LETTER OF CREDIT
AND
REIMBURSEMENT AGREEMENT
by and between
DOLLAR TREE DISTRIBUTION, INC.
and
FIRST UNION NATIONAL BANK
Dated as of May 1, 1998
TABLE OF CONTENTS
(This Table of Contents is not a part of the Agreement
but rather is for convenience of reference only.)
ARTICLE I
DEFINITIONS
Page
1.1 Definitions.........................................................1
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
2.1 Incorporation.......................................................9
2.2 Power and Authority................................................10
2.3 Financial Condition................................................10
2.4 Title to Assets....................................................10
2.5 Contingent Liabilities.............................................10
2.6 Litigation.........................................................11
2.7 Taxes..............................................................11
2.8 Contract or Restriction............................................11
2.9 Trademarks, Franchises and Licenses................................11
2.10 No Default.........................................................11
2.11 Governmental Authority.............................................11
2.12 No Untrue Statements...............................................11
2.13 ERISA Requirements.................................................12
2.14 Pollution and Environmental Control; Hazardous Substances..........12
2.15 Project Site.......................................................12
2.16 Labor Relations....................................................12
ARTICLE III
REIMBURSEMENT AND OTHER PAYMENTS
3.1 Letter of Credit...................................................12
3.2 Reimbursement and Other Payments...................................13
3.3 Tender Advances....................................................13
3.4 Commission and Fees................................................14
3.5 Increased Costs Due to Change in Law...............................15
3.6 Computation........................................................15
3.7 Payment Procedure..................................................15
i
3.8 Business Days......................................................15
3.9 Reimbursement of Expenses..........................................15
3.10 Extension of Expiration Date.......................................16
3.11 Obligations Absolute...............................................16
ARTICLE IV
SECURITY
4.1 Security...........................................................17
4.2 Insurance Required.................................................17
4.3 General Requirements Applicable to Insurance.......................17
4.4 Advances by Bank...................................................18
4.5 Application of Net Proceeds of Insurance...........................18
4.6 Requisitions from the Project Fund; Covenants Relating to
Construction.......................................................18
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 Repayment of Obligations...........................................19
5.2 Performance Under Reimbursement Agreement and Security
Instruments........................................................19
5.3 Financial and Business Information about the Borrower..............19
5.4 Notice of Certain Events...........................................20
5.5 Corporate Existence................................................21
5.6 Payment of Indebtedness; Performance of Other Obligations..........21
5.7 Payment of Trade Accounts Payable, Etc.............................22
5.8 Maintenance of Insurance...........................................22
5.9 Maintenance of Books and Records; Inspection.......................22
5.10 Comply with ERISA..................................................22
5.11 Consolidated Omnibus Budget Reconciliation Act.....................23
5.12 Maintenance of Properties; Conduct of Business.....................23
5.13 Provision of Information about the Project.........................23
5.14 Taxes and Liens....................................................23
5.15 Observe all Laws...................................................24
5.16 Redemption of Bonds................................................24
5.17 Year 2000..........................................................24
ARTICLE VI
NEGATIVE COVENANTS
6.1 Merger and Dissolution; Sale of Assets.............................25
6.2 Acquisitions.......................................................25
6.3 Indebtedness.......................................................25
6.4 Liens and Encumbrances.............................................26
6.5 Transactions With Related Persons..................................26
ii
6.6 Restrictions on Dividends, etc.....................................26
6.7 Sale and Leaseback.................................................26
6.8 New Business.......................................................26
6.9 Subsidiaries or Partnerships.......................................26
6.10 Hazardous Wastes...................................................26
6.11 Fiscal Year........................................................27
6.12 Consolidated Tangible Net Worth....................................27
6.13 Capital Expenditures...............................................27
6.14 Current Ratio......................................................27
6.15 Funded Debt to EBITDA Ratio........................................28
6.16 Operating Cash Flow to Debt Service Ratio..........................28
ARTICLE VII
CONDITIONS TO ISSUANCE OF LETTER OF CREDIT
7.1 Conditions to Issuance.............................................28
7.2 Additional Conditions Precedent to Issuance of the Letter of
Credit.............................................................29
7.3 Conditions Precedent to Each Tender Advance........................30
ARTICLE VIII
DEFAULT
8.1 Events of Default..................................................30
8.2 No Remedy Exclusive................................................32
ARTICLE IX
PLEDGED BONDS
9.1 The Pledge.........................................................32
9.2 Remedies Upon Default..............................................33
9.3 Valid Perfected First Lien.........................................34
9.4 Release of Pledged Bonds...........................................34
ARTICLE X
MISCELLANEOUS
10.1 Indemnification....................................................35
10.2 Transfer of Letter of Credit.......................................36
10.3 Reduction of Letter of Credit......................................36
10.4 Liability of the Bank..............................................36
10.5 Successors and Assigns.............................................36
10.6 Notices............................................................37
10.7 Amendment..........................................................37
iii
10.8 Effect of Delay and Waivers........................................37
10.9 Counterparts.......................................................38
10.10 Severability.......................................................38
10.11 Payment of Expenses................................................38
10.12 Reserved...........................................................38
10.13 Governing Law......................................................38
10.14 References.........................................................38
10.15 Taxes, Etc.........................................................38
10.16 Consent to Jurisdiction............................................38
10.17 Arbitration; Remedies..............................................39
10.18 Indirect Means.....................................................40
Exhibit A - Irrevocable Letter of Credit....................................A-1
Exhibit B - List of Subsidiaries............................................B-1
Exhibit C - Form of Borrower's Counsel Opinion..............................C-1
Exhibit D - Form of Bond Counsel Reliance Letter............................D-1
iv
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of May 1,
1998 (the "Agreement" or "Reimbursement Agreement"), is by and between DOLLAR
TREE DISTRIBUTION, INC., a Virginia corporation (the "Borrower") and FIRST UNION
NATIONAL BANK, a national banking association organized and existing under the
laws of the United States with its principal offices located in Charlotte, North
Carolina (the "Bank");
W I T N E S S E T H:
WHEREAS, arrangements have been made pursuant to a Trust Indenture
dated as of May 1, 1998 between Mississippi Business Finance Corporation (the
"Issuer") and AmSouth Bank, as Trustee (the "Trustee") (as amended, the
"Indenture") for the issuance and sale by the Issuer of its Mississippi Business
Finance Corporation Incremental Taxable Variable Rate Demand Revenue Bonds in
the original aggregate principal amount of $19,000,000 (the "Bonds"); and
WHEREAS, the proceeds from the sale of the Bonds have been loaned to
the Borrower pursuant to a Loan Agreement dated as of May 1, 1998, between the
Issuer and the Borrower (as amended or supplemented, the "Loan Agreement"); and
WHEREAS, in order to enhance the marketability of the Bonds, the
Borrower has requested that the Bank issue an irrevocable direct-pay letter of
credit in the form attached hereto as Exhibit A (such letter of credit or any
successor or substitute letter of credit issued by the Bank or its successor
herein individually and collectively called the "Letter of Credit") in an amount
of up to $19,304,521, of which $19,000,000 will support the principal of the
Bonds, and $304,521 will support up to 45 days' interest on the Bonds at an
assumed rate of 13% per annum;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, including the covenants, terms and conditions
hereinafter appearing, and to induce the Bank to issue the Letter of Credit, the
Borrower does hereby covenant and agree with the Bank as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. All words and terms defined in Article I of the Loan
Agreement shall have the same meanings in this Agreement, unless otherwise
specifically defined herein. The terms defined in this Article I have, for all
purposes of this Agreement, the meanings specified
hereinabove or in this Article, unless defined elsewhere herein or the context
clearly requires otherwise.
"Affiliate" means, with respect to any Person, any other Person (i)
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person or (ii) that directly or indirectly owns more than 5%
of the voting securities of such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such
corporation, whether through the ownership or voting securities, by contract or
otherwise. Notwithstanding anything herein to the contrary, for purposes of this
Agreement, the term "Affiliate" shall not include DTS or any of its
Subsidiaries.
"Agreement" means this Letter of Credit and Reimbursement Agreement, as
the same may from time to time be amended, modified or supplemented in
accordance with the terms hereof.
"Bankruptcy Code" means 11 U.S.C. ss. 101 et seq., as amended.
"Bond Documents" means, collectively, the Loan Agreement, the Note, the
Indenture, the Bonds, the Remarketing Agreement, the Placement Agreement and the
Placement Memorandum, as the same may be amended, modified or supplemented from
time to time in accordance with their respective terms.
"Business Day" means any day not a Saturday, Sunday or legal holiday,
on which commercial banks in Charlotte, North Carolina are open for business.
"Capitalized Lease" means any lease under which DTS or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are capitalized or are required to be capitalized on the
balance sheet of the lessee or obligor in accordance with Generally Accepted
Accounting Principles.
"Cash Equivalents" means (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within 90 days from the date of acquisition, (ii) commercial paper
issued by any Person organized under the laws of the United States of America,
maturing within 90 days from the date of acquisition and, at the time of
acquisition, having a rating of at least A-1 or the equivalent thereof by S&P or
at least P-1 or the equivalent thereof by Moody's, (iii) time deposits and
certificates of deposit maturing within 90 days from the date of issuance and
issued by a bank or trust company organized under the laws of the United States
of America or any state thereof that has combined capital and surplus of at
least $500,000,000 and that has (or is a subsidiary of a bank holding company
that has) a long-term unsecured debt rating of at least A or the equivalent
thereof by S&P or at least A2 or the equivalent thereof by Moody's, (iv)
repurchase obligations with a term not exceeding seven (7) days with respect to
underlying securities of the types described in clause (i) above entered into
with any bank or trust company meeting the qualifications specified in clause
(iii) above, and
2
(v) money market funds substantially all of whose assets are comprised of
securities of the types described in clauses (i) through (iv) above.
"Commission Payment Date" shall have the meaning set forth in Section
3.4(a).
"Commitment Letter" means that certain commitment letter from the Bank
to the Borrower dated February 12, 1998, and accepted and executed by the
Borrower on or before the date of issuance of the Bonds, along with any
supplements and addenda thereto.
"Consistent Basis" means, in reference to the application of Generally
Accepted Accounting Principles, that the accounting principles observed in the
period referred to are comparable in all material respects to those applied in
the preceding period, except as to any changes consented to by the Bank.
"Consolidated Capital Expenditures" means, for any period, the
aggregate amount (whether paid in cash or accrued as a liability) that would, in
accordance with Generally Accepted Accounting Principles, be included on the
consolidated statement of cash flows of DTS and its Subsidiaries for such period
as additions to equipment, fixed assets, real property or improvements or other
capital assets (including, without limitation, Capital Lease obligations);
provided, however, that Capital Expenditures shall not include any such
expenditures for replacements and substitutions for capital assets, to the
extent made with the proceeds of insurance.
"Consolidated Current Assets" means, at any time, all assets of DTS and
its Subsidiaries which would, in accordance with Generally Accepted Accounting
Principles, be classified as current assets, but excluding (i) accounts with
respect to products, goods and/or services which were delivered or performed by
DTS or any of its Subsidiaries more than ninety (90) days prior to such date,
and (ii) the assets described in subparagraphs (a) through (f) of the definition
of Consolidated Tangible Net Worth.
"Consolidated Current Liabilities" means, at any time, all liabilities
of DTS and its Subsidiaries which would, in accordance with Generally Accepted
Accounting Principles, be classified as current liabilities.
"Consolidated EBITDA" means, for any period, the aggregate of (i) the
Consolidated Net Income (or Deficit) of DTS and its Subsidiaries for such
period, plus (ii) the sum of interest expense, federal, state, local and other
income taxes, depreciation, amortization of intangible assets, and other noncash
expenses or charges reducing income for such period, all to the extent taken
into account in the calculation of such Consolidated Net Income (or Deficit) for
such period, minus (iii) the sum of extraordinary or nonrecurring gains
(including in connection with the sale or write-up of assets) and other noncash
credits increasing income for such period, all to the extent taken into account
in the calculation of such Consolidated Net Income (or Deficit) for such period.
3
"Consolidated Funded Debt" means, at any time, the outstanding balances
of all Indebtedness for borrowed money or other extensions of Credit of DTS and
its Subsidiaries on a consolidated basis (other than with respect to
intercompany Indebtedness), plus Capitalized Leases.
"Consolidated Net Income (or Deficit)" means, with respect to any
fiscal period, the consolidated net income (or deficit) of DTS and its
Subsidiaries, after deduction of all expenses, taxes, and other proper charges,
determined in accordance with Generally Accepted Accounting Principles.
"Consolidated Operating Cash Flow" means, with respect to any fiscal
period, the sum (determined with respect to the same period and without
duplication) of (a) Consolidated EBITDA minus (b) Capital Expenditures made or
incurred during such period plus (c) Rents payable during such period.
"Consolidated Tangible Net Worth" means the difference between
Consolidated Total Assets and Consolidated Total Liabilities, less the sum of:
(a) the total book value of all assets of DTS and its
Subsidiaries properly classified as intangible assets under Generally Accepted
Accounting Principles, including such items as goodwill, the purchase price of
acquired assets in excess of the fair market value thereof, unamortized debt
discount and expenses, trademarks, trade names, service marks, brand names,
copyrights, patents and licenses, and rights with respect to the foregoing, but
not including goodwill in an amount up to $75,000,000 resulting from the
acquisition of operating businesses by DTS or a subsidiary after the date
hereof; plus
(b) all amounts representing any write-up in the book value of
any assets of DTS or its Subsidiaries resulting from a revaluation thereof
subsequent to December 31, 1997; plus
(c) to the extent not already deducted, all reserves; plus
(d) the value of any minority interests in Subsidiaries; plus
(e) the aggregate amount of all loans made by DTS or any
Subsidiary to any officer, employee, or shareholder of DTS or any Subsidiary;
plus
(f) assets located, and notes and receivables due from
obligors domiciled, outside of the United States of America (excluding inventory
in transit)
"Consolidated Total Assets" means, at any date, all assets of DTS and
its Subsidiaries that, in accordance with Generally Accepted Accounting
Principles, should be classified as assets on a consolidated balance sheet of
DTS and its Subsidiaries.
4
"Consolidated Total Liabilities" means, at any date, all liabilities of
DTS and its Subsidiaries that, in accordance with Generally Accepted Accounting
Principles, should be classified as liabilities on the consolidated balance
sheet of DTS and its Subsidiaries.
"Credit Agreement" means that certain Amended and Restated Revolving
Credit Agreement dated as of September 27, 1996 among the Borrower, the
Guarantors and the financial institutions parties thereto from time to time, as
the same is or has been amended, modified, supplemented or restated from time to
time.
"Date of Issuance" means the date of issuance of the Letter of Credit.
"Debt Service" means, for any period, the sum of (i) the aggregate
(without duplication) of all principal and interest paid or payable by DTS and
its Subsidiaries during such period in respect of Indebtedness (including,
without limitation, the Bonds and Capitalized Leases, but excluding payments on
intercompany Indebtedness), plus (ii) Distributions made during such period,
plus (iii) Rents paid during such period, in each case determined in accordance
with Generally Accepted Accounting Principles.
"Distribution" means, with respect to any Person, the declaration or
payment of any dividend on or in respect of any shares of any class of capital
stock, other than (a) dividends payable solely in shares of common stock of such
Person and (b) the payment of cash in lieu of the distribution of fractional
shares in the event of any stock dividend or stock split; the purchase,
redemption, or other retirement of any shares of any class of capital stock of
such Person, directly or indirectly by such Person through a Subsidiary of such
Person or otherwise, unless such capital stock shall be redeemed or reacquired
through the exchange of such stock with stock of the same class, and except for
the redemption, repurchase, or acquisition of stock of the Borrower or Dollar
Tree Management, Inc. by DTS; the return of capital by such Person to its
shareholders as such; or any other distribution (whether of such or other
property) on or in respect of any shares of any class of capital stock of such
Person.
"DTS" means Dollar Tree Stores, Inc.
"Eminent Domain" means the taking of title to, or the temporary use of,
the Collateral or any part thereof pursuant to eminent domain or condemnation
proceedings, or any voluntary conveyance of any part of the Collateral during
the pendency of, or as a result of a threat of, such proceedings.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by any Person in the ordinary course of its business and not in response to any
third party action or request of any kind) or proceedings relating in any way to
any Environmental Law or any permit issued, or any approval given, under any
such Environmental Law (collectively, "Claims"), including (i) any and all
Claims by Governmental Authorities for enforcement, cleanup, removal, response,
remedial or other actions or damages pursuant to any applicable Environmental
Law and (ii) any and all Claims by any third party
5
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Substances or arising from alleged
injury or threat of injury to human health or the environment.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations, rules of common law and orders of courts or Governmental
Authorities, relating to the protection of human health or occupational safety
or the environment, now or hereafter in effect and in each case as amended from
time to time, including requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, including any rules and regulations promulgated thereunder.
"Event of Default" has the meaning specified in Article VIII hereof.
"Expiration Date" means May 19, 1999, the expiration date of the Letter
of Credit, as such date may be extended pursuant to the terms of Section 3.10
hereof.
"Generally Accepted Accounting Principles" means those principles of
accounting set forth in pronouncements of the Financial Accounting Standards
Board and its predecessors or pronouncements of the American Institute of
Certified Public Accountants or those principles of accounting which have other
substantial authoritative support and are applicable in the circumstances as of
the date of application, as such principles are from time to time supplemented
or amended.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantors" means DTS, Dollar Tree Management, Inc., and any other
material subsidiary of DTS or the Borrower from time to time, and any successor
or assign permitted under the Guaranty.
"Guaranty" means the Guaranty Agreement dated as of May 1, 1998 by and
between the Guarantors and the Bank, as the same may be amended, restated or
supplemented as therein permitted.
"Hazardous Substances" means any substances or materials (i) that are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) that are
defined by any Environmental Law as toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence
6
of which require investigation or response under any Environmental Law, (iv)
that constitute a nuisance, trespass or health or safety hazard to Persons or
neighboring properties, (v) that consist of underground or aboveground storage
tanks, whether empty, filled or partially filled with any substance or (vi) that
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or wastes, crude oil, nuclear fuel, natural gas or synthetic gas.
"Indebtedness" means all obligations, contingent and otherwise, that in
accordance with Generally Accepted Accounting Principles should be classified
upon the consolidated balance sheet of DTS and its Subsidiaries as liabilities,
or to which reference should be made by footnotes thereto including in any event
and whether or not so classified: (i) all obligations for borrowed money or
other extensions of credit whether or not secured or unsecured, absolute or
contingent, including, without limitation, unmatured reimbursement obligations
with respect to letters of credit or guarantees issued for the account of or on
behalf of DTS and its Subsidiaries, and all obligations representing the
deferred purchase price of property, other than accounts payable arising in the
ordinary course of business, (ii) all obligations evidenced by bonds, notes,
debentures or other similar instruments; (iii) all liabilities secured by any
mortgage, pledge, security interest, lien, charge, or other encumbrance existing
on property owned or acquired subject thereto, whether or not the liability
secured thereby shall have been assumed; and (iv) all guarantees, endorsements
(other than endorsements in the ordinary course of business of negotiable
instruments or documents for deposit or collection) and other contingent
obligations whether direct or indirect in respect of indebtedness of others or
otherwise, including any obligations with respect to puts, swaps, and other
similar undertakings, any obligation to supply funds to or in any manner to
invest in, directly or indirectly, the debtor, to purchase indebtedness, or to
assure the owner of indebtedness against loss, through an agreement to purchase
goods, supplies or services for the purpose of enabling the debtor to make
payment of the indebtedness held by such owner or otherwise, and the obligations
to reimburse the issuer in respect of any letters of credit; (v) that portion of
all obligations arising under Capital Leases that is required to be capitalized
on the consolidated balance sheet of DTS and its Subsidiaries; and (vi) all
redeemable preferred stock of DTS or its Subsidiaries valued at the greater of
its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends.
"Note" means the promissory note of the Borrower dated as of May 1,
1998 in the principal amount of $19,000,000, issued by the Borrower to the
Issuer, as such promissory note may be further amended, restated, modified or
supplemented.
"Permitted Dividends" means cash dividends in an aggregate amount per
year not to exceed fifty percent (50%) of Consolidated Net Income during the
twelve-month period ending on the last day of the fiscal quarter immediately
preceding the dividend declaration.
"Permitted Intercompany Distribution" means a Distribution from the
Borrower to a Guarantor, or from a Guarantor to the Borrower or another
Guarantor.
7
"Permitted Liens" means any of the following liens securing any
indebtedness of Borrower, its Subsidiaries or the Guarantors on their property,
real or personal, whether now owned or hereafter acquired:
(a) liens securing intercompany Indebtedness;
(b) liens on properties to secure taxes, assessments and other
government charges or claims for labor, material or supplies in respect
of obligations that are not overdue or that the Borrower, a Guarantor
or any Subsidiary is contesting in good faith by appropriate
proceedings and with due diligence;
(c) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(d) liens on properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 6.3;
(e) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties in existence less than
40 days from the date of creation thereof in respect of obligations
that are not overdue or that the Borrower, a Guarantor or any
Subsidiary is contesting in good faith by appropriate proceedings and
with due diligence;
(f) encumbrances on properties consisting of easements, rights
of way, zoning restrictions, restrictions on the use of real property
and defects and irregularities in the title thereto, landlord's or
lessor's liens under leases to which the Borrower, a Guarantor or any
Subsidiary is a party, and other minor liens or encumbrances none of
which interferes materially with the use of the property affected in
the ordinary conduct of the business of the Borrower, any Guarantor or
any Subsidiary, which defects do not individually or in the aggregate
have a materially adverse effect on the business of the Borrower, any
Guarantor or any Subsidiary individually or of DTS and its Subsidiaries
on a consolidated basis;
(g) presently outstanding liens listed on Schedule 6.4 hereto;
(h) any extension, renewal or refunding of any Lien permitted
hereunder; and
(i) liens in favor of the Bank under this Agreement, the Bond
Documents or the Loan Documents (as defined in the Credit Agreement).
"Person" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, joint
venture or a government or agency or political subdivision or instrumentality
thereof.
"Prime Rate" means the rate of interest designated by the Bank from
time to time as its prime commercial rate with any change in said prime
commercial rate to be effective as to the
8
Borrower as of the day of the relevant change in said prime commercial rate. The
Prime Rate is not intended to be the lowest rate of interest charged by the Bank
in connection with the extension of credit to its customers. The Bank reserves
the right to make loans to its customers bearing interest at rates which are at,
above or below the Prime Rate.
"Rents" means all consideration paid in the ordinary course of business
by DTS and its Subsidiaries to any Person for the use or occupation of property
under any operating lease to which DTS or any of its Subsidiaries is the lessee
or obligor, determined in accordance with Generally Accepted Accounting
Principles.
"State" means the State of North Carolina.
"Subsidiary" means, as to any Person, (i) any corporation more than 50%
of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time. Unless the context
indicates otherwise, all references herein to Subsidiaries are references to
Subsidiaries of the Borrower (excluding Dollar Tree Properties, Inc.).
"Tender Advance" has the meaning assigned to that term in Section 3.3
of this Agreement.
"Tender Draft" has the meaning assigned to that term in the Letter of
Credit.
"Termination Date" means the last day a drawing is available under the
Letter of Credit.
"Trustee" means any Person or group of Persons at the time serving as
trustee under the Indenture.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and warrants to the Bank (which representations
and warranties shall survive the delivery of the documents mentioned herein and
the issuance of the Letter of Credit) that:
2.1 Incorporation. Each of the Borrower, its Subsidiaries and the
Guarantors is a corporation duly organized, existing and in good standing under
the laws of the state of its incorporation, has the power to own its properties
and to carry on its business as now being conducted, and is duly qualified as a
foreign entity to do business in every jurisdiction in which the nature of its
business makes such qualification necessary and is in good standing in each such
9
jurisdiction, except where such qualification or good standing is not material
to the business of the Borrower, its Subsidiaries and the Guarantors, taken as a
whole.
2.2 Power and Authority. Each of the Borrower, its Subsidiaries and the
Guarantors is duly authorized under all applicable provisions of law to execute,
deliver and perform this Agreement and the Guaranty, and all corporate action on
its part required for the lawful execution, delivery and performance hereof and
thereof has been duly taken; and this Agreement and the Guaranty, upon the due
execution and delivery hereof or thereof, will be the valid and binding
obligation of the Borrower enforceable in accordance with its terms. Neither the
execution of this Agreement or the Guaranty, nor the fulfillment of or
compliance with the provisions and terms hereof or thereof, will (A) conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a violation of or default under, the Articles of Incorporation,
Bylaws or any other organizational documents of the Borrower or any Subsidiary,
or any agreement or instrument to which the Borrower or any Subsidiary is now a
party or any applicable law, regulation, judgment, writ, order or decree to
which the Borrower, any Subsidiary or any of their respective properties are
subject, or (B) create any lien, charge or encumbrance upon any of the property
or assets of the Borrower or any Subsidiary pursuant to the terms of any
agreement or instrument to which the Borrower or any Subsidiary is a party or by
which it or any of its properties, are bound.
2.3 Financial Condition. The consolidated balance sheet of DTS and its
Subsidiaries for the fiscal year ended as of December 31, 1997 and the related
consolidated statements of income and statement of cash flows for the year then
ended, copies of which have been furnished to the Bank, are correct and complete
in all material respects and fairly present the financial condition of DTS and
its Subsidiaries as at the date of said balance sheet and the results of their
operations for such period. Neither DTS nor any of its Subsidiaries has any
material direct or contingent liabilities as of the date of this Agreement which
are not provided for or reflected in the balance sheet dated December 31, 1997,
or referred to in notes thereto. All such financial statements have been
prepared in accordance with Generally Accepted Accounting Principles applied on
a Consistent Basis maintained throughout the period involved. There has been no
material adverse change in the business, properties or condition, financial or
otherwise, of the Borrower, DTS or the Subsidiaries of either since December 31,
1997.
2.4 Title to Assets. DTS and its Subsidiaries have good and marketable
title to their respective properties and assets, including the properties and
assets reflected in the most recent financial statements and notes thereto
described in Section 2.3 hereof, except for such assets as have been disposed of
since the date of said financial statements in the ordinary course of business
or as are no longer useful in the conduct of business, and all such properties
and assets are free and clear of all liens, mortgages, pledges, encumbrances or
charges of any kind except liens reflected in such financial statements or
otherwise permitted hereunder.
2.5 Contingent Liabilities. Neither the Borrower nor any Subsidiary or
Guarantor has guaranteed any obligations of others or, to the best of the
Borrower's knowledge, is contingently liable in any manner, direct or indirect,
except (i) with respect to intercompany Indebtedness or (ii) as otherwise
permitted hereunder.
10
2.6 Litigation. Except as set forth on Schedule 2.6 hereto, there are
no pending or, to the best of the Borrower's knowledge, threatened actions,
suits or proceedings before any court, arbitrator or governmental or
administrative body or agency which may materially adversely affect the
properties, business or condition, financial or otherwise, of the Borrower, any
Subsidiary or any Guarantor.
2.7 Taxes. Except as set forth on Schedule 2.7 hereto, each of the
Borrower, its Subsidiaries and the Guarantors has filed or properly extended all
tax returns required to be filed by it and all material taxes due with respect
thereto have been paid, and no controversy in respect of additional taxes,
state, federal or foreign, of the Borrower, any Subsidiary, or any Guarantor is
pending, or, to the knowledge of the Borrower, threatened.
2.8 Contract or Restriction. Neither the Borrower nor any Subsidiary or
Guarantor is a party to or bound by any contract or agreement or subject to any
charter or other corporate restrictions, or subject to the renegotiation of any
contract, which does or may materially and adversely affect its business,
properties or condition, financial or otherwise.
2.9 Trademarks, Franchises and Licenses. Each of the Borrower, its
Subsidiaries and the Guarantors owns, possesses, or has the right to use all
necessary patents, licenses, franchises, trademarks, trademark rights, trade
names, trade name rights and copyrights to conduct its businesses as now
conducted, without known material conflict with any patent, license, franchise,
trademark, trade name, or copyright of any other Persons, except where such
failure would not have a material adverse effect on the Borrower, Subsidiary, or
Guarantor, as applicable.
2.10 No Default. Neither the Borrower, any Guarantor nor any Subsidiary
is in default in the performance, observance or fulfillment of any of its
material obligations, covenants or conditions contained in any agreement or
instrument to which it is a party, including, without limitation, the Credit
Agreement, except where such default would not have a material adverse effect on
the Borrower, the Subsidiaries and the Guarantors, taken as a whole.
2.11 Governmental Authority. The Borrower has received the written
approval of all Governmental Authorities, if any, necessary to carry out the
terms of this Agreement, and no further governmental consents or approvals are
required in the making or performance of this Agreement or the Guaranty by the
Borrower, its Subsidiaries and the Guarantors.
2.12 No Untrue Statements. Neither this Agreement nor any reports,
schedules, certificates, information, exhibits, agreements or instruments
heretofore or simultaneously with the execution of this Agreement delivered to
the Issuer, the Bank or the Trustee by the Borrower or any Subsidiary or
Guarantor in connection with the negotiation of this Agreement or the issuance
and sale of the Bonds contains any material misrepresentation or untrue
statement of any material fact or omits to state any material fact necessary to
make this Agreement or any such reports, schedules, certificates, information,
exhibits, agreements or instruments not materially misleading.
11
2.13 ERISA Requirements. Neither the Borrower nor any Subsidiary or
Guarantor has incurred any material accumulated funding deficiency within the
meaning of ERISA, or incurred any material liability to the Pension Benefit
Guaranty Corporation established under ERISA (or any successor thereto under
ERISA) in connection with any employee pension benefit plan established or
maintained by it or by any Person under common control with any of them (within
the meaning of Section 414(c) of the Internal Revenue Code of 1986, as amended,
or of Section 4001(b) of ERISA), or in which employees of any of them are
entitled to participate; and no Reportable Event (as defined in ERISA) in
connection with any such plan has occurred or is continuing, except where such
incurrence or Reportable Event would not have a material adverse effect on the
Borrower, its or Subsidiaries and the Guarantors, taken as a whole, as
applicable.
2.14 Pollution and Environmental Control; Hazardous Substances. Each of
the Borrower, its Subsidiaries and the Guarantors has obtained all material
permits, licenses and other authorizations which are required under, and is in
material compliance with, all Environmental Laws. Neither the Borrower nor any
Subsidiary or Guarantor, nor to the Borrower's best knowledge any previous owner
of any real property owned or occupied by the Borrower or any Subsidiary or any
Guarantor, has disposed of any Hazardous Substances on any portion of any such
real property.
2.15 Project Site. The construction and operation of the Project, as
described in the plans and specifications therefor heretofore furnished to the
Bank, complies in all material respects with presently existing or amended
zoning and other land use restrictions affecting the Project Site, including
without limitation any restrictive covenants.
2.16 Labor Relations. Neither the Borrower nor any Subsidiary is
engaged in any unfair labor practice that could have a material adverse effect
on its business, property or condition (financial or otherwise). There is no
significant strike, labor dispute, slowdown or stoppage pending against the
Borrower or any Subsidiary or Guarantor or, to the best knowledge of the
Borrower, threatened against any of them.
ARTICLE III
REIMBURSEMENT AND OTHER PAYMENTS
3.1 Letter of Credit. The Bank agrees, on the terms and conditions
hereinafter set forth, to issue and deliver the Letter of Credit in favor of the
Trustee in substantially the form of Exhibit A attached hereto upon fulfillment
of the applicable conditions set forth in Article VII hereof. The Bank agrees
that any and all payments under the Letter of Credit will be made with the
Bank's own funds.
12
3.2 Reimbursement and Other Payments. Except as otherwise provided in
Section 3.3 below, the Borrower shall pay to the Bank:
(a) on or before 4:00 P.M. (Charlotte, North Carolina time) on
the date that any amount is drawn under the Letter of Credit, (so long
as the Borrower receives notice of the amount of such draw by 11:00
a.m. Charlotte time on the date of such draw) a sum (together with
interest on such sum from the date such amount is drawn until the same
is paid, at the rate per annum provided in clause (b) of this Section
3.2) equal to such amount so drawn under the Letter of Credit plus, to
the extent permitted by applicable law, any and all reasonable charges
and expenses which the Bank may pay or incur relative to the Letter of
Credit;
(b) on demand, interest on any and all amounts remaining
unpaid by the Borrower when due hereunder from the date such amounts
become due until payment thereof in full, at a fluctuating interest
rate per annum equal at all times to the lesser of the Prime Rate plus
two percent (2%) or the highest lawful rate permitted by applicable
law;
(c) on demand, any and all reasonable expenses incurred by the
Bank in enforcing any rights under this Agreement and the Guaranty; and
(d) on demand, all charges, commissions, costs and expenses
set forth in Sections 3.4, 3.5 and 3.9 hereof.
3.3 Tender Advances.
(a) If the Bank shall make any payment of that portion of the
purchase price corresponding to principal and interest of the Bonds
drawn under the Letter of Credit pursuant to a Tender Draft and the
conditions set forth in Section 7.3 shall have been fulfilled, such
payment shall constitute a tender advance made by the Bank to the
Borrower on the date and in the amount of such payment (a "Tender
Advance"); provided that if the conditions of said Section 7.3 have not
been fulfilled, the amount so drawn pursuant to the Tender Draft shall
be payable in accordance with the terms of Section 3.2(a) above.
Notwithstanding any other provision hereof, the Borrower shall repay
the unpaid amount of each Tender Advance, together with all unpaid
interest thereon, on the earlier to occur of: (i) such date as any
Bonds purchased pursuant to a Tender Draft are resold as provided in
Section 3.3(d) hereof; (ii) on the date one year following the date of
such Tender Advance; or (iii) the Termination Date. The Borrower may
prepay the outstanding amount of any Tender Advance in whole or in
part, together with accrued interest to the date of such prepayment on
the amount prepaid. The Borrower shall notify the Bank prior to 11:00
A.M. Charlotte, North Carolina time on the date of such prepayment of
the amount to be prepaid.
(b) The Borrower shall pay interest on the unpaid amount of
each Tender Advance from the date of such Tender Advance until such
amount is paid in full, payable monthly, in arrears, on the first day
of each month during the term of each Tender
13
Advance and on the date such amount is paid in full, at a fluctuating
interest rate per annum in effect from time to time equal to the Prime
Rate, provided that the unpaid amount of any Tender Advance which is
not paid when due shall bear interest at the lower of the Prime Rate
plus two percent (2%) or the highest rate permitted by applicable law,
payable on demand and on the date such amount is paid in full.
(c) Pursuant to Article IX, the Borrower has agreed that, in
accordance with the terms of the Indenture, Bonds purchased with
proceeds of any Tender Draft shall be delivered by the Tender Agent to
the Bank or its designee to be held by the Bank or its designee in
pledge as collateral securing the Borrower's payment obligations to the
Bank hereunder. Bonds so delivered to the Bank or its designee shall be
registered in the name of the Borrower, as provided for in Section 9.1.
(d) Prior to or simultaneously with the resale of Pledged
Bonds, the Borrower shall prepay the then outstanding Tender Advances
(in the order in which they were made) by paying to the Bank an amount
equal to the sum of (A) the amounts advanced by the Bank pursuant to
the corresponding Tender Drafts relating to such Bonds, plus (B) the
aggregate amount of accrued and unpaid interest on such Tender
Advances. Such payment shall be applied by the Bank in reimbursement of
such drawings (and as prepayment of Tender Advances resulting from such
drawings in the manner described above), and, upon receipt by the Bank
of a certificate completed and signed by the Trustee in substantially
the form of Annex F to the Letter of Credit, the Borrower irrevocably
authorizes the Bank to rely on such certificate and to reinstate the
Letter of Credit in accordance therewith. Funds held by the Tender
Agent as a result of sales of the Pledged Bonds by the Remarketing
Agent shall be paid to the Bank by the Tender Agent to be applied to
the amounts owing by Borrower to the Bank pursuant to this paragraph
(d). Upon payment to the Bank of the amount of such Tender Advance to
be prepaid, together with accrued interest on such Tender Advance to
the date of such prepayment on the amount to be prepaid, the principal
amount outstanding of Tender Advances shall be reduced by the amount of
such prepayment and interest shall cease to accrue on the amount
prepaid.
3.4 Commission and Fees.
(a) The Borrower shall pay to the Bank a fee or commission at
the rate of 0.18% per annum on the amount available to be drawn under
the Letter of Credit (computed on the date that such commission is
payable) from and including the Date of Issuance until the Termination
Date, payable: (i) as to the first year of the initial period for which
the Letter of Credit is issued, on the Date of Issuance; and (ii)
thereafter, annually in advance on the anniversary of the Date of
Issuance (each of the dates described in (i) and (ii), a "Commission
Payment Date"); provided, however, that if the Funded Debt to EBITDA
Ratio set forth in Section 6.21 is between 0.75 to 1.00 and 1.25 to
1.00 for any fiscal quarter of the Borrower, or if the Borrower shall
have failed to comply with any of the other financial covenants set
forth in Sections 6.18, 6.19, 6.20 and 6.22, then in either case the
commission due and owing to the Bank pursuant to this
14
paragraph (a) on the next succeeding Commission Payment Date shall be
0.25% per annum.
(b) On or before the date of issuance of any additional
amounts of Bonds after the Date of Issuance, the Borrower shall pay to
the Bank a fee or commission on such additional amounts of Bonds, at
the appropriate rate pursuant to paragraph (a) hereof, for the portion
of the year remaining until the next succeeding Commission Payment
Date.
(c) The Borrower shall pay to the Bank, upon transfer of the
Letter of Credit in accordance with its terms, a transfer fee of
$1,000.
(d) The Borrower shall pay to the Bank, upon each drawing
under the Letter of Credit in accordance with its terms, a fee of $50
per drawing.
3.5 Increased Costs Due to Change in Law. In the event of any change in
any existing or future law, regulation, ruling or other interpretation having
influence over the Bank which shall either: (a) impose, modify or make
applicable any reserve, special deposit, capital requirement, assessment or
similar requirement against the Letter of Credit; or (b) impose on the Bank any
other condition regarding the Letter of Credit, and the result of any event
referred to in clause (a) or (b) above shall be to increase the cost (including
a reasonable allocation of resources) or decrease the yield to the Bank of
issuing or maintaining the Letter of Credit (which increase in cost shall be the
result of the Bank's reasonable allocation of the aggregate of such cost
increases or yield decreases resulting from such events), then, upon demand by
the Bank, the Borrower shall immediately pay to the Bank, from time to time as
specified by the Bank, additional amounts which shall be sufficient to
compensate the Bank for such increased cost or decreased yield. A statement of
charges submitted by the Bank shall be conclusive, absent manifest error, as to
the amount owed.
3.6 Computation. All payments of interest, commission and other charges
under this Agreement shall be computed on the per annum basis of a year of 360
days and calculated for the actual number of days elapsed.
3.7 Payment Procedure. All payments made by the Borrower under this
Agreement shall be made to the Bank in lawful currency of the United States of
America and in immediately available funds at the Bank's office in Charlotte,
North Carolina before 12:00 Noon (Charlotte, North Carolina time) on the date
when due, except for payments made pursuant to Section 3.2(a).
3.8 Business Days. If the date for any payment hereunder falls on a day
which is not a Business Day, then for all purposes of this Agreement the same
shall be deemed to have fallen on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payments
of interest or commission, as the case may be.
3.9 Reimbursement of Expenses. The Borrower will pay all reasonable
legal fees (computed without regard to any statutory presumption) incurred by
the Bank in connection with the preparation, execution and delivery of this
Agreement, the Letter of Credit, the Guaranty, any
15
and all other agreements and transactions contemplated hereby and thereby and by
the Bond Documents (including any amendments hereto or thereto or consents or
waivers hereunder or thereunder) and will also pay all fees, charges or taxes
for the recording or filing of the Guaranty. The Borrower will also pay for all
reasonable out-of-pocket expenses of the Bank in connection with the
administration of the Letter of Credit, this Agreement and the Guaranty. The
Borrower will, upon request, promptly reimburse the Bank for all amounts
expended, advanced or incurred by the Bank to collect or satisfy any obligation
of the Borrower under this Agreement or the Guaranty, or to enforce the rights
of the Bank under this Agreement or the Guaranty, which amounts will include,
without limitation, all court costs, reasonable attorneys' fees, fees of
auditors and accountants and investigation expenses incurred by the Bank in
connection with any such matters.
3.10 Extension of Expiration Date. The Bank hereby agrees that the
Expiration Date shall automatically be extended for successive one-year terms
effective on the Expiration Date and each anniversary date of the Expiration
Date unless (i) the Bank shall have notified the Borrower and the Trustee in
writing at least 120 days prior to the Expiration Date, as extended from time to
time pursuant to this Section 3.10, that the Bank will not extend such
applicable Expiration Date or (ii) the Letter of Credit is otherwise terminated
in accordance with its terms.
3.11 Obligations Absolute. The obligations of the Borrower under this
Agreement shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, under all circumstances
whatsoever, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of the Letter of
Credit, the Bonds, any of the other Bond Documents, the Guaranty or any
other agreement or instrument related thereto;
(b) any amendment or waiver of or any consent to departure
from the terms of the Letter of Credit, the Bonds, any of the other
Bond Documents, the Guaranty or any other agreement or instrument
related thereto;
(c) the existence of any claim, setoff, defense or other right
which either the Borrower or the Issuer may have at any time against
the Trustee, any beneficiary or any transferee of the Letter of Credit
(or any Person for whom the Trustee, any such beneficiary or any such
transferee may be acting), the Bank or any other Person, whether in
connection with this Agreement, the Guaranty, the Letter of Credit, the
Bond Documents, the Project or any unrelated transaction;
(d) any statement, draft or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect, or any statement therein being untrue or
inaccurate in any respect whatsoever; or
(e) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement.
16
ARTICLE IV
SECURITY
4.1 Security. As security for the full and timely payment and
performance by the Borrower of its respective obligations hereunder, the
Borrower shall on the date hereof deliver to the Bank the Guaranty.
4.2 Insurance Required. The Borrower will keep the Project continuously
insured against such risks as are customarily insured against by businesses of
like size and type engaged in the same or similar operations including, without
limiting the generality of any other covenants contained herein or in the Bond
Documents or the Guaranty:
(a) general comprehensive liability insurance against claims
for bodily injury, death or property damage occurring on, in or about
the Project Site (such coverage to include provisions waiving
subrogation against the Bank) in amounts not less than $1,000,000 with
respect to bodily injury to any one person, $1,000,000 with respect to
bodily injury to two or more persons in any one accident and $1,000,000
with respect to property damage resulting from any one occurrence;
(b) liability insurance with respect to the operation of its
facilities under the workers' compensation laws of the State of
Mississippi;
(c) business interruption insurance with respect to a material
interruption in the operation of its facilities; and
(d) if at any time the Project Site is in an area that has
been identified by the Secretary of Housing and Urban Development as
having special flood and mud slide hazards, the Borrower shall purchase
and maintain a flood insurance policy satisfactory to the Bank.
provided, however, that the insurance so required may be provided by blanket
policies now or hereafter maintained by the Borrower.
4.3 General Requirements Applicable to Insurance.
(a) Each insurance policy obtained in satisfaction of the
requirements of Section 4.2 hereof:
(i) shall be by such insurer (or insurers) as shall
be financially responsible, qualified to do business in the
State, and of recognized standing;
17
(ii) shall be in such form and have such provisions
(including, without limitation, the loss payable clause, the
waiver of subrogation clause, if any, the deductible amount,
if any, and the standard mortgagee endorsement clause), as are
generally considered standard provisions for the type of
insurance involved and are acceptable in all respects to the
Bank;
(iii) shall prohibit cancellation or substantial
modification, termination or lapse in coverage by the insurer
without at least 30 days prior written notice to the Bank; and
(iv) shall provide that losses thereunder, prior to
the occurrence of an Event of Default (or event which, with
notice or lapse of time or both would constitute an Event of
Default) hereunder shall be adjusted with the insurer by the
Borrower at its expense on behalf of the insured parties and
the decision of the Borrower as to any adjustment shall be
final and conclusive; and
(b) Prior to expiration of any such policy, the Borrower shall
furnish the Bank with evidence satisfactory to the Bank that the policy
or certificate has been renewed or replaced or is no longer required by
this Agreement.
4.4 Advances by Bank. In the event the Borrower shall fail to maintain,
or cause to be maintained, (i) the full insurance coverage required pursuant to
Section 4.3 or (ii) the Project Site in good repair and good operating
condition, the Bank may (but shall be under no obligation to), after 10 days'
written notice to the Borrower and the Issuer and the failure of the Borrower to
obtain the required insurance or to commence (and complete with due diligence)
the making of the required repairs, renewals and replacements, contract for the
required policies of insurance and pay the premiums on the same or make any
required repairs, renewals and replacements; and the Borrower agrees to
reimburse the Bank to the extent of the amounts so advanced with interest
thereon at a rate per annum equal to the Prime Rate plus two (2) percentage
points, or the maximum rate permitted by law, whichever is lower, from the date
of advance to the date of reimbursement. Any amounts so advanced by the Bank
shall become an additional obligation of the Borrower secured by the Guaranty.
4.5 Application of Net Proceeds of Insurance. The Net Proceeds of the
insurance carried pursuant to the provisions of Sections 4.2(a), 4.2(b) and
4.2(c) hereof shall be applied by the Borrower toward extinguishment of the
defect or claim or satisfaction of the liability with respect to which such
insurance proceeds may be paid.
4.6 Requisitions from the Project Fund; Covenants Relating to
Construction.
(a) Use of Proceeds. The funds contained in the Project Fund
(as defined in the Indenture) shall be subject to disbursement to the
Borrower pursuant to the terms of the Indenture to (i) pay the cost of
issuance of the Bonds, and (ii) to pay for the cost of the Project.
18
(b) Construction of the Project. The Borrower shall
diligently pursue and complete or cause the completion in good
workmanlike fashion of the acquisition, construction and installation
of the Project.
(c) Inspector. The Borrower will permit the Bank and its
representatives, including, without limitation, the Person appointed by
the Bank as its representative relating to the construction of the
Project (the "Inspector"), to enter upon any of the Project Site, to
inspect the Project and all materials to be used in the construction
thereof, and to examine all detailed plans and drawings which are or
may be kept at the site, and will cooperate and cause the contractors
of the Borrower to cooperate, with the Bank and the Inspector in
connection with any such inspections. The Borrower shall have no right
to rely on any inspection, or lack thereof, by the Bank or its
Inspector. The Borrower agrees to pay all costs incurred by the Bank in
connection with any such inspections.
ARTICLE V
AFFIRMATIVE COVENANTS
Until all the obligations of the Borrower hereunder to be performed and
paid shall have been performed and paid in full, and for so long as the Letter
of Credit shall be outstanding, the Borrower covenants and agrees that, unless
the Bank consents otherwise in writing:
5.1 Repayment of Obligations. The Borrower will promptly repay the
payment obligations of the Borrower hereunder and under the Guaranty when due,
according to the terms of this Agreement and the Guaranty.
5.2 Performance Under Reimbursement Agreement and Guaranty. The
Borrower and the Guarantors will, and the Borrower will cause each of its
Subsidiaries to, perform all obligations required to be performed by each of
them under the terms of this Agreement and the Guaranty and any other agreements
now or hereafter existing or entered into between the Borrower, its
Subsidiaries, the Guarantors and the Bank, or any of them, subject to any
applicable notice and cure provisions contained therein.
5.3 Financial and Business Information about the Borrower. The Borrower
shall deliver to the Bank:
(a) As soon as practicable and in any event within 45 days
after the close of each fiscal quarter of DTS, beginning with the close
of the current fiscal quarter, (i) consolidated balance sheets and
consolidated statements of income and cash flows of DTS and its
Subsidiaries for or relating to the quarter then ended, all prepared in
accordance with Generally Accepted Accounting Principles (subject to
normal year-end adjustments and the absence of notes), applied on a
Consistent Basis, and certified by the chief executive officer and
chief financial officer of the Borrower or of DTS;
19
(b) As soon as practicable and in any event within 90 days
after the close of each fiscal year of DTS, beginning with the close of
the current fiscal year, an audited consolidated balance sheet of DTS
and its Subsidiaries as of the close of such fiscal year (and unaudited
consolidating balance sheets for DTS and its Subsidiaries) and audited
consolidated statements of income and cash flows of DTS and its
Subsidiaries for the fiscal year then ended (and unaudited
consolidating statements of income and cash flows), prepared by an
independent certified public accountant reasonably acceptable to the
Bank in accordance with Generally Accepted Accounting Principles,
applied on a Consistent Basis, and accompanied by a report thereon by
such certified public accountants and, with respect to such audited
financial statements, containing an opinion that is not qualified with
respect to scope limitations imposed by Borrower or DTS, as to going
concern or with respect to accounting principles followed by DTS not in
accordance with Generally Accepted Accounting Principles;
(c) Concurrently with the delivery of the financial statements
described in subsections (a) and (b) above, a certificate from the
chief executive officer and chief financial officer, senior vice
president-finance or corporate controller of DTS certifying to the Bank
that to the best of their knowledge after review of this Agreement and
appropriate inquiry, the Borrower and DTS have kept, observed,
performed and fulfilled each and every covenant, obligation and
agreement binding upon the Borrower and DTS contained in this Agreement
or the Guaranty, and that no Event of Default, or any event which with
the giving of notice or lapse of time or both would constitute an Event
of Default, has occurred or specifying any such Event of Default;
(d) Immediately upon issuance, each notice, financial report,
proxy statement, or other communication rendered to its shareholders;
and
(e) Upon the Bank's request, such other information about the
financial condition, Business or operations of the Borrower or DTS and
their Subsidiaries as the Bank may from time to time reasonably
request.
5.4 Notice of Certain Events. The Borrower shall promptly, after any
senior financial officer of the Borrower learns or obtains knowledge of the
occurrence thereof, give written notice to the Bank of:
(a) any litigation or proceeding brought against the Borrower,
any of its Subsidiaries or a Guarantor (other than those previously
disclosed) which may have a material adverse effect on the Borrower,
its Subsidiaries and the Guarantors, taken as a whole, whether or not
the claim is considered by the Borrower to be covered by insurance, and
the Borrower shall, if requested by the Bank, set up such reserves as
the Bank reasonably determines are necessary to protect the Bank
against loss;
20
(b) any written notice of a violation received by the
Borrower, any of its Subsidiaries or a Guarantor from any governmental
regulatory body or law enforcement authority which, if such violation
were established, might have a material and adverse effect on the
business of the Borrower, its Subsidiaries and the Guarantors, taken as
a whole or the ability of the Borrower to fulfill its obligations
hereunder;
(c) any labor controversy that has resulted in a strike or
other work action materially affecting the Borrower, any of its
Subsidiaries or a Guarantor;
(d) any attachment, judgment, lien, levy or order (other than
Permitted Liens) in an amount exceeding $2,000,000 that may be placed
on or assessed against or threatened against the Borrower, any of its
Subsidiaries or a Guarantor, which is not satisfied and as to which all
appeal periods have expired;
(e) any other matter that has resulted in a material adverse
effect on the Borrower, its Subsidiaries and the Guarantors, taken as a
whole;
(f) any breach or violation of or noncompliance with any
covenant or condition of this Agreement or any Event of Default
hereunder.
5.5 Corporate Existence. The Borrower will, and will cause each of its
Subsidiaries to, maintain and preserve its corporate existence and all rights,
privileges and franchises now enjoyed, except where failure to do so will not
have a material adverse effect on the Borrower, its Subsidiaries and the
Guarantors, taken as a whole.
5.6 Payment of Indebtedness; Performance of Other Obligations. The
Borrower and the Guarantors will, and the Borrower will cause each of its
Subsidiaries to, pay all material Indebtedness before such indebtedness shall
become past due, all taxes, assessments and other governmental charges that may
be levied or assessed upon it or the Project Site when due and all other
material obligations in accordance with customary trade practices, and comply
with all acts, rules, regulations and orders of any legislative, administrative
or judicial body or official applicable to the Project, the Project Site or any
part thereof or to the operation of its business; provided, however, that the
Borrower, a Guarantor or any Subsidiary may in good faith by appropriate
proceedings and with due diligence contest any such indebtedness, taxes,
assessments, governmental charges, acts, rules, regulations, orders and
directions that do not in the Bank's reasonable judgment materially and
adversely affect the Borrower's ability to fulfill its obligations under Article
III hereof, and if requested by the Bank, shall establish reserves reasonably
satisfactory to the Bank. The Borrower and the Guarantors will, and the Borrower
will cause each of its Subsidiaries to, observe and remain in compliance with
all laws, ordinances, governmental rules and regulations to which it is subject
and obtain all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its properties or the conduct of
its business, and observe and perform all covenants and conditions of all
agreements and instruments to which it is a party, except where failure to do so
will not have a material adverse effect on the Borrower, its Subsidiaries and
the Guarantors, taken as a whole.
21
5.7 Payment of Trade Accounts Payable, Etc. The Borrower will, and will
cause each of its Subsidiaries to, pay all of its trade accounts that are
payable or accrued as of the date thereof (except for trade accounts that are by
their terms payable on a date later than 90 days after the date thereof and
trade accounts that the Borrower or one of its Subsidiaries disputes in good
faith by appropriate proceedings and with due diligence) within 90 days after
the date thereof, except where failure to do so will not have a material adverse
effect on the Borrower, its Subsidiaries and the Guarantors, taken as a whole.
5.8 Maintenance of Insurance. The Borrower will, and will cause each of
its Subsidiaries to, maintain and pay for insurance upon the Project Site in
accordance with Sections 4.3 and 4.4 of this Agreement, including builder's risk
insurance if applicable, wherever located, covering casualty, hazard, public
liability, product liability, and such other risks and in such amounts and with
such insurance companies as shall be reasonably satisfactory to the Bank, and
such amounts shall not be less than the amounts required pursuant to Section
4.3; and the Borrower will deliver certified copies of such insurance policies
to the Bank.
5.9 Maintenance of Books and Records; Inspection. The Borrower and the
Guarantors will, and the Borrower will cause each of its Subsidiaries to,
maintain adequate books, accounts and records, and prepare all financial
information required under this Agreement in accordance with Generally Accepted
Accounting Principles (subject, in the case of unaudited interim statements, to
normal year-end adjustments and the absence of notes) and in material compliance
with the regulations of any governmental regulatory body having jurisdiction
over it, and permit employees or agents of the Bank at any reasonable time to
inspect the properties of the Borrower, its Subsidiaries and the Guarantors, and
to examine or audit the books, accounts and records of the Borrower, its
Subsidiaries and the Guarantors and make copies and memoranda of them, and to
discuss the affairs, finances and accounts of the Borrower, its Subsidiaries and
the Guarantors with its officers, employees and independent public accountants
and attorneys (and by this provision the Borrower, its Subsidiaries and the
Guarantors authorize said accountants to discuss the finances and affairs of the
Borrower, its Subsidiaries and the Guarantors), all at such reasonable times and
as often as may be reasonably requested, but in any event at least twice during
each fiscal year of the Borrower.
5.10 Comply with ERISA. Except where noncompliance will not have a
material adverse effect on the Borrower, its Subsidiaries and the Guarantors
taken as a whole, the Borrower will, and will cause each of its Subsidiaries to,
at all times make prompt payment of contributions required to meet the minimum
funding standards set forth in ERISA with respect to any employee benefit plan;
not withdraw from participation in, permit the termination or partial
termination of, or permit the occurrence of any other event with respect to any
employee benefit plan that could result in liability to the Pension Benefit
Guaranty Corporation; notify the Bank as soon as practicable of any "reportable
event" (as defined in Section 4043(b) of ERISA) and of any additional act or
condition arising in connection with any employee benefit plan which the
Borrower or any of its Subsidiaries believe might constitute grounds for the
termination thereof by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States district court of a trustee to
administer such plan; and furnish to the Bank upon the Bank's
22
request, such additional information about any employee benefit plan as may be
reasonably requested. Neither the Borrower nor any of its Subsidiaries or the
Guarantors will permit the occurrence of any "prohibited transaction" (as
defined in ERISA).
5.11 Consolidated Omnibus Budget Reconciliation Act. Each of the
employee benefit plans of the Borrower and its Subsidiaries shall at all times
satisfy the requirements set forth in Section 4980B of the Internal Revenue Code
of 1986, as amended, and all regulations from time to time promulgated
thereunder, and such other provisions of the Internal Revenue Code that replace
or complement such Section, except where failure to do so will not have a
material adverse effect on the Borrower, its Subsidiaries and the Guarantors,
taken as a whole.
5.12 Maintenance of Properties; Conduct of Business. The Borrower will,
and will cause each of its Subsidiaries to, conduct its business in an orderly,
efficient and customary manner, keep its properties used in the operations of
its business in good working order and condition (normal wear and tear
excepted), and from time to time make all needed repairs to, renewals of or
replacements of its properties (except to the extent that any of such properties
is obsolete or is being replaced) so that the efficiency of such property shall
be fully maintained and preserved. The Borrower and its Subsidiaries shall file
or cause to be filed in a timely manner all material reports, applications,
estimates and licenses that shall be required by any governmental authority and
which, if not timely filed, would have a material and adverse effect on the
Borrower and its Subsidiaries, taken as a whole.
5.13 Provision of Information about the Project. Upon request by the
Bank, and to the extent then available, the Borrower will furnish to the Bank in
form satisfactory to the Bank, (i) a copy of the construction contract with the
general contractor who shall construct the Project (as defined in the Loan
Agreement); (ii) an architect's or engineer's certification that all work has
been done and materials installed in compliance with plans and specifications;
(iii) a complete set of plans and specifications of the Project, which plans and
specifications are to be in full compliance with all building codes and local
ordinances; and (iv) proof as to payment of construction bills, lien waivers,
inspection reports, statements showing itemization of present and prospective
expenditures, a statement of items due and unpaid, and, if applicable, a list of
items necessary for completion of the Project.
5.14 Taxes and Liens. The Borrower will, and will cause each of its
Subsidiaries to, promptly pay or cause to be paid all material taxes,
assessments or other governmental charges which may lawfully be levied or
assessed upon its income or profits or upon any of its property, real, personal
or mixed, and also any lawful claims for labor, material and supplies which, if
unpaid, might become a lien or charge against any such property, the failure to
pay any of which taxes or claims would have a material adverse effect on the
Borrower, and its Subsidiaries taken as a whole; provided, however, that neither
the Borrower nor any Subsidiary shall be required to pay or cause to be paid any
such tax, assessment, charge, levy or claim so long as the validity thereof
shall be actively contested in good faith by proper proceedings and, if
requested by the Bank, reserves with respect thereto acceptable to the
Borrower's independent certified public accountants shall be established and
maintained; but provided further that any such tax, assessment, charge, levy or
claim shall be paid forthwith upon the commencement of proceedings
23
to foreclose any lien securing the same unless a surety bond satisfactory to the
Bank is obtained and delivered to the Bank.
5.15 Observe all Laws. The Borrower will conform to and duly observe
all laws, regulations and other valid requirements of any regulatory authority
with respect to the conduct of its business, except where failure to do so will
not have a material adverse effect on the Borrower, its Subsidiaries and the
Guarantors, taken as a whole.
5.16 Redemption of Bonds. The Borrower will redeem the Bonds in
accordance with Section 701(a) of the Indenture and pursuant to the following
schedule:
Date of Redemption
(June 1 of the year listed) Principal Amount Redeemed
--------------------------- -------------------------
2006 250,000
2007 250,000
2008 500,000
2009 500,000
2010 1,000,000
2011 1,000,000
2012 1,250,000
2013 1,500,000
2014 1,750,000
2015 2,000,000
2016 2,500,000
2017 3,000,000
2018 3,500,000
5.17 Year 2000. The Borrower has taken appropriate action necessary to
assure that the Borrower's and its Subsidiaries' material computer based systems
are able to operate, and effectively process data including dates, on and after
January 1, 2000. At the request of the Bank, the Borrower will provide the Bank
with assurances acceptable to the Bank of the Borrower's year 2000
compatibility.
ARTICLE VI
NEGATIVE COVENANTS
Until all the obligations of the Borrower hereunder to be performed and
paid shall have been performed and paid in full, and for so long as the Letter
of Credit shall be outstanding, the Borrower covenants and agrees that, unless
the Bank consents otherwise in writing, the Borrower and the Guarantors will
not, and the Borrower will not permit any Subsidiary to, either directly or
indirectly:
24
6.1 Merger and Dissolution; Sale of Assets. Without the prior written
consent of the Bank, which consent will not be withheld or delayed unreasonably
become a party to any merger or consolidation, or agree to or effect any asset
acquisition or disposition or stock acquisition or disposition (other than the
acquisition or disposition of assets in the ordinary course of business for fair
consideration and consistent with past practices) except (i) the merger or
consolidation of one or more of the Subsidiaries of DTS with and into DTS, (ii)
the merger or consolidation of two or more Subsidiaries of DTS, or (iii) the
merger or consolidation of a Subsidiary of DTS into a target corporation, or the
merger or consolidation of a target corporation into a Subsidiary of DTS, in
either case where substantially all of the consideration given by DTS in the
transaction consists of 10% or less of the stock of DTS, determined by value,
and where the surviving entity is a Guarantor.
6.2 Acquisitions. Without the prior written consent of the Bank, which
consent will not be withheld or delayed unreasonably, acquire the business or
all or a substantial portion of the assets of any Person, whether by purchase of
stock, assets or otherwise, provided that the Borrower, the Guarantors and the
Subsidiaries, taken as a whole, may make acquisitions the aggregate
consideration for which does not exceed $75,000,000.
6.3 Indebtedness. Create, incur, assume, guarantee or be or remain
liable, contingently or otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Bank arising under this Agreement, the
Credit Agreement and the other Loan Documents (as defined in the Credit
Agreement);
(b) current liabilities of the Borrower, a Subsidiary or any
Guarantor incurred in the ordinary course of business but not incurred through
(i) the borrowing of money, or (ii) the obtaining of credit except for credit on
an open account basis customarily extended and in fact extended in connection
with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and supplies to
the extent that payment therefor shall not at the time be required to be made in
accordance with the provisions of ss.5.6;
(d) Indebtedness in respect of judgments or awards not in
excess of $2,000,000.00 in the aggregate that have been in force for less than
the applicable period for taking an appeal so long as execution is not levied
thereunder or in respect of which the Borrower, Subsidiary or Guarantor (as
applicable) shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution shall have
been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary course
of business;
(f) intercompany Indebtedness;
25
(g) Indebtedness incurred for the construction of a new
distribution and office center for the Borrower, its Subsidiaries or a
Guarantor, the terms of which Indebtedness are approved by the Bank in its
discretion, which approval shall not be unreasonably withheld;
(h) Indebtedness existing on the date of this Agreement and
listed and described on Schedule 6.3 hereto.
6.4 Liens and Encumbrances. Create, assume or suffer to exist any lien,
deed of trust, mortgage, encumbrance or security interest (including the
interest of a conditional seller of goods) securing a charge or obligation, on
or of any of its property, real or personal, whether now owned or hereafter
acquired, including without limitation any raw materials inventory or work in
process, except for Permitted Liens.
6.5 Transactions With Related Persons. Except as described in Schedule
6.5 hereof or otherwise permitted hereunder, make any loan or advance to,
purchase, assume or guarantee any note to or from, or enter into any transaction
with, any of its officers, directors, shareholders or Affiliates, or any member
of the immediate family of any of its officers, directors, shareholders or
Affiliates, or subcontract any operations to any Affiliate, except (i) pursuant
to the reasonable requirements of its business and upon fair and reasonable
terms that are fully disclosed to the Bank and are no less favorable to it than
would obtain in a comparable arm's length transaction with a Person not an
Affiliate of the Borrower or such Subsidiary, as the case may be, or (ii)
transactions aggregating less than $200,000 in any twelve-month period.
6.6 Restrictions on Dividends, etc. Declare or pay any dividends, other
than dividends payable solely in its own stock or Permitted Dividends, upon any
of its stock, or purchase, redeem, retire, or otherwise acquire, directly or
indirectly, any shares of its stock, or make any distribution of cash, property
or assets among the holders of shares of its stock, or make any material change
in its capital structure; provided, however, that any Subsidiary may declare and
pay dividends to the Borrower.
6.7 Sale and Leaseback. Enter into any arrangement with any Person
providing for the leasing by the Borrower of any asset that has been sold or
transferred by the Borrower to such Person.
6.8 New Business. Without the written consent of the Bank, engage in
any business other than a retail or wholesale business engaged in the sale of
merchandise or a business reasonably related thereto.
6.9 Subsidiaries or Partnerships. Create any new Subsidiary or transfer
any assets to a Subsidiary, other than a Subsidiary which is a Guarantor, or
become a partner or joint venturer in any partnership or joint venture.
6.10 Hazardous Wastes. Permit, in violation of any federal, state or
local laws, regulations or orders, any hazardous or toxic wastes, contaminants,
oil, radioactive or other materials the removal of which is required or the
maintenance of which is restricted, prohibited or
26
penalized by any federal, state or local agency, authority or governmental unit
to be brought on to any real property owned by the Borrower or any Subsidiary,
or if so brought or found located thereon, shall be immediately removed, with
proper disposal, and all required environmental cleanup procedures shall be
diligently undertaken pursuant to all such laws, ordinances and regulations.
6.11 Fiscal Year. Change its fiscal year from a December 31 year end
without furnishing prior written notice thereof to, and first obtaining the
consent of, the Bank, which consent shall not be unreasonably withheld or
delayed.
6.12 Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
Worth as of the last day of any fiscal year, beginning with the fiscal year
ending December 31, 1998, to be less than the sum of (i) the Consolidated
Tangible Net Worth as of the immediately preceding fiscal year end, plus (ii)
the greater of (A) $20,000,000 or (B) sixty-five percent (65%) of the
Consolidated Net Income (or Deficit) for the fiscal year in which the
determination of the Borrower's compliance with this Section is then being made.
6.13 Capital Expenditures. Permit Consolidated Capital Expenditures
(exclusive of costs relating (i) to the Project and any future office or
distribution center, and (ii) to the acquisition of an operating business or
businesses for which the portion of the consideration representing Consolidated
Capital Expenditures does not exceed $25,000,000 in the aggregate under this
clause (ii)) to exceed the following amounts for the following periods:
Maximum Amount
Period of Capital Expenditures
------ -----------------------
Fiscal Year 1998 $35,000,000
Fiscal Year 1999 $40,000,000
Fiscal Year 2000 $50,000,000
Fiscal Year 2001 $50,000,000
Fiscal Year 2002 $55,000,000
6.14 Current Ratio. Permit the ratio of Consolidated Current Assets to
Consolidated Current Liabilities to be less than the following amounts for the
following periods:
Minimum
Period Current Ratio
------ -------------
Date of Issuance 1.45 : 1.00
Through Fiscal Year 1999
Thereafter 1.50 : 1.00
27
6.15 Funded Debt to EBITDA Ratio. Permit the ratio of Consolidated
Funded Debt to Consolidated EBITDA, measured quarterly in arrears on a rolling
four (4)-quarter basis, to be greater than 1.50 to 1.00.
6.16 Operating Cash Flow to Debt Service Ratio. Permit the ratio of
Consolidated Operating Cash Flow to Debt Service (excluding, for purposes of
this determination, Consolidated Capital Expenditures relating (i) to the
Project and (ii) to the acquisition of an operating business or businesses for
which the portion of the consideration representing Consolidated Capital
Expenditures does not exceed $25,000,000 in the aggregate under this clause
(ii)), measured quarterly on a rolling four (4)-quarter basis, to be less than
1.85 to 1.00.
ARTICLE VII
CONDITIONS TO ISSUANCE OF LETTER OF CREDIT
7.1 Conditions to Issuance. The obligation of the Bank to issue the
Letter of Credit shall be subject to the Bank's receipt of the following, in
form satisfactory to the Bank:
(a) two executed counterparts of this Agreement;
(b) executed counterparts of each of the Bond Documents
(except for the Note and the Bonds, as to which a specimen copy may be
furnished) and the Guaranty;
(c) evidence of compliance with the insurance requirements
contained herein (upon which there shall be affixed appropriate long
form loss payable clauses);
(d) opinions dated the Date of Issuance addressed to, and in
form and substance acceptable to, the Bank from the Issuer's counsel
and Bond Counsel, as to such matters as the Bank may require;
(e) an opinion of counsel for the Borrower and the Guarantors
dated the Date of Issuance addressed to the Bank, and substantially in
the form attached hereto as Exhibit C, or otherwise in form and
substance acceptable to, the Bank;
(f) (i) a copy of the Articles of Incorporation of the
Borrower, certified as of a date no earlier than 60 days prior to the
Date of Issuance by the Secretary of the Commonwealth of the
Commonwealth of Virginia; and (ii) a certificate dated no earlier than
60 days prior to the Date of Issuance of the Secretary of the
Commonwealth of the Commonwealth of Virginia as to the good standing of
the Borrower;
28
(g) a certificate from the secretary or an assistant secretary
of each of the Borrower and the Guarantors certifying to and attaching
copies of its bylaws and resolutions of its board of directors
authorizing and approving the transactions contemplated by this
Agreement and the Guaranty, and as to the incumbency of each of its
officers executing any of such documents;
(h) an opinion from Watkins Ludlam Winter & Stennis, P.A.,
Bond Counsel, or a letter in substantially the form of Exhibit D hereto
consenting to the Bank's reliance on certain opinions delivered by such
counsel in form and substance satisfactory to the Bank and its counsel;
(i) copies of all governmental approvals required in
connection with this transaction, including resolution of the Issuer
authorizing the issuance of the Bonds;
(j) evidence of payment to the Bank of the initial annual
letter of credit commission pursuant to Section 3.4(a) of this
Agreement;
(k) an executed counterpart of the Commitment Letter; and
(l) such other documents, instruments and certifications as
the Bank may require.
7.2 Additional Conditions Precedent to Issuance of the Letter of
Credit. The obligation of the Bank to issue the Letter of Credit shall be
subject to the following further conditions precedent:
(a) On the date of issuance the following statements shall be
true and the Bank shall have received a certificate signed by an
authorized officer of the Borrower, dated the date of issuance, stating
that:
(i) The representations and warranties contained in
Article II of this Agreement, Section 2.2 of the Loan
Agreement, and in the Guaranty are true and correct on and as
of the date of issuance of the Letter of Credit as though made
on and as of such date; and
(ii) No event has occurred or would result from the
issuance of the Letter of Credit, which constitutes an Event
of Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both; and
(b) There shall have been no introduction of or change in, or
in the interpretation of, any law or regulation that would make it
unlawful or unduly burdensome for the Bank to issue the Letter of
Credit, no outbreak or escalation of hostilities or other calamity or
crisis affecting the Bank, no suspension of or material limitation on
trading on the New York Stock Exchange or any other national securities
exchange, no declaration
29
of a general banking moratorium by United States or North Carolina
banking authorities, and no establishment of any new restrictions on
transactions in securities or on banks materially affecting the free
market for securities or the extension of credit by banks.
7.3 Conditions Precedent to Each Tender Advance. Each payment made by
the Bank under the Letter of Credit pursuant to a Tender Draft shall constitute
a Tender Advance hereunder only if on the date of such payment the following
statements shall be true:
(a) The representations and warranties contained in Article II
of this Agreement, Section 2.2 of the Loan Agreement, and in the
Guaranty are true and correct on and as of the date of such Tender
Advance as though made on and as of such date; and
(b) No event has occurred or would result from such Tender
Advance, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time
elapse or both.
Unless the Borrower shall have previously advised the Bank in writing or the
Bank has actual knowledge that one or more of the above statements is no longer
true, the Borrower shall be deemed to have represented and warranted, on the
date of payment by the Bank under the Letter of Credit pursuant to a Tender
Draft, that on the date of such payment the above statements are true and
correct.
ARTICLE VIII
DEFAULT
8.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement, whereupon all obligations of the Borrower
hereunder, whether then owing or contingently owing, will, at the option of the
Bank or its successors or assigns, immediately become due and payable by the
Borrower without presentation, demand, protest or notice of any kind, all of
which are hereby expressly waived, and the Borrower will pay the reasonable
attorneys' fees incurred by the Bank, or its successors or assigns, in
connection with such Event of Default:
(a) Failure of the Borrower to pay when due (i) any payment of
principal, interest, commission, charge or expense referred to in
Article III hereof, except for amounts owed by the Borrower pursuant to
a Tender Advance under Section 3.3 and (ii) any payment of principal or
interest referred to in Section 3.3 hereof, and such failure shall
continue for a period of five (5) days after notice of such failure is
given by the Bank to the Borrower; or
(b) The occurrence of an "event of default" or an "Event of
Default" under any of the Guaranty or any of the Bond Documents or the
Credit Agreement or any documents executed in connection therewith; or
30
(c) The Borrower or any Subsidiary defaults in the payment of
principal or interest on any other material Indebtedness (other than
the indebtedness to the Bank arising hereunder) beyond any period of
grace provided with respect thereto, or in the performance of any other
agreement, term or conditions contained in any agreement under which
any such material obligation is created, if the effect of such default
is to cause, or permit the holder or holders of such material
obligation to cause such obligation to become due prior to its stated
maturity; or
(d) Any material representation, warranty, certification or
statement made by the Borrower herein, or in any writing furnished by
or on behalf of the Borrower or any Subsidiary in connection with the
loan by the Issuer under the Loan Agreement or pursuant to this
Agreement, or in the Guaranty shall have been false, misleading or
incomplete in any material respect on the date as of which made; or
(e) The Borrower or any Subsidiary defaults in the performance
or observance of any agreement, covenant, term or condition binding on
it contained herein or in the Guaranty and such default shall not have
been remedied within ten (10) days (or any shorter period set forth in
such agreement or document) after the earlier of: (i) the Borrower
having knowledge thereof or (ii) written notice having been received by
it from the Bank; or
(f) With respect to the Borrower or any Subsidiary, (i) the
commencement of its liquidation or dissolution or the suspension of its
business or the entry of an order or decree approving or requiring the
same, (ii) the filing by it of a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization, arrangement,
readjustment of its debts or for any other relief under the Bankruptcy
Reform Act of 1978, as amended (the "Bankruptcy Code"), or under any
other insolvency act or law, state or federal, now or hereafter
existing, or any other action by it indicating its consent to, approval
of, or acquiescence in any such petition or proceeding, (iii) the
application by it for (or the consent or acquiescence to) the
appointment of a receiver or a trustee or an assignment for the benefit
of creditors, or (iv) its inability or admission in writing of its
inability to pay its debts as they mature; or
(g) With respect to the Borrower or any Subsidiary, (i) the
filing of an involuntary petition against it in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts or for any other
relief under the Bankruptcy Code or under any other insolvency act or
law, state or federal, now or hereafter existing, or the involuntary
appointment of a receiver or trustee for it or for all or a substantial
part of its property, and the continuance of any of such action for
thirty (30) days undismissed or undischarged, or (ii) the issuance of
an order for attachment, execution or similar process against any
substantial part of its property and the continuance of any such order
for sixty (60) days undismissed or undischarged; or
31
(h) The entry of an order in any proceedings against the
Borrower decreeing the dissolution or split-up of the Borrower; or
(i) The entry of a final judgment against the Borrower or any
Subsidiary, which with other outstanding final judgments against the
Borrower and its Subsidiaries exceeds an aggregate of $2,000,000, if
within thirty (30) days after entry thereof such judgment shall not
have been discharged or execution thereof stayed pending appeal; or
(j) The dissolution or termination of the existence of the
Borrower or any Guarantor, except as permitted hereunder; or
(k) The Guaranty shall for any reason cease to be in full
force and effect or any Guarantor or any Person acting on its behalf
shall deny or disaffirm such Guarantor's obligations under the
Guaranty;
then upon the occurrence of an Event of Default and at any time thereafter, the
Bank may (A) pursuant to Section 902 of the Indenture, advise the Trustee that
an Event of Default has occurred and instruct the Trustee to declare the
principal of all Bonds then outstanding and interest thereon to be immediately
due and payable, and (B) proceed hereunder, and under the Guaranty and, to the
extent therein provided, under the Bond Documents, in such order as it may
elect, and exercise all other rights and remedies available to it at law; and
the Bank shall have no obligation to proceed against any Person, to exhaust any
other remedy or remedies which it may have, or to resort to any other or
particular security, whether held by or available to the Bank.
8.2 No Remedy Exclusive. No remedy herein conferred upon or reserved to
the Bank is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder, under the Guaranty, or now or hereafter
existing at law or in equity.
ARTICLE IX
PLEDGED BONDS
9.1 The Pledge. The Borrower hereby pledges, assigns, hypothecates,
transfers, and delivers to the Bank all its right, title and interest to, and
hereby grants to the Bank a first lien on, and security interest in, all right,
title and interest of the Borrower in and to the following (hereinafter
collectively called the "Pledged Bond Collateral"):
(i) all Bonds delivered by the owners thereof to the Tender
Agent (as defined in the Indenture) or Remarketing Agent (as defined in
the Indenture) and purchased on behalf of the Borrower with proceeds of
drawings under the Letter of Credit (the "Pledged Bonds");
32
(ii) all income, earnings, profits, interest, premium or other
payments in whatever form in respect of the Pledged Bonds; and
(iii) all proceeds (cash and non-cash) arising out of the sale,
exchange, collection, enforcement or other disposition of all or any
portion of the Pledged Bonds.
The Pledged Bond Collateral shall serve as security for the payment and
performance when due of all obligations of the Borrower hereunder. The Borrower
shall deliver, or cause to be delivered, the Pledged Bonds to the Bank or to a
pledge agent designated by the Bank immediately upon receipt thereof or, in the
case of Pledged Bonds held under a book-entry system administered by The
Depository Trust Company ("DTC"), New York, New York (or any other clearing
corporation), the Borrower shall cause the Pledged Bonds to be reflected on the
records of DTC (or such other clearing corporation) as a position held by the
Bank (or a pledge agent acceptable to the Bank) as a DTC participant (or a
participant in such other clearing corporation) and the Bank (or its pledge
agent) shall reflect on its records that the Pledged Bonds are owned
beneficially by the Borrower subject to the pledge in favor of the Bank.
9.2 Remedies Upon Default. If any Event of Default shall have occurred
and be continuing, the Bank, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Borrower or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith collect, receive, appropriate and realize upon
the Pledged Bond Collateral, or any part thereof, and/or may forthwith sell,
assign, give option or options to purchase, contract to sell or otherwise
dispose of and deliver said Pledged Bond Collateral, or any part thereof, in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or at any of the Bank's offices or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk,
with the right to the Bank upon any such sale or sales, public or private, to
purchase the whole or any part of said Pledged Bond Collateral so sold, free of
any right or equity of redemption in the Borrower, which right or equity is
hereby expressly waived or released. The Bank shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred therein
or incidental to the care, safekeeping or otherwise of any and all of the
Pledged Bond Collateral or in any way relating to the rights of the Bank
hereunder, including reasonable attorneys' fees and legal expenses, to the
payment in whole or in part of the obligations of the Borrower hereunder in such
order as the Bank may elect, the Borrower remaining liable for any deficiency
remaining unpaid after such application, and only after so applying such net
proceeds and after the payment by the Bank of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Uniform Commercial Code, need the Bank account for the surplus, if any, to the
Borrower. The Borrower agrees that the Bank need not give more than ten days
notice of the time and place of any public sale or of the time after which a
private sale or other intended disposition is to take place and that such notice
is reasonable notification of such matters. No notification need be given to the
Borrower if it has signed after an Event of Default a statement renouncing or
modifying any right to notification of sale or other intended disposition. In
addition to the rights
33
and remedies granted to the Bank in this Agreement and in any other instrument
or agreement securing, evidencing or relating to any of the obligations of the
Borrower hereunder, the Bank shall have all the rights and remedies of a secured
party under the Uniform Commercial Code in effect in the State at that time.
9.3 Valid Perfected First Lien. The Borrower covenants that the pledge,
assignment and delivery of the Pledged Bond Collateral hereunder will create a
valid, perfected, first priority security interest in all right, title or
interest of the Borrower in or to such Pledged Bond Collateral, and the proceeds
thereof, subject to no prior pledge, lien, mortgage, hypothecation, security
interest, charge, option or encumbrance or to any agreement purporting to grant
to any third party a security interest in the property or assets of the Borrower
which would include the Pledged Bond Collateral. The Borrower covenants and
agrees that it will defend the Bank's right, title and security interest in and
to the Pledged Bond Collateral and the proceeds thereof against the claims and
demands of all persons whomsoever.
9.4 Release of Pledged Bonds. The Pledged Bonds shall not be released:
(a) in connection with Pledged Bonds purchased with the
proceeds of a Tender Draft, (i) until the Bank shall have been
reimbursed in full for any drawings under the Letter of Credit in order
to purchase Pledged Bonds, and (ii) until the amount available to be
drawn under the Letter of Credit shall have been reinstated in an
amount equal to the principal amount (and related interest) of the
Pledged Bonds to be so released. If the Borrower, or the Remarketing
Agent or the Tender Agent on behalf of the Borrower, reimburses the
Bank for any such Tender Advances and such payment is accompanied by a
certificate completed and signed by the Trustee in substantially the
form of Annex G to the Letter of Credit, the Bank or its Agent may
release from the lien of this Pledge Agreement and deliver to the
Borrower (or its order) or the Remarketing Agent (if such reimbursement
is made by the Remarketing Agent or Tender Agent on behalf of the
Borrower or if such Bonds are to be remarketed) Pledged Bonds in a
principal amount equal to the amount of such reimbursement; and
(b) in connection with Pledged Bonds that are purchased with
the proceeds of a Conversion Draft, until the Bank is reimbursed in
full pursuant to Section 3.2 of the Reimbursement Agreement with
respect to the drawing under the Letter of Credit in connection with
the presentation of such Conversion Draft. Upon such reimbursement,
there may be released from the lien of this Pledge Agreement and
delivered to the Borrower (or its order) Pledged Bonds in a principal
amount equal to the amount of such reimbursement.
With respect to a Tender Draft, the Bank will instruct the Agent not to
release Pledged Bonds until the Agent receives notice from the Bank that the
Letter of Credit has been reinstated in the principal amount of the Pledged
Bonds to be released.
34
ARTICLE X
MISCELLANEOUS
10.1 Indemnification.
(a) The Borrower hereby indemnifies and holds the Bank
harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses whatsoever which the Bank may incur in
its role as issuer of the Letter of Credit hereunder: (i) by reason of
or in connection with the execution and delivery or transfer of, or
payment or failure to pay under, the Letter of Credit, or (ii) by
reason of or in connection with the execution, delivery or performance
of any of the Bond Documents or the Guaranty or any transaction
contemplated by any thereof; provided, however, that the Borrower shall
not be required to indemnify the Bank for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent,
caused by the willful misconduct or gross negligence of the Bank. In
addition, if the Borrower has generated, stored, or disposed of any
hazardous substances on the Project Site, the Borrower agrees to
indemnify the Bank against any liability, cost and expense, including
reasonable attorneys' fees, arising out of or resulting from any such
generation, storage, disposal or location. Anything herein to the
contrary notwithstanding, nothing in this Section 10.1 is intended or
shall be construed to limit the Borrower's reimbursement obligation
contained in Article III hereof. Without prejudice to the survival of
any other obligation of the Borrower, the indemnities and obligations
of the Borrower contained in this Section 10.1 shall survive the
payment in full of amounts payable pursuant to Article III and the
Termination Date.
(b) The Borrower shall pay, indemnify, defend and hold
harmless the Bank, from and against any and all claims, demands, suits,
actions, investigations, proceedings and damages, and all reasonable
attorney's fees and disbursements and other costs and expenses actually
incurred in connection therewith (as and when they are incurred and
whether or not suit is brought), at any time asserted against, imposed
upon or incurred by any of them in connection with or arising out of
any pending or threatened investigation, litigation or proceeding, or
any action taken by any Person, with respect to any Environmental Claim
arising out of or related to any property or operations of Borrower or
any of its Subsidiaries including, without limitation, the Project
Site. No action taken by legal counsel chosen by the Bank in defending
against any such Environmental Claim shall vitiate or in any way impair
the Borrower's obligation and duty hereunder to indemnify and hold
harmless the Bank. In no event shall any site visit, observation, or
testing by the Bank be a representation that Hazardous Substances are
or are not present in, on, or under the site, or that there has been or
shall be compliance with any Environmental Laws. Neither the Borrower
nor any other party is entitled to rely on any site visit, observation,
or testing by the Bank. The Bank owes no duty of care to protect the
Borrower or any other Person against, or to inform, the Borrower or any
other Person of, any adverse condition affecting any site or property.
The Bank has no authority to direct the response of the Borrower or any
other Person with regard to conditions that might reasonably give rise
to an Environmental Claim.
35
10.2 Transfer of Letter of Credit. The Letter of Credit may be
transferred and assigned in accordance with its terms.
10.3 Reduction of Letter of Credit.
(a) The Letter of Credit is subject to reduction pursuant to
its terms.
(b) If the amount available to be drawn under the Letter of
Credit shall be permanently reduced in accordance with the terms
thereof, then the Bank shall have the right to require the Trustee to
surrender the Letter of Credit to the Bank and to issue on such date,
in substitution for such outstanding Letter of Credit, a substitute
irrevocable letter of credit, substantially in the form of the Letter
of Credit but with such changes therein as shall be appropriate to give
effect to such reduction, dated such date, for the amount to which the
amount available to be drawn under the Letter of Credit shall have been
reduced.
10.4 Liability of the Bank. The Borrower, to the extent permitted by
applicable law, assumes all risks of the acts or omissions of the Trustee and
any beneficiary or transferee of the Letter of Credit with respect to its use of
the Letter of Credit. Neither the Bank nor any of its officers, directors,
employees, agents or consultants shall be liable or responsible for:
(a) the use which may be made of the Letter of Credit or for
any acts or omissions of the Trustee or any beneficiary or transferee
in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or
of any endorsement(s) thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged;
(c) payment by the Bank against presentation of documents
which do not comply on their face with the terms of the Letter of
Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit; or
(d) any other circumstances whatsoever in any way related to
the making or failure to make payment under the Letter of Credit;
In furtherance and not in limitation of the foregoing, the Bank may accept
documents that appear on their face to comply with the terms of the Letter of
Credit, without responsibility for further investigation, regardless of any
notice or information to the contrary. Anything in this Section 10.4 to the
contrary notwithstanding, the Bank shall be liable to the Borrower for direct,
as opposed to consequential, damages if the Borrower proves those damages were
caused by the willful misconduct or gross negligence of the Bank.
10.5 Successors and Assigns. This Agreement shall be binding upon the
Borrower, its successors and assigns and all rights against the Borrower arising
under this Agreement shall be
36
for the sole benefit of the Bank, its successors and assigns, all of whom shall
be entitled to enforce performance and observance of this Agreement to the same
extent as if they were parties hereto.
10.6 Notices. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made when hand
delivered or mailed first class, certified or registered mail, postage prepaid,
addressed as follows or to such other address as the parties hereto shall have
been notified pursuant to this Section 10.6:
The Bank: First Union National Bank
One First Union Center
301 South College Street
Charlotte, North Carolina 28288
Attention: Hal A. Telimen
The Borrower
or DTS: Dollar Tree Distribution, Inc.
c/o Dollar Tree Stores, Inc.
500 Volvo Parkway
Chesapeake, Virginia 23320
Attention: Corporate Controller
with a copy to: Hofheimer, Nusbaum, P.C.
1700 Dominion Tower
999 Waterside Drive
Norfolk, VA 23510-3320
Attention: W.A. Old, Jr., Esq.
except in cases where it is expressly herein provided that such notice, request
or demand is not effective until received by the party to whom it is addressed,
in which event said notice, request or demand shall be effective only upon
receipt by the addressee.
10.7 Amendment. This Agreement may be amended, modified or discharged
only upon an agreement in writing of the Borrower and the Bank.
10.8 Effect of Delay and Waivers. No delay or omission to exercise any
right or power accruing upon any default, omission or failure of performance
hereunder shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Bank to
exercise any remedy now or hereafter existing at law or in equity or by statute,
it shall not be necessary to give any notice, other than such notice as may be
herein expressly required. In the event any provision contained in this
Agreement should be breached by any party and thereafter waived by the other
party so empowered to act, such waiver shall be limited to the particular breach
hereunder. No waiver, amendment, release or modification of this Agreement shall
be established by conduct, custom or course of dealing, but solely by an
instrument in writing duly executed by the parties thereunto duly authorized by
this Agreement.
37
10.9 Counterparts. This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.10 Severability. The invalidity or unenforceability of any one or
more phrases, sentences, clauses or Sections contained in this Agreement shall
not affect the validity or enforceability of the remaining portions of this
Agreement, or any part thereof.
10.11 Payment of Expenses. The Borrower shall be liable for the payment
of all fees and expenses, including reasonable attorneys' fees (computed without
regard to any statutory presumption), incurred in connection with the
preparation, execution, performance and enforcement of this Agreement and the
Guaranty, the modification hereof or thereof, and the exercise of any rights and
remedies of the Bank hereunder or thereunder. The obligations of the Borrower
contained in this Section 10.11 shall survive the payment in full of amounts
payable pursuant to Article III and the Termination Date.
10.12 (Reserved).
10.13 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina. The Borrower hereby
acknowledges that the Letter of Credit shall be governed by and construed in
accordance with Uniform Customs and Practice for Documentary Credits (1993
revisions), International Chamber of Commerce Publication No. 500.
10.14 References. The words "herein", "hereof", "hereunder" and other
words of similar import when used in this Agreement refer to this Agreement as a
whole, and not to any particular article, section or subsection.
10.15 Taxes, Etc. Any taxes (excluding income taxes) payable or ruled
payable by federal or state authority in respect of the Letter of Credit, this
Agreement or the Guaranty shall be paid by the Borrower upon demand by the Bank,
together with interest and penalties, if any.
10.16 Consent to Jurisdiction. AS PART OF THE CONSIDERATION FOR NEW
VALUE THIS DAY RECEIVED, THE BORROWER HEREBY CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY STATE COURT WITHIN MECKLENBURG COUNTY, NORTH CAROLINA OR ANY
FEDERAL COURT LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE OF NORTH CAROLINA
FOR ANY PROCEEDING INSTITUTED HEREUNDER OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OF DOCUMENT EXECUTED IN CONNECTION HEREWITH, OR ANY
PROCEEDING TO WHICH THE BANK OR THE BORROWER IS A PARTY, INCLUDING ANY ACTIONS
BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE BANK OR THE
BORROWER. THE BORROWER
38
IRREVOCABLY AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY
JUDGMENT RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION
THAT IT MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON
CONVENIENS TO THE CONDUCT OF ANY SUCH PROCEEDING. ALL SERVICE OF PROCESS WILL BE
MADE IN ACCORDANCE WITH APPLICABLE LAW. NOTHING IN THIS SECTION SHALL AFFECT THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION.
10.17 Arbitration; Remedies.
(a) Upon demand of any party hereto, whether made before or
after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to this
Agreement or any document executed in connection herewith ("Disputes")
between or among parties hereto or thereto shall be resolved by binding
arbitration as provided herein. Institution of a judicial proceeding by
a party does not waive the right of that party to demand arbitration
hereunder. Disputes may include, without limitation, tort claims,
counterclaims, claims brought as class actions, claims arising from
documents executed in the future, or claims arising out of or connected
with the transaction contemplated by this Agreement. Arbitration shall
be conducted under and governed by the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All arbitration
hearings shall be conducted in Charlotte, North Carolina. The expedited
procedures set forth in Rule 53 et seq. of the Arbitration Rules shall
be applicable to claims of less than $1,000,000. All applicable
statutes of limitation shall apply to any Dispute. A judgment upon the
award may be entered in any court having jurisdiction. The panel from
which all arbitrators are selected shall be comprised of licensed
attorneys. The single arbitrator selected for expedited procedure shall
be a retired judge from the highest court of general jurisdiction,
state or federal, of the state where the hearing will be conducted.
(b) Notwithstanding the foregoing, the Borrower and Bank agree
to preserve, without diminution, certain remedies that any party hereto
may employ or exercise freely, either alone, in conjunction with or
during a Dispute. The Borrower and the Bank shall have the right to
proceed in any court of proper jurisdiction or by self-help to exercise
or prosecute the following remedies, as applicable: (i) all rights to
foreclose against any real or personal property or other security by
exercising a power of sale granted under the Guaranty or under
applicable law or by judicial foreclosure and sale, including a
proceeding to confirm the sale; (ii) all rights of self-help including
peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; and (iii) obtaining
provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding. Preservation of these
remedies does not limit the power of any arbitrator to grant similar
remedies that may be requested by a party in a Dispute.
39
The Borrower and the Bank agree that they shall not have a remedy of
punitive or exemplary damages against the other in any Dispute and hereby waive
any right or claim to punitive or exemplary damages they have now or which may
arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially.
10.18 Indirect Means. Any act which the Borrower is prohibited from
doing shall not be done indirectly through a Subsidiary or by any other indirect
means.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Agreement to be executed in their respective names and their respective seals to
be hereunto affixed and attested by their duly authorized representatives, all
as of the date first above written.
THE BORROWER:
DOLLAR TREE DISTRIBUTION, INC.
By: /s/ H. Ray Compton
----------------------------
ATTEST: Title: Executive Vice President
Frederick C. Coble
- -----------------------
Assistant Secretary
(CORPORATE SEAL)
41
THE BANK:
FIRST UNION NATIONAL BANK
By: /s/ Eileen McCrickard
---------------------------------
Title: Vice President
42
As to Sections 2.3, 2.10, 5.2, 5.3, 5.4,
5.6, 5.9 and 5.10 and Articles II and VI
only:
DOLLAR TREE STORES, INC.
By: /s/ H. Ray Compton
----------------------------
Title: Executive Vice President
43
As to Sections 5.2, 5.4, 5.6, 5.9, 5.10 and
Articles II and VI only:
DOLLAR TREE MANAGEMENT, INC.
By: /s/ H. Ray Compton
-------------------------------
Title: Executive Vice President
44