**Exhibit10 (ii)**

 

 FIRST AMENDMENT TO CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the“Amendment”) is made as of the 29th day of May, 2003 by and among FAMILY DOLLARSTORES, INC., FAMILY DOLLAR, INC. (collectively, the “Borrowers”), and WACHOVIABANK, NATIONAL ASSOCIATION (formerly known as First Union National Bank) (the“Bank”).

 

RECITALS:

 

The Borrowers andthe Bank entered into a certain Credit Agreement dated as of August 7, 2001 (asamended, modified or supplemented prior to the date hereof, including by letteramendment dated May 1, 2002, the “Credit Agreement”).  Capitalized terms used in this Amendment which are not otherwisedefined in this Amendment shall have the respective meanings assigned to themin the Credit Agreement.

 

The Borrowers andthe Bank wish to amend the Credit Agreement in certain respects, as hereinafterprovided.

 

NOW, THEREFORE, inconsideration of the Recitals and the mutual promises contained herein and forother good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the Borrowers and the Bank, intending to be legally boundhereby, agree as follows:

 

SECTION 1.  Recitals.  The Recitals are incorporated herein by reference and shall bedeemed to be a part of this Amendment.

 

SECTION 2.  Amendments to the Credit Agreement.  The Credit Agreement is hereby amended asset forth in this Section 2.

 

SECTION 2.1 Amendmentsto Definitions. The definitions set forth in Section 1.01 of the CreditAgreement are hereby amended by amending and restating in their entirety as setforth below the following defined terms:

 

“Tranche ACommitment” means the obligation of the Bank to make Tranche A Loanshereunder in an aggregate principal amount up to but not exceeding FiftyMillion Dollars ($50,000,000.00), as the same may be reduced pursuant toSections 2.01(c) and 2.12 or terminated pursuant to Section 2.12.

 

“Tranche ATermination Date” means May 31, 2005 except to the extent extended pursuantto Section 2.01(c), or such earlier date as the Tranche A Commitment isterminated pursuant to this Agreement.

 

“Tranche BCommitment” means the obligation of the Bank to make Tranche B Loanshereunder in an aggregate principal amount up to but not exceeding FiftyMillion Dollars ($50,000,000.00), as the same may be reduced or terminatedpursuant to Section 2.12.

 

“Tranche BTermination Date” means May 27, 2004, or such earlier date as the Tranche BCommitment is terminated pursuant to this Agreement.

 

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SECTION 2.2  Amendment to Section 2.01(c).  The reference in the first sentence ofSection 2.01(c) to “or seven (7) years” shall be deleted.

 

SECTION 2.3  Amendment to Section 2.03(c)(i).  Section 2.03(c)(i) is hereby deleted in itsentirety and replaced with the following:

 

(i)  installmentsof principal each in an amount equal to one-fifth of the original principalamount of such Term Loan shall be payable on the First Anniversary and SecondAnniversary of such Term Loan, and (B) thereafter (x) if the Borrower hasnotified the Bank pursuant to Section 2.01(c) that after the Second Anniversaryinstallments of principal will be payable quarterly, installments of principalshall be payable in twelve (12) equal, consecutive quarterly installments eachin a principal amount equal to one twelfth (1/12th) of the then outstandingprincipal amount of such Term Loan on the Second Anniversary after givingeffect to the scheduled payment of principal on such date, with the first suchquarterly installment being payable on the date occurring three (3) monthsafter the Second Anniversary and subsequent like installments being payableevery three (3) months thereafter, or (y) if the Borrower has notified the Bankpursuant to Section 2.01(c) that after the Second Anniversary installments ofprincipal will be payable semiannually, installments of principal shall bepayable in six (6) equal, consecutive semiannual installments each in aprincipal amount equal to one sixth (1/6th) of the then outstanding principalamount of such Term Loan after giving effect to the scheduled payment ofprincipal on such date, with the first such semiannual installment beingpayable on the date occurring six (6) months after the Second Anniversary andsubsequent like installments being payable every six (6) months thereafter.

 

SECTION 2.4  Amendment to Section 2.03(c)(ii).  Section 2.03(c)(ii) is hereby deleted in itsentirety.

 

SECTION 3.   Conditions to Effectiveness.  The effectiveness of this Amendment and theobligations of the Bank hereunder are subject to the satisfaction of thefollowing conditions:

 

(a)                 theBank shall have received (i) from each of the Borrowers and each of theGuarantors a counterpart hereof signed by such party; (ii) from each of theBorrowers, a duly executed Trache A Note in the amount of the Tranche ACommitment, which Tranche A Notes shall replace and supercede any prior TrancheA Notes; and (iii) from each of the Borrowers, a duly executed Trache B Note inthe amount of the Tranche B Commitment, which Tranche B Notes shall replace andsupercede any prior Tranche B Notes; and

 

(b)                theBank shall have received corporate borrowing resolutions duly adopted by theboard of directors (or the executive committee of the board of directors) ofeach Borrower and Guarantor authorizing the borrowings contemplated hereunder(and the obligations of the Guarantors pursuant to the Guaranty with respectthereto) and the execution, delivery, and performance of this Amendment.

 

SECTION 4.  No Other Amendment.  Except for the amendments set forth above,the text of the Credit Agreement and each of the other Loan Documents,including, without limitation, the Guaranty, shall

 

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remain unchanged and infull force and effect.  This Amendmentis not intended to effect, nor shall it be construed as, a novation.  The Credit Agreement and this Amendmentshall be construed together as a single agreement.  Nothing herein contained shall waive, annul, vary or affect anyprovision, condition, covenant or agreement contained in the Credit Agreement,except as herein amended, nor affect or impair any rights, powers or remediesunder the Credit Agreement as hereby amended. The Borrowers promise and agree to perform all of the requirements,conditions, agreement and obligations under the terms of the Credit Agreement,as hereby amended, the Credit Agreement, as amended, being hereby ratified andaffirmed.  The Borrowers herebyexpressly agree that the Credit Agreement, as amended, and each of the other LoanDocuments, is in full force and effect.

 

SECTION 5.  Representations and Warranties.  Each of the Borrowers hereby represents andwarrants to the Bank as follows:

 

(a)                 NoDefault or Event of Default under the Credit Agreement or any other LoanDocument has occurred and is continuing unwaived by the Bank on the datehereof;

 

(b)                Therepresentations and warranties of the Borrowers set forth in Article V of theCredit Agreement (as amended hereby) shall be true on and as of the datehereof.

 

(c)                 Eachof the Borrowers has the power and authority to enter into this Amendment andto do all acts and things as are required or contemplated hereunder, orthereunder, to be done, observed and performed by it.

 

(d)                ThisAmendment has been duly authorized, validly executed and delivered by one ormore authorized officers of each Borrower and constitutes a legal, valid andbinding obligation of each of the Borrowers, enforceable against each of theBorrowers in accordance with its terms, provided that such enforceability issubject to general principles of equity.

 

(e)                 Theexecution and delivery of this Amendment and the performance hereunder by eachof the Borrowers does not and will not require the consent or approval of anyregulatory authority or governmental authority or agency having jurisdictionover any Borrower, nor be in contravention of or in conflict with thecertificate of incorporation or bylaws of any Borrower, or the provision of anystatute, or any judgement, order, indenture, instrument, agreement or undertaking,to which any Borrower is party or by which the assets or properties of anyBorrower are or may become bound.

 

SECTION 6.  Counterparts.  This Amendment may be executed in multiplecounterparts each of which shall be deemed to be an original and all of which,taken together, shall constitute one and the same agreement.

 

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SECTION 7.  Governing Law.  This Amendment shall be governed by andconstrued in accordance with the laws of the State of North Carolina, withoutreference to the conflicts or choice of law principles thereof.

 

IN WITNESS WHEREOF, theparties hereto have caused this Amendment to be duly executed, under seal, bytheir respective authorized officers as of the day and year first above written.

 

 
|             |   |                        | **Borrowers:**                       |
|------------------|--------|-----------------------------|--------------------------------------|
|             |   |                        |                                 |
| [CORPORATE SEAL] |   | FAMILY DOLLAR STORES,  INC. |
|             |   |                        |                                 |
|             |   |                        |                                 |
|             |   |                        | By:                                  |         /s/  C. Martin Sowers |   |
|             |   |                        |                                 | Name: | C. MARTIN SOWERS |
|             |   |                        |                                 | Title: | Sr. Vice President -  Finance |
|             |   |                        |                                 |
| [CORPORATE SEAL] |   | FAMILY DOLLAR, INC.         |
|             |   |                        |                                 |
|             |   |                        | By:                                  |         /s/  C. Martin Sowers |   |
|             |   |                        |                                 | Name: | C. MARTIN SOWERS |
|             |   |                        |                                 | Title: | Sr. Vice President -  Finance |
|             |   |                        |                                 |
|             |   |                        |                                 |
|             |   |                        | **Bank:**                            |
|             |   |                        |                                 |
|             |   |                        | WACHOVIA BANK, NATIONAL  ASSOCIATION |
|             |   |                        |                                 |
|             |   |                        |                                 |
|             |   |                        | By:                                  |         /s/  Denis Waltrich |   |
|             |   |                        |                                 | Name: | DENIS WALTRICH |
|             |   |                        |                                 | Title: | Associate |
|                  |        |                             |                                      |  |  |  |

 

 

ACKNOWLEDGED AND AGREEDBY GUARANTORS:

 

 
| FAMILY DOLLAR SERVICES,  INC. | [CORPORATE SEAL]                                                      |
|-------------------------------|-----------------------------------------------------------------------|
|                          |
| By:                           |         /s/  C. Martin Sowers |   |
|                          | Name:                                                                 | C. MARTIN SOWERS |
|                          | Title:                                                                | Sr. Vice President -  Finance |
|                               |                                                                       |  |  |  |

 

[SIGNATURESCONTINUE ON FOLLOWING PAGE]

 

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| FAMILY DOLLAR  OPERATIONS, INC. | [CORPORATE SEAL]                                                      |
|---------------------------------|-----------------------------------------------------------------------|
|                            |
| By:                             |         /s/  C. Martin Sowers |   |
|                            | Name:                                                                 | C. MARTIN SOWERS |
|                            | Title:                                                                | Sr. Vice President -  Finance |
|                                 |                                                                       |  |  |  |

 
| FAMILY DOLLAR TRUCKING,  INC. | [CORPORATE SEAL]                                                      |
|-------------------------------|-----------------------------------------------------------------------|
|                          |
| By:                           |         /s/  C. Martin Sowers |   |
|                          | Name:                                                                 | C. MARTIN SOWERS |
|                          | Title:                                                                | Sr. Vice President -  Finance |
|                               |                                                                       |  |  |  |

 

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