-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OY+r14siXIbUbBw8H2vUx2a/rKFuVxmiAvoHG+hB9ORkh0fI4X4DoDzC/DZrq+Er ZoeZWDqq6JxxQDOaLS0+wg== 0000935703-00-000022.txt : 20000501 0000935703-00-000022.hdr.sgml : 20000501 ACCESSION NUMBER: 0000935703-00-000022 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20000428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOLLAR TREE STORES INC CENTRAL INDEX KEY: 0000935703 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 541387365 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-35916 FILM NUMBER: 613758 BUSINESS ADDRESS: STREET 1: 500 VOLVO PARKWAY STREET 2: NORFOLK COMMERCE PARK CITY: CHESAPEAKE STATE: VA ZIP: 23320 BUSINESS PHONE: 7573215000 MAIL ADDRESS: STREET 1: P.O. BOX 2500 CITY: NORFOLK STATE: VA ZIP: 23501-2500 S-3 1 SHELF REGISTRATION 4-28-2000 As filed with the Securities and Exchange Commission on April 28, 2000 Registration No. 333- ======================================================================= SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------- 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) ------------------------ 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 ------------ 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. [ ] 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. [ ] ------------
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 - -------------------------------------------------------------------------------------------------- Common Stock 1,800,000 $50.21875 $90,393,750 $23,863.95 - -------------------------------------------------------------------------------------------------- (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.
------------ 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. ========================================================================== 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. 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. ------------------------------- ========================================================================= The date of this prospectus is April , 2000. 1 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; 2 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. 3 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. 4 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 5 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 6 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 7 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 8 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. 9 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 10 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); 11 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 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 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.
Number of Number of Shares Percent of Shares Beneficially Outstanding Offered Name of Selling Shareholder Owned (1) Shares (2) Hereby (1)(3) --------------------------- ---------- ---------- ------------- 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 * 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 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.
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 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 =================================== =================================== 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 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 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 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 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 /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 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 EX-5.1 2 LEGAL OPINION 4-28-2000 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. EX-10.1 3 ESCROW AGREEMENT 4-28-2000 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 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 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 3 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, 4 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. 5 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 6 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. 7 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 8 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). 9 (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. 10 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 11 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] 12 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 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 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 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 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 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 EX-23.1 4 AUDITOR'S CONSENT 4-28-2000 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 -----END PRIVACY-ENHANCED MESSAGE-----