SECOND AMENDMENT
TO
CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Second Amendment")
dated as of April 29, 1998 relates to that certain Credit Agreement dated
as of February 27, 1997, as amended by the First Amendment dated as of
February 9, 1998 (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.
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 "Second 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 amending and restating the
definition of "Master Lease Documents" in its entirety to read as
follows:
"MASTER LEASE DOCUMENTS" shall mean a Master Lease
evidencing the terms of the Master Lease Facility and any
agreements, documents and instruments executed in
connection therewith, as the same may be amended,
restated, supplemented or otherwise modified from time to
time, PROVIDED that the aggregate Dollar amount advanced
for assets leased under the lease facility shall not
exceed $115,000,000.
2.2 AMENDMENT TO SECTION 5.01. Section 5.01 of the
Credit Agreement is hereby amended by adding a new clause (xxviii)
at the end thereof to read as follows:
(xxviii) Year 2000. All reprogramming required to
permit the proper functioning, in and following the
year 2000, of the computer systems and equipment
Tab 1
operations of Southland and its Subsidiaries and the
testing of all such systems and equipment, as so
reprogrammed, will be materially completed in a timely
fashion and will not result in a Material Adverse
Effect.
2.3 AMENDMENT TO SECTION 8.01. Section 8.01 of the
Credit Agreement is hereby amended by (i) amending and restating
CLAUSE (i) thereof in its entirety to read as follows:
(i) the Obligations and the obligations arising
under the Master Lease Documents;
and (ii) amending and restating clause (v) thereof in its entirety
to read as follows:
(v) Indebtedness consisting of (A) Capital Lease
obligations, (B) Indebtedness incurred in connection with
Capital Expenditures (and within a reasonable period of
time thereafter), (C) obligations under sale and leaseback
transactions, (D) 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 and (E) extensions, renewals, replacements or
refinancings of the Indebtedness described in SUBCLAUSES
(A) through (D) of this SECTION 8.01(v), 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, HOWEVER, that such
Indebtedness (1) is incurred in connection with the
acquisition or leasing of assets at fair value after the
Effective Date, (2) is unsecured or (other than in the
case of Indebtedness described in SUBCLAUSE (D) and
extensions, renewals, replacements or refinancings
thereof) secured only by the assets acquired or leased in
connection with the transaction pursuant to which the
Indebtedness was originally incurred and (3) does not
exceed $150,000,000 in aggregate principal amount (of
which no more than $50,000,000 shall be used in sale and
leaseback transactions, other than sales and leasebacks of
store sites);
2.4 AMENDMENT to SECTION 8.04. Section 8.04 of the
Credit Agreement is hereby amended by renumbering CLAUSE (xiv)
thereof as CLAUSE (xv) and inserting a new CLAUSE (xiv)
immediately following CLAUSE (xiii) to read as follows:
(xiv) Accommodation Obligations permitted by SECTION
8.01(v);
2.5 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 3.40x
March 31, 1998
-----------------------------------------------
April 1, 1998 through 4.10x
March 31, 1999
-----------------------------------------------
April 1, 1999 through 3.50x
December 31, 1999
-----------------------------------------------
January 1, 2000 and 2.25x
thereafter
-----------------------------------------------
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 2.00x
March 31, 1998
-----------------------------------------------
April 1, 1998 through 1.80x
December 31, 1998
-----------------------------------------------
January 1, 1999 through 1.90x
December 31, 1999
-----------------------------------------------
January 1, 2000 through 2.25x
December 31, 2000
-----------------------------------------------
January 1, 2001 and 2.50x
thereafter
-----------------------------------------------
2.7 AMENDMENT TO SECTION 9.03. Section 9.03 of the
Credit Agreement is hereby amended and restated in its entirety to
read as follows:
9.03. MINIMUM FIXED CHARGE COVERAGE RATIO. (a)
Southland shall not on any Quarterly Determination Date
occurring during any period set out below permit the ratio
of (i) EBITDA, MINUS Capital Expenditures 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
------ -------------
-----------------------------------------------
Effective Date through 0.65x
December 31, 1997
-----------------------------------------------
January 1, 1998 through 0.35x
March 31, 1998
-----------------------------------------------
(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 1.50x
December 31, 1999
-----------------------------------------------
January 1, 2000 and 1.75x
thereafter
-----------------------------------------------
2.8 ADDITION OF SECTION 9.04. A new Section 9.04 is hereby
added to the Credit Agreement, immediately following Section 9.03,
to read as follows:
9.04. CAPITAL EXPENDITURES. Southland shall not,
and shall not permit its Subsidiaries to, make or incur
Capital Expenditures in any period set out below in excess
of the amount set out opposite such period:
PERIOD MAXIMUM AMOUNT OF CAPITAL
----- -------------------------
EXPENDITURES
------------
-----------------------------------------------------
Fiscal Year 1998 $425,000,000
-----------------------------------------------------
Fiscal Year 1999 $325,000,000
-----------------------------------------------------
Fiscal Year 2000 $325,000,000
-----------------------------------------------------
January 1, 2001 and $325,000,000
thereafter
-----------------------------------------------------
3. AMENDMENT FEE. Southland shall pay to the Administrative
Agent for the account of the Administrative Agent and the Senior Lenders
the fees agreed to between the Administrative Agent and Southland
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 Second 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 Second
Amendment Effective Date, no Event of Default or Potential Event of Default
has occurred and is continuing.
5. SECOND AMENDMENT EFFECTIVE DATE. This Second Amendment
shall become effective as of the date first above written (the "Second
Amendment Effective Date") upon receipt by the Administrative Agent (with
sufficient copies for each Senior Lender) of counterparts hereof, executed
by Southland, the Administrative Agent and the Requisite Senior Lenders.
6. MISCELLANEOUS. This Second 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 Second Amendment may be executed in
any number of counterparts which together shall constitute one instrument.
8. GOVERNING LAW. THIS SECOND AMENDMENT, AND ALL ISSUES
RELATING TO THIS SECOND AMENDMENT, INCLUDING THE VALIDITY, ENFORCEABILITY,
INTERPRETATION OR CONSTRUCTION OF THIS SECOND 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 Second Amendment to be
executed by their respective officers thereunto duly authorized as of the
date first above written.
BORROWER: THE SOUTHLAND CORPORATION
By: /s/ Ezra Shashoua
---------------------------------
Title: Treasurer
ADMINISTRATIVE AGENT: CITIBANK, N.A., as the Administrative Agent
By: /s/ Robert A. Snell
--------------------------------
Title: as attorney in fact
SENIOR LENDERS: CITIBANK, N.A.
By: /s/ Robert A. Snell
---------------------------------
Title: as attorney in fact
THE SAKURA BANK, LIMITED, NEW YORK BRANCH
By: /s/ Keiji Kanai
----------------------------------------
Title: Vice President & Senior Manager
THE ASAHI BANK, LTD., NEW YORK BRANCH
By: /s/ Douglas E. Price
-----------------------------------------
Title: Senior Vice President
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
By: /s/ Ryohei Takashima
------------------------------------------
Title: Senior Vice President
THE FUJI BANK, LIMITED, HOUSTON AGENCY
By: /s/ Philip C. Lauinger III
-------------------------------------------
Title: Vice President & Manager
THE MITSUI TRUST AND BANKING COMPANY, LIMITED,
NEW YORK BRANCH
By: /s/ Margaret Holloway
-------------------------------------------
Title: Vice President & Manager
THE INDUSTRIAL BANK OF JAPAN TRUST COMPANY
By: THE INDUSTRIAL BANK OF JAPAN, LIMITED,
HOUSTON OFFICE, Authorized Representative
By:
----------------------------------------
Title:
NATIONSBANK OF TEXAS, N.A.
By: /s/ Delaney A. Burgdorfer
----------------------------------------
Title: Vice President
BANKERS TRUST COMPANY
By: /s/ David J. Bell
-----------------------------------------
Title: Vice President
CIBC INC.
By: /s/ Elizabeth Fischer
-----------------------------------------
Title: Executive Director
CIBC Oppenheimer Corp., as Agent