AMENDMENT TO MERGER AGREEMENT
THIS AMENDMENT TO MERGER AGREEMENT ("Amendment") dated October
20, 1998, by and among DOLLAR TREE STORES, INC., a Virginia corporation
("Parent"), DOLLAR TREE WEST, INC., a California corporation and a wholly owned
subsidiary of Parent ("Sub"), and STEP AHEAD INVESTMENTS, INC., a California
corporation ("Company"). The capitalized terms used herein shall have the
meanings given such terms in the Merger Agreement dated July 22, 1998 by and
among the parties hereto ("Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to the Agreement, if the Average Closing
Price of Parent's stock is less than $34 11/32 per share, Parent can terminate
the Agreement unless Company elects to treat the Average Closing Price as $34
11/32; and
WHEREAS, the parties desire to modify the Agreement to extend
the time between the determination of the Average Closing Price and the date of
the Company Shareholders Meeting to give the parties additional time to consider
the decisions described above; and
WHEREAS, the parties also desire to make certain other
amendments described below; and
WHEREAS, the Boards of Directors of Parent and Sub have
approved this Amendment in accordance with Section 13.3 of the Merger Agreement,
applicable law and the Articles of Incorporation and By-laws of Parent and Sub;
and
WHEREAS, the Board of Directors of the Company has (i)
approved this Amendment in accordance with the requirements of Section 13.3 of
the Merger Agreement, the
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California Code and the Articles of Incorporation and the By-laws of the
Company, (ii) directed the Agreement, as modified by the Amendment, and the
Merger to be submitted to, and recommended approval by, the Shareholders.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements set forth herein, the parties hereby amend the
Agreement and agree as follows:
1. Average Closing Price. The definition of "Average Closing Price"
shall be amended by restating the first sentence of Section 2.2(b) to read as
follows:
For the purposes of this calculation, each share of Parent Common Stock
shall be valued at the arithmetic average ("Average Closing Price") of
the closing price per share of Parent Common Stock, as reported on the
Nasdaq National Market System ("Nasdaq") for each of the five (5)
consecutive trading days ending with the sixth (6th) business day prior
to the Date of the Company Shareholders Meeting ("ACP Determination
Date"). The "Date of the Company Shareholders Meeting" shall be the
date for the Shareholders Meeting specified in the Company's definitive
Proxy Statement when first delivered to the Shareholders.
2. Fully Diluted Company Shares. The definition of "Fully Diluted
Company Shares" shall be amended by restating the last sentence of Section
2.1(a) to read as follows:
"Fully Diluted Company Shares" shall be calculated by adding (i) the
total number of shares of Company Common Stock issued and outstanding
as of the ACP Determination Date (including Dissenting Shares) plus
(ii) the total number of shares of Company Preferred Stock issued and
outstanding as of the ACP Determination Date (including Dissenting
Shares) plus (iii) the total number of shares of Company Common or
Preferred Stock subject to Options (as defined in paragraph (e) below)
outstanding as of the ACP Determination Date (as defined in Section
2.2(b)).
3. Termination of Agreement. Section 11.1(k) shall be restated in its
entirety as follows:
(k) if the Average Closing Price is less than $34
11/32, Parent may terminate the Agreement in accordance with the
procedures set forth below:
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(i) No later than 5:00 p.m. Sacramento time
on the third calendar day following the ACP Determination Date, Parent
may send a notice to Company electing to change the Average Closing
Price to a final price of $34 11/32 or less (as determined by Parent
in its sole discretion) for all purposes of this Agreement (including
the determination of the Exchange Ratio). If this notice is not sent,
the Average Closing Price shall be determined by Section 2.2(b), this
Agreement shall not be deemed terminated pursuant to this Section
11.1(k), and the following provisions of this Section 11.1(k) shall not
apply.
(ii) If Parent sends the notice described in
Section 11.1(k)(i) above, Company shall send a reply notice to Parent
either accepting or rejecting Parent's election to change the Average
Closing Price no later than 5:00 p.m. Sacramento time on the third
business day preceding the Date of the Company Shareholders Meeting.
If Company rejects Parent's election (or a reply notice is not sent),
this Agreement shall be deemed terminated by Parent pursuant to this
Section 11.1(k). If Company accepts Parent's election, the Average
Closing Price shall be the price specified by Parent in the notice
described in Section 11.1(k)(i) above, and this Agreement shall not
be deemed terminated by Parent pursuant to this Section 11.1(k).
4. Indemnification of Directors and Officers of the Company. All
references to "Sub" in Section 6.16 shall be replaced with the phrase "Surviving
Corporation."
5. Miscellaneous. The original Agreement, as amended hereby, shall
remain in full force and effect and embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein in conformity with Section 13.5 of the Agreement. This
Amendment may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument, and, when signed by all of the parties hereto, shall become legally
binding on such parties effective as of the date set forth at the beginning of
this Amendment.
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IN WITNESS WHEREOF, the parties have executed or caused to be
executed this Agreement effective as of the day and year first above written.
STEP AHEAD INVESTMENTS, INC.
By: /s/ Gary Cino
---------------------------
Gary Cino
Chief Executive Officer
DOLLAR TREE STORES, INC.
By: /s/ H. Ray Compton
----------------------------
H. Ray Compton
Executive Vice President
DOLLAR TREE WEST, INC.
By: /s/ H. Ray Compton
----------------------------
H. Ray Compton
Executive Vice President
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