedule 1 hereto. The Escrow Shares shall be
represented by a stock certificate in the name of State Street Bank and Trust
Company, as Escrow Agent under the Escrow Agreement, dated April ___, 2000.
Notwithstanding the foregoing, during the term of this Escrow Agreement, title
to the Escrow Shares will be in the name of the Escrow Agent for record holder
purposes only. The parties acknowledge that the Shareholders are the beneficial
owners of the Escrow Shares, subject to the terms and conditions of the Merger
Agreement and this Escrow Agreement, and each Shareholder shall retain all
rights to vote the shares of Parent Common Stock delivered on behalf of such
Shareholder to the Escrow Agent that are not transferred to Parent pursuant to
Section 2 hereof.
1.2 The Escrow Shares shall be contributed into escrow hereunder
on behalf of the Shareholders in the same proportion to the Parent Common Stock
to be received by each Shareholder pursuant to Article 2 of the Merger
Agreement. Escrow Agent agrees to submit said shares for transfer into its name
as Escrow Agent hereunder or, in its discretion, into the name of its nominee,
and agrees to hold and administer said shares subject to the terms of this
Escrow Agreement. Except as set forth in this Agreement, the Escrow Agent shall
be under no obligation to preserve, protect or exercise rights in the Escrow
Shares, and shall be responsible only for reasonable measures to maintain the
physical safekeeping thereof, and otherwise to perform and observe such duties
on its part as are expressly set forth in this Escrow Agreement. The Escrow
Agent shall have no responsibility for the genuineness, validity, market value,
title or sufficiency for any intended purpose of the Escrow Shares.
2 The Escrow Fund. All cash dividends on or proceeds from the
permitted sale of the Escrow Shares shall be deposited directly into an escrow
account created by the Escrow Agent specifically for the purpose of holding such
cash dividends and proceeds (the "Dividend Account"), without any tax or other
withholding or deduction, subject to the terms of the Escrow Agreement. Shares
resulting from stock dividends, stock splits and other shares or securities
issued in respect of the Escrow Shares shall be issued in the name of the Escrow
Agent, and shall be held by the Escrow Agent subject to the provisions of this
Agreement, and upon issuance
2
<PAGE>
shall become part of the Escrow Shares. The Escrow Agent shall invest the
Dividend Account at, and pursuant to, the written direction of the Shareholder
Representatives in Eligible Investments and shall not be responsible or liable
for any loss accruing from any investment made in accordance herewith except for
losses due to the gross negligence or wilful misconduct of the Escrow Agent.
"Eligible Investments" shall mean (i) obligations issued or guaranteed by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States is pledged in support thereof);
(ii) obligations (including certificates of deposit and banker's acceptances) of
any domestic commercial bank having capital and surplus in excess of
$500,000,000; (iii) repurchase obligations for underlying securities of the type
described in clause (i); (iv) shares of money market funds at least 95% of the
assets of which constitute obligations of the type described in clause (i)
above. No investment shall have a term of more than ninety (90) days. If
otherwise qualified, obligations of the Escrow Agent shall qualify as Eligible
Investments. Absent its timely receipt of such specific written investment
instruction from the Shareholder Representatives, the Escrow Agent shall invest
the funds in the Dividend Account in the Eligible Investments described in
clause (i) above. All earnings received from the investment of the Dividend
Account shall be credited to, and shall become a part of, the Dividend Account
(and any losses on such investments shall be debited to the Dividend Account).
The Escrow Agent shall have no liability for any investment losses, including
any losses on any investment required to be liquidated prior to maturity in
order to make a payment required hereunder except for losses due to the gross
negligence or wilful misconduct of the Escrow Agent.
The Escrow Agent is hereby authorized, in making or disposing of any
investment permitted by this section, to deal with itself (in its individual
capacity) or with any one or more affiliates, whether it or such affiliate is
acting as an agent of the Escrow Agent or for any third person or dealing as
principal for his own account.
3 Voting and Disposition of Escrow Shares.
(a) The Escrow Shares shall be voted on all matters submitted to
the shareholders of Parent as each Shareholder shall direct with respect to the
number of Escrow Shares allocated to such Shareholder. During the period the
Escrow Shares are held hereunder, Parent shall cause all proxy solicitation
materials, including forms of proxy, to be sent to the Shareholders and Escrow
Agent as and when sent to the shareholders of Parent. In the absence of
direction from any Shareholder, the Escrow Agent shall not be responsible for
forwarding to any party, notifying any party with respect to, or taking any
action with respect to any Escrow Shares.
(b) Following the Restricted Period (as defined below), and subject
to compliance with the requirements of applicable securities laws, the Escrow
Shares may be sold by the Escrow Agent on behalf of the Shareholders for cash at
the time and in the manner the Shareholder Representatives shall direct. No
Escrow Shares may be sold, transferred or otherwise disposed of, nor shall any
person in any other way reduce such person's risk or other
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shares of the capital stock of Parent until after such time as financial results
covering at least 30 days of post merger combined operations of Parent and the
Company have been published (within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies) by Parent, in the form of a
post-effective amendment, issuance of a quarterly earnings report, a Form 10-K,
10-Q or 8-K filing, or any other public issuance which includes the combined
sales and net income (the "Restricted Period"). Proceeds from the permitted sale
of the Escrow Shares shall be deposited in the Dividend Account and allocated to
identified subaccount for the benefit of the applicable Shareholders.
Notwithstanding any provision of this section 3(b) to the contrary, the Escrow
Agent conclusively may assume that the Restricted Period has expired if it
receives directions from the Shareholder Representatives to sell shares.
4 Application of Escrow Shares and the Dividend Account to Claims of
Parent Indemnified Parties and Deficit Amount.
4.1 In the event a Parent Indemnified Party claims that it is
entitled to indemnification pursuant to the Merger Agreement (including without
limitation a claim for a Deficit Amount pursuant to Section 7.1(vi)), such
Parent Indemnified Party shall give written notice of such claim to the
Shareholder Representatives and the Escrow Agent. Any such notice shall be
signed by an officer of Parent and shall contain (i) a reasonable description of
the claim and (ii) and the amount thereof. The Escrow Agent shall thereupon, but
in no event less promptly than five (5) business days thereafter, deliver a copy
of such notice to the Shareholder Representatives. Subject to compliance by such
Parent Indemnified Party with the applicable indemnification provisions of the
Merger Agreement, the amount of such claim shall be paid to the Parent
Indemnified Party as provided in Section 4.3, unless the Shareholder
Representatives shall contest the right of such Parent Indemnified Party to such
payment by delivering to such Parent Indemnified Party and the Escrow Agent
notice of such contest within twenty (20) days after such Parent Indemnified
Party shall have delivered notice to the Shareholder Representatives of the
claim.
4.2 If within the twenty (20) day period specified in Section 4.1
above, the Shareholder Representatives shall deliver to the Parent Indemnified
Party and the Escrow Agent the notice of contest referred to in Section 4.1
above, the Parent Indemnified Party and the Shareholder Representatives shall
use their reasonable efforts to resolve the dispute by mutual agreement within
ninety (90) days from the receipt of such notice of contest. If at the end of
such ninety-day period, the Parent Indemnified Party and Shareholder
Representatives have not reached an agreement with respect to such dispute, then
such parties shall use their good faith efforts to submit such dispute promptly
to binding arbitration or, if such parties cannot agree to the terms of such
arbitration, to a court of competent jurisdiction. The Escrow Agent shall make
no payment hereunder with respect to the claim involved until the dispute has
been finally settled by written agreement of such Parent Indemnified Party and
the Shareholder Representatives, a copy of which is delivered to Escrow Agent,
or, in the absence of such an agreement, by a binding and final arbitration
award if such Parent Indemnified Party and the Shareholder Representative have
agreed to such arbitration, or otherwise by a binding and final judgment,
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order or decree of a court of competent jurisdiction, a copy of which is
delivered to Escrow Agent.
4.3 Promptly upon determination by the Escrow Agent that a payment
is to be made to a Parent Indemnified Party hereunder, then the Escrow Agent
shall calculate each Shareholder's pro rata liability for such payment ("Per
Shareholder Amount") in accordance with Schedule 1 hereof. The Escrow Agent
shall then make such payment of the Per Shareholder Amount, with respect to each
Shareholder:
(i) first, by cancellation of the number of whole
unsold Escrow Shares allocable to such Shareholder having an aggregate
value nearest to the Per Shareholder Amount ("Share Value") without
exceeding the Per Shareholder Amount, such value per share to be
$_______ (the "Average Closing Price") subject to appropriate
adjustment to take into account any stock split, stock dividend or
recapitalization subsequent to the Effective Time and not reflected in
such Average Closing Price; and
(ii) second, if the Per Shareholder Amount cannot be
fully satisfied pursuant to Section 4.3(i), by payment of a
distribution of amounts, if any, contained in the Dividend Account
allocable to such Shareholder which shall be made to such Parent
Indemnified Party in an amount equal to the Per Shareholder Amount
minus the Share Value.
The intent of this provision is to divide any payment made to Parent Indemnified
Parties among the Shareholders and then to satisfy such payments first out of
each Shareholder's unsold Escrow Shares and secondly out of each Shareholder's
share of the Dividend Account.
5 Final Distribution. On the first anniversary of the date hereof
(the "Anniversary"), except as otherwise provided in this Section, the Escrow
Shares and the Dividend Account then remaining in escrow shall be distributed to
the Shareholders pro rata in accordance with Schedule 1 hereto. If any claim
theretofore asserted by a Parent Indemnified Party shall not have been paid or
finally determined to be without merit or the amount of such claim shall not
have been finally determined, the number of whole shares of the Escrow Shares
having an aggregate value (determined as provided in Section 4.3 above) nearest
to the amount of such claim on the Anniversary (the "Retained Escrow Shares"),
plus, if the Retained Escrow Shares are insufficient to cover the amount of such
claim, an amount from the Dividend Account equal to any amount remaining subject
to such claim, shall be retained in escrow until such claim(s) shall have been
paid or finally determined to be without merit, whereupon such Retained Escrow
Shares and Dividend Account amount shall be distributed to the Shareholders pro
rata in accordance with Schedule 1 hereto, subject to the remaining provisions
of this Section. Any distribution pursuant hereto shall be net of any required
tax or other withholding or deduction. The parties will make all reasonable
efforts to resolve any claims hereunder as quickly as possible.
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6 Fractional Shares; Distributions. In the event any calculations
required under this Escrow Agreement result in the allocation of a fractional
share amount to a Shareholder, the fraction shall be rounded to the next lower
whole number, and any remainder shares shall be canceled. Parent agrees to
deliver to any Shareholder requesting it, a cash payment to such Shareholder in
the amount of the value of any canceled fractional share, measured at the
Average Closing Price. All deliveries under this Escrow Agreement shall be made
by and to the parties hereto (or their lawfully appointed attorneys-in-fact) in
the United States.
7 Shareholder Representatives; Unanimous Action; Notices and Written
Directions.
(a) Each Shareholder agrees to execute a power of attorney in the
form of Exhibit A hereto (and to deliver copies of such power to Parent and the
Escrow Agent), which power appoints the Shareholder Representative to be his,
her or its true and lawful attorney for those matters specified therein.
Notwithstanding the foregoing, the Shareholder Representative will not act on
behalf of the Shareholders with respect to distributions, voting or tax
withholdings.
(b) The Shareholder Representatives hereby agree to accept, with
respect to each Shareholder, the appointment as set forth in Exhibit A. Whenever
there are two or more Shareholder Representatives, action by the Shareholder
Representatives shall require their unanimous consent, and all obligations in
this Escrow Agreement with respect to the Shareholder Representatives shall
apply to both such representatives.
(c) Until notified in writing by the Shareholder Representatives
that they have resigned or by holders of 75% of the Escrow Shares that they have
been removed, the Escrow Agent may act upon the directions, instructions and
notices of the Shareholder Representatives named above and, thereafter, upon the
directions, instructions and notices of any successor named in a writing
executed by holders of 75% of the Escrow Shares delivered to the Escrow Agent.
8 Escrow Agent.
8.1 Duties. Each Interested Party acknowledges and agrees that the
Escrow Agent (i) shall not be responsible for any of the agreements referred to
or described herein (including without limitation the Merger Agreement), or for
determining or compelling compliance therewith, and shall not otherwise be bound
thereby, (ii) shall be obligated only for the performance of such duties as are
expressly and specifically set forth in this Escrow Agreement on its part to be
performed, each of which are ministerial (and shall not be construed to be
fiduciary) in nature, and no implied duties or obligations of any kind shall be
read into this Escrow Agreement against or on the part of the Escrow Agent,
(iii) shall not be obligated to take any legal or other action hereunder which
might in its judgment involve or cause it to incur any expense or liability
unless it shall have been furnished with acceptable
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indemnification, (iv) may rely on and shall be protected in acting or refraining
from acting upon any written notice, instruction (including, without limitation,
wire transfer instructions, whether incorporated herein or provided in a
separate written instruction), instrument, statement, certificate, request or
other document furnished to it hereunder and reasonably believed by it to be
genuine and to have been signed or presented by the proper person, and shall
have no responsibility for determining the accuracy thereof, and (v) may consult
counsel satisfactory to it, including in-house counsel, and the opinion or
advice of such counsel in any instance shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion or advice of such
counsel. Escrow Agent shall not be in any manner liable or responsible for the
sufficiency, correctness, genuineness or validity of any instruments deposited
with it or with reference to the form of execution thereof, or the identity,
authority or rights of any person executing or depositing same, and Escrow Agent
shall not be liable for any loss that may occur by reason of forgery, false
representation or the exercise of its discretion in any particular manner or for
any other reason to anyone for any action taken or omitted to be taken by it
hereunder, except for its own gross negligence or willful misconduct or for a
breach of the terms of this Escrow Agreement. In no event shall the Escrow Agent
be liable for punitive, special or consequential damage or loss (including but
not limited to lost profits) whatsoever, even if the Escrow Agent has been
informed of the likelihood of such loss or damage and regardless of the form of
action.
8.2 Indemnification. Except in instances of Escrow Agent's own
gross negligence or willful misconduct Shareholders collectively or the one hand
and the Parent on the other shall each indemnify, defend, and hold harmless
Escrow Agent (and its directors, officers and employees) against fifty percent
(50%) of any and all costs, losses, claims, damages, liabilities, expenses,
including reasonable costs of investigation, court costs, and attorneys' fees,
and disbursements, which may be imposed upon Escrow Agent (or its directors,
officers and employees) solely in connection with its actions taken within the
scope of duties specified hereunder as Escrow Agent (and the exercise or failure
to exercise its discretion hereunder), including any litigation arising from
this Escrow Agreement involving the subject matter hereof, and all such costs,
expenses and disbursement shall be for the account of and shall be borne and
paid by Parent and the Shareholders as a condition to termination of this Escrow
Agreement. The foregoing indemnification and agreement to hold harmless shall
survive the termination of the Escrow Agreement.
8.3 Disputes. In the event of a dispute between the parties, in the
discretion of Escrow Agent, Escrow Agent shall be entitled to tender into the
registry or custody of any court of competent jurisdiction all money or property
in its hands under this Escrow Agreement, together with such legal pleadings as
it deems appropriate, and thereupon shall be discharged from all further duties
and liabilities under this Escrow Agreement. Any such legal action may be
brought in such court as Escrow Agent shall determine to have jurisdiction
thereof. The filing of any such legal proceedings shall not deprive Escrow Agent
of its compensation earned prior to such filing, or of the benefits of Section
8.2 hereof.
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8.4 Receipt. Escrow Agent shall provide written acknowledgment to
the Parent and the Shareholder Representatives of receipt of the Escrow Shares.
8.5 Fees. Escrow Agent's fees hereunder shall be as set forth on
the fee schedule attached hereto as Schedule 2 and incorporated herein by
reference. All such fees, expenses and reimbursements (other than in relation to
a dispute, which shall be governed by Section 8.3) shall be paid by the Parent.
9 Transfer of Interests. The interests of the Shareholders in the
Escrow Shares and the rights and obligations of the Shareholders hereunder may
not be transferred except by will, the laws of descent and distribution or by
other operation of law.
10 Miscellaneous.
10.1 Benefits and Burdens; Assignment. This Escrow Agreement shall
inure to the benefit of and shall be binding upon Parent and the Shareholders
and Escrow Agent and their respective heirs, representatives, successors and
assigns. No party to this Escrow Agreement may assign its rights or obligations
hereunder without the prior written consent of each of the other parties hereto,
provided however, that this Escrow Agreement may only be assigned by Parent to a
corporation, all of whose issued and outstanding capital stock is owned directly
or indirectly by Parent, and in such event Parent shall not be released from its
obligations hereunder.
10.2 Governing Law. This Escrow Agreement shall be governed by the
internal laws (ignoring principles of conflicts of laws) of the Commonwealth of
Massachusetts. All deliveries under this Escrow Agreement shall be made by and
to the parties hereto (or their lawfully appointed attorneys-in-fact) in the
United States.
10.3 Headings. The section and paragraph headings contained in this
Escrow Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Escrow Agreement.
10.4 Notices; Wiring Instructions.
(a) Any transmittals, notice or other communications
required or permitted hereunder shall be sufficiently given if sent by
registered or certified mail, postage prepaid, by national overnight courier
service or, in the case of any communication not involving a transmittal of
original documents, by telecopy, addressed as follows:
If to Parent or, after the Closing, the Company:
Dollar Tree Stores, Inc.
500 Volvo Parkway
Chesapeake, Virginia 23320
Attention: Mr. Frederick C. Coble
Telecopier: (757) 321-5111
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With a copy to:
Hofheimer Nusbaum, P.C.
999 Waterside Drive, Suite 1700
P. O. Box 3460
Norfolk, Virginia 23514
Attention: William A. Old, Jr., Esquire
Telecopier: (757) 629-0660
If to the Shareholder Representatives:
With a copy to:
If to Shareholders:
To the addresses stated on Schedule 1
If to Escrow Agent:
State Street Bank and Trust Company
Two Avenue de Lafayette, Sixth Floor
Boston, Massachusetts 02111
Attention: Corporate Trust Department
Attention: Dollar Tree/Dollar Express Escrow
Fax: 617-662-1463
With a copy to:
Donald E. Vaughan, Esq.
Peabody & Arnold LLP
50 Rowes Wharf
Boston, Massachusetts 02110-3342
or such other addresses as shall be furnished in writing by any of the parties,
and any such notice or communication shall be deemed to have been given as of
the next business day, if delivered by overnight courier service or upon receipt
(as evidenced by proof of transmission), if telecopied when received and three
days after the date so mailed (if mailed).
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(b) Any funds to be paid to or by the Escrow Agent
hereunder shall be sent by wire transfer or certified or cashier's check
pursuant to the following instructions (or by such method of payment and
pursuant to such instruction as may have been given in advance and in writing to
or by the Escrow Agent, as the case may be, in accordance with Section 10.4(a)
above):
If to Parent:
Bank: First Union National Bank, N.A.
ABA #: 0514 0054 9
A/C #: 2070000330892
Attn: Theresa Boneske (757) 628-0438
Ref: Dollar Tree/DLRX Escrow
If to Shareholders:
By certified or cashier's check sent via registered
or certified mail, postage prepaid, or by national
overnight courier service to the addresses stated on
Schedule 1.
If to the Escrow Agent:
Bank: State Street Bank and Trust Company
ABA #: 0110 0002 8
A/C #: 9903-9901
Attn: Corporate Trust Department
Ref: Dollar Tree/DLRX Escrow
10.5 Counterparts. This Escrow Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
10.6 Modification. This Escrow Agreement may be modified only by a
written instrument signed by each of the parties hereto, provided however that
Schedule 1 hereto may be modified to reflect valid transfers of the
Shareholders' interests in the Escrow Shares by a writing signed by Parent and
the Shareholder Representatives, upon which Escrow Agent shall be entitled to
rely without further investigation.
10.7 Cooperation. Shareholders, Parent and the Escrow Agent shall
deliver to each other such information and documents and shall execute and
deliver to each other such further information and documents and shall execute
and deliver such further instruments and agreements as the others may reasonably
request in order to accomplish the purpose of this Escrow Agreement or to assure
to the others the benefits of this Escrow Agreement.
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10.8 Entire Understanding. This Escrow Agreement and the schedules
referred to herein represent the entire understanding of the parties with
respect to the subject matter hereof and supersede all correspondence,
memoranda, conversations or other communications with respect thereto.
10.9 Severability. The invalidity or unenforceability of any
provision of this Escrow Agreement shall not affect the validity or
enforceability of any other provision of this Escrow Agreement.
10.10 Time. Time is of the essence under this Escrow Agreement.
10.11 Statutes. Any reference herein to any federal, state or
local statute shall include all amendments to such statute through the date of
this Escrow Agreement.
10.12 Interpretation. It is the intention of the parties hereto
and the Shareholders and Company that the Merger qualify as a "reorganization"
under the provisions of Section 368 of the Code, and be accounted for as a
"pooling of interests," and this Escrow Agreement shall be interpreted and
applied in a manner consistent with, and shall be subject to amendment to
conform to, the requirements for such treatment.
10.13 Tax-Related Terms.
(a) Tax Reporting. The Interested Parties agree that,
for tax reporting purposes, all interest or other income earned from the
investment of the Dividend Account in any tax year shall (i) to the extent such
interest or other income is distributed by the Escrow Agent to any person or
entity pursuant to the terms of this Escrow Agreement during such tax year, be
allocated to such person or entity, and (ii) otherwise shall be allocated to the
Shareholders in proportion to their holdings as set forth on Schedule 1.
(b) Certification of Tax Identification Number. The
Shareholder Representatives agree to obtain the certified tax identification
number for each Shareholder on a Form W-9 (or Form W-8, in case of non-U.S.
persons) and deliver the same to the Escrow Agent prior to the date on which any
income earned on the investment of the Dividend Account is credited to the
Dividend Account. In the event that any tax identification number is not
certified to the Escrow Agent, the Internal Revenue Code, as amended from time
to time, may require withholding of a portion of any interest or other income
earned on the investment of the Dividend Account.
(c) Tax Indemnification. The Shareholder Representa-
tives will instruct the Escrow Agent in writing with respect to the Escrow
Agent's responsibility for
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withholding and other taxes, assessments or other governmental charges, and will
instruct the Escrow Agent with respect to any certifications and governmental
reporting that may be required under any laws or regulations that may be
applicable in connection with its acting as Escrow Agent under this Escrow
Agreement. The Shareholders will indemnify and hold the Escrow Agent harmless
from any liability or obligation on account of taxes, assessments, additions for
late payment, interest, penalties, expenses and other governmental charges that
may be assessed or asserted against the Escrow Agent in connection with or
relating to any payment made or other activities performed under the terms of
this Escrow Agreement, including without limitation any liability for the
withholding or deduction of (or the failure to withhold or deduct) the same, and
any liability for failure to obtain proper certifications or to report properly
to governmental authorities in connection with this Escrow Agreement, including
costs and expenses (including reasonable legal fees and expenses), interest and
penalties. The foregoing indemnification and agreement to hold harmless shall
survive the termination of this Escrow Agreement.
10.14 Resignation. The Escrow Agent may at any time resign as
Escrow Agent hereunder by giving ten (10) business days' prior written notice of
resignation to the Parent and the Shareholder Representatives. Prior to the
effective date of the resignation as specified in such notice, the Parent will
issue to the Escrow Agent a written instruction authorizing redelivery of the
Escrow Shares and Dividend Account to a bank or trust company that it selects as
successor to the Escrow Agent hereunder, subject to the consent of the
Shareholder Representatives (which consent shall not be unreasonably withheld).
If, however, the Parent shall fail to name such a successor escrow agent within
five (5) business days after the notice of resignation from the Escrow Agent,
the Shareholder Representatives shall be entitled to name such successor escrow
agent. If no successor escrow agent is named by the Parent or the Shareholder
Representatives, the Escrow Agent may apply to a court of competent jurisdiction
for appointment of a successor escrow agent.
10.15 Force Majeure. The Escrow Agent shall not be responsible for
delays or failures in performance resulting from acts beyond its control. Such
acts shall include but not be limited to acts of God, strikes, lockouts, riots,
acts of war, epidemics, governmental regulations superimposed after the fact,
fire, external power or communications line failures, earthquakes or other
natural disasters.
10.16 Reproduction of Documents. This Escrow Agreement and all
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, and (b) certificates and
other information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, optical disk, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
[Signatures pages follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement under seal as of the date first written above.
PARENT: DOLLAR TREE STORES, INC.
By__________________________________
[Name]
[Title]
SHAREHOLDER ____________________________________
REPRESENTATIVES: BERNARD SPAIN, as Shareholder Representative
------------------------------------
WILLIAM WOO, as Shareholder Representative
[Executions Continue]
Signature Pages
<PAGE>
SHAREHOLDERS:
------------------------------------------
BERNARD SPAIN
------------------------------------------
MURRAY SPAIN
BERNARD SPAIN FAMILY LIMITED PARTNERSHIP
By: ____________________________________
Murray Spain, its General Partner
MURRAY SPAIN FAMILY LIMITED PARTNERSHIP
By: ____________________________________
Stephen Greenfield, its General Partner
[Executions Continue]
Signature Pages
<PAGE>
GLOBAL PRIVATE EQUITY III LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
its General Partner
By: Advent International Corporation, its
General Partner
By:_______________________________________
Name: David M. Mussafer
Title: Senior Vice President
ADVENT PGGM GLOBAL LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
its General Partner
By: Advent International Corporation, its
General Partner
By:_______________________________________
Name: David M. Mussafer
Title: Senior Vice President
[Executions Continue]
Signature Pages
<PAGE>
ADVENT PARTNERS GPE III LIMITED PARTNERSHIP
By: Advent International Corporation, General
Partner
By:_______________________________________
Name: David M. Mussafer
Title: Senior Vice President
ADVENT PARTNERS (NA) GPE III LIMITED
PARTNERSHIP
By: Advent International Corporation, General
Partner
By:_______________________________________
Name: David M. Mussafer
Title: Senior Vice President
ADVENT PARTNERS LIMITED PARTNERSHIP
By: Advent International Corporation, General
Partner
By:_______________________________________
Name: David M. Mussafer
Title: Senior Vice President
[Executions Continue]
Signature Pages
<PAGE>
GUAYACAN PRIVATE EQUITY FUND LIMITED
PARTNERSHIP
By: Advent-Morro Equity Partners, Inc., its
General Partner
By:_______________________________________
Name: Cyril L. Meduna
Title: President
DOLLAR EXPRESS INVESTMENT, LLC
By:_______________________________________
Name:
Title:
[Executions Continue]
Signature Pages
<PAGE>
ESCROW AGENT: STATE STREET BANK AND TRUST COMPANY
(Acting solely as Escrow Agent herein and not
in its individual capacity)
By___________________________________
Name:
Title:
Signature Pages
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Dollar Tree Stores, Inc.:
We consent to the use of our report dated January 24, 2000 relating to the
consolidated balance sheets of Dollar Tree Stores, Inc. and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated income statements and
statements of shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1999, incorporated by reference in the
registration statement (No. 333-___________), on Form S-3, of Dollar Tree
Stores, Inc. which report appears in the Annual Report on Form 10-K for the year
ended December 31, 1999 of Dollar Tree Stores, Inc. and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Norfolk, Virginia
April 26, 2000
