UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 1, 1998
Commission file number 0-4769
DOLLAR GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
TENNESSEE 61-0502302
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
104 Woodmont Blvd.
Suite 500
Nashville, Tennessee 37205
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (615) 783-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No____.
The number of shares of common stock outstanding at June 8, 1998 was
167,162,069.
<PAGE>
Dollar General Corporation
Form 10-Q
For the Quarter Ended May 1, 1998
Index
Part I. Financial Information Page No.
Item 1. Financial Statements (unaudited):
Consolidated Balance Sheets as of May 1,
1998, January 30, 1998 (audited) and May 2, 1997. 3
Consolidated Statements of Income for
the three months ended May 1, 1998
and May 2, 1997. 4
Consolidated Statements of Cash Flows
for the three months ended May 1, 1998
and May 2, 1997. 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. 8-10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
May 1, Jan. 30, May 2,
1998 1998 1997
(Unaudited) (Audited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 37,241 $ 7,128 $ 33,388
Merchandise inventories 692,658 631,954 540,956
Deferred income taxes 6,283 5,743 3,747
Other current assets 20,449 21,884 18,669
Total current assets 756,631 666,709 596,760
Property and equipment, at cost 415,974 391,911 315,645
Less: accumulated depreciation 162,692 150,466 121,885
253,282 241,445 193,760
Other assets 6,591 6,684 5,487
Total assets $1,016,504 $ 914,838 $ 796,007
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 715 $ 1,450 $ 1,940
Short-term borrowings 119,650 21,933 50,000
Accounts payable 179,120 179,958 152,724
Accrued expenses 87,065 92,027 61,382
Income taxes 11,227 12,343 955
Total current liabilities 397,777 307,711 267,001
Long-term debt 406 1,294 1,807
Deferred income taxes 21,669 21,937 7,847
Shareholders' equity:
Preferred stock 858 858 858
Common stock 83,719 83,526 53,672
Additional paid-in capital 395,938 379,954 350,387
Retained earnings 316,664 320,085 314,962
797,179 784,423 719,879
Less treasury stock 200,527 200,527 200,527
Total shareholders' equity 596,652 583,896 519,352
Total liabilities and shareholders'
equity $1,016,504 $ 914,838 $ 796,007
The accompanying notes are an integral part of these consolidated
financial statements.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
Three Months Ended
May 1, May 2,
1998 1997
Net Sales $705,260 $520,014
Cost of goods sold 514,928 378,159
Gross profit 190,332 141,855
Selling, general and
administrative expense 140,940 110,335
Operating profit 49,392 31,520
Interest expense 939 526
Income before taxes on income 48,453 30,994
Provision for taxes on income 18,049 11,700
Net income $ 30,404 $ 19,294
Diluted earnings per share $ 0.18 $ 0.11
Weighted average diluted shares 171,988 170,340
Basic earnings per share $ 0.21 $ 0.13
The accompanying notes are an integral part of these consolidated
financial statements.
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
May 1, May 2,
1998 1997
Operating activities:
Net income $ 30,404 $ 19,294
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 12,364 8,577
Deferred income taxes (808) 2,218
Change in operating assets and liabilities:
Merchandise inventories (60,704) (64,853)
Accounts payable (838) 49,201
Accrued expenses (4,962) (9,059)
Income taxes (1,116) (9,047)
Other 1,720 (953)
Net cash used by operating activities (23,940) (4,622)
Investing activities:
Purchase of property and equipment (24,393) (27,822)
Proceeds from sale of property and equipment 0 34,074
Net cash provided (used) by investing activities (24,393) 6,252
Financing activities:
Issuance of short-term borrowings 128,535 147,404
Repayments of short-term borrowings (30,818) (135,873)
Issuance of long-term debt 0 190
Repayments of long-term debt (1,623) (1,055)
Payments of cash dividend (8,076) (6,477)
Proceeds from exercise of stock options 11,926 12,715
Repurchase of common stock (26,066) 0
Tax benefit of stock option exercises 4,568 8,291
Net cash provided by financing activities 78,446 25,195
Net increase in cash and cash equivalents 30,113 26,825
Cash and cash equivalents, beginning of period 7,128 6,563
Cash and cash equivalents, end of period $ 37,241 $ 33,388
The accompanying notes are an integral part of these consolidated
financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying consolidated financial statements are presented in
accordance with the requirements of Form 10-Q and consequently do
not include all of the disclosures normally required by generally
accepted accounting principles or those normally made in the
Company's Annual Report on Form 10-K. Accordingly, the reader of
the quarterly report on Form 10-Q should refer to the Company's
Annual Report on Form 10-K for the year ended January 30, 1998 for
additional information.
The accompanying consolidated financial statements have been
prepared in accordance with the Company's customary accounting
practices and have not been audited. In management's opinion, all
adjustments (which are of a normal recurring nature) necessary for a
fair presentation of the consolidated results of operations for the
three-month periods ended May 1, 1998 and May 2, 1997, respectively,
have been made.
Interim cost of goods sold is determined using estimates of
inventory shrinkage, inflation, and markdowns which are adjusted to
reflect actual results at year end. Because of the seasonal nature
of the Company's business, the results for interim periods are not
necessarily indicative of the results to be expected for the entire
year.
2. Changes in shareholders' equity for the three months ended May 1,
1998 and May 2, 1997 were as follows (dollars in thousands except per
share amounts):
<TABLE>
<CAPTION>
Additional
Preferred Common Paid-In Retained Treasury
Stock Stock Capital Earnings Stock Total
<S> <C> <C> <C> <C> <C> <C>
Balances, January 31, 1997 $ 858 $53,105 $329,948 $302,145 $200,527 $485,529
Net income 19,294 19,294
Cash dividend, $.05 per
common share, as declared (5,723) (5,723)
Cash dividend, $.44 per
preferred share (754) (754)
Issuance of common
stock under employee stock
incentive plans 567 12,148 12,715
Tax benefit of stock options
exercised 8,291 8,291
Balances, May 2, 1997 $ 858 $53,672 $350,387 $314,962 $200,527 $519,352
Balances, January 30, 1998 $ 858 $83,526 $379,954 $320,085 $200,527 $583,896
Net Income 30,404 30,404
Cash dividend, $.04 per
common share, as declared (7,062) (7,062)
Cash dividend, $.61 per
preferred share (1,047) (1,047)
Issuance of common stock
under employee stock
incentive plans 543 11,416 11,959
Stock repurchase (350) (25,716) (26,066)
Tax benefit of stock options
exercised 4,568 4,568
Balances, May 1, 1998 $ 858 $83,719 $395,938 $316,664 $200,527 $596,652
</TABLE>
3. Earnings Per Share
Amounts are in thousands except per share data and shares have been
adjusted for the March 23, 1998, and September 22, 1997, five-for-
four common stock splits.
May 1, 1998
Per-Share
Income Shares Amount
Net Income $30,404
Less: preferred stock dividends 1,047
Basic Earnings per Share
Income available to common shareholders $29,357 141,043 $0.21
Stock options outstanding 4,765
Convertible preferred stock 1,047 26,180
Diluted Earnings per Share
Income available to common stockholders
plus assumed conversions $30,404 171,988 $0.18
May 2,1997
Per-Share
Income Shares Amount
Net Income $19,294
Less: preferred stock dividends 754
Basic Earnings per Share
Income available to common shareholders $18,540 140,226 $0.13
Stock options outstanding 3,934
Convertible preferred stock 754 26,180
Diluted Earnings per Share
Income available to common stockholders
plus assumed conversions $19,294 170,340 $0.11
4. Subsequent Event
On June 1, 1998 stockholders of Dollar General Corporation
approved a change in the state of incorporation of Dollar General
Corporation from Kentucky to Tennessee by approving the Agreement
and Plan of Merger by and between Dollar General Corporation, a
Kentucky corporation ("Dollar General-KY"), and Dollar General
Corporation-TN, a Tennessee corporation and wholly-owned subsidiary
of Dollar General-KY.
The Articles of Merger were filed with the respective office
of the Secretary of State for the State of Tennessee and the
Commonwealth of Kentucky and effective on June 2, 1998. Pursuant to
the Agreement and Plan of Merger, Dollar General-TN is the surviving
corporation and is the successor registrant under Rule 12g-3
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Upon effectiveness of the merger, Dollar
General-TN's name was changed to "Dollar General Corporation" as set
forth in the Agreement and Plan of Merger.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis contains both historical and forward-
looking information. The forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Although the Company believes the
assumptions underlying the forward-looking statements contained
herein are reasonable, any of the assumptions could be inaccurate,
and therefore, there can be no assurance that the forward-looking
statements included herein will prove to be accurate. Forward-
looking statements may be significantly impacted by certain risks
and uncertainties, including, but not limited to: general
transportation and distribution delays or interruptions; inventory
risks due to shifts in market demand; changes in product mix; costs
and delays associated with building, opening and operating new
distribution centers; and the risk factors listed in the Annual
Report on Form 10-K for the year ended January 30, 1998. The
Company undertakes no obligation to publicly release any revisions
to any forward-looking statements contained herein to reflect events
or circumstances occurring after the date hereof or to reflect the
occurrence of interruptions in suppliers' operations or
unanticipated events.
The following text contains references to years 1999, 1998, 1997 and
1996 which represent fiscal years ending or ended January 29, 1999,
January 30, 1998, and January 31, 1997 and 1996, respectively. This
discussion and analysis should be read in conjunction with, and is
qualified in its entirety by, the consolidated financial statements,
including the notes thereto.
RESULTS OF OPERATIONS
The nature of the Company's business is seasonal. Historically,
sales in the fourth quarter have been significantly higher than
sales achieved in each of the first three quarters of the fiscal
year. Thus, expenses, and to a greater extent operating income,
vary by quarter. Results of a period shorter than a full year may
not be indicative of results expected for the entire year.
Furthermore, comparing any period to a period other than the same
period of the previous year will reflect the seasonal nature of the
Company's business.
THREE MONTHS ENDED MAY 1, 1998 AND MAY 2, 1997
NET SALES. Net sales for the first quarter of fiscal 1999 increased
$185.3 million, or 35.6%, to $705.3 million from $520.0 million for
the comparable period of fiscal 1998. The increase resulted from
460 net additional stores being in operation as of May 1, 1998 as
compared with May 2, 1997 and an increase of 19.4% in same-store
sales. Same store sales growth was a 1.6% increase for the same
period last year.
The Company regards same stores as those opened prior to the
beginning of the previous fiscal year which have remained open
throughout the previous fiscal year and the period reported. Sales
were negatively affected during the first and second quarters of
fiscal 1998 as the Company refurbished more than 2,400 stores to the
latest prototype.
GROSS PROFIT. Gross profit for the quarter was $190.3 million, or
27.0% of net sales, compared to $141.9 million, or 27.3% of net
sales, in the same period last year. This decrease was primarily
driven by greater markdowns and higher freight costs which more than
offset lower inventory shrinkage. The increase in freight costs was
driven by better in-stock levels of the 700 new faster-turning
items. For the second quarter of fiscal 1999, management expects
gross margin, as a percent of sales, to increase slightly as we
anniversary the initial stocking and related freight costs of the
700 items.
SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSE. SG&A expenses
for the quarter totaled $140.9 million, or 20.0% of net sales,
compared with $110.3 million, or 21.2% of net sales last year.
Higher same-store sales for the quarter enabled the Company to
leverage payroll costs significantly. Total SG&A expense increased
27.7% primarily as a result of 460 net additional stores being in
operation as compared to last year. For the second quarter,
management expects SG&A, as a percentage of sales, to decrease
slightly as a result of the continued leverage provided by the
expected double digit same store sales increases.
INTEREST EXPENSE. Interest expense increased to $0.9 million, or
0.13% of sales, compared with $0.5 million or 0.10% of sales, in the
comparable period last year. This increase was primarily a result
of higher average borrowings. During the first quarter, the Company
repurchased 701,000 shares of common stock at an average cost of
$37.18 per share. For the second quarter, management expects
interest expense, as percent of sales, to increase slightly as a
result of higher inventory levels related to the introduction of a
new apparel program.
PROVISIONS FOR TAXES ON INCOME. The effective income tax rate for
the quarter was 37.3% compared with 37.8% in the comparable period
last year.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities - Cash flows used in operating
activities totaled $23.9 million during the quarter compared with
$4.6 million in the comparable period last year. This increase in
use of cash was primarily the result of decreased accounts payable
as a result of overall shorter payment terms related to the new
product mix.
Cash flows from investing activities - Cash used by investing
activities totaled $24.4 million during the quarter compared with
cash provided by investing activities of $6.3 million in the
comparable period last year. The increase in cash used by investing
activities was primarily the result of the $33.8 million received in
1997 from the sale/leaseback of the South Boston, Virginia
distribution center. Current period cash used resulted primarily
from $24.4 million in expenditures primarily from opening 166 new
stores.
Cash flows from financing activities - The Company's repayment of
short-term borrowings during the first three months of fiscal 1999
totaled $30.8 million compared with $135.9 million in the comparable
period last year.
Because of the significant impact of seasonal buying (e.g., Spring
and December holiday purchases), the Company's working capital
requirements vary significantly during the year. These working
capital requirements were financed by short-term borrowings under
the Company's $175.0 million revolving credit/term loan facility and
short-term bank lines of credit totaling $155.0 million at May 1,
1998. The Company had short-term bank lines of credit borrowings of
$119.7 million outstanding as of May 1, 1998 and $50.0 million as of
May 2, 1997. Seasonal working capital expenditure requirements will
continue to be met through cash flow provided by operations
supplemented by the revolving credit/term loan facility and short-
term bank lines of credit.
Capital requirements for the construction of new stores, new
distribution centers and the new corporate headquarters complex will
continue to be funded under the Company's $225.0 million leveraged
lease facility. The company began funding construction costs under
this facility in the third quarter of fiscal 1998. As of May 1, 1998
$38.8 million of construction costs had been funded under this
facility. During the first quarter of fiscal 1999 the Company
entered into a five year interest rate swap agreement to fix the
interest rate on $50.0 million of this leveraged lease facility.
The Company's liquidity position is set forth in the following table
(dollars in thousands):
May 1, January 30, May 2,
1998 1998 1997
Current ratio 1.9x 2.2x 2.2x
Total borrowings/equity 20.2% 4.2% 10.3%
Working Capital $358,854 $358,998 $329,759
Average daily use of debt
(fiscal year-to-date) $ 81,122 $ 90,882 $ 41,373
Maximum outstanding short-term
debt (fiscal year-to-date) $122,131 $184,725 $ 64,855
ACCOUNTING PRONOUNCEMENTS
The Company will adopt Statement of Financial Accounting Standards
(SFAS) No. 131 "Disclosures about Segments of an Enterprise and
Related Information" for the year ended January 29, 1999. The
Company will adopt Statement of Position 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use,"
for the year ending January 28, 2000. Management does not believe
adoption of these pronouncements will have a significant impact on
the Company's financial reporting or have a material impact on its
operating results or financial position.
YEAR 2000
The Company has considered the impact of the year 2000 on its
computer systems and applications. An action plan has been
developed which includes establishing a task force to evaluate the
Company's major vendors' year 2000 compliance. The Company is in
the process of installing a new, previously planned general ledger
system that will be year 2000 compliant. Previously planned
software and equipment upgrades and revisions are expected to remedy
year 2000 compliance issues. The Company believes the impact of the
year 2000 and related costs of compliance will not have any material
impact on its operations or liquidity.
PART II - OTHER INFORMATION
Item 1. Not applicable.
Item 2. Not applicable.
Item 3. Not applicable.
Item 4. Not applicable.
Item 5. Not applicable.
Item 6. A. Exhibits
10(a) ISDA Master Agreement dated March 11, 1998 by and among
Dollar General Corporation and SunTrust Bank, Atlanta
10(b) Amendment to Master Agreement dated March 31, 1998 by and
among Dollar General Corporation, Atlantic Financial Group,
LTD., Certain Financial Institutions parties hereto as lenders,
and SunTrust Bank, Nashville, N.A. as agent for the Lenders
27 Financial Data Schedule (for SEC use only)
B. Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
DOLLAR GENERAL CORPORATION
(Registrant)
June 13, 1997
/s/Phil Richards
Phil Richards, Vice President
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000029534
<NAME> DOLLAR GENERAL CORP.
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JAN-29-1999 JAN-30-1998
<PERIOD-END> MAY-01-1998 MAY-02-1997
<CASH> 37241 33388
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 692658 540956
<CURRENT-ASSETS> 20449 18669
<PP&E> 415974 315645
<DEPRECIATION> 162692 121885
<TOTAL-ASSETS> 1016504 796007
<CURRENT-LIABILITIES> 397777 267001
<BONDS> 0 0
0 0
858 858
<COMMON> 83719 53672
<OTHER-SE> 512075 464822
<TOTAL-LIABILITY-AND-EQUITY> 1016504 796007
<SALES> 705260 520014
<TOTAL-REVENUES> 705260 520014
<CGS> 514928 378159
<TOTAL-COSTS> 140940 110335
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 939 526
<INCOME-PRETAX> 48453 30994
<INCOME-TAX> 18049 11700
<INCOME-CONTINUING> 30404 19294
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 30404 19294
<EPS-PRIMARY> 0.21 0.13
<EPS-DILUTED> 0.18 0.11
</TABLE>
EXHIBIT 10(A)
ISDA
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of March 11, 1998
SunTrust Bank, Atlanta and Dollar General Corporation
have entered and/or anticipate entering into one or more
transactions (each a "Transaction") that are or will be governed by
this Master Agreement, which includes the schedule (the "Schedule")
exchanged between the parties confirming those Transactions.
Accordingly, the parties agree as follows:-
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the
Schedule will have the meanings therein specified for the
purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement
(including the Schedule), such Confirmation will prevail for
the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in
reliance on the fact that this Master Agreement and all
Confirmations form a single agreement between the parties
(collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in
each Confirmation to be made by it, subject to the other
provisions of this Agreement.
(ii) Payments under this Agreement will be made on the date for
value on that date in the place of the account specified in
the relevant Confirmation or otherwise pursuant to this
Agreement, in freely transferable funds and in the manner
customary for payments in the required currency. Where
settlement is by delivery (that is, other than by payment),
such delivery will be made for receipt on the due date in
the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or
elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(I) is
subject to (1) the condition precedent that no Event of
Default or Potential Event of Default with respect to the
other party has occurred and is continuing, (2) the
condition precedent that no Early Termination Date in
respect of the relevant Transaction has occurred or been
effectively designated and (3) each other applicable
condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for
receiving a payment or delivery by giving notice to the other
party at least five Local Business Days prior to the scheduled
date for the payment or delivery to which such change applies
unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:-
(i) in the same currency: and
(ii) in respect of the same Transaction.
by each party to the other, then, on such date, each party's
obligation to make payment of any such amount will be automatically
satisfied and discharged and, if the aggregate amount that would
otherwise have been payable by the other party, replaced by an
obligation upon the party by whom the larger aggregate amount.
The parties may elect in respect of two or more Transactions that
a net amount will be determined in respect of all amounts payable on
the same date in the same currency in respect of such Transactions,
regardless of whether such amounts are payable in respect of the
same Transaction. The election may be made in the Schedule or a
confirmation by specifying that subparagraph (ii) above will not
apply to the Transactions identified as being subject to the
election, together with the starting date). This election may be
made separately for different groups or Transactions and will apply
separately to each pairing of Offices through which the parties make
and receive payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made
without any deduction or withholding for or on account of
any Tax unless such deduction or withholding is required by
any applicable law, as modified by the practice of any
governmental revenue authority, then in effect, If a party
is so required to deduct or withhold, then that party("X")
will:-
(1) promptly notify the other party("Y"0 of such
requirement:
(2) pay to the relevant authorities the full amount
required to be deducted or withheld(including the
full amount required to be deducted or withheld
from any additional amount paid by X to Y under
this Section 2(d) promptly upon the earlier of
determining that such deduction or withholding is
required or receiving notice that such amount has
been assessed against Y:
(3) promptly forward to Y an official receipt (or a
certified copy), or other documentation reasonably
acceptable to Y, evidencing such payment to such
authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in
addition to the payment to which Y is otherwise
entitled under this Agreement, such additional
amount as is necessary to ensure that the net
amount actually received by Y (free and clear of
Indemnifiable Taxes, whether assessed against X or Y)
will equal the full amount Y would have received had
no such deduction or withholding been required.
However, X will not be required to pay any additional
amount to Y to the extent that it would not be
required to be paid but for:-
(A) the failure by Y to comply with or perform
any agreement contained in Section 4(a)(I),
4(a)(iii) or 4(d); or
(B) the failure of a representation made by y
pursuant to Section 3(f) to be accurate and
true unless such failure would not have
occurred but for (I) any action taken by
a taxing authority, or brought in a court of
competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless
of whether such action is taken or brought with
respect to a party to this Agreement) or
(II) a Change in Tax Law.
(ii) Liability. If:-
(1) X is required by any applicable law, as
modified by the practice of any relevant
governmental revenue authority, to make
any deduction or withholding in respect
of which X would not be required to pay
an additional amount to Y under Section
2(d)(I)(4)
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is
assessed directly against X, then,
except to the extent Y has satisfied or
then satisfies the liability resulting
from such Tax, Y will promptly pay to X
the amount of such liability (including
any related liability for interest, but
including any related liability for
penalties only if Y has failed to comply
with or perform any agreement contained
in Section 4(a)(iii) or 4(d).
(e) Default Interest: Other Amounts. Prior to the occurrence
or effective designation of an Early Termination Date in
respect of the relevant Transaction, a party that
defaults in the performance of any payment obligation
will, to the extent permitted by law and subject to
Section 6 ( c), be required to pay interest (before as
well as after judgment) on the overdue amount to the
other party on demand in the same currency as such
overdue amount, for the period from (and including) the
original due date for payment to (but excluding) the
date of actual payment, at the Default Rate. Such
interest will be calculated on the basis daily
compounding and the actual number of days elapsed. If
prior to the occurrence or effective designation any
obligation required to be settled by delivery, it will
compensate the other party on demand if and to the
extent provided for in the relevant Confirmation or
elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which
representations will be repeated by each party on each date on
which a Transaction is entered into and, in the case of the
representations in Section 3(f), at all times until the
termination of this Agreement) that:-
(a) Basic Representations.
(i) Status. It is duly organized and validly
existing under the laws jurisdiction of its
organization or incorporation and, if relevant
under such laws, in good standing;
(ii) Powers. It has the power to execute this
Agreement and any other documentation relating to
this Agreement to which it is a party, to deliver
this Agreement and any other documentation
relating to this Agreement that is required by
this Agreement to deliver and to perform its
obligations under this Agreement and any obligations
it has under any Credit Support Document to which it
is a party and has taken all necessary action to
authorize such execution, delivery, and performance;
(iii) No Violation or Conflict. Such execution,
delivery and performance do not violate or
conflict with any law applicable to it, any
provision of its constitutional documents, any
order or judgment of any court or other agency of
government applicable to it or any of its assets
or any contractual restriction binding on or
affecting it or any of its assets;
(iv) Consents. All governmental and other consents
that are required to have been obtained by it
with respect to this Agreement or any Credit
Support Document to which it is party have been
obtained and are in full force and effect and
all conditions of any such consents have been
complied with; and
(v) Obligations Binding. Its obligations under
this Agreement and any Credit Support Document
to which it is a party constitute its legal,
valid and binding obligations, enforceable in
accordance with their respective terms (subject
to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws
affecting creditors rights generally and
subject, as to enforceability, to equitable
principles of general application (regardless
of whether enforcement is sought in a
proceeding in equity or at law).
(b) Absence of Certain Events. No Event or Default
or Potential Event of Default or, to its
knowledge, Termination Event with respect to it
has occurred and is continuing and no such
event or circumstances would occur as a result
of its entering into or performing its
obligations under this Agreement or any Credit
Support Document to which it is a party.
(c) Absence of Litigation. There is not pending
or, to its knowledge, threatened against it or
any of its Affiliates any action, suit or
proceeding at law or in equity or before any
court, tribunal, governmental body, agency or
official or any arbitrator that is likely to
affect the legality, validity or enforceability
against it of this Agreement or any Credit
Support Document to which it is a party or its
ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All
applicable information that is furnished in
writing by or on behalf of it to the other
party and is identified for the purpose of this
Section 3(d) in the Schedule is, as of the date
of the information, true, accurate and complete
in every material respect.
(e) Payer Tax Representation. Each representation
specified in the Schedule as being made by it
for the purpose of this Section 3(e) is
accurate and true.
(f) Payee Tax Representations. Each representation
specified in the Schedule as being made by it
for the purpose of this Section 3(f) is
accurate and true.
4. Agreements
Each party agrees with the other that, so
long as either party has or may have any
obligation under this Agreement or under any
Credit Support Document to which it is a party:-
(a) Furnish Specified Information. It will deliver
to the other party or, in certain cases under
subparagraph (iii) below, to such government or
taxing authority as the other party reasonably
directs:-
(i) any forms, documents specified in the
Schedule or any Confirmation;
(ii) any other documents specified in the
Schedule or any Confirmation; and
(iii) upon reasonable demand by such other
party, any form or document that may be
required or reasonably requested in
writing in order to allow such other
party or its Credit Support Provider to
make a payment under this Agreement or
any applicable Credit Support Document
without any deduction or withholding for
or on account of any Tax or with such
deduction or withholding at a reduced
rate (so long as the completion,
execution or submission of such form or
document would not materially prejudice
the legal or commercial position of the
party in receipt of such demand), with
any such form or document to be accurate
and completed in a manner reasonably
satisfactory to such other party and to
be executed and to be delivered with any
reasonably required certification,
in each case by the date specified in the Schedule
or such Confirmation or, if none is specified, as
soon as reasonably practicable.
(b) Maintain Authorizations. It will use all
reasonable efforts to maintain in full force
and effect all consents of any governmental or
other authority that are required to be
obtained by it with respect to this Agreement
or any Credit Support Document to which it is a
party and will use all reasonable efforts to
obtain any that may become necessary in the
future.
(c) Comply with Laws. It will comply in all
material respects with all applicable laws and
orders to which it may be subject if failure so
to comply would materially impair its ability
to perform its obligations under this Agreement
or any Credit Support Document to which it is a
party.
(d) Tax Agreement. It will give notice of any
failure of a representation made by it under
Section 3(f) to be accurate and true promptly
upon learning of such failure.
(e) Payment of Stamp Tax. Subject to Section 11.
It will pay any Stamp Tax levied or imposed
upon it or in respect of its execution or
performance of this Agreement by a jurisdiction
in which it is incorporated, organized, managed
and controlled, or considered to have its seat,
or in which a branch or office through which it
is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will
indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in
respect of the other party's execution or
performance of this Agreement by any such Stamp
Tax Jurisdiction which is not also a Stamp Tax
Jurisdiction with respect to the other party.
(5) Events of Default and Termination Events
(a) Events of Default. The occurrence at any time
with respect to a party or, if applicable, any
Credit Support Provider of such party or any
Specified Entity of such party of any of the
following events constitutes an event of
default (an "Event of Default") with respect to
such party:-
(i) Failure to Pay or Deliver. Failure by
the party to make, when due, any payment
under this Agreement or delivery under
Section 2(a)(i) or 2(e) required to be
made by it if such failure is given to
the party;
(ii) Breach of Agreement. Failure by the
party to comply with or perform any
agreement or obligation (other than an
obligation to make any payment under this
Agreement or delivery under Section
2(a)(i) or 2(e) or to give notice of a
Termination Event or any agreement of
obligation with this Section 4(a)(i),
4(a)(iii) or 4(d) to be complied with or
performed by the party in accordance with
this Agreement if such failure is not
remedied on or before the thirtieth day
after notice of such failure is given to
the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit
Support Provider of such party to
comply with or perform any
agreement or obligation to be
complied with or performed by it in
accordance with any Credit Support
Document if such failure is
continuing after any applicable
grace period has elapsed;
(2) the expiration or termination of
such Credit Support Document or the
failing or ceasing of such Credit
Support Document to be in full
force and effect for the purpose of
this Agreement(in either case other
than Transaction to which such
Credit Support Document relates
without the written consent of the
other party; or
(3) the party or such Credit Support
Provider disaffirms, disclaims,
repudiates or rejects, in whole or
in part, or challenges the validity
of, such Credit Support Document;
(iv) Misrepresentation. A representation
(other than a representation under
Section 3(e) or (f)) made or repeated or
deemed to have been made or repeated by
the party or any Credit Support Provider
of such party in this Agreement or any
Credit Support Document proves to have
been incorrect or misleading in any
material respect when made or repeated or
deemed to have been made or repeated;
(v) Default under Specified Transaction. The
party, any Credit Support Provider of
such party or any applicable Specified
Entity of such party (1) defaults under a
Specified Transaction and, after giving
effect to any applicable notice
requirement or grace period, there occurs
a liquidation of, an acceleration of
obligations under, or an early
termination of, that Specified
Transaction, (2) defaults, after giving
effect to any applicable notice
requirement or grace period, in making
any payment or delivery due on the last
payment, delivery or exchange date of, or
any payment on early termination of, a
Specified Transaction (or such default
continues for at least three Local
Business Days if there is no applicable
notice requirement or grace period) or
(3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified
Transaction (or such action is taken by
any person or entity appointed or
empowered to operate it or act on its
behalf);
(vi) Cross Default. If "Cross Default" is
specified in the Schedule as applying to
the party, the occurrence or existence of
(1) a default, event of default or other
similar condition or event (however
described) in respect of such party, any
Credit Support Provider of such party or
any applicable Specified Entity of such
party under one or more agreements or
instruments relating to Specified
Indebtedness of any of them (individually
or collectively) in an aggregate amount
of not less than the applicable Threshold
Amount (as specified in the Schedule)
which has resulted in such Specified
Indebtedness becoming, or becoming
capable at such time of being declared,
due and payable under such agreements or
instruments, before it would otherwise
have been due and payable or (2) a
default by such party, such Credit
Support Provider or such Specified Entity
(individually or collectively) in making
one or more payments on the due date
thereof in an aggregate amount of not
less than the applicable Threshold Amount
under such agreements or instruments
(after giving effect to any applicable
notice requirement or grace period):
(vii) Bankruptcy. The party , any Credit
Support Provider of such party or nay
applicable Specified Entity of such
party:-
(1) is dissolved (other than pursuant
to a consolidation, amalgamation or
merger); (2) becomes insolvent or
is unable to pay its debts or fails
or admits in writing its inability
generally to pay its debts as they
become due; (3) makes a general
assignment, arrangement or
composition with or for the benefit
of its creditors; (4) institutes or
has instituted against it a
proceeding seeking a judgment of
insolvency or bankruptcy or any
other relief under any bankruptcy
or insolvency law or other similar
law affecting creditors rights, or
a petition is presented for its
winding up or liquidation, and, in
the case of any such proceeding or
petition instituted or presented
against it, such proceeding or
petition (A) results in a judgment
of insolvency or bankruptcy or the
entry of an order for relief or the
making of an order for its winding-
up or liquidation or (B) is not
dismissed, discharged, stayed or
restrained in each case within 30
days of institution or presentation
thereof; (5) has a resolution
passed for its winding-up, official
management or liquidation (other
than pursuant to consideration,
amalgamation or merger); (6) seeks
or becomes subject to the
appointment of an administrator,
provisional liquidator,
conservator, receiver, trustee,
custodian or other similar official
for it or for all or substantially
all its assets; (7) has a secured
party take possession of all or
substantially all its assets or has
a distress, execution, attachment,
sequestration or other legal
process levied, enforced or sued on
or against all or substantially all
its assets and such secured party
maintains possession, or any such
process is not dismissed,
discharged, stayed or restrained,
in each case within 30 days
thereafter; (8) causes or is
subject to any event with respect
to it which, under the applicable
laws of any jurisdiction, has an
analogous effect to any of the
events specified in clauses (1) to
(7)(inclusive); or (9) takes any
action in furtherance of, or
indicating its consent to, approval
of, or acquiescence in, any of the
foregoing acts; or
(viii) Merger Without Assumption. The party
or any Credit Support Provider of such
party consolidates or amalgamates with,
or merges with or into, or transfers all
or substantially all its assets to,
another entity and, at the time of such
consolidation, amalgamation, merger or
transfer:-
(1) the resulting, surviving or
transferee entity fails to assume
all the obligations of such party
or such Credit Support Provider
under this Agreement or any Credit
Support Document to which it or its
predecessor was a party by
operation of law or pursuant to an
agreement reasonably satisfactory
to the other party to this
Agreement: or
(2) the benefits of any Credit Support
Document fail to extend (without
the consent of the other party) to
the performance by such resulting,
surviving or transferee entity of
its obligations under this
Agreement.
(b) Termination Events. The occurrence at any time
with respect to a party or any Specified Entity
of such party of any event specified below
constitutes an illegality if the event is
specified in (i)below, a Tax Event if the event
is specified in (ii) below or a Tax Event Upon
Merger if the event is specified in (iii)
below, and, if specified to be applicable, a
Credit Event Upon Merger if the event is
specified pursuant to (iv) below or an
Additional Termination Event if the event is
specified pursuant to (v) below:-
(i)Illegality. Due to the adoption of, or any
change in, any applicable law after the date
on which a Transaction is entered into, or
due to the promulgation of, or any change in,
the interpretation by any court, tribunal or
regulatory authority with competent
jurisdiction of any applicable law after such
date, it becomes unlawful (other than as a
result of a breach by the party of Section
4(b)) for such party (which will be the
Affected Party):-
(1) to perform any absolute or contingent
obligation to make payment or delivery or to
receive a payment or delivery in respect of
such Transaction or to comply with any other
material provision of this Agreement
relating to such Transaction: or
(2) to perform, or for any Credit Support
Provider of such party to perform, any
contingent or other obligation which the
party (or such Credit Support Provider)
has under any Credit Support Document
(ii) Tax Event. Due to (x) any action taken by a
taxing authority, or brought in a court of
competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless
of whether such action is taken or brought with
respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the
Affected Party) will, or there is a substantial
likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay
to the other party an additional amount in
respect of an indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under
Section 2(e), 6(d)(ii) or 6(e) or (2) receive a
payment from which an amount is required to be
deducted or withheld for or on account of a Tax
(except in respect of interest under Section
2(e), 6(d)(ii) or 6(e)) and no additional
amount is required to be paid in respect of
such Tax under Section 2(d)(i)(4) (other than
by reason of Section 2(d)(i)(4)(A) or (B));
(iii) Tax Event Upon Merger. The party (the
"Burdened Party") on the next succeeding
Scheduled Payment Date will either (1) be
required to pay an additional amount in respect
of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under
Section 2(e), 6(d)(ii) or 6(e)) or (2) receive
a payment from which an amount has been
deducted or withheld for or on account of any
Indemnifiable Tax in respect of which the other
party is not required to pay an additional
amount (other than by reason of Section
2(d)(i)(4)(A) or (B)), in either case as a
result of a party consolidating or amalgamating
with, or merging with or into, or transferring
all or substantially all its assets to, another
entity (which will be the Affected Party) where
such action does not constitute an event
described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event
Upon Merger" is specified in the Schedule as
applying to the party, such party ("X"), any
Credit Support Provider of X or any applicable
Specified Entity of X consolidates or
amalgamates with, or merges with or into, or
transfers all or substantially all its assets
to, another entity and such action does not
constitute an event described in Section
5(a)(viii) but the creditworthiness of the
resulting, surviving or transferee entity is
materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as
the case may be, immediately prior to such
action (and, in such event X or its successor
or transferee, as appropriate, will be the
Affected Party); or
(v) Additional Termination Event. If any
"Additional Termination Event" is specified in
the Schedule or any Confirmation as applying,
the occurrence of such event (and, in such
event, the Affected Party or Affected Parties
shall be as specified for such Additional
Termination Event in the Schedule or such
Confirmation).
(c)Event of Default and Illegality. If an event or
circumstance which would otherwise constitute or give
rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will
not constitute an Event of Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an
Event of Default with respect to a party (the "Defaulting Party")
has occurred and is then continuing, the other party (the "Non-
defaulting Party") may, by not more than 20 days notice to the
Defaulting Party specifying the relevant Event of Default,
designate a day not earlier than the day such notice is effective
as an Early Termination date in respect of all outstanding
Transactions, If however, "Automatic Early Termination" is
specified in the Schedule as applying to a party, then an Early
Termination Date in respect of all outstanding Transactions will
occur immediately upon the occurrence with respect to such party
of an Event of Default specified in Section 5(a)(vii)(1), (3),
(5), (6) or, to the extent analogous thereto, (8), and as of the
time immediately preceding the institution of the relevant
proceeding or the presentation of the relevant petition upon the
occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous
thereto, (8).
(b) Right to Terminate Following Termination Events.
(i) Notice. If a Termination Event occurs, an Affected Party
will, promptly upon becoming aware of it, notify the other
party, specifying the nature of that Termination Event and
each Affected Transaction and will also give such other
information about that Termination Event as the other party
may reasonably require.
(ii) Transfer to Avoid Termination Event. If either an
Illegality under Section 5(b)(i)(1) or a Tax Event occurs
and there is only one Affected Party, or if a Tax Event
Upon Merger occurs and the Burdened party is the Affected
Party, the Affected Party will, as a condition to its right
to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not
require such party to incur a loss, excluding immaterial,
incidental expenses) to transfer within 20 days after it
gives notice under Section 6(b)(i)all its rights and
obligations under this Agreement in respect of the Affected
Transactions to another of its Offices of Affiliates so
that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it
will give notice to the other party to that effect within such
20 day period, whereupon the other party may effect such a
transfer within 30 days after the notice is given under
Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will
be subject to and conditional upon the prior written consent
of the other party, which consent will not be withheld if such
other party's policies in effect at such time would permit it
to enter into transactions with the transferee on the terms
proposed.
(iii) Two Affected Parties. If an Illegality under Section
5(b)(i)(1) or a Tax Event occurs and there are two Affected
Parties, each party will use all reasonable efforts to
reach agreement within 30 days after thereof is given
Section 6(b)(i) on action to avoid that Termination Event.
(iv) Right to Terminate. If:-
(1) a transfer under Section 6(b)(ii) or an agreement
under Section 6(b)(iii), as the case may be, has not
been effected with respect to all Affected Party
gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit
Event Upon Merger or an Additional Termination Event
occurs, or a Tax Event Upon Merger occurs and the
Burdened Party is not the Affected Party,
either party in the case of an Illegality, the Burdened Party
in the case of a Tax Event Upon Merger, any Affected Party in
the case of a Tax Event or an Additional Termination Event if
there is more than one Affected Party, or the party which is
not the Affected Party in the case of a Credit Event Upon
Merger or an Additional Termination Event if there is only one
Affected party may, by not more than 20 days notice to the
other party an provided that the relevant Termination Event is
continuing, designate a day not earlier than the day such
notice is effective as an early Termination Date in respect of
all Affected Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination date is given
under Section 6(a) or (b), the Early Termination Date will
occur on the date so designated, whether or not the
relevant Event of Default or Termination Event is then
continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under
Section 2(a)(i) or 2(e) in respect of the Terminated
Transactions will be required to be made, but without
prejudice to the other provisions of this Agreement. The
amount, if any, payable in respect of an Early Termination
date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable
following the occurrence of an Early Termination Date, each
party will make the calculations on its part, if any,
contemplated by Section 6(e) and will provide to the other
party a statement (1) showing, in reasonable detail, such
calculations (including all relevant quotations and
specifying any amount payable under Section 6(e) and (2)
giving details of the relevant account to which any amount
payable to it is to be paid. In the absence of written
confirmation from the source of a quotation obtained in
determining a Market Quotation, the records of the party
obtaining such quotation will be evidence of the existence
and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in
respect of any Early Termination Date under Section 6(e)
will be payable on the day that notice of the amount
payable is effective (in the case of an Early Termination
Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business days
after the day on which notice of the amount payable is
effective (in the case of an early Termination Date which
is designated as a result of a Termination Event). Such
amount will be paid together with (to the extent permitted
under applicable law) interest thereon (before as well as
after judgment) in the Termination Currency, from (and
including) the relevant Early Termination Date to (but
excluding) the date such amount is paid, at the Applicable
Rate. Such interest will be calculated on the basis of
daily compounding and the actual number of days elapsed.
(e) Payments on Early Termination. If Early Termination date occurs,
the following provisions shall apply based on the parties
election in the Schedule of a payment measure, either "Market
Quotation" or "Loss", and a payment method, either the "First
Method" or the "Second Method". If the parties fail to designate
a payment measure or payment method in the Schedule, it will be
deemed that "Market Quotation" or the "Second Method", as the
case may be, shall apply. The amount, if any, payable in respect
of an Early Termination Date and determined pursuant to this
Section will be subject to any Set-off.
(i) Events of Default. If the Early Termination date results
from an Event of Default:-
(1) First Method and Market Quotation. If the Fist
Method and Market Quotation apply, the Defaulting
Party will pay to the Non-defaulting Party the
excess, if a positive number, of (A) the sum of the
Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and
the Termination Currency Equivalent of the Unpaid
Amounts owing to the Non-defaulting Party over (B)
the Termination Currency Equivalent of the Unpaid
Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss
apply, the Defaulting Party will pay to the Non-
defaulting Party, if a positive number, the Non-
defaulting Party's Loss in respect of this Agreement.
(a) Second Method and Market Quotation. If the Second
Method and Market Quotation apply, an amount will be
payable equal to (A) the sum of the Settlement Amount
(determined by the Non-defaulting Party) in respect
of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to
the Non-defaulting Party less (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to
the Defaulting Party. If that amount is a positive
number, the Defaulting Party will pay it to the Non-
defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of
that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and
Loss apply, an amount will be payable equal to the
Non-defaulting Party's Loss in respect of this
Agreement. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting
Party will pay the absolute value of that amount to
the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results
from a Termination Event:-
(1) One Affected Party. There is one Affected Party, the
amount payable will be determined in accordance with
Section 6(e)(i)(3), if Market Quotations applies, or
Section 6(e)(i)(4), if Loss applies, except that, in
either case, references to the Defaulting Party and to
the Non-defaulting Party, respectively, and if Loss
applies and fewer than all the Transactions are being
terminated. Loss shall be calculated in respect of all
Terminated Transactions.
(2) Two Affected Parties. If there are two Affected
Parties:-
(A) if Market Quotation applies, each party will
determine a Settlement Amount in respect of the
Terminated Transactions, and an amount will be
payable equal to (I) the sum of (a) one-half of
the difference between the Settlement Amount of
the party with the higher Settlement Amount
("Y") and (b) the Termination Currency
Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its
Loss in respect of this Agreement (or, if fewer
than all the Transactions are being terminated,
in respect of all Terminated Transactions) and
an amount will be payable equal to one-half of
the difference between the Loss of the party
with the higher Loss ("X") and the Loss of the
party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it
to X; if it is a negative number, X will pay the absolute
value of that amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination"
applies in respect of a party, the amount determined under this
Section 6(e) will be subject to such adjustments as are
appropriate and permitted by law to reflect any payments or
deliveries made by one party to the other under this Agreement
(and retained by such other party) during the period from the
relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable pre-
estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks
and except as otherwise provided in this Agreement neither party
will be entitled to recover any additional damages as a
consequence of such losses.
7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any interest
or obligation in or under this Agreement may be transferred (whether
by way of security or otherwise) by either party without the prior
written consent of the other party, except that:-
(a) a party may make such transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or
transfer of all or substantially all its assets to, another entity
(but without prejudice to any other right or remedy under this
Agreement); and
(b) a party may make such a transfer of all or any part of its
interest any amount payable to it from a Defaulting Party under
Section 6(e).
Any purported transfer that is not in compliance with Section will be
void.
8. Contractual Currency
(a)Payment in the Contractual Currency. Each payment under this
Agreement will be made in the relevant currency specified in this
Agreement for that payment (the "Contractual Currency"). To the
extent permitted by applicable law, any obligation to make payments
under this Agreement in the Contractual Currency will not be
discharged or satisfied by nay tender in any currency other than the
Contractual Currency will not be discharged or satisfied by any
tender in any currency other than the Contractual Currency, except to
the extent such tender results in the actual receipt by the party to
which payment is owed, acting in a reasonable manner and in good
faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all
amounts payable in respect of this Agreement. If for nay reason tha
amount in the Contractual Currency so received falls short of the
amount in the Contractual Currency payable in respect of this
Agreement, the party required to make the payment will , to the
extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate
for the shortfall. If for any reason the amount in the Contractual
Currency so received exceeds the amount in the Contractual Currency
payable in respect of this Agreement, the party receiving the payment
will refund promptly the amount of such excess.
(b) Judgments. To the extent permitted by applicable law, if any
judgment or order expressed in a currency other than the
Contractual Currency is rendered (i) for the payment of any amount
owing in respect of this Agreement, (ii) for the payment of any
amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another
court for the payment of any amount described in (i) or (ii)
above, the party seeking recovery, after recovery in full of the
aggregate amount to which such party is entitled pursuant to the
judgment or order, will be entitled to receive immediately from
the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in
such other currency and will refund promptly to the other party
any excess of the Contractual Currency received by such party as a
consequence of sums paid in such other currency if such shortfall
or such excess arises or results from any variation between the
rate of exchange at which the Contractual Currency is converted
into the currency of the judgment or order for the purposes of
such judgment or order and the rate of exchange at which such
party is able, acting in a reasonable manner and in good faith in
converting the currency received into the Contractual Currency, to
purchase the Contractual Currency with the amount of the currency
of the judgment or order actually received by such party. The term
"rate of exchange" includes, without limitation, any premiums and
costs of exchange payable in connection with the purchase of or
conversion into the Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law,
these indemnities constitute separate and independent obligations
from the other obligations in this Agreement, will be enforceable
as separate and independent causes of action, will apply
notwithstanding any indulgence granted by the party to which any
payment is owed and will not be affected by judgment being
obtained or claim or proof being made for any other sums payable
in respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be
sufficient for the party to demonstrate that it would have
suffered a loss had an actual exchange or purpose been made.
(9) Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties with respect to its subject
matter and supersedes all oral communication and prior writings
with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of
this Agreement will be effective unless in writing (including a
writing evidenced by a facsimile transmission) and executed by
each of the parties or confirmed by an exchange of telexes or
electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii)
and 6(e)(ii), the obligations of the parties under this Agreement
will survive the termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the
rights, powers, remedies and privileges provided in this Agreement
are cumulative and not exclusive of any rights, powers, remedies
and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver
in respect of it) may be executed and delivered in
counterparts (including by facsimile transmission), each of
which will be deemed an original.
(ii) The parties intend that they are legally bound by the
terms of each Transaction from the moment they agree to
those terms (whether orally or otherwise). A Confirmation
shall be entered into as soon as practicable and may be
executed and delivered in counterparts (including by
facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an
electronic messaging system, which in each case will be
sufficient for all purposes to evidence a binding supplement
to this Agreement. The parties will specify therein or
through another effective means that any such counterpart,
telex or electronic message constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right,
power or privilege in respect of this Agreement will not be
presumed to operate as a waiver, and a single or partial exercise
of any right, power or privilege will not be presumed to preclude
any subsequent or further exercise, of that right, power or
privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience
of reference only and are not to affect the construction of or to
be taken into consideration in interpreting this Agreement.
(10) Offices: Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying,
each party that enters into a Transaction through an Office
other than its head or home office represents to the other
party that, notwithstanding the place of booking office or
jurisdiction of incorporation or organization of such party,
the obligations of such party are the same as if it had
entered into the Transaction through its head or home
office, This representation will be deemed to be repeated by
such party on each date on which a Transaction is entered
into.
(b) Neither party may change the Office through which it makes
and receives payments or deliveries for the purpose of a
Transaction without the prior written consent of the other
party.
(c) If a party is specified as a Multibranch Party in the
Schedule, such Multibranch Party may make and receive
payments or deliveries under any Transaction through any
Office listed in the Schedule, and the Office through which
it makes and receives payments or deliveries with respect to
a Transaction will be specified in the relevant
Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless
the other party for and against all reasonable out-of-pocket
expenses, including legal fees and Stamp Tax, incurred by such
other party by reason of the enforcement and protection of its
rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early
termination of any Transaction, including, but not limited to,
costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect
of this Agreement may be given in any manner set froth below
(except that a notice or other communication under Section 5
or 6 may not be given by facsimile transmission or
electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:-
(i) if in writing and delivered in person or by courier,
on the date it is delivered;
(ii) if sent by telex, on the date the recipient's
answerback is received;
(iii) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of
the recipient in legible form (it being agreed that
the burden of proving receipt will be on the sender
and will not be met by transmission report generated
by the sender's facsimile machine).
(iv) if sent by certified or registered mail (airmail, if
overseas) or the equivalent (return receipt
requested), on the date that mail is delivered or its
delivery is attempted: or
(v) if sent by electronic messaging system, on the date
that electronic message is received,
unless the date of that delivery (or attempted delivery) or that
receipt, as applicable, is not a Local Business Day or that
communication is delivered (or attempted) or received, as applicable,
after the close of business on a Local Business Day, in which case
that communication shall be deemed given and effective on the first
following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other
change the address, telex or facsimile number or electronic
messaging system details at which notices or other communications
are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed
in accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings
relating to this Agreement ("Proceedings"), each party
irrevocably:-
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to
the non-exclusive jurisdiction of the courts of the State of
New York and the United States District Court located in the
Borough of Manhattan in New York City, if this Agreement is
expressed to be governed by the laws of the State of New
York; and
(ii) waives any objection which it may have at any time to the
laying of venue of any Proceedings brought in any such
court, waives any claim that such Proceedings have been
brought in an inconvenient forum and further waives the
right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing
Proceedings in any other jurisdiction (outside, if this Agreement is
expressed to be governed by English law, the Contracting States, as
defined in Section 1(3) of the Civil Jurisdiction and Judgments Act
1982 or any modification, extension or re-enactment thereof for the
time being in force) nor will the bringing of Proceedings in any one
or more jurisdictions preclude the bringing of Proceedings in any
other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process
Agent (if any) specified opposite its name in the Schedule to
receive, for it and on its behalf, service of process in any
Proceedings,. If for any reason any party's Process Agent is
unable to act as such, such party will promptly notify the other
party and within 30 days appoint a substitute process agent
acceptable to the other party. The parties irrevocably consent to
service of process given in the manner provided for notices in
Section 12. Nothing in this Agreement will affect the right of
either party to serve process in any other manner permitted by
law.
(d) Waiver of Immunities. Each party irrevocably waives, to the
fullest extent permitted by applicable law, with respect to itself
and its revenues and assets (irrespective of their use or intended
use), all immunity on the grounds of sovereignty or other similar
grounds from (i) suit, (ii) jurisdiction of any court, (iii)
relief by way of injunction, order for specific performance of for
recovery of property, (iv) attachment of its assets (whether
before or after judgment) and (v) execution or enforcement of any
judgment to which it or its revenues or assets might otherwise be
entitled in any Proceedings in the courts of nay jurisdiction and
irrevocably agrees, to the extent permitted by applicable law,
that it will not claim any such immunity in any Proceedings.
14. Definitions
As used in this Agreement:-
"additional Termination Event" has the meaning specified in Section
5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination
Event consisting of an Illegality, Tax Event or Tax Event Upon
Merger, all Transactions affected by the occurrence of such
Termination Event and (b) with respect to any other Termination
Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any
person, any entity controlled, directly or indirectly, by the person,
any entity that controls, directly or indirectly, the person or any
entity directly or indirectly under common control with the person.
For this purpose, "control" of any entity or person means ownership
of a majority of the voting power of the entity or person.
"Applicable rate" means:-
(a) in respect of obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Defaulting Party, the
Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e)
of either party from and after the date (determined in accordance
with Section 6(d)(ii) on which that amount is payable, the Default
Rate;
(c) in respect of all other obligations payable or deliverable (or
which would have been but for Section 2(a)(iii) by a Non-
defaulting Party, the Non-default Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or
after the date on which the relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorization,
exemption, notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
`Credit Support Document" means any agreement of instrument that is
specified as such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without
proof or evidence of any actual cost) to the relevant payee (as
certified by it) if it were to fund or of funding the relevant amount
plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with
Section 6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be
imposed in respect of a payment under this Agreement but for a
present or former connection between the jurisdiction of the
government or taxation authority imposing such Tax and the recipient
of such payment or a person related to such recipient (including,
without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such
jurisdiction, or having or having had a permanent establishment or
fixed place of business in such jurisdiction, but excluding a
connection arising solely from such recipient or related person
having executed, delivered, performed its obligations or received a
payment under, or enforced, this Agreement or a Credit Support
Document).
"law" includes any treaty, law, rule or regulation (as modified, in
the case of tax matters, by the practice of any relevant governmental
revenue authority) and "lawful" and "unlawful" will be construed
accordingly.
"Local Business Day" means, subject to the Schedule, a day on which
commercial banks are open for business (including dealings in foreign
exchange currency deposits) (a) in relation to any obligation under
Section 2(a)(i), in the place(s) specified in the relevant
Confirmation or, if not so specified, as otherwise agreed by the
parties in writing or determined pursuant to provisions contained, or
incorporated by reference, in this Agreement, (b) in relation to any
other payment, in the place where the relevant account is located
and, if different, in the principal financial center, if any, of the
currency of such payment, (c) in relation to any notice or other
communication, including notice contemplated under Section 5(a)(i),
in the city specified in the address for notice provided by the
recipient and, in the case of a notice contemplated by Section 2(b),
in the place where the relevant new account is to be located and (d)
in relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more
Terminated Transactions, as the case may be, and a party, the
Termination Currency Equivalent of an amount that party reasonably
determines in good faith to be its total losses and costs (or gain,
in which case expressed as a negative number) in connection with this
Agreement or that Terminated Transaction or group of Terminated
Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication,
loss or cost incurred as a result of its terminating, liquidating,
obtaining or reestablishing any hedge or related trading position (or
any gain resulting from them). Loss includes losses and costs (or
gains) in respect of any payment or delivery required to have been
made (assuming satisfaction of each applicable condition precedent)
on or before the relevant Early Termination Date and not made,
except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or
6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees
and out0of-pocket expenses referred to under Section 11. A party will
determine its Loss as of the relevant Early Termination Date, or, if
that is not reasonably practicable, as of the earliest date
thereafter as is reasonably practicable. A party may (but need not)
determine its Loss by reference to quotations of relevant rates or
prices from one or more leading dealers in the relevant markets.
"Market Quotations" means, with respect to one or more Terminated
Transactions and a party making the determination, an amount
determined on the basis of quotations from Reference Market-makers.
Each quotation will be for an amount, if any, that would be paid to
such party (expressed as a negative number) or by such party
(expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support
Document with respect to the obligations of such party) and the
quoting Reference Market-maker to enter into a transaction (the
"Replacement Transaction") that would have the effect of preserving
for such party the economic equivalent of any payment or delivery
(whether the underlying obligation was absolute or contingent and
assuming the satisfaction of each applicable condition precedent) by
the parties under Section 2(a)(i) in respect of such Terminated
Transaction or group of Terminated Transactions that would, but for
the occurrence of the relevant Early Termination Date, have been
required after that date. For this purpose. Unpaid Amounts in respect
of the Terminated Transaction or group of Terminated Transactions are
to be excluded, but without limitation, any payment or delivery that
would, but for the relevant early Termination Date is to be included,
The Replacement Transaction would be subject to such documentation as
such party and the Reference Market-maker may, in good faith, agree.
The party making the determination (or its agent) will request each
Reference (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The
day and time as of which those quotations are to be obtained will be
selected in good faith by the party obliged to make a determination
under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are
provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and
lowest values. If exactly three such quotations are provided, the
Market Quotation will be the quotation remaining after disregarding
the highest and lowest quotations. For this purpose, if more than one
quotation has the same highest value or lowest value, then on of such
quotations shall be disregarded, If fewer than three quotations are
provided, it will be deemed that the Market Quotation in respect of
such Terminated Transaction or group of Terminated Transactions
cannot be determined.
"Non-defaulting Rate" means a rate per annum equal to the cost
(without proof or evidence of any actual cost) to the Non-defaulting
Party (as certified by it) if it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such
party's head or home office.
"Potential Event of Default" means any event which, with the giving
of notice or the lapse of time or both would constitute an Event of
Default.
"Reference Market-makers" means four leading dealers in the relevant
market selected by the party determining a Market Quotation in good
faith (a) from among dealers of the highest credit standing which
satisfy all the criteria the such party applies generally at the time
in deciding whether to offer or to make an extension of credit and
(b) to the extent practicable, from among such dealers having an
office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the
jurisdictions (a) in which the party is incorporated, organized,
managed and controlled or considered to have its seat, (b) where an
Office through which the party is acting for purposes of this
Agreement is located, (c) in which the party executes this Agreement
and (d) in relation to any payment, from or through which such
payment is made.
"Scheduled Payment Date" means a date on which a payment of delivery
is to be made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of
retention or withholding or similar right or requirement to which the
payer of an amount under Section 6 is entitled or subject (whether
arising under this Agreement, another contract, applicable law or
otherwise) that is exercised by, or imposed on, such payer.
"Settlement Amount" Means, with respect to a party and Early
Termination Date, the sum of:-
(a) the Termination Currency Equivalent of the Market Quotations
(whether positive or negative) for each Terminated Transaction or
group of Terminated or group of Terminated Transactions for which
a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without
reference to any Unpaid Amounts) for each Terminated Transaction
or group of Terminated Transactions for which a Market Quotation
cannot be determined or would not (in the reasonable belief of the
party making the determination) produce a commercially reasonable
result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any
obligation (whether present or future, contingent or otherwise, as
principal or surety or otherwise) in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any
transaction (including an agreement with respect thereto) now
existing or hereafter entered into between one party to his Agreement
(or any Credit Support Provider of such party or any applicable
Specified Entity of such party) and the other party to this Agreement
(or any Credit Support Provider of such other party or any applicable
Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any
option with respect to any of these transactions), (b) any
combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the
relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar
tax.
"Tax" means any present or future tax, levy, impost, duty, charge,
assessment or fee of nay nature (including interest, penalties and
additions thereto) that is imposed by any government or other taxing
authority in respect of any payment under this Agreement other than a
stamp, registration, documentation or similar tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination
Date (a) if resulting from a Termination Event, all Affected
Transactions and (b) if resulting from an Event of Default, all
Transactions (in either case) in effect immediately before the
effectiveness of the notice designating that Early Termination Date
(or, if "Automatic Early Termination" applies, immediately before
that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, ion respect of any amount
denominated in the Termination Currency, such Termination Currency
amount and, in respect of any amount denominated in a currency other
than the Termination Currency (the "Other Currency"), the amount in
the Termination Currency determined by the party making the relevant
determination as being required to purchase such amount of such Other
Currency as at the relevant Early Termination Date, or, if the
relevant Market Quotation or Loss (as the case may be), is determined
as of a later date, that later date, with the Termination Currency at
the rate equal to the spot exchange rate of the foreign exchange
agent (selected a provided below) for the purchase of such Other
Currency with the Termination Currency at or about 11:00 a.m. (in the
city in which such foreign exchange is located) on such date as would
be customary for the determination of such a rate for the purchase of
such Other Currency for value on the relevant Early Termination Date
or that later date. The foreign exchange agent will, if only one
party is obliged to make a determination under Section 6(e), be
selected in good faith by that party and otherwise will be agreed by
the parties.
"termination Event" means an Illegality, a Tax Event Upon Merger or,
if specified to be evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such
amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions., the amounts that became payable (or that would have
become payable but for Section 2(a)(iii)) to such party under Section
2(a)(i) on or prior to such Early Termination Date and which remain
unpaid as at such Early Termination Date and (b) in respect of each
Terminated Transaction, for each obligation under Section 2(a)(i)
which was (or would have been but for Section 2(a)(iii) required to
be settled by delivery to such party on or prior to such Early
Termination Date and which has not been so settled as at such Early
Termination Date, an amount equal to the fair market value of that
which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with
(to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts
or obligations were or would have been required to have been paid or
performed to (but excluding) such Early Termination Date, at the
Applicable Rate. Such amounts of interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. The
fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the Termination Currency Equivalents of the
fair market values reasonably determined by both parties.
AMENDMENT TO MASTER AGREEMENT
This Amendment to Master Agreement, dated as of March 31, 1998
( this "Amendment ") is among DOLLAR GENERAL CORPORATION, a Kentucky
corporation ( " Dollar " ), ATLANTIC FINANCIAL GROUP, LTD., a Texas
limited partnership ( the " Lessor " ), certain financial
institutions parties hereto as lenders ( the Lenders " ), and
SUNTRUST BANK, NASHVILLE, N. A., a national banking association, as
agent for the Lenders ( in such capacity, the " Agent " ).
BACKGROUND
1. Dollar, certain subsidiaries of Dollar, the Lessor, the Lenders
and the Agent are parties to that certain Master Agreement,
dated as of September 2, 1997 ( the " Master Agreement " ).
2. The parties hereto desire to amend the Master Agreement to
provide for an increase in the aggregate limit on funded
amounts thereunder.
Now, THEREFORE, in consideration of the foregoing and other good
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions. Capitalized terms used in this Amendent
and not otherwise defined herein shall have the meanings assigned
thereto in the Master Agreement.
SECTION 2. Limits on Funded Amounts. Section 2.2 ( c ) of the
Master Agreement is hereby amended by deleting the number "
$100,000,000 " where it appears in the first sentence thereof and
substituting therefor the number " $225,000,000 ".
SECTION 3. Schedule 2.2 . Schedule 2.2 to the Master Agreement
is hereby deleted in its entirety and replaced by Schedule 2.2 to
this Amendment.
SECTION 4. Conditions Precedent. The effectiveness of this
Amendment shall be subject to the receipt by the Agent of the
following documents: (i ) this Amendment duly executed by the
parties hereto; ( ii ) a new A note and B note, duly executed by
the Lessor, for each Lender; and ( iii ) a Certificate of the
Secretary or the Assistant Secretary of Dollar with attached
Resolutions duly authorizing the execution, delivery and
performance of this Amendment by Dollar.
SECTION 5. Representations and Warranties. Dollar hereby
represents and warrant that, after giving effect to this Amendment (
i ) each representation and warranty of each Lessee contained in the
Operative Documents is true and correct in all Material respects on
and as of the date hereof as though made on and as of the date
hereof, except to the extent such representations or warranties
relate solely to an earlier date, in which case such representations
and warranties were true and correct in all Material respects on and
as of such earlier date,
( ii ) no Event of Default, Potential Event of Default or
Construction Force Majeure Event has occurred and is continuing,
each Operative Document to which any Lessee is a party is in full
force and effect with respect to it and ( iv ) no event that could
reasonably be expected to have a Material Adverse Effect has
occurred since January 31, 1997.
SECTION 6. Reaffirmation of Guaranty. Dollar hereby reaffirms and
acknowledges that, after giving effect to this Amendment, the
Guaranty remains in full force and effect.
SECTION 7. Additions of Lender. Bank One, National Association (
" BankOne " ) is hereby added as a Lender under the Operative
Documents and agrees to be bound as Lender, and shall have all of
the rights of a Lender, under the Operative Documents as though it
were an original signatory thereto.
SECTION 8. Payments. On the date hereof, those Lenders that are
increasing their Commitment Percentages or are being added as
Lenders shall increase their Loans ( and shall make a corresponding
payment ) and those Lenders that are decreasing their Commitment
Percentages shall reduce their Loans ( and shall receive a
corresponding payment ), such that, after giving effect thereto,
each Funding Party's Funded Amount shall be equal to its Commitment
Percentage ( as set forth on Schedule 2.2 to this Amendment ) of the
aggregate Funded Amounts.
SECTION 9. Miscellaneous. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of Tennessee.
This Amendment may be executed by the parties hereto in separate
counterparts ( including by facsimile ) each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same agreement.
This Master Agreement, as amended hereby, remains in full force and
effect. Any reference to the Master Agreement from and after the
date hereof shall be deemed to refer to the Master Agreement as
amended hereby, unless otherwise expressly stated.
IN WITNESS WHEREOF, the parties hereto have caused this amendent
to be executed by their respective duly authorized officers as of
the year first above written.
DOLLAR GENERAL CORPORATION, as a
Lessee and as Guarantor
Name Printed: Philip W. Richards
Title: Vice President and Chief
Financial Officer
ATLANTIC FINANCIAL GROUP, LTD. as
Lessor
By: Atlantic Financial Managers, Inc., its
General Partner
Name Printed: Stephen Brookshire
Title: President
