Exhibit
10.1
Master
Confirmation of OTC Collared ASAP Minus
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Date:
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August
30, 2007
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ML
Ref: ______________
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To:
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Dollar
Tree Stores,
Inc. (“Counterparty”)
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Attention:
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Kent
Kleeberger
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From:
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Merrill
Lynch International
(“MLI”)
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Merrill
Lynch Financial Centre
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This
master confirmation (this “Master Confirmation”), dated as of
August 30, 2007, is intended to supplement the terms and provisions of certain
Transactions (each, a “Transaction”) entered into from time to
time between Merrill Lynch International (“MLI”) and Dollar
Tree Stores, Inc. (“Counterparty”). This Master
Confirmation, taken alone, is neither a commitment by either party to enter
into
any Transaction nor evidence of a Transaction. The terms of any particular
Transaction shall be set forth in (i) a Supplemental Confirmation in the form
of
Exhibit A hereto (a “Supplemental Confirmation”), which shall
reference this Master Confirmation and supplement, form a part of, and be
subject to this Master Confirmation and (ii) a Trade Notification in the form
of
Exhibit B hereto (a “Trade Notification”), which shall
reference the relevant Supplemental Confirmation and supplement, form a part
of,
and be subject to such Supplemental Confirmation. This Master Confirmation,
each
Supplemental Confirmation and the related Trade Notification together shall
constitute a “Confirmation” as referred to in the Agreement specified
below.
The
definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “Equity Definitions”), as published by the
International Swaps and Derivatives Association, Inc., are incorporated into
this Master Confirmation. This Master Confirmation, each Supplemental
Confirmation and the related Trade Notification evidence a complete binding
agreement between Counterparty and MLI as to the subject matter and terms of
each Transaction to which this Master Confirmation, such Supplemental
Confirmation and Trade Notification relate and shall supersede all prior or
contemporaneous written or oral communications with respect
thereto.
This
Master Confirmation, each Supplemental Confirmation and each Trade Notification
supplement, form a part of, and are subject to an agreement in the form of
the
1992 ISDA Master Agreement (Multicurrency -Cross Border) (the
“Agreement”) as if MLI and Counterparty had executed the
Agreement on the date of this Master Confirmation (but without any Schedule
except for (i) the election of Loss and Second Method, New York law (without
regard to the conflicts of law principles) as the governing law and US Dollars
(“USD”) as the Termination Currency, (ii) the election that
subparagraph (ii) of Section 2(c) will not apply to the Transactions, (iii)
the
replacement of the word “third” in the last line of Section 5(a)(i) with the
word “first”, (iv) the election that the “Cross Default” provisions of Section
5(a)(vi) shall apply to Counterparty and MLI, with a “Threshold Amount” of USD50
million and (v) the amendment of Section 5(a)(vi) to delete the phrase “or
becoming capable at such time of being declared” in the seventh line thereof).
Notwithstanding the terms of Sections 5 and 6 of the Agreement, if at any time
and so long as Counterparty has satisfied its payment obligations under Section
2(a)(i) of the Agreement in respect of all Transactions and has at the time
no
further payment obligations under such Section, then unless MLI is required
pursuant to appropriate proceedings to return to Counterparty, or otherwise
returns to Counterparty upon demand of Counterparty, any portion of any such
payment, (a) the occurrence of an event described in Section 5(a) (excluding
Section 5(a)(ii), Section 5(a)(iv) and Section 5(a)(vii)) of the Agreement
with
respect to Counterparty shall not constitute an Event of Default or a Potential
Event of Default with respect to Counterparty as the Defaulting Party and (b)
MLI shall be entitled to designate an Early Termination Date pursuant to Section
6(b) of the Agreement only as a result of the occurrence of a Termination Event
set forth in (i) Sections 5(b)(i) and 5(b)(ii) of the Agreement with respect
to
MLI as an Affected Party, (ii) Section 5(b)(iii) of the Agreement with respect
to MLI as a Burdened Party and (iii) Section 5(b)(v) of the
Agreement.
For
each
Transaction, all provisions contained or incorporated by reference in the
Agreement shall govern this Master Confirmation, the Supplemental Confirmation
and each Trade Notification relating to such Transaction except as expressly
modified herein or in such Supplemental Confirmation or Trade
Notification.
If,
in
relation to any Transaction to which this Master Confirmation, a Supplemental
Confirmation and a Trade Notification relate, there is any inconsistency between
the Agreement, this Master Confirmation, any Supplemental Confirmation, any
Trade Notification and the Equity Definitions, the following will prevail for
purposes of such Transaction in the order of precedence
indicated: (i) such Trade Notification, (ii) such Supplemental
Confirmation; (iii) this Master Confirmation; (iv) the Agreement; and (v) the
Equity Definitions.
1. Each
Transaction constitutes a Share Forward Transaction for the purposes of the
Equity Definitions. Set forth below are the terms and conditions which,
together with the terms and conditions set forth in the related Supplemental
Confirmation and Trade Notification (in respect of the relevant Transaction),
shall govern each such Transaction.
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Trade
Date:
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For
each Transaction, as set forth in the Supplemental
Confirmation.
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Shares:
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Shares
of common stock, $1.00 par value, of Counterparty
(Ticker: DLTR)
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Forward
Price:
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The
arithmetic average of the VWAP Prices for each Exchange Business
Day in
the Calculation Period
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VWAP
Price:
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For
any Exchange Business Day, as determined by the Calculation Agent
based on
the NASDAQ 10b-18 Volume Weighted Average Price per Share for the
regular
trading session (including any extensions thereof) of the Exchange
on such
Exchange Business Day (without regard to pre-open or after hours
trading
outside of such regular trading session for such Exchange Business
Day),
as published by Bloomberg at 4:15 p.m. New York time (or 15 minutes
following the end of any extension of the regular trading session)
on such
Exchange Business Day, on Bloomberg page “DLTR.Q AQR_SEC” (or any
successor thereto). For purposes of calculating the VWAP Price, the
Calculation Agent will include only those trades that are reported
during
the period of time during which Counterparty could purchase its own
shares
under Rule 10b-18(b)(2) and pursuant to the conditions of Rule
10b-18(b)(3), each under the Securities Exchange Act of 1934, as
amended
(the “Exchange Act”) (such trades, “Rule 10b-18
eligible transactions”).
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Forward
Price
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Adjustment
Amount:
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For
each Transaction, as set forth in the Supplemental
Confirmation.
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Calculation
Period:
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The
period from and including the first Exchange Business Day immediately
following the Hedge Completion Date to and including the Termination
Date
(as adjusted in accordance with the provisions
hereof).
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Termination
Date:
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For
each Transaction, the Scheduled Termination Date set forth in the
Supplemental Confirmation (as the same may be postponed in accordance
with
the provisions hereof); provided that MLI shall have the right to
designate any date (the “Accelerated Termination Date”)
on or after the First Acceleration Date to be the Termination Date
by
providing notice to Counterparty of any such designation on such
date.
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First
Acceleration Date:
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For
each Transaction, as set forth in the Supplemental
Confirmation.
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Hedge
Period:
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The
period from and including the day immediately after the Trade Date
to and
including the Hedge Completion Date (as adjusted in accordance with
the
provisions hereof).
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Hedge
Completion Date:
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For
each Transaction, as set forth in the Trade Notification, to be the
Exchange Business Day on which MLI finishes establishing its initial
Hedge
Positions in respect of such Transaction, as determined by MLI in
its good
faith and commercially reasonable discretion, which date shall be
subject
to any limitations set forth in the Supplemental
Confirmation.
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Hedge
Period
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Reference
Price:
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For
each Transaction, as set forth in the Trade Notification, to be the
arithmetic average of the VWAP Prices for each Exchange Business
Day in
the Hedge Period.
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Market
Disruption Event:
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The
definition of “Market Disruption Event” in Section 6.3(a) of the Equity
Definitions is hereby amended by deleting the words “at any time during
the one-hour period that ends at the relevant Valuation Time” and
inserting the words “at any time on any Scheduled Trading Day during the
Hedge Period or Calculation Period or” after the word “material,” in the
third line thereof.
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Notwithstanding
anything to the contrary in the Equity Definitions, to the extent that a
Disrupted Day occurs in the Hedge Period or the Calculation Period, the
Calculation Agent may in good faith and acting in a commercially reasonable
manner postpone the Hedge Completion Date or the Termination Date, as the case
may be. In such event, the Calculation Agent must determine whether (i) such
Disrupted Day is a Disrupted Day in full, in which case the VWAP Price for
such
Disrupted Day shall not be included for purposes of determining the Hedge Period
Reference Price or the Forward Price, as the case may be, or (ii) such Disrupted
Day is a Disrupted Day only in part, in which case the VWAP Price for such
Disrupted Day shall be determined by the Calculation Agent based on Rule 10b-18
eligible transactions in the Shares on such Disrupted Day effected before the
relevant Market Disruption Event occurred and/or after the relevant Market
Disruption Event ended, and the weighting of the VWAP Price for the relevant
Exchange Business Days during the Hedge Period or the Calculation Period, as
the
case may be, shall be adjusted in a commercially reasonable manner by the
Calculation Agent for purposes of determining the Hedge Period Reference Price
or the Forward Price, as the case may be, with such adjustments based on, among
other factors, the duration of any Market Disruption Event and the volume,
historical trading patterns and price of the Shares.
If
a
Disrupted Day occurs during the Hedge Period or the Calculation Period, as
the
case may be, and each of the seven immediately following Scheduled Trading
Days
is a Disrupted Day, then the Calculation Agent, in its good faith and
commercially reasonable discretion, may either (i) deem such seventh Scheduled
Trading Day to be an Exchange Business Day and determine the VWAP Price for
such
seventh Scheduled Trading Day using its good faith estimate of the value of
the
Shares on such seventh Scheduled Trading Day based on the volume, historical
trading patterns and price of the Shares and such other factors as it deems
appropriate or (ii) further extend the Hedge Period or the Calculation Period,
as the case may be, as it deems necessary to determine the VWAP
Price.
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Exchange:
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NASDAQ
Global Select Market
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Related
Exchange(s):
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All
Exchanges.
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Prepayment\
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Variable
Obligation:
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Applicable
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Prepayment
Amount:
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For
each Transaction, as set forth in the Supplemental
Confirmation.
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Prepayment
Date:
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Two
(2) Exchange Business Day following the Trade
Date.
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Physical
Settlement:
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Applicable;
provided that MLI does not, and shall not, make the agreement or
the representations set forth in Section 9.11 of the Equity Definitions
related to the restrictions imposed by applicable securities laws
with
respect to any Shares delivered by MLI to Counterparty under any
Transaction.
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Number
of
Shares
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to
be Delivered:
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A
number of Shares equal to (a) the Prepayment Amount dividedby
(b) the Forward Price minus the Forward Price Adjustment Amount;
provided that the Number of Shares to be Delivered shall not be
less than the Minimum Shares and not greater than the Maximum Shares.
The
Number of Shares to be Delivered on the Settlement Date shall be
reduced,
but not below zero, by (i) any Shares delivered pursuant to the Initial
Share Delivery described below and (ii) any Shares delivered pursuant
to
the Minimum Share Delivery described
below.
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Excess
Dividend Amount:
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For
the avoidance of doubt, all references to the Excess Dividend Amount
shall
be deleted from Section 9.2(a)(iii) of the Equity
Definitions.
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Settlement
Date:
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Three
(3) Exchange Business Days following the Termination
Date.
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Initial
Share Delivery:
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MLI
shall deliver a number of Shares equal to the Initial Shares to
Counterparty on the Initial Share Delivery Date in accordance with
Section
9.4 of the Equity Definitions, with the Initial Share Delivery Date
deemed
to be a “Settlement Date” for purposes of such Section
9.4.
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Initial
Share Delivery Date:
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Two
(2) Exchange Business Day following the Trade
Date.
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Initial
Shares:
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For
each Transaction, as set forth in the Supplemental
Confirmation.
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Minimum
Share Delivery:
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MLI
shall deliver a number of Shares equal to the excess, if any, of
the
Minimum Shares over the Initial Shares on the Minimum Share Delivery
Date
in accordance with Section 9.4 of the Equity Definitions, with the
Minimum
Share Delivery Date deemed to be a “Settlement Date” for purposes of such
Section 9.4.
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Minimum
Share
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Delivery
Date:
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Three
(3) Exchange Business Days following the Hedge Completion
Date.
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Minimum
Shares:
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For
each Transaction, as set forth in the Supplemental
Confirmation.
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Maximum
Shares:
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For
each Transaction, as set forth in the Supplemental
Confirmation.
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Potential
Adjustment Event:
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Notwithstanding
anything to the contrary in Section 11.2(e) of the Equity Definitions,
an
Extraordinary Dividend shall not constitute a Potential Adjustment
Event.
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Extraordinary
Dividend:
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For
any calendar quarter occurring (in whole or in part) during the period
from and including the first day of the Calculation Period to and
including the Termination Date, any dividend or distribution on the
Shares
with an ex-dividend date occurring during such calendar quarter (other
than any dividend or distribution of the type described in Section
11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity
Definitions).
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Method
of Adjustment:
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Calculation
Agent Adjustment
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Consequences
of Merger
Events
and Tender Offers:
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(a) Share
for Share:
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Modified
Calculation Agent Adjustment
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(b) Share-for-Other:
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Cancellation
and Payment
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(c) Share-for-Combined:
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Component
Adjustment
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Nationalization,
Insolvency
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or
Delisting:
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Cancellation
and Payment; provided that in addition to the provisions of
Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute
a
Delisting if the Exchange is located in the United States and the Shares
are not immediately re-listed, re-traded or re-quoted on any of the
New
York Stock Exchange, the American Stock Exchange, The NASDAQ Global
Select
Market or The NASDAQ Global Market (or their respective successors);
if
the Shares are immediately re-listed, re-traded or re-quoted on any
such
exchange or quotation system, such exchange or quotation system shall
be
deemed to be the Exchange.
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Notwithstanding
anything to the contrary in the Equity Definitions, if, as a result of a Merger
Event, a Tender Offer, a Nationalization, an Insolvency or a Delisting,
Cancellation and Payment applies to one or more Transactions hereunder (whether
in whole or in part), an Additional Termination Event (with the Transactions
(or
portions thereof) to which Cancellation and Payment applies being the Affected
Transactions, Counterparty being the sole Affected Party and the Early
Termination Date being the date on which such Transactions would be cancelled
pursuant to Article 12 of the Equity Definitions) shall be deemed to occur,
and,
in lieu of Sections 12.7 and 12.8 of the Equity Definitions, Section 6 of the
Agreement shall apply to such Affected Transactions.
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Additional
Disruption Events:
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(a) Change
in Law:
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Applicable
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(b) Failure
to Deliver:
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Applicable
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(c) Insolvency
Filing:
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Applicable
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(d) Loss of
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Stock
Borrow:
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Applicable;
provided that Sections 12.9(a)(vii) and 12.9(b)(iv) of the Equity
Definitions shall be amended by deleting the words “at a rate equal to or
less than the Maximum Stock Loan Rate” and replacing them with “at a rate
of return equal to or greater than
zero”.
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Notwithstanding
anything to the contrary in the Equity Definitions, if, as a result of an
Additional Disruption Event, any Transaction is cancelled or terminated, an
Additional Termination Event (with such terminated Transaction(s) being the
Affected Transaction(s), Counterparty being the sole Affected Party and the
Early Termination Date being the date on which such Transaction(s) would be
cancelled or terminated pursuant to Article 12 of the Equity Definitions) shall
be deemed to occur, and, in lieu of Sections 12.7 and 12.8 of the Equity
Definitions, Section 6 of the Agreement shall apply to such Affected
Transaction(s).
Non-Reliance/Agreements
and
Acknowledgements
Regarding
Hedging
Activities/Additional
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Acknowledgements:
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Applicable
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Transfer:
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Notwithstanding
anything to the contrary in the Agreement, MLI may assign, transfer
and
set over all rights, title and interest, powers, privileges and remedies
of MLI under any Transaction, in whole or in part, to an affiliate
of MLI
whose obligations are guaranteed by Merrill Lynch & Co., Inc. without
the consent of Counterparty.
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Counterparty’s
Contact
Details
for Purpose of
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Giving
Notice:
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Kent
Kleeberger, 500 Volvo Parkway, Chesapeake, VA
23320
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MLI’s
Contact
Details
for Purpose of
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Giving
Notice:
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Merrill
Lynch International
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Merrill
Lynch Financial Centre
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2
King Edward Street, London EC1A 1HQ
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Attention:
Gary Rosenblum
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Telephone
No.: (212) 449-6309
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With
a copy to:
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GMI
Counsel
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Merrill
Lynch World Headquarters
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4
World Financial Center, 5th
Floor
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Attention:
Global Equity Derivatives
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Telephone
No.: (212) 449-6309
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Facsimile
No.: (212) 449-6576
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2. Calculation
Agent: MLI; provided that any disagreement regarding any
determination made by the Calculation Agent shall be resolved in accordance
with
Section 20 of this Master Confirmation.
3. Additional
Mutual Representations, Warranties and Covenants of MLI and
Counterparty. In addition to the representations and warranties
in the Agreement, each party represents, warrants and covenants to the other
party that:
(a) Eligible
Contract Participant. (i) It is an “eligible contract
participant”, as defined in the U.S. Commodity Exchange Act (as amended), and
(ii) is entering into each Transaction hereunder as principal (and not as agent
or in any other capacity, fiduciary or otherwise) and not for the benefit of
any
third party.
(b) Accredited
Investor. Each party acknowledges that the offer and sale of each
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”), by
virtue of Section 4(2) thereof and the provisions of Regulation D promulgated
thereunder (“Regulation D”). Accordingly, each party represents
and warrants to the other that (i) it has the financial ability to bear the
economic risk of its investment in each Transaction and is able to bear a total
loss of its investment, (ii) it is an “accredited investor” as that term is
defined under Regulation D, (iii) it will purchase each Transaction not with
a
view to the distribution or resale thereof in a manner that would violate the
Securities Act and (iv) the disposition of each Transaction is restricted under
this Master Confirmation, the Securities Act and state securities
laws.
4. Additional
Representations, Warranties and Covenants of MLI In addition to
the representations, warranties and covenants in the Agreement and those
contained herein, MLI hereby represents, warrants and covenants to Counterparty
that:
(a) with
respect to (i) all purchases of Shares made by MLI during any relevant Hedge
Period in respect of any Transaction and (ii) purchases during the related
Relevant Period (as defined below) of a number of Shares equal to the Minimum
Shares for such Transaction less the number of Shares so purchased during the
related Hedge Period in respect of such Transaction, MLI will use good faith
efforts to effect such purchases in a manner so that, if such purchases were
made by Counterparty, they would meet the requirements of Rule 10b-18(b)(2),
(3)
and (4), and effect calculations in respect thereof, taking into account any
applicable Securities and Exchange Commission no-action letters as appropriate
and subject to any delays between the execution and reporting of a trade of
the
Shares on the Exchange and other circumstances beyond MLI’s
control;
(b) it
will
conduct its purchases in connection herewith in a manner that would not be
deemed to constitute a tender offer within the meaning of Section 14(d)(1)
of
the Exchange Act; and
(c) for
the
avoidance of doubt, MLI has implemented reasonable policies and procedures,
taking into consideration the nature of its business, to ensure that individuals
making investment decisions would not violate laws prohibiting trading on the
basis of material nonpublic information. Such individuals shall not be in
possession of material nonpublic information during all relevant times beginning
on the date hereof and continuing through the Hedge Period and the Calculation
Period for any Transaction.
5. Additional
Representations, Warranties and Covenants of Counterparty. In
addition to the representations, warranties and covenants in the Agreement
and
those contained herein, as of (i) the date hereof, (ii) the Trade Date for
each
Transaction hereunder and (iii) to the extent indicated below, each day during
the Hedge Period and Calculation Period for each Transaction hereunder,
Counterparty represents, warrants and covenants to MLI that:
(a) assuming
the accuracy of the representations by MLI in Section 4(b) hereof, the purchase
or writing of each Transaction and the transactions contemplated hereby will
not
violate Rule 13e-1 or Rule 13e-4 under the Exchange Act;
(b) it
is not
entering into any Transaction (i) on the basis of, and is not aware of, any
material non-public information with respect to the Shares (ii) in anticipation
of, in connection with, or to facilitate, a distribution of its securities,
a
self tender offer or a third-party tender offer or (iii) to create actual or
apparent trading activity in the Shares (or any security convertible into or
exchangeable for the Shares) or to raise or depress or otherwise manipulate
the
price of the Shares (or any security convertible into or exchangeable for the
Shares);
(c) each
Transaction is being entered into pursuant to a publicly disclosed Share
buy-back program and its Board of Directors has approved the use of derivatives
to effect the Share buy-back program;
(d) without
limiting the generality of Section 13.1 of the Equity Definitions, it
acknowledges that MLI is not making any representations or warranties with
respect to the treatment of any Transaction under FASB Statements 128, 133
as
amended, or 149, 150, EITF 00-19, 01-6 or 03-6 (or any successor issue
statements) or under the Financial Accounting Standards Board’s Liabilities
& Equity Project;
(e) Counterparty
is in compliance with its reporting obligations under the Exchange Act in all
material respects and its most recent Annual Report on Form 10-K, together
with
all reports subsequently filed by it pursuant to the Exchange Act, taken
together and as amended and supplemented to the date of this representation,
do
not, as of their respective filing dates, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(f) Counterparty
shall report each Transaction as required under Regulation S-K and/or Regulation
S-B under the Exchange Act, as applicable;
(g) Counterparty
is not, and will not be, engaged in a “distribution” of Shares or securities
that are convertible into, or exchangeable or exercisable for Shares for
purposes of Regulation M promulgated under the Exchange Act (“Regulation
M”) at any time during the Hedge Period or the period commencing on
the
first day of the Calculation Period and ending on the last day of the
Calculation Period or, in the event MLI designates an Accelerated Termination
Date or either party designates an Early Termination Date or an Early
Termination Date is deemed to occur, the 15th Exchange Business Day immediately
following such Accelerated Termination Date or Early Termination Date, as the
case may be, or such earlier day as elected by MLI and communicated to
Counterparty on such day (the “Relevant Period”) unless
Counterparty has provided written notice to MLI of such distribution (a
“Regulation M Distribution Notice”) not later than the
Scheduled Trading Day immediately preceding the first day of the relevant
“restricted period” (as defined in Regulation M); Counterparty acknowledges that
any such notice may cause the Hedge Period or the Calculation Period to be
extended or suspended pursuant to Section 6 below; accordingly, Counterparty
acknowledges that its delivery of such notice must comply with the standards
set
forth in Section 7 below;
(h) Counterparty
acknowledges that each Transaction is a derivatives transaction in which it
has
granted MLI an option; MLI may purchase shares for its own account at an average
price that may be greater than, or less than, the price paid by Counterparty
under the terms of the related Transaction;
(i) as
of the
Trade Date, the Prepayment Date, the Initial Share Delivery Date, the Minimum
Share Delivery Date and the Settlement Date for each Transaction, Counterparty
is not and will not be “insolvent” (as such term is defined under Section
101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the
“Bankruptcy Code”)) and Counterparty would be able to purchase
a number of Shares equal to the Maximum Shares in compliance with the laws
of
the jurisdiction of Counterparty’s incorporation;
(j) Counterparty
is not and, after giving effect to any Transaction, will not be, required to
register as an “investment company” as such term is defined in the Investment
Company Act of 1940, as amended; and
(k) Counterparty
has not and, during the Hedge Period or Relevant Period for any Transaction,
will not enter into agreements similar to the Transactions described herein
where any initial hedge period (however defined), the calculation period
(however defined) or the relevant period (however defined) in such other
transaction will overlap at any time (including as a result of extensions in
such initial hedge period, calculation period or relevant period as provided
in
the relevant agreements) with any Hedge Period or Relevant Period under this
Master Confirmation. In the event that the initial hedge period, calculation
period or relevant period in any other similar transaction overlaps with any
Hedge Period or Relevant Period under this Master Confirmation as a result
of an
extension of the Termination Date pursuant to Section 6 herein, Counterparty
shall promptly amend such transaction to avoid any such overlap.
6. Suspension
of Hedge Period or Calculation Period.
(a) If
Counterparty concludes that it will be engaged in a distribution of the Shares
for purposes of Regulation M, Counterparty agrees that it will, on a day no
later than the Scheduled Trading Day immediately preceding the start of the
relevant restricted period, provide MLI with a Regulation M Distribution Notice.
Upon the effectiveness of such Regulation M Distribution Notice, MLI shall
halt
any purchase of Shares in connection with hedging any Transaction during the
relevant restricted period (other than any purchases made by MLI in connection
with dynamic hedge adjustments of MLI’s exposure to any Transaction as a result
of any equity optionality contained in such Transaction). If on any Scheduled
Trading Day Counterparty delivers the Regulation M Distribution Notice in
writing (and confirms by telephone) by 8:30 a.m. New York City time (the
“Notification Time”) then such notice shall be effective as of such Notification
Time. In the event that Counterparty delivers such Regulation M Distribution
Notice in writing and/or confirms by telephone after the Notification Time,
then
such notice shall be effective as of 8:30 a.m. New York City time on the
following Scheduled Trading Day or as otherwise required by law or agreed
between Counterparty and MLI Upon the effectiveness of such Regulation M
Distribution Notice, the Calculation Period or the Hedge Period, as the case
may
be, shall be suspended and the Termination Date or the Hedge Completion Date
or
both, as the case may be, shall postponed for each Scheduled Trading Day in
such
restricted period; accordingly, Counterparty acknowledges that its delivery
of
such notice must comply with the standards set forth in Section 7 below,
including, without limitation, the requirement that such notice be made at
a
time at which none of Counterparty or any officer, director, manager or similar
person of Counterparty is aware of any material non-public information regarding
Counterparty or the Shares.
(b) In
the
event that MLI reasonably concludes, in its good faith discretion, based on
advice of outside legal counsel, that it is appropriate with respect to any
legal, regulatory or self-regulatory requirements or related policies and
procedures (whether or not such requirements, policies or procedures are imposed
by law or have been voluntarily adopted by MLI), for it to refrain from
purchasing Shares on any Scheduled Trading Day during the Hedge Period or the
Calculation Period, MLI may by written notice to Counterparty (confirmed by
telephone) elect to suspend the Hedge Period or the Calculation Period, as
the
case may be, for such number of Scheduled Trading Days as is specified in the
notice; provided that MLI may exercise this right to suspend only in
relation to events or circumstances that are unknown to it or any of its
affiliates at the Trade Date of any Transaction, occur within the normal course
of its or any of its affiliates’ businesses, and are not the result of
deliberate actions of it or any of its affiliates with the intent to avoid
its
obligations under the terms of any Transaction. The notice shall not specify,
and MLI shall not otherwise communicate to Counterparty, the reason for MLI’s
election to suspend the Hedge Period or the Calculation Period, as the case
may
be. The Hedge Period or the Calculation Period, or both, as the case may be,
shall be suspended and the Termination Date shall be extended for each Scheduled
Trading Day occurring during any such suspension.
(c) In
the
event that the Calculation Period or the Hedge Period, as the case may be,
is
suspended pursuant to Section 6(a) or 6(b) above during the regular trading
session on the Exchange, such suspension shall be deemed to be an additional
Market Disruption Event, and the second and third paragraphs under “Market
Disruption Event” shall apply.
(d) In
the
event that the Calculation Period is extended pursuant to any provision hereof
(including, without limitation, pursuant to Section 10(d) below), the
Calculation Agent, in its good faith and commercially reasonable discretion,
shall adjust any relevant terms of the related Transaction if necessary to
preserve as nearly as practicable the economic terms of such Transaction prior
to such extension; provided that Counterparty shall not be required to
make any additional cash payments or deliver any Shares in connection with
any
such adjustments.
7. 10b5-1
Plan. Counterparty represents, warrants and covenants to MLI that
for each Transaction:
(a) Counterparty
is entering into this Master Confirmation and each Transaction hereunder in
good
faith and not as part of a plan or scheme to evade the prohibitions of Rule
10b5-1 under the Exchange Act (“Rule 10b5-1”) or any antifraud
or anti-manipulation provisions of the federal or applicable state securities
laws and that it has not entered into or altered and will not enter into or
alter any corresponding or hedging transaction or position with respect to
the
Shares. Counterparty acknowledges that it is the intent of the parties that
each
Transaction entered into under this Master Confirmation comply with the
requirements of Rule 10b5-1(c)(1)(i)(A) and (B) and each Transaction entered
into under this Master Confirmation shall be interpreted to comply with the
requirements of Rule 10b5-1(c).
(b) Counterparty
will not seek to control or influence MLI to make “purchases or sales” (within
the meaning of Rule 10b5-1(c)(1)(i)(B)(3)) under any Transaction entered into
under this Master Confirmation, including, without limitation, MLI’s decision to
enter into any hedging transactions. Counterparty represents and warrants that
it has consulted with its own advisors as to the legal aspects of its adoption
and implementation of this Master Confirmation, each Supplemental Confirmation
and each Trade Notification under Rule 10b5-1.
(c) Counterparty
acknowledges and agrees that any amendment, modification, waiver or termination
of this Master Confirmation, the relevant Supplemental Confirmation or Trade
Notification must be effected in accordance with the requirements for the
amendment or termination of a “plan” as defined in Rule
10b5-1(c). Without limiting the generality of the foregoing, any such amendment,
modification, waiver or termination shall be made in good faith and not as
part
of a plan or scheme to evade the prohibitions of Rule 10b-5, and no such
amendment, modification, waiver or termination shall be made at any time at
which Counterparty or any officer, director, manager or similar person of
Counterparty is aware of any material non-public information regarding
Counterparty or the Shares.
8. Counterparty
Purchases.
Counterparty
(or any “affiliated purchaser” as defined in Rule 10b-18 under the Exchange Act
(“Rule 10b-18”)) shall not, without the prior written consent
of MLI, directly or indirectly purchase any Shares (including by means of a
derivative instrument), listed contracts on the Shares or securities that are
convertible into, or exchangeable or exercisable for Shares (including, without
limitation, any Rule 10b-18 purchases of blocks (as defined in Rule 10b-18))
during any Hedge Period or Relevant Period (as extended pursuant to the
provisions hereof). During this time, any such purchases by Counterparty shall
be made through MLI, or if not through MLI, with the prior written consent
of
MLI (which shall not be unreasonably withheld), and in compliance with Rule
10b-18 or otherwise in a manner that Counterparty and MLI reasonably believe
is
in compliance with applicable requirements. However, the foregoing shall not
limit Counterparty’s ability, pursuant to its employee incentive plan, to
re-acquire Shares in connection with the related equity transactions or to
limit
Counterparty’s ability to withhold shares to cover tax liabilities associated
with such equity transaction or otherwise restrict Counterparty’s ability to
repurchase Shares under privately negotiated transactions with any of its
employees, officers, directors or affiliates, so long as any re-acquisition,
withholding or repurchase does not constitute a “Rule 10b-18 purchase” (as
defined in Rule 10b-18). Furthermore, this Section shall not restrict any
purchase by Counterparty of Shares effected during any suspension of any Hedge
Period or Calculation Period in accordance with Section 6(b).
9. Additional
Termination Event. The declaration of any Extraordinary Dividend
by the Issuer during the Calculation Period for any Transaction will constitute
an Additional Termination Event, with Counterparty as the sole Affected Party
and all Transactions hereunder as the Affected Transactions.
10. Special
Provisions for Merger Transactions. Notwithstanding anything to
the contrary herein or in the Equity Definitions,
(a) Counterparty
shall, prior to the opening of trading in the Shares on any day during any
Hedge
Period or Calculation Period on which Counterparty makes, or expects to be
made,
any public announcement (as defined in Rule 165(f) under the Securities Act
of
1933, as amended) of any Merger Transaction, notify MLI of such public
announcement;
(b) promptly
notify MLI following any such announcement that such announcement has been
made;
and
(c) promptly
provide MLI with written notice specifying (i) Counterparty’s average daily Rule
10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar
months immediately preceding the Announcement Date that were not effected
through MLI or its affiliates and (ii) the number of Shares purchased pursuant
to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full
calendar months preceding the Announcement Date. Such written notice shall
be
deemed to be a certification by Counterparty to MLI that such information is
true and correct. In addition, Counterparty shall promptly notify MLI of the
earlier to occur of the completion of such transaction and the completion of
the
vote by target shareholders. Counterparty acknowledges that any such notice
may
cause the terms of any Transaction to be adjusted or such Transaction to be
terminated; accordingly, Counterparty acknowledges that its delivery of such
notice must comply with the standards set forth in Section 7;
and
(d) MLI
in
its good faith and commercially reasonable discretion may (i) make adjustments
to the terms of any Transaction, including, without limitation, the Termination
Date, the Forward Price Adjustment Amount and the Maximum Shares to account
for
the number of Shares that could be purchased on each day during the Hedge Period
or the Calculation Period in compliance with Rule 10b-18 following such public
announcement, provided that Counterparty shall not be required to make
any additional cash payments or deliver any Shares in connection with any such
adjustments or (ii) treat the occurrence of such public announcement as an
Additional Termination Event with Counterparty as the sole Affected Party and
the Transactions hereunder as the Affected Transactions.
“Merger
Transaction” means any merger, acquisition or similar transaction
involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under
the
Exchange Act.
11. Acknowledgments. The
parties hereto intend for:
(a) each
Transaction to be a “securities contract” as defined in Section 741(7) of the
Bankruptcy Code, a “swap agreement” as defined in Section 101(53B) of the
Bankruptcy Code and a “forward contract” as defined in Section 101(25) of the
Bankruptcy Code, and the parties hereto to be entitled to the protections
afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 362(b)(27),
362(o), 546(e), 546(g), 555, 556, 560 and 561 of the Bankruptcy
Code;
(b) the
Agreement to be a “master netting agreement” as defined in Section 101(38A) of
the Bankruptcy Code;
(c) a
party’s
right to liquidate or terminate any Transaction, net out or offset termination
values or payment amounts, and to exercise any other remedies upon the
occurrence of any Event of Default or Termination Event under the Agreement
with
respect to the other party or any Extraordinary Event that results in the
termination or cancellation of any Transaction to constitute a “contractual
right” (as defined in the Bankruptcy Code);
(d) any
cash,
securities or other property transferred as performance assurance, credit
support or collateral with respect to each Transaction to constitute “margin
payments” (as defined in the Bankruptcy Code); and
(e) all
payments for, under or in connection with each Transaction, all payments for
the
Shares and the transfer of such Shares to constitute “settlement payments” and
“transfers” (as defined in the Bankruptcy Code).
12. Credit
Support Documents. The parties hereto acknowledge that no
Transaction hereunder is secured by any collateral.
13. Limitation
on Set-off. (a) Notwithstanding
anything to the contrary in the Agreement or the Equity Definitions, the
calculation of any Settlement Amounts and Unpaid Amounts shall be calculated
separately for (A) all Terminated Transactions in the Shares of the Issuer
that
qualify as equity under applicable accounting rules (collectively, the
“Equity Shares”) as determined by the Calculation Agent and (B)
all other Terminated Transactions under the Agreement including, without
limitation, Transactions in Shares other than those of the Issuer (collectively,
the “Other Shares”) and the netting and set-off provisions of
the Agreement shall only operate to provide netting and set-off (i) among
Terminated Transactions in the Equity Shares and (ii) among Terminated
Transactions in the Other Shares. In no event shall the netting and set-off
provisions of the Agreement operate to permit netting and set-off between
Terminated Transactions in the Equity Shares and Terminated Transactions in
the
Other Shares.
(b) The
parties agree that upon the occurrence of an Event of Default or Termination
Event with respect to a party who is the Defaulting Party or an Affected Party
(“X”), the other party (“Y”) will have the
right (but not be obliged) without prior notice to X or any other person to
set-off or apply any obligation of X owed to Y (or any Affiliate of Y) (whether
or not matured or contingent and whether or not arising under the Agreement,
and
regardless of the currency, place of payment or booking office of the
obligation) against any obligation of Y (or any Affiliate of Y) owed to X
(whether or not matured or contingent and whether or not arising under the
Agreement, and regardless of the currency, place of payment or booking office
of
the obligation). Y will give notice to the other party of any set-off effected
under this Section 13.
Amounts
(or the relevant portion of such amounts) subject to set-off may be converted
by
Y into the Termination Currency at the rate of exchange at which such party
would be able, acting in a reasonable manner and in good faith, to purchase
the
relevant amount of such currency. If any obligation is unascertained, Y may
in
good faith estimate that obligation and set-off in respect of the estimate,
subject to the relevant party accounting to the other when the obligation is
ascertained. Nothing in this Section 13 shall be effective to create a charge
or
other security interest. This Section 13 shall be without prejudice and in
addition to any right of set-off, combination of accounts, lien or other right
to which any party is at any time otherwise entitled (whether by operation
of
law, contract or otherwise).
(c) Notwithstanding
anything to the contrary in the foregoing, MLI agrees not to set off or net
amounts due from Counterparty with respect to any Transaction against amounts
due from MLI to Counterparty with respect to contracts or instruments that
are
not Equity Contracts. “Equity Contract” means any transaction
or instrument that does not convey rights to MLI senior to claims of common
stockholders in the event of Counterparty’s bankruptcy.
14. Early
Termination. In the event that an Early Termination Date (whether
as a result of an Event of Default or a Termination Event) occurs or is
designated with respect to any Transaction (except as a result of a Merger
Event
in which the consideration or proceeds to be paid to holders of Shares consists
solely of cash), if MLI would owe any amount to Counterparty pursuant to Section
6(d)(ii) of the Agreement (calculated as if the Transactions being terminated
on
such Early Termination Date were the sole Transactions under the Agreement)
(any
such amount, a “MLI Amount”), then, in lieu of any payment of
such MLI Amount, Counterparty may, no later than the Early Termination Date
or
the date on which such Transaction is terminated, elect for MLI to deliver
to
Counterparty a number of Shares (or, in the case of a Merger Event, a number
of
units, each comprising the number or amount of the securities or property that
a
hypothetical holder of one Share would receive in such Merger Event (each such
unit, an “Alternative Delivery Unit” and, the securities or
property comprising such unit, “Alternative Delivery
Property”)) with a value equal to the MLI Amount, as determined by the
Calculation Agent (and the parties agree that, in making such determination
of
value, the Calculation Agent may take into account a number of factors,
including the market price of the Shares or Alternative Delivery Property on
the
date of early termination and the prices at which MLI purchases Shares or
Alternative Delivery Property to fulfill its delivery obligations under this
Section 14); provided that in determining the composition of any
Alternative Delivery Unit, if the relevant Merger Event involves a choice of
consideration to be received by holders, such holder shall be deemed to have
elected to receive the maximum possible amount of cash.
15. Payment
Date upon Early Termination. Notwithstanding anything to the
contrary in Section 6(d)(ii) of the Agreement, all amounts calculated as being
due in respect of an Early Termination Date under Section 6(e) of the Agreement
will be payable on the day that notice of the amount payable is effective;
provided that if Counterparty elects to receive Shares or Alternative
Delivery Property in accordance with Section 14), such Shares or Alternative
Delivery Property shall be delivered on a date selected by MLI as promptly
as
practicable.
16. Special
Provisions for Counterparty Payments. The parties hereby agree
that, notwithstanding anything to the contrary herein or in the Agreement,
in
the event that an Early Termination Date (whether as a result of an Event of
Default or a Termination Event) occurs or is designated with respect to any
Transaction and, as a result, Counterparty owes to MLI an amount calculated
under Section 6(e) of the Agreement (calculated as if the Transactions being
terminated on such Early Termination Date were the sole Transactions under
the
Agreement), such amount shall be deemed to be zero. It is understood and agreed
that once Buyer has paid the Prepayment Amount for any Transaction, it has
no
further obligations to deliver cash or securities upon the settlement of such
Transaction or under Section 6(e) of the Agreement in respect of such
Transaction.
17. Claim
in Bankruptcy. MLI agrees that in the event of the bankruptcy of
Counterparty, MLI shall not have rights or assert a claim that is senior in
priority to the rights and claims available to the shareholders of the common
stock of Counterparty.
18. Governing
Law. The Agreement, this Master Confirmation, each Supplemental
Confirmation, each Trade Notification and all matters arising in connection
with
the Agreement, this Master Confirmation, each Supplemental Confirmation and
each
Trade Notification shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York (without reference to its
choice of laws doctrine).
19. Offices.
(a) The
Office of MLI for each Transaction is: Merrill Lynch Financial
Centre, 2 King Edward Street, London EC1A 1HQ. The Office of
Counterparty for each Transaction is: 500 Volvo Parkway, Chesapeake,
Virginia 23320.
20. Arbitration. The
Agreement, this Master Confirmation, each Supplemental Confirmation and each
Trade Notification are subject to the following arbitration
provisions:
(a) All
parties to this Confirmation are giving up the right to sue each other in court,
including the right to a trial by jury, except as provided by the rules of
the
arbitration forum in which a claim is filed.
(b) Arbitration
awards are generally final and binding; a party’s ability to have a court
reverse or modify an arbitration award is very limited.
(c) The
ability of the parties to obtain documents, witness statements and other
discovery is generally more limited in arbitration than in court
proceedings.
(d) The
arbitrators do not have to explain the reason(s) for their
award.
(e) The
panel of arbitrators will typically include a minority of arbitrators who were
or are affiliated with the securities industry, unless Counterparty is a member
of the organization sponsoring the arbitration facility, in which case all
arbitrators may be affiliated with the securities
industry.
(f) The
rules of some arbitration forums may impose time limits for bringing a claim
in
arbitration. In some cases, a claim that is ineligible for arbitration may
be
brought in court.
(g) The
rules of the arbitration forum in which the claim is filed, and any amendments
thereto, shall be incorporated into this Confirmation.
Counterparty
agrees that any and all controversies that may arise between Counterparty and
MLI, including, but not limited to, those arising out of or relating to the
Agreement or any Transaction hereunder, shall be determined by arbitration
conducted before The New York Stock Exchange, Inc. (“NYSE”) or NASD Dispute
Resolution (“NASD-DR”), or, if the NYSE and NASD-DR decline to hear the matter,
before the American Arbitration Association, in accordance with their
arbitration rules then in force. The award of the arbitrator shall be final,
and
judgment upon the award rendered may be entered in any court, state or federal,
having jurisdiction.
No
person shall bring a putative or certified class action to arbitration, nor
seek
to enforce any pre-dispute arbitration agreement against any person who has
initiated in court a putative class action or who is a member of a putative
class who has not opted out of the class with respect to any claims encompassed
by the putative class action until: (i) the class certification is
denied; (ii) the class is decertified; or (iii) Counterparty is excluded from
the class by the court.
Such
forbearance to enforce an agreement to arbitrate shall not constitute a waiver
of any rights under this Confirmation except to the extent stated
herein.”
21. Counterparts.
This Master Confirmation may be executed in any number of counterparts, all
of
which shall constitute one and the same instrument, and any party hereto may
execute this Master Confirmation by signing and delivering one or more
counterparts.
Please
confirm that the foregoing correctly sets forth the terms of our agreement
by
executing the copy of this Master Confirmation enclosed for that purpose and
returning it to us.
Very
truly yours,
MERRILL
LYNCH INTERNATIONAL
By:
_/s/ Tyler Mullin_____________________________
Name:
Tyler Mullin
Title:
Equity Derivatives Documentation
Confirmed
as of the date first above written:
DOLLAR
TREE STORES, INC.
By:
__/s/ Kent A. Kleeberger__________________________
Name: Kent
Kleeberger
Title: Senior
Vice President, Chief Financial Officer
Acknowledged
and agreed as to matters relating to the Agent:
MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
solely
in its capacity as Agent hereunder
By:
_/s/ Fran Jacobson______________________________
Name:
Fran Jacobson
Title:
Vice President, Equity Derivatives Documentation
