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Exhibit 99.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of May 5, 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 DAVID MUSSAFER, 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;
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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 May 5, 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 shall become part of the Escrow Shares. The Escrow
Agent shall
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Escrow Agreement--Page 2
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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 its 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 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
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Escrow Agreement--Page 3
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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 direction 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, order
or decree of a court of competent jurisdiction, a copy of which is delivered to
Escrow Agent.
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Escrow Agreement--Page 4
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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 $57.10 (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.
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
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Escrow Agreement--Page 5
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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 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
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Escrow Agreement--Page 6
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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 on 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.
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.
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Escrow Agreement--Page 7
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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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Escrow Agreement--Page 8
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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:
Mr. Bernard Spain
233 S. 6th Street
Philadelphia, Pennsylvania 19106
Mr. David Mussafer
Advent International Corporation
75 State Street
Boston, Massachusetts 02109
With copies to:
Cary S. Levinson, Esq.
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth & Arch Streets
Philadelphia, PA 19103-2799
Telecopier: 215-981-4750
Ramon R. Obod, Esq.
Fox, Rothschild, O'Brien & Frankel, LLP
2000 Market Street, Tenth Floor
Philadelphia, PA 19103-3291
Telecopier: 215-299-2150
If to Shareholders:
To the addresses stated on Schedule 1
If to Escrow Agent:
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Escrow Agreement--Page 9
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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).
(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.
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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.
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
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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 Representatives will
instruct the Escrow Agent in writing with respect to the Escrow Agent's
responsibility for 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
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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]
--------------------------------------------------------------------------------
Escrow Agreement--Page 13
<PAGE>
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 /s/ Frederick C. Coble
-----------------------------------------------
Frederick C. Coble
Senior Vice President - Chief Financial Officer
/s/ Bernard Spain
SHAREHOLDER -------------------------------------------------
REPRESENTATIVES: BERNARD SPAIN, as Shareholder Representative
/s/ David Mussafer
-------------------------------------------------
DAVID MUSSAFER, as Shareholder Representative
[Executions Continue]
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Escrow Agreement--Signature Pages
<PAGE>
SHAREHOLDERS: /s/ Bernard Spain
-------------------------------------------------
BERNARD SPAIN
/s/ Murray Spain
-------------------------------------------------
MURRAY SPAIN
BERNARD SPAIN FAMILY LIMITED
PARTNERSHIP
By: /s/ Murray Spain
---------------------------------------------
Murray Spain, its General Partner
MURRAY SPAIN FAMILY LIMITED
PARTNERSHIP
By: /s/ Stephen Greenfield
---------------------------------------------
Stephen Greenfield, its General Partner
[Executions Continue]
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Escrow Agreement--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: /s/ David M. Mussafer
----------------------------------------------
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: /s/ David M. Mussafer
----------------------------------------------
Name: David M. Mussafer
Title: Senior Vice President
[Executions Continue]
--------------------------------------------------------------------------------
Escrow Agreement--Signature Pages
<PAGE>
ADVENT PARTNERS GPE III LIMITED
PARTNERSHIP
By: Advent International Corporation, General
Partner
By: /s/ David M. Mussafer
----------------------------------------------
Name: David M. Mussafer
Title: Senior Vice President
ADVENT PARTNERS (NA) GPE III LIMITED
PARTNERSHIP
By: Advent International Corporation, General
Partner
By: /s/ David M. Mussafer
----------------------------------------------
Name: David M. Mussafer
Title: Senior Vice President
ADVENT PARTNERS LIMITED PARTNERSHIP
By: Advent International Corporation, General
Partner
By: /s/ David M. Mussafer
----------------------------------------------
Name: David M. Mussafer
Title: Senior Vice President
[Executions Continue]
--------------------------------------------------------------------------------
Escrow Agreement--Signature Pages
<PAGE>
GUAYACAN PRIVATE EQUITY FUND LIMITED
PARTNERSHIP
By: Advent-Morro Equity Partners, Inc., its
General Partner
By: /s/ Cyril L. Meduna
----------------------------------------------
Name: Cyril L. Meduna
Title: President
DOLLAR EXPRESS INVESTMENT, LLC
By: [illegible]
----------------------------------------------
Name:
Title:
[Executions Continue]
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Escrow Agreement--Signature Pages
<PAGE>
ESCROW AGENT: STATE STREET BANK AND TRUST COMPANY
(Acting solely as Escrow Agent herein and not in
its individual capacity)
By: /s/ Arthur L. Blakeslee
----------------------------------------------
Name: Arthur L. Blakeslee
Title: Assistant Vice President
--------------------------------------------------------------------------------
Escrow Agreement--Signature Pages
<PAGE>
SCHEDULE 1
LIST OF SHAREHOLDERS
--------------------------------------------------------------------------------
Name Escrow Shares Pro Rata Percentage SS# or
and Address Contributed of Total Escrow Shares Tax Id#
--------------------------------------------------------------------------------
Bernard Spain 83,618 28.5973% ###-##-####
233 S. 6th Street
Philadelphia, PA 19106
--------------------------------------------------------------------------------
Murray Spain 82,981 28.3795% ###-##-####
1429 Garrison Drive
Ambler, PA 19002
--------------------------------------------------------------------------------
Bernard Spain Family 11,028 3.7716% 23-3007519
Limited Partnership
1429 Garrison Drive
Ambler, PA 19002
--------------------------------------------------------------------------------
Murray Spain Family 11,555 3.9518% 23-3007513
Limited Partnership
11300 Rockville Pike
Rockville, MD 20852
--------------------------------------------------------------------------------
Global Private Equity III 83,192 28.4516% 04-3352454
Limited Partnership
75 State Street
Boston, MA 02109
--------------------------------------------------------------------------------
Advent PGGM Global 12,748 4.3598% 04-3339615
Limited Partnership
75 State Street
Boston, MA 02109
--------------------------------------------------------------------------------
Advent Partners GPE III 1,256 0.4296% 04-3353928
Limited Partnership
75 State Street
Boston, MA 02109
--------------------------------------------------------------------------------
Advent Partners Limited 546 0.1867% 04-3259121
Partnership
75 State Street
Boston, MA 02109
--------------------------------------------------------------------------------
Advent Partners (NA) 372 0.1272% 04-3353929
GPE III Limited
Partnership
75 State Street
Boston, MA 02109
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Escrow Agreement--Schedules
<PAGE>
--------------------------------------------------------------------------------
Name Escrow Shares Pro Rata Percentage SS# or
and Address Contributed of Total Escrow Shares Tax Id#
--------------------------------------------------------------------------------
Guayacan Private 2,949 1.0086% 66-0536180
Equity Fund Limited
Partnership
Banco Popular Bldg.
206 Tetuan, Street, Ste
903,
San Juan, PR 0901
--------------------------------------------------------------------------------
Dollar Express 2,153 0.7363% 56-2127458
Investment LLC
101 S. Tryon St.
40th Flr.
Charlotte, NC 28280
--------------------------------------------------------------------------------
Total 292,398 100.0000%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Escrow Agreement--Schedules
<PAGE>
SCHEDULE 2
STATE STREET
SCHEDULE OF FEES
FOR
ESCROW SERVICES
Dollar Tree Stores
and
Dollar Express
ACCEPTANCE FEE: Waived
ADMINISTRATION FEE: $3,500.00 per year or part thereof,
Plus $500.00 per sale of Escrow Shares
INVESTMENT FEE (IF APPLICABLE):
direct investments in treasuries, $65.00 per buy/sell
C/D's CP, Repos, etc.
SWEEP FEE (IF APPLICABLE):
SSgA or selected other Money 40 basis points per annum of
Market Funds the average daily net assets
State Street's Insured Money No Charge
Market Account
WIRE TRANSFER FEE (outgoing, if
applicable): $20.00
OUT-OF-POCKET EXPENSES: At cost
LEGAL FEES (Peabody & Arnold): At cost
April 24, 2000 (Revised)
--------------------------------------------------------------------------------
Escrow Agreement--Schedules
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
NOTICE
THE PURPOSE OF THIS POWER OF ATTORNEY IS TO GIVE THE PERSON YOU
DESIGNATE (YOUR "AGENT") BROAD POWERS TO HANDLE YOUR PROPERTY, WHICH MAY INCLUDE
POWERS TO SELL OR OTHERWISE DISPOSE OF ANY REAL OR PERSONAL PROPERTY WITHOUT
ADVANCE NOTICE TO YOU OR APPROVAL BY YOU.
THIS POWER OF ATTORNEY DOES NOT IMPOSE A DUTY ON YOUR AGENT TO
EXERCISE GRANTED POWERS, BUT WHEN POWERS ARE EXERCISED, YOUR AGENT MUST USE DUE
CARE TO ACT FOR YOUR BENEFIT AND IN ACCORDANCE WITH THIS POWER OF ATTORNEY.
YOUR AGENT MAY EXERCISE THE POWERS GIVEN HERE THROUGHOUT YOUR
LIFETIME, EVEN AFTER YOU BECOME INCAPACITATED, UNLESS YOU EXPRESSLY LIMIT THE
DURATION OF THESE POWERS OR YOU REVOKE THESE POWERS OR A COURT ACTING ON YOUR
BEHALF TERMINATES YOUR AGENT'S AUTHORITY.
YOUR AGENT MUST KEEP YOUR FUNDS SEPARATE FROM YOUR AGENT'S FUNDS.
A COURT CAN TAKE AWAY THE POWERS OF YOUR AGENT IF IT FINDS YOUR
AGENT IS NOT ACTING PROPERLY.
THE POWERS AND DUTIES OF AN AGENT UNDER A POWER OF ATTORNEY ARE
EXPLAINED MORE FULLY IN 20 Pa.C.S. Ch. 56.
IF THERE IS ANYTHING ABOUT THIS FORM THAT YOU DO NOT UNDERSTAND, YOU
SHOULD ASK A LAWYER OF YOUR OWN CHOOSING TO EXPLAIN IT TO YOU.
I HAVE READ OR HAD EXPLAINED TO ME THIS NOTICE AND I UNDERSTAND ITS
CONTENTS.
Signed, Date:
______________________________________ ______________, 2000
--------------------------------------------------------------------------------
Escrow Agreement--Power of Attorney
<PAGE>
The undersigned Shareholder hereby irrevocably (except to the extent
described below) constitutes and appoints Bernard Spain and David Mussafer, with
power and authority to act in any matter hereunder or under the Merger Agreement
or Escrow Agreement, the true and lawful attorney-in-fact of the undersigned
Shareholder, with full power in the name of, for and on behalf of, the
undersigned Shareholder with respect to all matters arising in connection with
the Escrow Shares and the indemnification obligations of the undersigned
Shareholder pursuant to the Merger Agreement including, but not limited to, the
power and authority to take any and all of the following actions:
(i) negotiate, determine, defend and settle any dispute which
may arise under Article 10 of the Merger Agreement or under the Escrow
Agreement; and
(ii) make, execute, acknowledge and deliver any releases,
assurances, receipts, requests, instructions, notices, agreements, certificates
and any other instruments, and to generally do any and all things and to take
any and all actions which may be requisite, proper or advisable in connection
with Article 10 of the Merger Agreement or under the Escrow Agreement.
The undersigned Shareholder acknowledges that Shareholders holding
at least seventy-five percent (75%) of the Escrow Shares may replace the
Shareholder Representatives at any time with one or more substitute Shareholder
Representative(s). In such event, the appointment of the Shareholder
Representatives as such undersigned Shareholder's attorneys-in-fact shall be
revoked and the substitute Shareholder Representative(s) shall be deemed to be
automatically appointed, in their stead, as attorney(s)-in-fact hereunder,
without the necessity of further action on the part of the undersigned
Shareholders. The undersigned also acknowledges that neither the Shareholder
Representatives nor any substitute Shareholder Representative(s) shall be liable
to any person for any action taken or any omission to act, in good faith, in
connection with the Shareholder Representatives' responsibilities as Shareholder
Representative.
The power of attorney conferred hereby is an agency coupled with an
interest and all authority conferred hereby shall be irrevocable and shall not
be terminated by any act of the undersigned Shareholders or by operation of law,
whether by the death or incapacity of the undersigned or by the occurrence of
any other event or events (including, without limiting the foregoing, the
termination of any trust or estate for which the undersigned Shareholders are
acting as a fiduciary or fiduciaries or the dissolution or liquidation of any
corporation or partnership); provided, however, that the appointment of Bernard
Spain and David Mussafer as attorneys-in-fact shall be deemed revoked in the
event a substitute Shareholder Representative(s) is/are selected, whereupon the
substitute Shareholder Representative(s) shall be deemed automatically appointed
as attorney(s)-in-fact in their stead. If after the execution hereof any of the
undersigned should die or become incapacitated, or if any trust or estate should
be terminated, or if any corporation or partnership should be dissolved or
liquidated, or if any other such event or events shall occur, before the
completion of the transactions contemplated by the Merger Agreement and the
Escrow
--------------------------------------------------------------------------------
Escrow Agreement--Power of Attorney
<PAGE>
Agreement, actions taken by the Shareholder Representatives (or any substitute
Shareholder Representative(s)) hereunder shall be as valid as if such death,
incapacity, termination, dissolution, liquidation or other event or events had
not occurred, regardless of whether or not the Shareholder Representatives (or
substitute Shareholder Representative(s)), Parent or the Escrow Agent, or any
one of them, shall have received notice of such death, incapacity, termination,
dissolution, liquidation or other event.
Action by the Shareholders 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.
Signed, Date:
______________________________________ ______________, 2000
ACKNOWLEDGMENT BY AGENT
I have read the attached power of attorney and am the person
identified as the agent for the principal. I hereby acknowledge that in the
absence of specific provision to the contrary in the power of attorney or in the
Pennsylvania Probate, Estates and Fiduciaries Code (20 Pa.C.S.) when I act as
agent:
I shall exercise the powers for the benefit of the principal.
I shall keep the assets of the principal separate from my assets.
I shall exercise reasonable caution and prudence.
I shall keep a full and accurate record of all actions, receipts and
disbursements on behalf of the principal.
Signed, Date:
______________________________________ ______________, 2000
Bernard Spain
______________________________________ ______________, 2000
David Mussafer
--------------------------------------------------------------------------------
Escrow Agreement--Power of Attorney
