NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT ("Agreement"), made the ______ day of
____________, 1998, by and among [ ] (the "Selling
Shareholder") and Dollar Tree Stores, Inc., a Virginia corporation ("Parent")
and its wholly-owned subsidiary Dollar Tree West, Inc., a California
corporation ("Sub") (Parent and its direct and indirect subsidiaries, including
Sub, are referred to hereinafter as "Dollar Tree").
W I T N E S S E T H:
WHEREAS, Selling Shareholder owns _____________________ percentage of all
the issued and outstanding shares of stock of Step Ahead Investments, Inc., a
California corporation ("SAI"); and
WHEREAS, concurrently herewith and pursuant to the Merger Agreement dated
July 22, 1998, ("Merger Agreement"), Sub will be merged with and into SAI with
SAI as the surviving corporation (the "Merger").
WHEREAS, concurrently herewith and pursuant to the Merger Agreement, all
of the issued and outstanding stock of SAI will be converted into shares of
common stock of Parent.
WHEREAS, Selling Shareholder acknowledges that (i) SAI directly or
indirectly operates stores, offices and distribution facilities under the name
Step Ahead Investments and the tradenames "98CENTS Clearance Center" and
"Clearance 98CENTS Centers" engaged in the retail and wholesale distribution of
variety merchandise (the "Business"); (ii) the Business is conducted in the
United States; (iii) the operation of the Business by SAI has given Selling
Shareholder access to trade secrets of and confidential information relating
to, the Business; and
WHEREAS, the parties hereto agree that Selling Shareholder and Selling
Shareholder's affiliates shall not compete (as described herein) with Dollar
Tree for a certain period of time
subsequent to the Effective Time as defined in the Merger Agreement in
accordance with the terms and conditions set forth herein; and
WHEREAS, as a fundamental condition to the consummation of the Merger, the
Selling Shareholder has agreed to enter into this Agreement, which is designed
to ensure Dollar Tree receives the value of the Merger; and
WHEREAS, Selling Shareholder further acknowledges Dollar Tree may suffer
irreparable damage should Selling Shareholder breach this Agreement.
NOW, THEREFORE, in consideration of good and valuable consideration
described above and the covenants hereinafter set forth, the receipt and
sufficiency of which is hereby acknowledged by Selling Shareholder, and for the
grant of [___________] options to purchase the stock of Parent pursuant to the
terms of a separate option agreement, it is agreed as follows:
1. NON-COMPETITION COVENANT.
The Selling Shareholder acknowledges (i) as an [director,] officer
and principal shareholder of SAI, he has been instrumental in the Business of
SAI and its success and (ii) has been privy to and had access to the offices,
personnel, technology, confidential and proprietary information of SAI.
1.1 Selling Shareholder agrees, during the period ending five years
from the Effective Time ("Restricted Period"), neither Selling Shareholder nor
any affiliate of Selling Shareholder shall conduct any of the following
activities described in Sections 1.1.1, 1.1.2, and 1.1.3:
1.1.1 engage in Restricted Activities within the Restricted
Area (as defined below); or
1.1.2 operate or promote within the Restricted Area a store
using (or at least a 500 square foot area within a store dedicated to) a
single price point retail concept selling goods at a single price point at or
below $2.00; or
1.1.3 operate any variety, clearance, or close-out retail
store in the same shopping center as any retail location of SAI existing as of
the Effective Time or, in the case of an existing store of SAI not in a
shopping center, within one-quarter mile of such retail location.
1.2 Selling Shareholder agrees that, at no time after the Effective
Time for so long as Dollar Tree or its successors carry on the Business, shall
Selling Shareholder or Selling Shareholder's Affiliates operate any business
(a) under the names or names similar to "98 CENTS Clearance Center," "Clearance
98 CENTS Centers," "Everything 98 CENTS ... or less," or "Step Ahead
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Non-Competition Agreement -- Page 2
Investments"; (b) advertise or promote outside or within a store using the
terms, or terms similar to "Everything 98 CENTS," 98 CENTS Clearance
Centers," and "Clearance 98 CENTS Centers"; or (c) under any name containing
the words "98 CENTS," "Tree," or "Super Dollar," including their plurals.
1.3 As used in this Agreement, the following terms have the
following meanings:
1.3.1 a. While Selling Shareholder is a resident of
California, "Restricted Area" shall mean all counties and cities in the States
of California and Nevada in which SAI, as of the Effective Time, carries on the
Business. The covenant not to compete in the Restricted Area shall be
construed as a series of separate covenants with regard to such city or county
in the States of California and in Nevada.
b. If Selling Shareholder ceases to be a resident of
California, immediately upon Selling Shareholder's change of residency
"Restricted Area" shall mean each state in which either Dollar Tree or SAI, as
of the Effective Time, has a store or otherwise carries on the Business. The
covenant not to compete in the Restricted Area shall be viewed as a series of
separate covenants with regard to each state where either Dollar Tree or SAI
carries on the Business.
1.3.2 "Restricted Activities" means the operation of (i) a
wholesale merchandise business that supplies stores of the type described in
clause (ii) hereof, or (ii) any store engaged in the retail sale of goods
(e.g., toys, health and beauty aids, food, books, party goods, stationery,
hardware, housewares, jewelry, hair products, crafts, pet supplies, etc.) where
at least eighty percent (80%) of such goods are sold at or below $2.00.
1.3.3 A "shopping center" means a group of at least six (6)
retail shops organized in a strip or mall configuration (but not necessarily in
attached or adjacent buildings) sharing common parking areas and having the
same landlord or leasing agent.
1.4 Selling Shareholder agrees that the restrictions in Section 1
are reasonable and necessary to protect the value of Dollar Tree, including the
good will associated therewith, and do not unduly restrict Selling
Shareholder's ability to earn a livelihood.
2. NO SOLICITATION AND NO HIRE OF EMPLOYEES. Unless the parties hereto
otherwise agree, Selling Shareholder agrees that from July 22, 1998 until the
end of the Restricted Period, Selling Shareholder has not and shall not,
directly or indirectly, hire or attempt to hire any employee of Dollar Tree or
SAI, or solicit, induce, or attempt to solicit or induce (other than through
newspaper classified advertisements) any employee of Dollar Tree or SAI to
leave his or her job for any reason whatsoever without the written consent of
Dollar Tree. For purposes of this paragraph, an "employee" shall mean, as of
any given date, anyone who has been an employee of Dollar Tree or SAI or any
affiliate at any time during the four (4) month period prior to such date.
3. RETURN OF PROPERTY. All property, materials, memoranda, notes,
lists, records and other documents or papers (and all copies thereof),
including such items stored in computer
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Non-Competition Agreement -- Page 3
memories, on microfiche or by any other means, made or compiled by or on behalf
of SAI or its affiliates relating to or useful in the operation of the
Business, are and shall be SAI's property ("Property") and all such Property
that is confidential or that SAI does not have copies of shall be delivered to
SAI at or prior to the Effective Time; provided, however, Selling Shareholder
shall be allowed to retain copies of such Property necessary for Selling
Shareholder to prepare, compute or support Selling Shareholder's tax returns
or tax liabilities.
4. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Selling Shareholder
shall not, without the prior written approval of Dollar Tree, at any time copy,
reproduce, disclose or divulge to any third party, use or permit others to use
any confidential information of SAI or Dollar Tree (including financial
information, sources of supplies and materials, prospective and existing
expansion programs, joint ventures and affiliate agreements, business systems
and marketing methods, and all business affairs). During the Restricted
Period, Selling Shareholder shall keep secret and retain in strictest
confidence, and shall not use for the benefit of Selling Shareholder, Selling
Shareholder's affiliate, or others, all confidential matters of the Business or
of Dollar Tree, including trade secrets, details of supplier contracts, lease
provisions and terms, operational methods and marketing plans or strategies.
Notwithstanding the foregoing, nothing herein contained shall preclude Selling
Shareholder from using the confidential information described in this Section 4
in the operation of or in the leasing of any real property or the operation of
any business in connection with a business not coming within the definition of
Restricted Activities or for other personal use, so long as such use does not
conflict with any provision of this Agreement. This Section 4 shall not apply
if (a) such information is already known to such party or to others not bound
by a duty of confidentiality or such information is or becomes publicly
available through no fault of Selling Shareholder or Selling Shareholder's
Affiliates, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for the
consummation of the closing under the Merger Agreement, or (c) the furnishing
or use of such information is required by legal proceedings.
5. COOPERATION. Selling Shareholder agrees to cooperate in any
reasonable manner with any reasonable requests by Dollar Tree from time to time
to verify compliance with the provisions of this Agreement, provided, however,
Dollar Tree shall reimburse Selling Shareholder for Selling Shareholder's
reasonable out-of-pocket costs in complying with such request.
6. AFFILIATES.
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6.1. Selling Shareholder agrees that the restrictions contained in
Sections 1, 2, 3, and 4 above shall apply to any direct or indirect activities
of Selling Shareholder whether conducted as (i) an individual, (ii) a partner
(limited or otherwise) or joint venturer with any other person or entity, (iii)
an employee, agent or representative of any other person or entity, (iv) as an
officer, director or shareholder of any corporation (other than the ownership
of less than 5% of the interests in a publicly traded entity), or (v) as a
member or manager of any limited liability company (other than the ownership of
less than 5% of the interests in a publicly traded entity).
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6.2. As used herein, the term "affiliate" with respect to any person
shall mean any person or entity which controls such person, which that person
controls, or which is under common control with that person. In the case of
Selling Shareholder, the term "affiliate" shall include the spouse, sibling, or
lineal descendant or ancestor of Selling Shareholder, a trust for the benefit
of any of the preceding, or any corporation, partnership, joint venture, or
other entity which the Selling Shareholder, the spouse, sibling, or lineal
descendant or ancestor of Selling Shareholder, or a trust for the benefit of
any of the preceding, controls. For purposes of the preceding sentences, the
term "control" means the power, direct or indirect through one or more
intermediaries, to direct or cause to the direction of the management and
policies of a person or entity through voting securities, contract, or
otherwise.
7. INJUNCTION; REMEDIES. The Selling Shareholder acknowledges that
Dollar Tree shall have no adequate remedy at law and that irreparable injury
may result to Dollar Tree in the event Selling Shareholder violates or breaches
any of the above agreements, covenants, or restrictions. Therefore, it is
hereby agreed that upon any breach of any of the above covenants, agreements,
or restrictions, Dollar Tree shall be entitled, in addition to any other
remedies available, to an injunction to restrain the violation or breach of any
of the terms of such covenants, agreements, or restrictions by Selling
Shareholder, and that no bond shall be required in procuring any such
injunction. In addition, if any party files suit to enforce its rights under
this Agreement and prevails, the other party agrees to reimburse the prevailing
party for all reasonable costs and fees, including any reasonable attorney's
fees the prevailing party incurs. The court shall determine who is the
prevailing party for purposes of the preceding sentence. The foregoing
remedies for breach of this Agreement are cumulative and not exclusive of any
other remedies Dollar Tree may have at law or in equity in the event of breach.
8. ENFORCEABILITY.
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8.1 Selling Shareholder has examined this Agreement in detail,
understands the nature of the burdens imposed by this Agreement, and is
entering into this Agreement on Selling Shareholder's own volition. Selling
Shareholder has been encouraged by Dollar Tree to have this Agreement reviewed
by Selling Shareholder's independent legal counsel and has had adequate
opportunity to do so. Selling Shareholder agrees that the restrictions,
covenants and agreements contained in this Agreement are (i) reasonable in all
respects (including, without limitation, geographic area and duration), (ii)
necessary to protect the value of Dollar Tree, and (iii) are not unduly harsh
upon Selling Shareholder's ability to earn a livelihood. Selling Shareholder
represents that upon careful review, Selling Shareholder knows of no reason why
any agreement, covenant, or restriction contained in this Agreement is not
reasonable and enforceable.
8.2 If any provision of this Agreement shall be found by any
arbitration panel or court of competent jurisdiction to be invalid or
unenforceable, such provision shall be replaced by such panel or court by a
valid and enforceable provision that will achieve, to the extent possible, the
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Non-Competition Agreement -- Page 5
economic, business and other purposes of the invalid or unenforceable provision
and, as modified, shall be enforced as any other provision hereof, all other
provisions continuing in full force and effect to the maximum extent possible.
The enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
9. NON-DISPARAGEMENT. From and after the execution of this Agreement,
the Selling Shareholder shall not make any material public statement,
representation or communication of any sort, whether oral, in writing, or by
any other medium, which disparages Dollar Tree, its directors, officers,
shareholders, partners, employees, products, services or financial condition.
10. NO DEFENSE. The existence of any claim or cause of action of the
Selling Shareholder against Dollar Tree, whether predicated on this Agreement
or not, shall not constitute a defense to the enforcement by Dollar Tree of the
restrictions, covenants and agreements contained herein.
11. AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented only by written agreement
of Selling Shareholder and Dollar Tree at any time.
12. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Selling
Shareholder to comply with any obligation, covenant, agreement or condition
herein may be waived only by a writing signed by Dollar Tree only and such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
13. NOTICES. All claims, notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given or made (i) upon receipt when delivered by hand
or sent by overnight delivery by a nationally recognized private courier, (ii)
upon receipt for notices delivered by facsimile or (iii) three (3) business
days after being mailed, first class, certified mail, return receipt
requested, with postage prepaid:
13.1 If to the Selling Shareholder, to:
[Insert address]
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Non-Competition Agreement -- Page 6
with a required copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esquire
Telecopier: 000-000-0000
or to such other person or address as any of the Selling Shareholder shall
furnish to Dollar Tree.
13.2 If to Dollar Tree to:
Dollar Tree Stores, Inc.
000 Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Mr. H. Xxx Xxxxxxx
Telecopier: 000-000-0000
in each case with a required copy to:
Xxxxxxx X. Old, Jr., Esquire
Xxxxxxxxx Xxxxxxx, P.C.
0000 Xxxxxxxx Xxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier: 757-629-0660
or to such other person or address as Dollar Tree shall furnish to the Selling
Shareholder.
14. ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and any
subsidiaries of Dollar Tree and their respective heirs, successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties.
15. GOVERNING LAW. While Selling Shareholder is a resident of
California, the Agreement shall be governed by the internal laws of the State
of California, and the Courts of the State of California and the United States
District Court for the Eastern District of California shall be the exclusive
courts of jurisdiction and venue for any litigation, special proceeding or
other proceeding as between the parties that may be brought, or arise out of,
in connection with, or by reason of this Agreement. If Selling Shareholder
ceases to be a resident of California, immediately upon Selling Shareholder's
change of residency, this Agreement shall be governed by the internal
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Non-Competition Agreement -- Page 7
laws of the Commonwealth of Virginia, and the Circuit Court of the City of
Norfolk and the United States District Court, Eastern District of Virginia,
Norfolk Division, shall be the exclusive courts of jurisdiction and venue for
any litigation, special proceeding or other proceeding as between the parties
that may be brought, or arise out of, in connection with, or by reason of this
Agreement. The parties hereby consent to the jurisdiction of such courts.
16. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Dollar Tree and Selling
Shareholder agree that at least two (2) completely executed counterparts of
this Agreement shall be delivered to Dollar Tree and at least two (2)
completely executed counterparts of this Agreement shall be delivered to
Selling Shareholder.
17. HEADINGS. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
18. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants or undertakings other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties.
19. CONSTRUCTION. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement. The word "including" shall mean
including without limitation.
20. RIGHTS OF THIRD PARTIES. Nothing in this Agreement shall be
construed as giving any person, firm, corporation, or other entity, other than
the parties who are signatory hereto and their respective successors and
permitted assigns, any right, remedy, or claim under or in respect of this
Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have made and entered into
this Agreement under their hand and seal as of the date first hereinabove set
forth.
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[Name]
Selling Shareholder
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DOLLAR TREE STORES, INC.
By
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Name:
Title:
DOLLAR TREE WEST, INC.
By
-------------------------
Name:
Title:
State of
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City/County of
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The foregoing instrument was acknowledged before me this ___ day of
___________, 1998, by ______________________________ as Selling Shareholder.
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Notary Public
My commission expires:
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Commonwealth of Virginia
City of
----------------
The foregoing instrument was acknowledged before me this ___ day of
____________, 1998, by ________________________ as the ___________________ of
Dollar Tree Stores, Inc., a Virginia corporation, on behalf of such
corporation, and as the ___________________ of Dollar Tree West, Inc., a
California corporation, on behalf of such corporation.
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Notary Public
My commission expires:
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