Exhibit 10.(i)(5)
THIRD AMENDMENT
TO
CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the "Third Amendment")
dated as of February 23, 1999 relates to that certain Credit Agreement
dated as of February 27, 1997, as amended by the First Amendment dated as
of February 9, 1998, as further amended by the Second Amendment to Credit
Agreement dated as of April 29, 1998 (as so amended, the "Credit
Agreement"), among The Southland Corporation, a Texas corporation
("Southland"), the financial institutions party thereto as "Senior
Lenders" or "Issuing Banks", Citibank, N.A., as administrative agent for
the Senior Lenders and Issuing Banks (in such capacity, together with any
successor administrative agent appointed pursuant to SECTION 11.07 of the
Credit Agreement, the "Administrative Agent") and The Sakura Bank,
Limited, New York Branch, as Co-Agent (in such capacity, the "Co-Agent").
1. DEFINITIONS. Capitalized terms defined in the Credit
Agreement and not otherwise defined or redefined herein have the meanings
assigned to them in the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. Upon the "Third Amendment
Effective Date" (as defined in Section 5 below), the Credit Agreement is
hereby amended as follows:
2.1 AMENDMENT TO SECTION 1.01. Section 1.01 of the
Credit Agreement is hereby amended by adding the definition of "CQUIDS
Subordinated Notes" in its entirety to read as follows:
"CQUIDS SUBORDINATED NOTES" shall mean one or more
Quarterly Income Debt Securities issued by Southland to Ito-Yokado or
Seven-Eleven Japan, Co., Ltd. subsequent to the Third Amendment Effective
Date in the aggregate principal amount of up to $500,000,000 the terms
and provisions of which shall be no less favorable to the Senior Lenders
than the terms and provisions of the QUIDS Subordinated Notes, PROVIDED
that prior to the issuance thereof, the Administrative Agent shall have
received such legal opinions as the Administrative Agent shall reasonably
request, each of which shall be in form and substance satisfactory to the
Tab 1
Administrative Agent, PROVIDED, FURTHER, that the net proceeds thereof
shall be applied in accordance with SECTION 2.07(b)."
2.2 AMENDMENT TO SECTION 1.01. Section 1.01 of the
Credit Agreement is hereby amended by amending and restating the
definition of "Subordinated Indebtedness" in its entirety to read as
follows:
"SUBORDINATED INDEBTEDNESS" shall mean the Indebtedness
evidenced by, or in respect of, (i) the Senior Subordinated Debentures,
(ii) the QUIDS Subordinated Notes, (iii) CQUIDS Subordinated Notes and
(iv) any additional Indebtedness (A) subordinated in right of payment on
terms not less favorable to the Senior Lenders, and subject to terms and
conditions (including, but not limited to, covenants, events of default
and payment terms) not more burdensome to Southland, than the
subordination provisions, covenants and events of default applicable to
the Senior Subordinated Debentures or (B) incurred on other terms
approved in writing by the Requisite Senior Lenders.
2.3 AMENDMENT TO SECTION 2.05(a)(ii). Section 2.05(a)(ii)
of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:
(ii) If a Eurodollar Rate Loan, then at a rate per annum
equal to the sum of (A) 0.475% per annum PLUS (B) the Eurodollar Rate
determined for the applicable Eurodollar Interest Period; or
2.4 AMENDMENT TO SECTION 2.07(b). Section 2.07(b) of the
Credit Agreement is hereby amended and restated in its entirety to read
as follows:
(b) MANDATORY PREPAYMENT. (i) Southland shall make
prepayments of Revolving Loans to the extent necessary to assure that
the Revolving Credit Obligations at any time do not exceed the Revolving
Credit Commitments at such time. If, after giving effect to any
prepayment of the Revolving Loans made pursuant to the preceding
sentence, the Revolving Credit Obligations at such time continue to
exceed the Revolving Credit Commitments at such time, Southland shall,
notwithstanding any provision to the contrary herein or in any
Competitive Bid Note, make prepayments of Competitive Bid Loans to the
extent necessary to assure that the Revolving Credit Obligations at such
time do not exceed the Revolving Credit Commitments at such time.
(ii) Upon each issuance of CQUIDS Subordinated Notes,
Southland shall apply no less than fifty percent (50%) of the net
proceeds thereof (other than the first $100,000,000 of aggregate net
proceeds), (A) first, to the repayment of the then outstanding principal
amount of Term Loans to be applied pro rata to reduce the then remaining
quarterly installments payable on the Term Loans pursuant to SECTION
2.01(d), (B) second, to the permanent reduction of Revolving Credit
Commitments, and (C) thereafter, to the repayment of all other
Obligations.
2.5 AMENDMENT TO SECTION 2.09(b)(v). Section 2.09(b)(v)
of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:
(v) There shall be no more than fifteen (15) Eurodollar
Interest Periods in effect at any one time.
2.6 AMENDMENT TO SECTION 8.01. Section 8.01 of the
Credit Agreement is hereby amended by (I) amending and restating CLAUSE
(iii) thereof in its entirety to read as follows:
(iii) Subordinated Indebtedness (other than QUIDS
Subordinated Notes and CQUIDS Subordinated Notes) and extensions,
renewals, replacements and refinancings thereof which satisfy the
criteria set forth in the definition of "Subordinated Indebtedness", the
aggregate principal amount of which shall not exceed $370,000,000
(together with, in the case of a refinancing, interest accrued thereon
and reasonable costs incurred in connection with the refinancing);
(ii) amending and restating CLAUSE (v) thereof in its entirety
to read as follows:
(v)(A) Capital Lease obligations (other than such
obligations included in Permitted Existing Indebtedness and the Master
Lease Facility) and Indebtedness incurred in connection with Capital
Expenditures (and within a reasonable period of time thereafter), if (1)
such Capital Lease obligations and Indebtedness are incurred in
connection with the acquisition of assets at fair value after the
Effective Date, (2) such Capital Lease obligations and Indebtedness are
either unsecured or secured only by the assets subject to such Capital
Lease or which are the subject of such Capital Expenditure, and (3) any
Liens securing such Capital Lease obligations or Indebtedness do not
exceed the purchase price of the assets and the costs incurred in
connection with the acquisition of such assets; (B) sale and leaseback
transactions (other than the Master Lease Facility) and Accommodation
Obligations with respect to financing incurred by lessors solely for the
purpose of acquiring and constructing stores, store sites and related
fixtures and equipment which are or are to be leased by Southland, if the
obligations and Indebtedness incurred in connection with such transaction
are either unsecured or secured only by the assets subject to such
transactions; and (C) extensions, renewals, replacements or refinancings
thereof, not exceeding the principal amount outstanding before giving
effect to the extension, renewal, replacement or refinancing (together
with, in the case of a refinancing, interest accrued thereon and
reasonable costs incurred in connection with the refinancing); PROVIDED,
that the aggregate principal amount outstanding at any time pursuant to
SECTION 8.01(v)(B) (other than such obligations or Indebtedness included
in Permitted Existing Indebtedness) and extensions, renewals,
replacements and refinancings thereof pursuant to SECTION 8.01(v)(C) do
not exceed $300,000,000 (of which no more than $233,000,000 shall consist
of Accommodation Obligations with respect to financing incurred by
lessors solely for the purpose of acquiring and constructing stores,
store sites and related fixtures and equipment which are or are to be
leased by Southland);
(iii) amending and restating CLAUSE (xiv) thereof in its entirety
to read as follows:
(xiv) unsecured Indebtedness which is either (A)
Commercial Paper or (B) owing to Ito-Yokado in connection with payments
by Ito-Yokado of the principal of or interest on (or other amounts owing
with respect to) Commercial Paper; PROVIDED, that the aggregate principal
amount outstanding pursuant to SUBCLAUSES (A) and (B) shall not exceed
$700,000,000, and PROVIDED, FURTHER, that a written commitment by Ito-
Yokado to the Administrative Agent or Senior Lenders satisfactory in form
and substance to the Administrative Agent with respect to the
Indebtedness permitted by SECTION 8.01(xiv)(B) shall provide that no
payment (whether in respect of principal, interest or otherwise) of such
Indebtedness shall be permitted or required other than (1) payments after
the date which is one year after payment in full in cash of the
Obligations and termination of the Commitments and (2) so long as there
does not exist an Event of Default or Potential Event of Default and the
Commercial Paper shall then have a rating of at least A-1 from S&P or
Prime-1 from Moody's (or, if at any time neither Standard and Poors nor
Moody's shall be rating the Commercial Paper, the Commercial Paper shall then
have a rating at least equal to the highest rating from such other nationally
recognized rating service as is acceptable to the Administrative Agent),
payments of the principal amount of such Indebtedness made solely with
proceeds of subsequent issuances of Commercial Paper by Southland.
Notwithstanding the foregoing and so long as (x) there exists an Event of
Default or Potential Event of Default, or (y) commercial paper issued
pursuant to this SECTION 8.01(xiv) shall cease to qualify as Commercial
Paper, Southland shall not permit any further issuances of commercial
paper, and any payments of principal of or interest on (or other amounts
owing with respect to) Commercial Paper then outstanding shall be paid
directly by Ito-Yokado pursuant to its unconditional guarantee thereof
and shall not be paid by Southland;
(ii) amending and restating CLAUSE (xv) thereof in its
entirety to read as follows:
(xv) Indebtedness with respect to QUIDS Subordinated Notes in
an aggregate principal amount not exceeding $380,000,000 and Indebtedness
with respect to CQUIDS Subordinated Notes in an aggregate principal
amount not exceeding $500,000,000;
2.7 AMENDMENT TO SECTION 8.10. Section 8.10 of the
Credit Agreement is hereby amended and restated in its entirety to read
as follows:
8.10. COMMERCIAL PAPER FACILITY. Southland shall not
amend the terms of the documents governing or relating to the
Commercial Paper other than (i) increases in the maximum amount of
Commercial Paper which may at any time be outstanding, PROVIDED,
HOWEVER, that the maximum principal amount of Commercial Paper
outstanding at any time shall not exceed the limitation set forth
in SECTION 8.01(xiv), and (ii) extensions of the date beyond which
Southland may not issue Commercial Paper pursuant to such
documents (including an extension of the guaranty of Ito-Yokado
with respect to the Commercial Paper).
2.8 AMENDMENT TO SECTION 9.01. Section 9.01 of the
Credit Agreement is hereby amended and restated in its entirety to read
as follows:
9.01. SENIOR INDEBTEDNESS TO EBITDA. Southland shall not
on any Quarterly Determination Date occurring during any period set out
below permit the ratio of (i) Senior Indebtedness (other than
Indebtedness not exceeding $41,400,000 arising under the Master Lease
Documents) as of such Quarterly Determination Date to (ii) EBITDA as
determined as of such Quarterly Determination Date for the four (4)
calendar quarters ending on such date, to be greater than the ratio set
out below opposite such period:
PERIOD MAXIMUM RATIO
------ -------------
Effective Date through March 31, 1998 3.40x
April 1, 1998 through March 31, 1999 4.10x
April 1, 1999 through June 30, 1999 4.00x
July 1, 1999 through March 31, 2000 3.95x
April 1, 2000 through June 30, 2000 3.65x
July 1, 2000 through September 30, 2000 3.50x
October 1, 2000 and thereafter 3.25x
2.6 AMENDMENT TO SECTION 9.02. Section 9.02 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
9.02. MINIMUM INTEREST AND RENT COVERAGE RATIO. Southland
shall not on any Quarterly Determination Date occurring during any period
set out below permit the ratio of (i) the sum of (A) EBITDA, PLUS (B)
Rent Expense on Operating Leases to (ii) the sum of (A) Consolidated Cash
Interest Expense, PLUS (B) Rent Expense on Operating Leases, in each case
as determined as of such Quarterly Determination Date for the four (4)
calendar quarters ending on such date, to be less than the ratio set out
below opposite such period:
PERIOD MINIMUM RATIO
------ -------------
Effective Date through March 31, 1998 2.00x
April 1, 1998 through December 31, 1998 1.80x
January 1, 1999 through December 31, 1999 1.90x
January 1, 2000 through March 31, 2000 1.95x
April 1, 2000 through September 30, 2000 2.00x
October 1, 2000 and thereafter 2.10x
2.7 AMENDMENT TO SECTION 9.03(b). Section 9.03(b) of the
Credit Agreement is hereby amended and restated in its entirety to read
as follows:
(b) Southland shall not on any Quarterly Determination
Date occurring during any period set out below permit the
ratio of (i) EBITDA to (ii) Consolidated Fixed Charges, in
each case as determined as of such Quarterly Determination
Date for the four (4) calendar quarters ending on such date,
to be less than the ratio set out below opposite such period:
PERIOD MINIMUM RATIO
------ -------------
April 1, 1998 through December 31, 1999 1.50x
January 1, 2000 through March 31, 2000 1.65x
April 1, 2000 through June 30, 2000 1.70x
July 1, 2000 and thereafter 1.75x
2.9 AMENDMENT TO SECTION 9.04. Section 9.04 of the Credit
Agreement is hereby amended and restated in its entirety to read as
follows:
9.04. TOTAL EXPENDITURES. Southland shall not, and shall not
permit its Subsidiaries to, make or incur (i) Capital Expenditures, and
(ii) Accommodation Obligations with respect to financing incurred by
lessors solely for the purpose of acquiring and constructing stores,
store sites and related fixtures and equipment which are or are to be
leased by Southland (the sum of the aggregate principal amounts under
SUBCLAUSES (i) and (ii) in any Fiscal Year being, the "Total
Expenditures") which in the aggregate exceed $475,000,000 in any Fiscal
Year; PROVIDED, HOWEVER, that Southland and its Subsidiaries may exceed
the $475,000,000 limitation for any Fiscal Year in an amount (the "Total
Expenditure Carryover") equal to fifty percent (50%) of the difference of
$475,000,000 MINUS the Total Expenditures for the preceding Fiscal Year,
PROVIDED, FURTHER, that the Total Expenditure Carryover in any Fiscal
Year shall not exceed $15,000,000.
3. AMENDMENT FEE. In addition to any other fees, expenses, or
costs payable by Southland, Southland shall pay to the Administrative
Agent on the Third Amendment Effective Date (as defined in Section 5) for
the account of such Senior Lenders as become signatories to this Third
Amendment on or before March 10, 1999, a fee equal to 0.125% of the
aggregate amount of the Commitments of such Senior Lenders in effect on
March 10, 1999 payable in lawful money of the United States in
immediately available funds.
4. REPRESENTATIONS AND WARRANTIES. Southland hereby
represents and warrants to each Senior Lender, each Issuing Bank, the
Administrative Agent and the Co-Agent that (a) each of the statements set
forth in Section 5.01 of the Credit Agreement (as amended hereby) are
true, correct and complete on and as of the Third Amendment Effective
Date as though made to each Senior Lender, each Issuing Bank, the
Administrative Agent and the Co-Agent on and as of such date and (b) as
of the Third Amendment Effective Date, no Event of Default or Potential
Event of Default has occurred and is continuing.
5. THIRD AMENDMENT EFFECTIVE DATE. This Third Amendment
shall become effective as of MARCH 10, 1999 (the "Third Amendment
Effective Date") upon receipt by the Administrative Agent of (i) a
reaffirmation of commitments made by Ito-Yokado pursuant to SECTION
8.01(xiv) of the Credit Agreement (as amended by this Third Amendment) in
form and substance satisfactory to the Administrative Agent and (ii)
counterparts of this Third Amendment, executed by Southland, the
Administrative Agent and the Requisite Senior Lenders (with sufficient
copies for each Senior Lender).
6. MISCELLANEOUS. This Third Amendment is a Loan Document.
The headings herein are for convenience of reference only and shall not
alter or otherwise affect the meaning hereof. Except to the extent
specifically amended or modified hereby, the provisions of the Credit
Agreement shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of any Senior Lender or Issuing Bank
under any of the Loan Documents, nor constitute a waiver of any provision
of any of the Loan Documents.
7. COUNTERPARTS. This Third Amendment may be executed in any
number of counterparts which together shall constitute one instrument.
8. GOVERNING LAW. THIS THIRD AMENDMENT, AND ALL ISSUES
RELATING TO THIS THIRD AMENDMENT, INCLUDING THE VALIDITY, ENFORCEABILITY,
INTERPRETATION OR CONSTRUCTION OF THIS THIRD AMENDMENT OR ANY PROVISION
HEREOF, SHALL BE GOVERNED BY, AND SHALL BE DETERMINED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Administrative Agent, the Requisite
Senior Lenders and Southland have caused this Third Amendment to be
executed by their respective officers thereunto duly authorized as of the
date first above written.
BORROWER: THE SOUTHLAND CORPORATION
By:
------------------------
Name:
Title:
ADMINISTRATIVE AGENT: CITIBANK, N.A., as the Administrative Agent
By:
--------------------------
Name:
Title:
SENIOR LENDERS: CITIBANK, N.A.
By:
--------------------------
Name:
Title:
THE SAKURA BANK, LIMITED, NEW
YORK BRANCH
By:
--------------------------
Name:
Title:
THE ASAHI BANK, LTD., NEW YORK
BRANCH
By:
---------------------------
Name:
Title:
BANK OF TOKYO, MITSUBISHI TRUST
COMPANY
By:
-----------------------------
Name:
Title:
THE FUJI BANK, LIMITED, NEW YORK
BRANCH
By:
-----------------------------
Name:
Title:
THE MITSUI TRUST AND BANKING
COMPANY, LIMITED, NEW YORK
BRANCH
By:
-----------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By: THE INDUSTRIAL BANK OF
JAPAN,LIMITED,HOUSTON OFFICE,
Authorized Representative
By:
---------------------------
Name:
Title:
NATIONSBANK, N.A.
By:
----------------------------
Name:
Title:
BANKERS TRUST COMPANY
By:
----------------------------
Name:
Title:
CIBC INC.
By:
---------------------------
Name:
Title:
