VOTING AGREEMENT
AGREEMENT dated as of July 22, 1998 by and among Dollar Tree
Stores, Inc., a Virginia corporation ("Parent"), Gary L. Cino ("Gary"), Janet
Cino ("Janet"), Gary L. Nett, Trustee for The Cino Children's Trust dated March
18, 1997 ("Children's Trustee"), and Gary and Janet Cino, Trustees of the Gary
and Janet Cino Trust dated May 1, 1991 ("Cino Trustees") (Gary, Janet, the
Children's Trustee and the Cino Trustees shall be referred to herein
individually as a "Stockholder" and collectively as the "Stockholders").
W I T N E S S E T H:
WHEREAS, immediately prior to the execution of this Agreement, Parent,
Step Ahead Investments, Inc., a California corporation (the "Company"), and
Dollar Tree West, Inc., a California corporation ("Sub"), have entered into a
Merger Agreement (as such agreement may hereafter be amended from time to time,
the "Merger Agreement"), pursuant to which Sub will be merged with and into the
Company (the "Merger"); and
WHEREAS, the Stockholders are the record holders of the shares of
Company Stock described on Schedule A attached hereto;
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has requested that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
Section 1. Certain Definitions. Capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement.
For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities Beneficially
Owned by a person shall include securities Beneficially Owned by all other
persons with whom such person would constitute a "group" within the meaning of
Section 13(d) of the Exchange Act with respect to securities of the same issuer.
(b) "Company Stock" shall mean at any time the capital stock
of the Company, including the Company's common stock, no par value per share,
and the Company's Series A Preferred Stock.
(c) "Existing Shares" shall mean the shares of Company Stock
Beneficially Owned by the Stockholders on the date hereof.
(d) "Shares" shall mean the Existing Shares and any shares of
Company Stock and/or other equity securities of the Company the Beneficial
Ownership of which is acquired by the Stockholders in any capacity after the
date hereof and prior to the termination of this Agreement, whether upon the
exercise of options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities, or by means of purchase, dividend,
distribution, split-up, recapitalization, combination, exchange of shares or the
like, gift, bequest, inheritance or as a successor in interest in any capacity
or otherwise Beneficially Owned by the Stockholders.
Section 2. Voting of Company Stock. The Stockholders hereby agree that
at any meeting (whether annual or special and whether or not an adjourned or
postponed meeting) of the holders of Company Stock, however called, or in
connection with any written consent of the holders of Company Stock, the
Stockholders will appear at the meeting or otherwise cause the Shares to be
counted as present thereat for purposes of establishing a quorum and the
Stockholders shall vote or consent (or cause to be voted or consented) the
Shares in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval and adoption of the terms thereof and each of
the other actions contemplated by the Merger Agreement and this Agreement and
any actions required in furtherance thereof and hereof.
Section 3. Covenants, Representations and Warranties of the
Stockholders. The Stockholders hereby represent and warrant to, and agree with,
Parent as follows:
(a) Ownership of Shares. The Stockholders are the record and
Beneficial Owner of Existing Shares consisting solely of the shares of Company
Stock shown on Schedule A. On the date hereof, the Existing Shares constitute
all of the Shares owned of record or Beneficially Owned by the Stockholders. The
Stockholders have sole voting power and sole power to issue instructions with
respect to the matters set forth in Section 2 hereof, sole power of disposition,
sole power of conversion, sole power to demand appraisal rights and sole power
to agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Existing Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the terms
of this Agreement.
(b) Binding Effect. This Agreement has been duly and validly
executed and delivered by the Stockholders and constitutes a valid and binding
agreement enforceable against the Stockholders in accordance with its terms
except to the extent (i) such enforcement may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) No Conflicts. Except for filings, authorizations, consents
and approvals as may be required under the HSR Act, the Exchange Act and the
Securities Act, (i) no filing with, and no permit, authorization, consent or
approval of, any state or federal governmental body or authority is necessary
for the execution and delivery and performance of this Agreement by the
Stockholders
and (ii) none of the execution and delivery and performance of this Agreement by
the Stockholders, the consummation by the Stockholders of the transactions
contemplated hereby or compliance by the Stockholders with any of the provisions
hereof shall (A) conflict with or result in any breach of any organizational
documents of the Stockholders, (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default under any
of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which any of the
Stockholders is a party or by which any of the Stockholders or any of their
properties or assets may be bound, or (C) violate any order, writ, injunction,
decree, judgment, statute, law, rule or regulation applicable to any of the
Stockholders or any of their properties or assets.
(d) No Encumbrances. Except as applicable in connection with
the transactions contemplated hereby, the Shares and the certificates
representing such Shares are now, and at all times during the term hereof, will
be, held by the Stockholders, or by a nominee or custodian for the benefit of
the Stockholders, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except those which would not affect the
Stockholders' performance hereunder or for any such encumbrances or proxies
arising hereunder.
(e) Restriction on Transfer, Proxies; Non-Interference. No
Stockholder shall, directly or indirectly: (i) offer for sale, sell, transfer,
tender, pledge, encumber (other than by operation of law), assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
the Shares or any interest therein; (ii) except as contemplated by this
Agreement, grant any proxies or powers of attorney, deposit the Shares into a
voting trust or enter into a voting agreement with respect to the Shares; or
(iii) take any action that would make any representation or warranty of such
Stockholder contained herein untrue or incorrect or would result in a breach by
such Stockholder of its obligations under this Agreement or a breach by the
Company of its obligations under the Merger Agreement or the effect of which
would be inconsistent or violative of any provision or agreement contained in
this Agreement.
(f) Reliance by Parent. The Stockholders understand and
acknowledge that Parent is entering into the Merger Agreement in reliance upon
the Stockholders' execution and delivery of this Agreement.
Section 4. Representations and Warranties of Parent. Parent hereby
represents and warrants to the Stockholders as follows:
(a) Organization. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Virginia, has all requisite corporate power and authority to execute and deliver
this Agreement and perform its obligations hereunder. The execution and delivery
by Parent of this Agreement and the performance by Parent of its obligations
hereunder have been duly and validly authorized by the Board of Directors of
Parent and no other
corporate proceedings on the part of Parent are necessary to authorize the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
(b) Corporate Authorization. This Agreement has been duly and
validly executed and delivered by Parent and constitutes a valid and binding
agreement of Parent enforceable against Parent in accordance with its terms
except to the extent (i) such enforcement may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) No Conflicts. Except for filings, authorizations, consents
and approvals as may be required under the HSR Act, the Exchange Act and the
Securities Act, (i) no filing with, and no permit, authorization, consent or
approval of, any state or federal governmental body or authority is necessary
for the execution and delivery of this Agreement by Parent and the consummation
by Parent of the transactions contemplated hereby and (ii) none of the execution
and delivery of this Agreement by Parent, the consummation by Parent of the
transactions contemplated hereby or compliance by Parent with any of the
provisions hereof shall (A) conflict with or result in any breach of the
certificate of incorporation or by-laws of Parent, (B) result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms, conditions or
provisions of any note, loan agreement, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which Parent is a party or its properties or assets
may be bound, or (C) violate any order, writ, injunction, decree, judgment,
statute, law, rule or regulation applicable to Parent or any of its properties
or assets.
(d) No Finder's Fee. No broker, investment banker, financial
adviser or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Parent.
Section 5. Stop Transfer; Legend.
(a) The Stockholders agree with, and covenant to, Parent that
the Stockholders shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares unless such transfer is made in compliance with
this Agreement.
(b) In the event of a stock dividend or distribution, or any
change in the Company Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like other than
pursuant to the Merger, the term "Shares" shall be deemed to refer to and
include the shares of Company Stock as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Shares
may be changed or exchanged and appropriate adjustments shall be made to the
terms and provisions of this Agreement.
(c) Each Stockholder will, prior to the Effective Time, duly
execute and deliver to Parent an Affiliate Agreement contemplated in Section
6.11 of the Merger Agreement substantially in the form of Exhibit D to the
Merger Agreement.
(d) The Stockholders shall use reasonable efforts to find and
surrender to the Company all certificates representing the Shares, and the
Company shall place the following legend on such certificates:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A STOCKHOLDER AGREEMENT DATED AS OF JULY 22, 1998 BY AND
BETWEEN DOLLAR TREE STORES, INC. AND GARY L. CINO, JANET CINO,
GARY L. NETT, TRUSTEE FOR THE CINO CHILDREN'S TRUST, GARY AND
JANET CINO, TRUSTEES OF THE GARY AND JANET CINO TRUST WHICH,
AMONG OTHER THINGS, RESTRICTS THE TRANSFER AND VOTING
THEREOF."
Section 6. Termination.The provisions of this Agreement shall terminate
upon the earlier to occur of (i) the Effective Time and (ii) the termination of
the Merger Agreement in accordance with its terms.
Section 7. Confidentiality. The Stockholders recognize that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, the Stockholders hereby agree not
to disclose or discuss such matters with anyone not a party to this Agreement
(other than to the Company and to its and the Company's counsel and advisors)
without the prior written consent of Parent, except for filings required
pursuant to the Exchange Act and the rules and regulations thereunder or
disclosures its counsel advises are necessary in order to fulfill its
obligations imposed by law, in which event the Stockholders shall give prior
notice of such disclosure to Parent as promptly as practicable so as to enable
Parent to seek a protective order from a court of competent jurisdiction with
respect thereto.
Section 8. Disclosure. The Stockholders hereby agree to permit Parent
to publish and disclose in the Registration Statement and the Proxy Statement
(including all documents, exhibits and schedules filed with the SEC), and any
press release or other disclosure document which Parent's counsel advises are
necessary or desirable in connection with the Merger and any transactions
related thereto, the Stockholders' identity and ownership of Company Stock or
shares of Parent Common Stock, as the case may be, and the nature of its
commitments, arrangements and understandings under this Agreement.
Section 9. Miscellaneous.
(a) Entire Agreement. This Agreement (including the Schedule A
attached hereto and made a part hereof) constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and thereof.
(b) Binding Agreement. The Stockholders agree that this
Agreement and the obligations hereunder shall attach to the Shares and shall be
binding upon any person to which legal or Beneficial Ownership of such Shares
shall pass, whether by operation of law or otherwise, including, without
limitation, the Stockholders' heirs, distributees, guardians, administrators,
executors, legal representatives, or successors, partners or other transferees
(for value or otherwise) and any other successors in interest. Notwithstanding
any transfer of Shares, the transferor shall remain liable for the performance
of all obligations under this Agreement of the transferor. Nothing in this
clause (b) shall permit any transfer of Shares otherwise prohibited by the
provisions of this Agreement.
(c) Assignment. No party may assign any of its rights or
obligations hereunder, by operation of law or otherwise, without the prior
written consent of the other party; provided that Parent may assign, in its sole
discretion, its rights and obligations hereunder to any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall relieve Parent
of its obligations hereunder if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy, or by
any courier service, such as Federal Express, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to Stockholders: Mr. Gary Cino
Step Ahead Investments, Inc.
3222 Winona Way
North Highland, California 95660
Telecopier: (916) 348-0380
with a copy to: Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Attention: Tracy Edmonson, Esquire
Telecopier: (415) 395-8095
If to Parent: Dollar Tree Stores, Inc.
500 Volvo Parkway
Chesapeake, Virginia 23320
Attention: Mr. H. Ray Compton
Telecopier: (757) 321-5111
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
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had near been
contained herein.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Virginia, without
giving effect to the principles of conflicts of law thereof.
(k) Noncontravention. Notwithstanding anything herein to the
contrary, the covenants and agreements set forth herein shall not prevent any
Stockholder serving on the Board
of Directors of the Company from taking any action, subject to the applicable
provisions of the Merger Agreement, while acting in such capacity as a director
of the Company.
(l) Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement.
(m) Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
IN WITNESS WHEREOF, Parent and the Stockholders have caused this
Agreement to be duly executed as of the day and year first above written.
DOLLAR TREE STORES, INC.
By: /s/ H. Ray Compton
-----------------------------------
H. Ray Compton
Executive Vice President
/s/ Gary Cino
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Gary Cino
/s/ Janet Cino
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Janet Cino
/s/ Gary L. Nett
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Gary L. Nett, Trustee for The Cino
Children's Trust dated March 18, 1997
/s/ Gary Cino
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Gary Cino, Trustee of the Gary and Janet
Cino Trust dated May 1, 1991
/s/ Janet Cino
-----------------------------------------
Janet Cino, Trustee of the Gary and Janet
Cino Trust dated May 1, 1991