SECURED YEN LOAN AGREEMENT
THE SOUTHLAND CORPORATION
BORROWER
12,500,000,000 yen
LOAN AMOUNT
SECURED BY THE BENEFICIAL ASSIGNMENT OF TRADEMARKS,
THE MASTER AGREEMENT AND ROYALTIES PAYABLE BY
7-ELEVEN JAPAN CO., LTD.
CITICORP SECURITIES, INC. CITIBANK, N.A.
ARRANGER AGENT
THE SAKURA BANK, LIMITED CIBC WOOD GUNDY THE ASAHI BANK, LTD.
CO-AGENT CO-AGENT CO-AGENT
THE FUJI BANK, LIMITED
LEAD MANAGER
Tab 2
TABLE OF CONTENTS
PAGE
1. DEFINITIONS 2
2. THE FACILITY 8
2.01. Agreement to Lend 8
2.02. Use of Proceeds 9
2.03. Drawdown Procedures 9
2.04 Delivery of Documents; Alternative Date. 9
2.05 Several Obligations. 10
2.06 Interest 10
2.07 Repayment; Interest Payments 10
2.08 Prepayment Restricted 13
2.09 Payments 13
2.10 Loan Account 14
2.11 Loan Registry; Certificates. 14
3. RECOURSE AND COLLATERAL 15
3.01. Limited Recourse Liability 15
3.02 Master Agreement Indemnities 16
3.03. Credit Agreement Indemnities 16
3.04. Other Parties' Liabilities 17
3.05. Expenses Included 17
4. YIELD PROTECTION 17
4.01. Taxes 17
4.02. Compliance Costs 20
4.03. Yield Protection Prepayment 20
4.04. Yen and Dollar Transaction 20
5. FEES AND EXPENSES 21
5.01. Arranger 21
5.02. Agents. 21
5.03. Expenses 21
6. REPRESENTATIONS AND WARRANTIES 22
6.01. Organization, Power and Authority 22
6.02. Compliance with Law and Other Agreements 22
6.03. Authorization 22
6.04. Registrations and Approvals 23
6.05. Agreement Binding 23
6.06. Other Obligations 23
6.07. Litigation 23
6.08. Taxes 24
6.09. ERISA 24
6.10. Information; Financial Statements 24
6.11. Solvency 25
6.12. Trademark and Other Rights 25
6.13. Master Agreement 25
6.14. Japanese Royalties 26
6.15. Records 26
7. COVENANTS 26
7.01. Performance of Obligations 27
7.02. Financial Statements; Other Information 27
7.03. Performance and Notice 28
7.04. Mortgages; Liens 29
7.05. Maintenance and Continuity of Business 30
7.06. Maintenance of Governmental Approvals 30
7.07. Taxes 31
7.08. ERISA 31
7.09. Maintenance of Records 32
7.10. Protection of Security Interests 32
7.11. Master Agreement 33
7.12. Existing Yen Facility 34
8. SWAP 34
8.01. The Swap 34
8.02. Collateral Sharing 35
9. CONDITIONS PRECEDENT AND SUBSEQUENT 35
9.01. Conditions Precedent 35
9.02. Conditions Subsequent 38
10. TERMINATION EVENTS 38
10.01. Termination Events 39
10.02. Cash Reserve Events 41
11. THE AGENTS 42
11.01. Paying Agent. 43
11.02. Collateral Agent. 43
11.03. Direction by the Lenders 43
11.04. Reimbursement for Expenses 44
11.05. Liability and Credit Appraisal. 44
11.06. Reliance by Agents 44
11.07. Indemnification by Lenders 45
11.08. Advance of Loans 45
11.09. Rights of Agents 45
11.10. Payments and Communications to Lenders 45
11.11. Agency Fees and Reimbursement 46
11.12. Successor Agents 46
11.13. Sharing 47
12. LOAN ADMINISTRATION 47
12.01. Term 47
12.02. Entire Agreement 47
12.03. Waiver; Cumulative Rights 47
12.04. Assignment of Loan Interests 48
12.05. Governing Law 49
12.06. Submission to Jurisdiction 49
12.07. Confidentiality 51
12.08. Notices 51
12.09. Usury 53
12.10. Counterparts 53
Exhibit A - Form of Assignment and Security Agreement
Exhibit B - Form of Assignment of Japanese Royalties
Exhibit C - Form of Assignment of Japanese Trademarks
Exhibit D - Form of Assignment of New Lock Box Account
Exhibit E - Form of Collateral Sharing Agreement
Exhibit F - Form of Loan Assignment and Acceptance
Exhibit G - Form of Opinion of Southland's Senior Vice President and
General Counsel
Exhibit H - Form of Opinion of Nagashima & Ohno
Exhibit I - Form of Opinion of Xxxxxx, Xxxxx & Xxxxxxx, LLP
Schedule I - Lenders/Commitments
Schedule II - Amortization Schedule
Schedule III - Loan Certificate
Schedule IV - Japanese Trademark
SECURED YEN LOAN AGREEMENT
This Secured Yen Loan Agreement dated as of April 21, 1998 by and
among The Southland Corporation as borrower, the financial institutions
listed on Schedule I as Lenders and Citibank, N.A., Tokyo Branch as Paying
Agent and as Collateral Agent sets forth the binding agreement of the
parties.
PRELIMINARY STATEMENT
Southland entered into the Master Agreement to license Japanese
tradenames, trademarks and service marks relating to the operations of 7-
Eleven convenience stores in Japan to Seven-Eleven Japan and to provide
technical assistance and marketing support. Pursuant to the Existing Yen
Facility a syndicate of Japanese lenders made a loan through CCIL as a
nominee and intermediary to Southland in the original principal amount of
41,000,000,000 yen with recourse limited to an assignment of the Master
Agreement and the Japanese Royalties payable thereunder and a security
interest in the Japanese Trademarks. At the date hereof, the approximate
balance of principal on the Existing Yen Facility is 19,590,691,212 yen.
Pursuant to this Agreement the Lenders will lend to Southland and
Southland will borrow under this New Yen Facility the principal amount of
12,500,000,000 yen. The obligations of Southland will be secured by the
assignment of the Master Agreement and the other Collateral which secures
and funds payment of interest and repayment of principal of the Existing
Yen Facility and by the assignment of the New Lock Box Account to the
Collateral Agent for the benefit of the Lenders. Recourse to Southland on
the New Yen Facility will be limited to recourse to the Collateral and will
not be a general obligation of Southland except for recourse for breach of
indemnities or representations specifically provided herein to create
general obligations.
The rights of the Agents and the Creditors in the Collateral are
explicitly SUBJECT AND SUBORDINATE TO THE RIGHTS OF THE EXISTING YEN
FACILITY LENDERS; no payment of Collateral will be made to the Creditors
and no remedies will be exercised by the Collateral Agent or the Creditors
against the Collateral until the repayment in full of all amounts due under
the Existing Yen Facility. The Paying Agent (as directed by and on behalf
of the Lenders) has entered into the Swap pursuant to which the fixed rate
payments representing interest under the New Yen Facility will be swapped
with the Swap Provider for floating rate payments. Pursuant to the Swap,
the Swap Provider will make floating rate payments to the Lenders from the
Drawdown Date notwithstanding that fixed rate payments will not be made by
Southland until repayment in full of the Existing Yen Facility. The Swap
will provide that fixed rate payments owed to the Swap Provider prior to
the commencement of payment by Southland of fixed rate interest (Swap
Cumulative Advances) will accrue with interest thereon and will be paid to
the Swap Provider after the Existing Yen Facility has been repaid in full
and after payments of Japanese Royalties commence to be made to the New
Lock Box Account for the benefit of the Creditors. The Swap Provider will
share PARI PASSU with the Lenders in all of the rights to the Collateral.
The defined terms used in the caption and this Preliminary Statement are
defined below.
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1. DEFINITIONS
The following terms are used in this Agreement with the meanings
set forth below:
1.01. AGENTS shall mean the collective reference to the
Paying Agent and the Collateral Agent.
1.02. AGENT ACCOUNT shall mean Account No. 0-000000-000
standing in the name of the Paying Agent at Citibank, N.A., Tokyo Branch.
1.03. ARRANGER shall mean Citicorp Securities, Inc., in its
capacity as arranger of the New Yen Facility.
1.04. ASSIGNMENT AND SECURITY AGREEMENT shall mean the New
York law assignment and security agreement between Southland and the
Collateral Agent assigning the Collateral to the Collateral Agent for the
benefit of the Creditors as collateral security, SUBJECT AND SUBORDINATE TO
THE RIGHTS OF THE EXISTING YEN FACILITY LENDERS, for Southland's
obligations to the Lenders hereunder, which agreement shall be
substantially in the form of Exhibit A hereto and in any event in form and
substance satisfactory to the Collateral Agent and its counsel.
1.05. ASSIGNMENT OF JAPANESE ROYALTIES shall mean the
Japanese law assignment assigning and pledging the Japanese Royalties and
assigning the beneficial interest of Southland in the New Lock Box Account
and any monies deposited therein as security for Southland's obligations to
the Lenders hereunder, which agreement shall be substantially in the form
of Exhibit B hereto and in any event in form and substance satisfactory to
the Collateral Agent and which agreement shall be reinstated on each
Repayment Date to continue the assigned interest in Japanese Royalties and
the New Lock Box Account.
1.06. ASSIGNMENT OF JAPANESE TRADEMARKS shall mean the
Japanese law agreement between Southland, Seven-Eleven Japan and the
Collateral Agent making (i) an assignment for security purposes of the
beneficial ownership of Southland in the Japanese Trademarks and (ii) an
assignment of the record ownership of Tokyo Leasing Co., Ltd. in the
Japanese Trademarks to the Collateral Agent for the benefit of the
Creditors pursuant to arrangements which constitute security for
Southland's obligations hereunder, which agreement shall be substantially
in the form of Exhibit C hereto and in any event in form and substance
satisfactory to the Collateral Agent and its counsel.
1.07. ASSIGNMENT OF NEW LOCK BOX ACCOUNT shall mean the
Japanese law assignment assigning and pledging all right, title and
interest of Southland in the New Lock Box Account and any monies deposited
therein as security for Southland's obligations to the Lenders hereunder,
which agreement shall be substantially in the form of Exhibit D hereto and
in any event in form and substance satisfactory to the Collateral Agent and
which agreement shall be reinstated on each Repayment Date to continue the
assigned interest in the New Lock Box Account.
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1.08. BUSINESS DAY shall mean each day (other than a Saturday
or Sunday) on which banks are generally open for clearing payments, dealing
in foreign currencies and dealing in the interbank market in Tokyo and New
York, New York.
1.09. CASH RESERVE EVENT(S) shall have the meaning set forth in
Section 10.02.
1.10. CCIL shall mean Citibank (Channel Islands) Limited, the
lender of record to Southland under the Existing Yen Facility.
1.11. CERTIFICATE OF LOAN INTEREST shall mean each certificate
(substantially in the form of Schedule III hereto) evidencing the record
ownership of a Loan issued by the Agent to each Lender.
1.12. CO-AGENTS shall mean those banks identified as Co-
Agents on the front page of this Loan Agreement in their capacity as co-
agents of the New Yen Facility.
1.13. COLLATERAL shall mean the collateral which secures the
obligations of Southland pursuant to this Agreement being a collective
reference to the Master Agreement, the Japanese Royalties, the New Lock Box
Account and Southland's beneficial interest in the Japanese Trademarks.
1.14. COLLATERAL AGENT shall mean Citibank, N.A., acting
through its Tokyo Branch and its permitted successors or assigns, in its
capacity as collateral agent of the Lenders.
1.15. COLLATERAL SHARING AGREEMENT shall mean the Collateral
Sharing Agreement among Southland, the Agents and the Swap Provider
providing for the Agents to act on behalf of the Swap Provider and the
Lenders and for the Collateral to be shared among the Swap Provider and the
Lenders as set forth therein, which agreement shall be substantially in the
form of Exhibit E annexed hereto.
1.16. COMMITMENT shall mean, with respect to each Lender, the
principal amount set forth in Schedule I opposite such Lender's name as the
maximum Loan committed to be advanced by such Lender or, where the context
so requires, the obligation of such Lender to advance such amount as its
Loan. "Commitments" shall mean the aggregate of the Commitments of all
Lenders.
1.17. COMPLETION DATE shall mean the date on which the Loans
have been repaid and all other amounts payable by Southland to the Lenders
hereunder have been paid in full.
1.18. CONFIDENTIAL INFORMATION shall mean: (i) business
forecasts, projections or other information relating to 7-Eleven in Japan
which have not been publicly disseminated; (ii) disclosure statements or
notices provided by Southland which have not been publicly disseminated,
relating to developments, operations or plans concerning 7-Eleven in Japan,
Southland's relationship with Seven Eleven Japan, or the 7-Eleven business
in Japan generally; and (iii) any other information disclosed to the Agents
or the Lenders which is not otherwise publicly available,
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which Confidential Information shall be restricted pursuant to the
confidentiality provisions of Section 11.08; PROVIDED, HOWEVER, that
Confidential Information shall not include information already in the
possession of a Lender on a non-confidential basis or information provided
to a Lender on a non-confidential basis by a person who, in so providing,
has not violated a duty of confidentiality owing to Southland.
1.19. CONSENTS TO ASSIGNMENT shall mean the consent of Seven-
Eleven Japan to the Assignment of Japanese Royalties and the consent of
Citibank, N.A. as the depositary of the New Lock Box Account to the
Assignment of New Lock Box Account, which Consents to Assignment shall be
substantially in the forms attached to the Assignment of Japanese Royalties
and the Assignment of New Lock Box Account, respectively.
1.20. CREDITORS shall mean the Lenders and the Swap Provider.
1.21. DOLLARS and the sign "$" shall mean dollars in the
lawful money of the United States of America.
1.22. DRAWDOWN DATE shall mean April 30, 1998 (Tokyo time).
1.23. ERISA shall mean the Employee Retirement Income
Security Act of 1974.
1.24. EXISTING YEN FACILITY shall mean the Limited Recourse
Financing Facility created pursuant to (i) the Credit Agreement dated as of
March 21, 1988 by and among Southland, CCIL and Citicorp International
Limited; (ii) the Assignment and Security Agreement dated as of March 21,
1988 between CCIL and Southland; (iii) the Pledge Agreement dated as of
March 21, 1988 between CCIL and Southland; (iv) the Trademark Security
Agreement dated as of Xxxxx 00, 0000 xxxxx Xxxxxxxxx, Xxxxx-Xxxxxx Xxxxx
and Diamond Lease Company, Ltd. and Tokyo Leasing Co., Ltd. and (v) the
other documents, agreements and instruments entered into in connection
therewith including the agreements pursuant to which CCIL passed on its
interest in the loans and collateral to a syndicate of Japanese financial
institutions.
1.25. EXISTING YEN FACILITY LENDERS shall mean the financial
institutions providing the Existing Yen Facility, including CCIL in its
capacity as nominee and lender of record for certain Japanese financial
institutions for whose benefit it is acting as lender under the Existing
Yen Facility and such Japanese financial institutions to which CCIL has
assigned all of its interests in the collateral thereunder.
1.26. EXISTING YEN FACILITY REPAYMENT DATE shall mean the
date on which the loan evidenced by the Existing Yen Facility has been
repaid and all other amounts due thereunder have been paid in full and the
Collateral Agent receives from Tokyo Leasing Co., Ltd. a Confirmation (as
defined in the Memorandum of Understanding dated April 21, 1988 among
Southland, Seven-Eleven Japan, Diamond Lease Company, Ltd., Tokyo Leasing
Co., Ltd. and the Collateral Agent).
1.27. EXPECTED EXISTING YEN FACILITY REPAYMENT DATE shall
mean August 10, 2001 which
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is the expected date based on projections of Japanese Royalties that the
Existing Yen Facility will be repaid in full so that thereafter the
Japanese Royalties will commence to be paid to the New Lock Box Account for
the benefit of the Lenders and the Swap Provider.
1.28. FUNDING COSTS shall mean the costs incurred by any
affected Lender by (i) reason of the prepayment of the Loans pursuant to
Section 4.03, (ii) the exercise of any remedies following the occurrence of
a Termination Event or (iii) the failure to fulfill conditions precedent
so that the advance of the Loans does not occur on the Drawdown Date,
representing the costs of breaking any deposit obtained by each affected
Lender to fund its Loan (or to advance its Loan) or the loss of expected
yield from the re-employment of prepaid funds (or reinvested funds from a
deferred drawdown) at an interest rate lower than the then applicable
floating interest rate to be received by such affected Lender pursuant to
the Swap until the next following Repayment Date, as certified by each
affected Lender to the Paying Agent and notified by the Paying Agent to
Southland.
1.29. INDEBTEDNESS shall mean, in regard to any person, all
indebtedness (including guaranties and other contingent obligations) with
respect to borrowed money or for the deferred purchase price of property or
services and all indebtedness of others secured by or benefiting from any
charge against, or any encumbrance or segregation or other preferential
arrangement on or with respect to, properties or revenues of such person,
including without limitation accounts receivable and contract rights,
whether or not such person has become liable for such Indebtedness.
1.30. JAPANESE ROYALTIES shall mean all royalties receivable
by Southland from Seven-Eleven Japan after the Drawdown Date pursuant to
Section II of the Master Agreement to and including the Completion Date.
Japanese Royalties shall not include any payments due under the Master
Agreement with respect to the reimbursement of costs incurred by Southland
or the payment of consultants' fees to Southland pursuant to the Master
Agreement.
1.31. JAPANESE TRADEMARKS shall mean the beneficial interest
of Southland and the record ownership interest of Seven-Eleven Japan or
Tokyo Leasing Co., Ltd. in the "7-Eleven" tradenames, trademarks and
service marks which are the subject of Japanese trademark registrations,
which at the date of this Agreement are the trademark registrations set
forth on Schedule IV annexed hereto and such variations thereof as may be
agreed between Southland and Seven-Eleven Japan, which tradenames,
trademarks and servicemarks have been licensed by Southland to Seven-Eleven
Japan for use in Japan pursuant to the Master Agreement and whose
registered ownership has been assigned by way of security to Diamond Lease
Company, Ltd. and Tokyo Leasing Company, Ltd. pursuant to the documents
comprising the Existing Yen Facility.
1.32. LENDER shall mean (i) on the date hereof (and for so
long as such person shall continue to own all or any portion of its Loan
hereunder), each of the financial institutions named in Schedule I hereto
undertaking to lend pursuant to this Agreement and (ii) thereafter, each
such person and each of such persons' successors and permitted assigns.
1.33. LIEN shall mean any mortgage, lien, pledge, security
interest, charge or other encumbrance of any kind.
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1.34. LOAN shall mean the amount of the loan of each Lender
advanced hereunder to Southland and amounts which have been capitalized
pursuant to Section 2.07(c) which is, at the date referred to in the
context in which the term is used, outstanding. "Loans" shall mean the
aggregate of the Loans of all the Lenders.
1.35. LOAN ASSIGNMENT AND ACCEPTANCE shall mean the form of
assignment and transfer by a Lender of its ownership interests in a Loan
pursuant to the procedures and conditions set forth in Section 12.04.
1.36. LOAN REGISTRY shall mean the book-entry registry of
record ownership of Loans to be maintained by the Agent as provided in
Section 12.04.
1.37. MAJORITY LENDERS shall mean, as at any time of
determination, Lenders owning Loans which constitute more than 50 percent
of the aggregate of the then remaining principal amount of the Loans, or if
the Loans have not been advanced at such time, Lenders having more than 50
percent of the Commitments.
1.38. MARGIN shall mean, for the period commencing on the
Drawdown Date and ending on April 10, 2001, 60 basis points, and
thereafter, 50 basis points.
1.39. MASTER AGREEMENT shall mean the Area Service and
License Agreement dated November 30, 1973 between Southland and Ito-Yokado
Co., Ltd. as amended prior to the date hereof and as such agreement may be
further amended or otherwise modified from time to time in accordance with
the provisions of this Agreement.
1.40. NEW LOCK BOX ACCOUNT shall mean Account No. 5-157810-
407 standing in the name of Southland at Citibank, N.A., Tokyo Branch, as
depositary into which Southland has instructed Seven-Eleven Japan to
deposit the Japanese Royalties following the Existing Yen Facility
Repayment Date in accordance with the Notice of Assignment which account
shall be maintained and managed by the Collateral Agent for the benefit of
the Creditors.
1.41. NEW YEN FACILITY shall mean the limited recourse Yen
Credit Facility created by this Agreement, the Swap, the Security Documents
and the other agreements related hereto.
1.42. NEW YEN FACILITY CUMULATIVE DEFICIENCY shall mean the
Yen amount due on any Repayment Date by reason of Yen payments on prior
Repayment Dates in amounts less than the New Yen Facility Payment Amount
for such dates, representing the cumulative deficiency of actual payments
compared to the respective New Yen Facility Payment Amounts consisting of
amounts of principal and interest to be paid by Southland to the Lenders.
1.43. NEW YEN FACILITY PAYMENT AMOUNT shall mean the amount
shown on Schedule II
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under the column for which this defined term is the caption representing
the Yen amount on each Repayment Date which is payable by Southland to the
Lenders consisting of the sum of the scheduled interest payment and the
scheduled principal repayment to be made on such date.
1.44. NOTICE shall mean notice delivered by a party to this
Agreement to another party in the manner provided in Section 11.09.
1.45. NOTICES OF ASSIGNMENT shall mean the notice by
Southland to Seven-Eleven Japan of the Assignment of Japanese Royalties and
the notice by Southland to Citibank, N.A., Tokyo Branch as the depositary
of the New Lock Box Account of the Assignment of New Lock Box Account, each
requesting the Consent to Assignment of the addressees, which Notices of
Assignment shall be substantially in the forms attached to the Assignment
of Japanese Royalties and the Assignment of New Lock Box Account,
respectively.
1.46. PAYING AGENT shall mean Citibank, N.A., Tokyo Branch
and its permitted successors or assigns, solely in its capacity as paying
agent of the Lenders.
1.47. PERMITTED INVESTMENTS shall mean Yen denominated
obligations, not exceeding 90 days, of the governments of Japan or of
commercial banks, including Citibank, N.A., or corporate issuers of short-
term securities with a rating at least A-1+ by Standard & Poor's and P-1 by
Xxxxx'x Investor Services, or, if not rated, deemed equivalent quality by
the Collateral Agent.
1.48. REPAYMENT DATE shall mean each date on which payments
of interest and principal shall be made on the New Yen Facility, being the
semi-annual dates commencing after the Drawdown Date which are listed on
Schedule II hereto. In the event that any Repayment Date would otherwise
fall on a day which is not a Business Day, such Repayment Date shall be
adjusted to occur on the immediately succeeding day which is a Business
Day; PROVIDED, HOWEVER, that after the Scheduled Maturity Date the
Repayment Dates shall be monthly on the tenth day of each month.
1.49. SCHEDULED MATURITY DATE shall mean October 11, 2006
1.50. SECURITY DOCUMENTS shall mean the agreements creating
and perfecting security interests in favor of the Collateral Agent for the
benefit of the Creditors in the Collateral consisting of: (i) the
Assignment and Security Agreement; (ii) the Assignment of Japanese
Royalties; (iii) the Assignment of New Lock Box Account; (iv) the
Assignment of Japanese Trademarks; (v) the Notices of Assignment; (vi) the
Consents to Assignment; and (vi) the other agreements, documents and
instruments to be delivered hereunder and thereunder.
1.51. SEVEN-ELEVEN JAPAN shall mean Seven-Eleven (Japan) Co.,
Ltd., a KABUSHIKI KAISHA organized and existing under the laws of Japan
with its registered office located at 0-0-0, Xxxxx- xxxx, Xxxxxx-xx, Xxxxx
000, Xxxxx.
1.52. SOUTHLAND shall mean The Southland Corporation, a
corporation organized and existing under the laws of the State of Texas.
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1.53. SOUTHLAND ACCOUNT shall mean the account (or accounts)
designated to the Paying Agent by Southland to which Yen payments shall be
made to Southland by the Paying Agent, including the initial advance of the
Loans and payments of excess Japanese Royalties payable to Southland
hereunder.
1.54. SWAP shall mean the Interest Rate Swap entered into
between the Paying Agent and the Swap Provider for the payment to the Swap
Provider (on a net basis) of Yen fixed rate payments payable by Southland
hereunder in exchange for payment to the Paying Agent of Yen floating rate
payments at the rate determined from time to time to be equal to Yen LIBOR
plus the Margin as documented by the ISDA Master Agreement (including the
Schedule and the Confirmation thereto) dated as of the date hereof between
the Paying Agent and the Swap Provider and terminating on the Scheduled
Maturity Date.
1.55. SWAP BREAKAGE COSTS shall mean any Loss (as such term
is defined in the Swap) as paid in accordance with the terms and provisions
of the Swap.
1.56. SWAP CUMULATIVE ADVANCES shall mean the aggregate of
the amounts of Yen fixed rate payments due to the Swap Provider under the
Swap prior to the first Repayment Date after the Expected Existing Yen
Facility Repayment Date (before payments of interest are received on the
New Yen Facility), which amounts shall accrue interest hereunder at the
rate specified in Section 2.06 (compounding on each Repayment Date) until
the first Repayment Date after the Expected Existing Yen Facility Repayment
Date, and thereafter at Yen LIBOR plus the Margin.
1.57. SWAP CUMULATIVE ARREARAGE shall mean for any Repayment
Date after the Existing Yen Facility Repayment Date, the aggregate amount
of fixed rate payments due to be paid to the Swap Provider under the Swap
on such Repayment Date and not paid as a result of amounts in the New Lock
Box Account not being sufficient to cover interest payable by Southland
hereunder on such Repayment Date, which cumulative deficiency shall be
added to the principal amount of the Loans as a new advance thereof and
shall accrue interest at Yen LIBOR plus the Margin (compounding on each
Repayment Date) until repaid.
1.58. SWAP PROVIDER shall mean Citibank, N.A., Tokyo Branch.
1.59. TAX shall mean any present or future tax, levy, impost,
duty, charge, assessment or fee (including interest, penalties or additions
thereto) that is imposed by any government or other taxing authority, other
than a stamp, value-added, documentation, registration or other similar
tax.
1.60. TERMINATION EVENT shall have the meaning set forth in
Section 10.01.
1.61. YEN and the symbol "Y" shall mean Yen in the lawful
currency of Japan.
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1.62. YEN LIBOR shall mean the interest rate defined as LIBOR
in the Swap, which shall be the LIBOR rate for six-month Yen deposits in
London as determined and for the periods specified in the Swap.
All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in
the United States of America, consistently applied. Any business or
banking terms (such as BASIS POINTS) shall be construed in accordance with
generally accepted practice in the international financial markets as
interpreted and applied by the Paying Agent in transactions of this kind.
Any reference herein to any agreement or to any law shall be deemed to be a
reference to such agreement or such law as amended and as in effect from
time to time.
2. THE FACILITY
2.01. AGREEMENT TO LEND
Subject to the terms and conditions of this Agreement, each
Lender hereby agrees, severally and not jointly, to lend to Southland up to
the aggregate amount of its Commitment. Southland hereby agrees to assign
and pledge the Collateral to the Collateral Agent for the benefit of the
Creditors on or before the Drawdown Date by execution of the Security
Documents to secure the rights of the Lenders to payment of the principal
amount of the Loans, accrued interest thereon and all other amounts which
may become payable hereunder. The aggregate principal amount of the Loans,
accrued interest thereon and any amounts which may become payable pursuant
to the yield protection provisions of Section 4 shall be recovered solely
from the collection of the Japanese Royalties and, if necessary and
permitted as provided herein, from the realization of the security
interests in the Collateral, without recourse to Southland or any of its
other assets with respect to the recovery of such amounts except as
hereinafter expressly provided.
2.02. USE OF PROCEEDS
The proceeds of the Loans shall be used by Southland for general
corporate purposes.
2.03. DRAWDOWN PROCEDURES
Subject to fulfillment of the conditions precedent set forth in
Section 8.01, Southland shall draw down the entire amount of the
Commitments on the Drawdown Date. Each Lender shall, not later than 10:00
A.M. (Tokyo time) on the Drawdown Date, advance its Commitment to the Agent
Account, and the Paying Agent shall, not later than 11:00 A.M. (Tokyo time)
on such date, transfer the proceeds of the Loans to the Southland Account
or in accordance with Southland's written instructions.
2.04 DELIVERY OF DOCUMENTS; ALTERNATIVE DATE
In order to permit the Lenders to obtain funding and advance
their Loans on the Drawdown
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Date and at the time specified in Section 2.03, all of the documents to be
delivered in fulfillment of the conditions precedent specified in Section
9.01 will be executed and delivered in New York City on April 21, 1998 or
in Tokyo on April 22, 1998 to be dated as of April 21, 1998, and upon
fulfillment of the conditions precedent to the drawdown (other than those
which, by the terms of Section 9, may only be fulfilled on the Drawdown
Date), the Paying Agent will transmit to each Lender by the close of
business on April 22, 1998 (New York City time) a Notice of fulfillment of
such conditions and confirmation that the drawdown will take place on the
Drawdown Date as provided in Section 2.03. In the event that the Paying
Agent does not so confirm the fulfillment of such conditions, an
alternative date and procedure for advance of the Loans will be proposed by
the Paying Agent following consultation with, and with the consent of,
Southland, and such alternative date and procedure for drawdown of the
Loans will be advised to the Lenders by Notice from the Paying Agent;
PROVIDED, HOWEVER, that such Notice shall not waive the fulfillment of any
of the conditions precedent to the drawdown of the Loans. Each Lender
shall fund its Loan on such alternative date in accordance with the
procedure specified by the Paying Agent hereunder. After a Notice setting
the Drawdown Date has been given as provided herein the obligation of
Southland to draw the Loans on such date shall be irrevocable and, in the
event that the conditions precedent to drawdown do not continue to be
fulfilled on the Drawdown Date or for any other reason the drawdown does
not take place on the Drawdown Date (other than due to the fault of the
Lenders), Southland will pay the Funding Costs of the Lenders incurred by
reason of the suspension of the drawdown.
2.05 SEVERAL OBLIGATIONS
The obligations of the Lenders hereunder to advance their
Commitments are several and not joint. Failure by one or more of the
Lenders to advance its Commitment shall not relieve the other Lenders of
their several obligations to do so and shall not relieve Southland of its
obligations hereunder; none of the other Lenders or the Agents shall be
liable for the obligations of such defaulting or non-performing Lender. In
the event that the Lenders have advanced an amount equal to the
Commitments of all Lenders, then each Lender who has failed to advance its
Commitment for value at 10:00 A.M. (Tokyo time) on the Drawdown Date agrees
to pay to the advancing Lenders the amount reasonably determined by the
Paying Agent to be their Funding Costs.
2.06 INTEREST
During the period from the Drawdown Date to the Scheduled
Maturity Date, the Loans shall bear interest, based on a year of 365 days
and the actual number of days elapsed, at the fixed interest rate of 2.325
percent PER ANNUM, with interest payable semi-annually on each Repayment
Date as provided herein. If Southland shall fail to make any payment of
principal when due, such amount shall accrue interest at the rate equal to
Yen LIBOR plus the Margin from and including such due date until the
payment of said sum in full. The Lenders have directed the Paying Agent to
enter into the Swap for the benefit of the Lenders as provided in Section
8.01 and pursuant to the Swap, the fixed rate payments representing
interest payable on the Loans will be swapped with the Swap Provider for
floating rate payments at a rate equal to Yen LIBOR, which shall be
determined two days
10
prior to each Repayment Date for the subsequent interest period in
accordance with the Swap, plus the Margin. It is anticipated and
acknowledged by the Lenders that no Japanese Royalties will be paid into
the New Lock Box Account until the Existing Yen Facility Repayment Date.
On each Repayment Date prior to the Expected Existing Yen Facility
Repayment Date the Swap Provider will make floating rate payments as
described in Section 8.01 and provided in the Swap although no amounts will
be received from Southland or Seven-Eleven Japan in respect of the New Yen
Facility. After the Scheduled Maturity Date the Loans shall bear interest
at a rate equal to Yen LIBOR plus the Margin, which shall be determined two
days prior to each Repayment Date for the subsequent interest period in
accordance with the then prevailing ISDA defined term corresponding to Yen
LIBOR. With respect to any Repayment Date interest shall accrue on the
then outstanding Loans from and including the immediately preceding
Repayment Date (or, in the case of the first Repayment Date, from and
including the Drawdown Date) to but excluding such Repayment Date based on
actual days elapsed from the prior Repayment Date. Such interest shall be
payable in accordance with the provisions of Section 2.07.
2.07 REPAYMENT; INTEREST PAYMENTS
(a) Except as otherwise expressly provided in Section 3, the
Loans shall be repaid and accrued interest thereon and any yield protection
amounts due pursuant to Section 4 shall be paid solely from the collection
of the Japanese Royalties by the Paying Agent and, if necessary and
permitted as provided herein, from the realization of the security
interests in the Collateral. Pursuant to irrevocable instructions to
Citibank, N.A., Tokyo Branch, or such other bank at which the New Lock Box
Account is maintained, which instructions are set forth in the Assignment
of New Lock Box Account, all Japanese Royalties received in the New Lock
Box Account after the Existing Yen Facility Repayment Date shall be
retained in the New Lock Box Account and invested in Permitted Investments
as directed from time to time by Southland. Japanese Royalties are payable
monthly under the Master Agreement. All Japanese Royalties shall be
retained and invested until the next following Repayment Date on which date
the amount shown on Schedule II as the New Yen Facility Payment Amount plus
any New Yen Facility Cumulative Deficiency shall be withdrawn from the New
Lock Box Account and transferred to the Paying Agent for distribution on
such Repayment Date to the Lenders and the Swap Provider. After such
transfer to the Paying Agent, the balance in the New Lock Box Account shall
be transferred to the Southland Account and shall be free from any claims
or liens of the Collateral Agent or the Creditors. Amounts which are
transferred to the Paying Agent for payment to the Lenders and the Swap
Provider shall be applied as follows:
(I) FIRST, to payment of any fees, costs or
expenses due hereunder and any amounts then due
under the yield protection provisions of Section
4;
(ii) SECOND, to payment of the Swap Cumulative
Advances until repaid in full;
(iii) THIRD, to interest on the Loans to such
Repayment Date;
(iv) FOURTH, to payment of any Swap Cumulative
Arrearage;
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(v) FIFTH, to repayment of the Loans then
outstanding by application first to payment of any
New Yen Facility Cumulative Deficiency (excluding
Swap Cumulative Arrearage) and then to the
scheduled principal repayment; and
(vi) SIXTH, upon repayment of the Loans due, in
accordance with the written instructions of
Southland.
Southland hereby authorizes and directs the Paying Agent to
manage and transfer the amounts in the New Lock Box Account as provided
herein. Amounts received in the New Lock Box Account and paid over to the
Lenders by the Paying Agent shall be deemed to be applied on the relevant
Repayment Date in accordance with this Section 2.07(a) toward satisfaction
of Southland's obligations hereunder, irrespective of whether the Paying
Agent shall have applied such amounts or shall have caused such amounts to
be applied as required hereunder.
(b) Notwithstanding the provisions of Section 2.07(a) for
distributions from the New Lock Box Account, the following restrictions and
limitations shall apply:
(i) In order to form a predictable basis for
computation of amounts to be exchanged in the Swap, all
Yen amounts received in the New Lock Box Account prior to
the Expected Existing Yen Facility Repayment Date shall be
retained in the New Lock Box Account and invested in
Permitted Investments. The amount of interest accrued on
each Repayment Date prior to the Expected Existing Yen
Facility Repayment Date shall constitute Swap Cumulative
Advances as shown on Schedule II. Swap Cumulative
Advances shall be capitalized by being added to the
principal amount of the Loans then outstanding and shall
accrue interest at the fixed interest rate specified in
Section 2.06 (compounding on each successive Repayment
Date) until the first Repayment Date following the
Expected Existing Yen Facility Repayment Date, and
thereafter at Yen LIBOR plus the Margin. On the first
Repayment Date following the Expected Existing Yen
Facility Repayment Date (October 11, 2001), amounts in the
New Lock Box Account shall be applied first to pay the
New Yen Facility Payment Amount due on such date and then
to payment of the amount indicated on Schedule II as the
excess amount returnable to Southland on such date. Any
balance remaining on such date shall be retained in the
New Lock Box Account and invested in Permitted
Investments. On the second Repayment Date following the
Expected Existing Yen Facility Repayment Date (April 10,
2002), amounts in the New Lock Box Account shall be
applied first to the payment of the New Yen Facility
Payment Amount due on such date (plus any New Yen Facility
Cumulative Deficiency) and then to payment of the amount
indicated on Schedule II as the excess amount returnable
to Southland on such date. Any balance remaining on such
date shall be retained in the New Lock Box Account and
invested in Permitted Investments. On the third Repayment
Date following the Expected Existing Yen Facility
Repayment Date (October 11, 2002) and on each Repayment
Date thereafter until the Scheduled Maturity Date, amounts
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in the New Lock Box Account shall be applied first to the
payment of the New Yen Facility Payment Amount due on such
date (plus any New Yen Facility Cumulative Deficiency) and
the entire excess amount shall be distributed to
Southland; and
(ii) In order to permit the Swap Provider to
recover amounts of fixed rate payments which shall become
due to the Swap Provider prior to the Existing Yen
Facility Repayment Date, the Lenders acknowledge and agree
that distributions of amounts in the New Lock Box Account
shall be applied after fees (referred to in Section
2.07(a)(i)) to the payment to the Swap Provider of Swap
Cumulative Advances as provided in the sequence of payment
provision in Section 2.07(a);
(iii) No Yen amounts received in the New Lock Box
Account after the Scheduled Maturity Date shall be
returned to Southland until the Loans and all other
amounts due hereunder or in connection herewith shall have
been paid in full; and
(iv) If a Cash Reserve Event shall occur and be
continuing, distributions of Japanese Royalties and
payment of amounts in the New Lock Box Account may be
changed as provided in Section 10.02.
(c) In the event that the Japanese Royalties actually received
from Seven-Eleven Japan are insufficient to pay to the Lenders on any
Repayment Date after the Expected Existing Yen Facility Repayment Date the
full amount of interest then due, such unpaid amounts (which constitute
Swap Cumulative Arrearage) shall be capitalized by being added to the
principal amount of the Loans then outstanding. The Loans, including such
capitalized amounts, shall thereafter bear interest in accordance with
Section 2.06 on the increased amount of the Loans (compounding on each
Repayment Date) until repaid in full. As between the Paying Agent and the
Swap Provider, if the Yen amounts in the New Lock Box Facility are
insufficient to pay the fixed rate payments due on any Repayment Date, the
Swap Provider will pay the Paying Agent the same percentage of floating
rate payments as the percentage of fixed rate payments paid to the Swap
Provider and the deficiency of fixed rate payments due to the Swap Provider
(Swap Cumulative Arrearage) shall be capitalized as provided in this
Section and shall be repaid in the manner and order provided in Section
2.07(a).
(d) Should Seven-Eleven Japan make payment of any Japanese
Royalties after the Existing Yen Facility Repayment Date to an account
other than the New Lock Box Account, Southland shall immediately give
Notice to the Paying Agent and arrange for the transfer of such funds to
the New Lock Box Account. Should Seven-Eleven Japan make payment of any
Japanese Royalties after the Existing Yen Facility Repayment Date on a date
later than that provided in the Master Agreement for such payment to be
made, the Paying Agent shall apply such amounts in accordance with Section
2.07(a) as if such payment had been made on the due date therefor (except
that interest accrued through the date of receipt of such payment shall be
paid prior to the application of such payment to repayment of the Loans).
Any overpayment of Japanese Royalties to the New Lock Box Account by Seven-
Eleven Japan shall be refunded to Seven-Eleven Japan without interest or
applied by the Paying Agent in accordance with Section 2.07(a), in which
event the amount of such overpayment shall be
13
credited against (and thereby reduce) the obligation of Seven-Eleven Japan
to make payment of Japanese Royalties in the next succeeding month.
2.08 PREPAYMENT RESTRICTED
Southland may not (except as otherwise expressly provided in
Sections 4.03) prepay the Loans in whole or in part. If Southland prepays
the Loan of any Lender pursuant to Section 4.03 Southland shall pay as a
general obligation of Southland the Funding Costs of such Lender and any
resulting Swap Breakage Costs.
2.09 PAYMENTS
(a) All sums payable to Southland by the Paying Agent hereunder
shall be payable in Tokyo in Yen and in immediately available funds (or
such other Yen funds as may be determined by the Paying Agent to then be
customary for the settlement of international banking transactions
denominated in Yen) not later than 12:00 noon (Tokyo time) on the day in
question to the Southland Account or as otherwise instructed by Southland
in writing.
(b) All sums denominated in Yen which are to be advanced by the
Lenders on the Drawdown Date or which are payable by Southland shall be
payable in Tokyo in Yen and in immediately available funds (or such other
Yen funds as may be determined by the Paying Agent to then be customary for
the settlement of international banking transactions denominated in Yen)
not later than 11:00 a.m. (Tokyo time) on the day in question to the Agent
Account. All sums denominated in Dollars which are payable to the Paying
Agent or the Lenders hereunder or under any document contemplated hereby
shall be payable in New York in Dollars and in immediately available funds
not later than 10:00 a.m. (New York time) on the day in question, to the
Agent Account. Any indemnities, costs, expenses or other payments due
hereunder shall, if incurred in Yen or Dollars, be payable in such currency
in accordance with the preceding provisions of this Section 2.09(b). If any
such indemnities, costs, expenses or other payments are incurred in any
other currency, they shall be payable, at the Paying Agent's election, in
such currency or in Yen or Dollars to such account, in such city, in such
funds and calculated at such publicly-quoted rate of exchange as the Paying
Agent shall reasonably direct by Notice to Southland.
(c) If Southland shall fail to make any payment when due of any
sum hereunder, other than a payment with respect to which recourse is
limited to the Collateral, Southland shall pay default interest on the
unpaid amounts, to the extent permitted by applicable law, from and
including such due date until the payment of said sum in full (after as
well as before judgment) at the rate that is (i) with respect to any
overdue payment denominated in Yen, two percent (2%) PER ANNUM above the
interest rate on the Loans (ii) with respect to any overdue payment
denominated in Dollars, two percent (2%) PER ANNUM above the rate of
interest announced publicly by Citibank, N.A. in New York from time to time
as its base rate, and (iii) with respect to any overdue payment denominated
in any other currency, two percent (2%) PER ANNUM above such base lending
rate in such currency as the Paying Agent shall reasonably designate. Such
interest shall be payable on the Agent's demand therefor.
14
(d) Any payment made to the Paying Agent hereunder or under any
document contemplated hereby which constitutes a payment which is not a
general obligation of Southland shall be applied in the same manner as
provided in Section 2.07(a) with respect to the Japanese Royalties. All
other payments made to the Paying Agent hereunder, if any, or under any
document contemplated hereby shall be applied FIRST to pay costs and
expenses due hereunder (including amounts then due pursuant to the yield
protection provisions of Section 4), THEN to pay Southland's indemnity
obligations pursuant to Section 3, THEN against interest on past due
amounts, THEN to pay interest due on the Loans pursuant to Section 2.07,
and THEREAFTER to repayment of the Loans.
2.10 LOAN ACCOUNT
The Paying Agent shall open and maintain on its books a loan
account in Southland's name which will show the advance of the Loans, the
accrual of interest, the capitalization of interest and other amounts (if
any), repayments of the Loans, interest payments and other amounts due and
sums paid hereunder. Promptly following each Repayment Date which occurs
after the Existing Yen Facility Repayment Date, the Paying Agent shall
provide to Southland a statement setting forth (i) the amount of the
Japanese Royalties received and applied on such Repayment Date in
accordance with Section 2.07(a) to each of the payment categories set forth
therein and (ii) the amount of the Loans outstanding on such Repayment Date
following the application of the amounts so received. The loan account and
such statement shall be conclusive and binding on the parties hereto as to
the amounts at any time due hereunder, absent manifest error.
2.11 LOAN REGISTRY; CERTIFICATES
The ownership interest of each Lender in its Loan shall be
recorded on the Loan Registry to be maintained by the Paying Agent, which
shall be a book-entry system constituting the definitive evidence of record
ownership of the Loans. Promptly following the drawdown of the Loans, the
Paying Agent shall execute and deliver to each Lender a Certificate of Loan
Interest substantially in the form attached as Schedule III, and such
Certificate of Loan Interest shall serve to confirm the advance by the
Lender of a Loan in the amount specified. Transfers of record ownership of
the Loans can be made only on the Loan Registry by an assignment in
accordance with the provisions and restrictions of Section 12.04. The
Certificate of Loan Interest is not a promissory note or negotiable
instrument. Delivery of the Certificate of Loan Interest is not necessary
to transfer the loan interest evidenced thereby. Each Lender agrees that
all amounts in respect of the Loans will be paid solely on the basis of
record ownership in the Loan Registry to the respective accounts of the
record owners of the Loans as shown thereon.
3. RECOURSE AND COLLATERAL
3.01. LIMITED RECOURSE LIABILITY
(a) The liability of Southland under this Agreement with respect
to the repayment of the Loans, the payment of accrued interest thereon and
the payment of amounts which may become due
15
pursuant to the yield protection provisions of Section 4 shall, except as
otherwise expressly provided in this Section 3, be limited to the Japanese
Royalties actually received from Seven-Eleven Japan under the Master
Agreement (whether such payments shall be received from Seven-Eleven Japan
by collection in the ordinary course of business, by legal proceedings to
enforce Seven-Eleven Japan's payment obligations under the Master Agreement
or otherwise) and, if necessary, from realization of the security interests
in the other Collateral. In any suit, action or proceeding against
Southland to realize upon the Collateral for the purpose of obtaining
satisfaction or payment of Southland's limited recourse obligations with
respect to the Loans, no deficiency between the amounts so due to the
Lenders and the amounts realized on the Collateral shall be recoverable
against Southland.
(b) On the basis of current projections provided to the Paying
Agent by Southland, it is anticipated that the Japanese Royalties will
repay the Loans and accrued interest thereon on the Repayment Date
occurring in the month which is 102 months following the Drawdown Date.
Should the Japanese Royalties actually received hereunder be less than such
projections during such period, the Japanese Royalties under the Master
Agreement shall be applied hereunder toward repayment of the Loans and to
payment of accrued interest and all other amounts which may become due
hereunder until all such amounts shall have been paid in full. In the
event that the Japanese Royalties shall not have repaid the Loans in full
and shall not have paid all accrued interest thereon on or prior to the
Repayment Date which occurs in the month which is 222 months following the
Drawdown Date, then the remaining balance of the Loans shall be canceled
and shall not be repaid from any Japanese Royalties paid thereafter and the
Collateral shall be released and all rights of the Lenders shall be
terminated. Notwithstanding the foregoing, if prior to the date of
cancellation of the Loans any Termination Event shall have occurred the
Collateral Agent shall be entitled (but shall not be obligated unless
directed by the Majority Lenders) to enforce or to cause to be enforced the
security interests in the Collateral as permitted and subject to the
restrictions in Section 10.01. The Collateral Agent and the Lenders agree
that they will not exercise any remedies or take any action to cause (i)
the transfer of the Master Agreement or (ii) the sale or other disposition
of the Japanese Trademarks except as provided in Section 10.01 and any such
action shall respect and provide for the exercise by Seven-Eleven Japan of
its rights of first refusal to purchase the Japanese Trademarks as provided
in the Master Agreement.
(c) The obligations of Southland hereunder, other than with
respect to the repayment of the Loans pursuant to Section 2.07 and the
payment of accrued interest thereon and of amounts which may become due
pursuant to the yield protection provisions of Section 4, are general
obligations of Southland ranking PARI PASSU in priority of payment with all
unsubordinated obligations of Southland. Without limitation of the
foregoing, the indemnities of Southland which may become payable pursuant
to Section 3 and fees and expenses payable pursuant to Section 5 (other
than enforcement expenses with respect to Southland's limited recourse
obligations) are general obligations of Southland hereunder with respect to
which recourse is not limited and such obligations shall benefit from, but
shall not be limited to, the security interests in the Collateral.
3.02. MASTER AGREEMENT INDEMNITIES
16
(a) Southland agrees to indemnify and to hold the Lenders
harmless against any loss, cost, expense, damage or liability arising out
of or resulting from Southland's default or alleged default in performance
of any of its obligations to Seven-Eleven Japan under the Master Agreement,
which default or alleged default results in the reduction (by means of set-
off or otherwise) or non-payment of any of the Japanese Royalties by Seven-
Eleven Japan under the Master Agreement. In the event of termination of
the Master Agreement by Seven-Eleven Japan pursuant to Section VII. B of
the Master Agreement, Southland, in addition to any other loss, expense or
liability arising therefrom which shall be payable to the Lenders
hereunder, shall, as a further indemnity hereunder, repay the Loans in full
together with accrued interest thereon and all other amounts then due and
payable pursuant to this Agreement or the Security Documents. The
obligation of Southland to pay the indemnities provided in this section
shall be a general obligation of Southland. Southland shall have no
liability under this Section 3.02(a) to the Lenders or any other
institution for any special, exemplary or punitive damages.
(b) Payments pursuant to this Section 3.02 shall be made by
Southland to the Paying Agent on the date five Business Days following the
Paying Agent's written demand hereunder, which demand shall set forth the
Paying Agent's calculations as to the amounts so due. The amounts so due
as set forth in the Paying Agent's demand shall be conclusive and binding
on the parties hereto, absent manifest error. Payments received by the
Paying Agent hereunder shall be applied by the Paying Agent in accordance
with Section 2.09(d).
3.03. LOAN AGREEMENT INDEMNITIES
(a) Southland agrees to indemnify the Lenders and to hold the
Lenders harmless against any loss, expense or liability arising out of or
resulting from (i) any representation or warranty made by Southland in this
Agreement, the Security Documents or in the documents comprising the
Existing Yen Facility, or any other document or certificate delivered
pursuant to this Agreement or pursuant to the documents comprising the
Existing Yen Facility, having been incorrect in any material respect when
made or (ii) any material default by Southland in the due observance and
performance of its covenants set forth in this Agreement, the documents
comprising the Existing Yen Facility or any of the Security Documents.
(b) Payments pursuant to this Section 3.03 shall be made by
Southland to the Paying Agent on the date five Business Days following the
Paying Agent's written demand hereunder, which demand shall set forth the
Paying Agent's calculations as to the amounts so due. The amounts so due
as set forth in the Paying Agent's demand shall be conclusive and binding
on the parties hereto, absent manifest error. Payments received by the
Paying Agent hereunder shall be applied by the Paying Agent in accordance
with Section 2.09(d).
3.04. OTHER PARTIES' LIABILITIES
No obligation or liability to Seven-Eleven Japan or any other
third party (including without limitation any governmental authority in
Japan) under or with respect to the Master
17
Agreement or this Agreement is assumed by the Agents or the Lenders (other
than the obligation as secured parties to permit the exercise of the right
of first refusal granted to Seven-Eleven Japan), or any of their respective
successors and assigns by reason of the execution, delivery or performance
of this Agreement and the transactions contemplated hereby, and any such
assumption is hereby expressly disclaimed. Southland shall indemnify and
hold harmless each of the Agents and the Lenders and their respective
successors and assigns against any loss, expense or liability arising out
of or resulting from any determination by a court or governmental authority
of competent jurisdiction that any of such parties has assumed any such
obligation or liability to Seven-Eleven Japan or any other third party
under the Master Agreement or any of the Security Documents. The Agents and
the Lenders, or any of their respective successors and assigns, as the case
may be, shall give prompt notice to Southland of the initiation of any
legal proceedings against it which could give rise to an indemnity from
Southland pursuant to this Section 3.05, and Southland shall have the right
to assume the defense of any such proceedings which could give rise to any
such indemnity. None of the Agents or the Lenders, or any of their
respective successors and assigns, shall settle any claim or proceeding
against it which may give rise to an indemnity from Southland pursuant to
this Section 3.05 without the prior written consent of Southland to the
terms of such settlement.
3.05. EXPENSES INCLUDED
Indemnification pursuant to the provisions of this Section 3
shall include, without limitation, reasonable counsel fees and expenses and
other out-of-pocket expenses including expenses of investigation incurred
in connection with the matter or transaction giving rise to a claim for
indemnification.
4. YIELD PROTECTION
4.01. TAXES
(a) Any and all payments made to the Paying Agent for the benefit
of the Lenders hereunder shall be made free and clear of and without
deduction for any present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto imposed
by the United States or Japan or any political subdivision or taxing
authority of either such nation (all such taxes other than any tax or
charge on net income being hereinafter referred to as "Indemnifiable
Taxes"). Subject to the limitation on recourse specified in Section
4.01(e), if Southland shall be required by law to make any such deduction
from any payment hereunder (other than from any payment of Japanese
Royalties referred to in the final sentence of this Section 4.01(a)), (i)
Southland shall make such additional payment to the Paying Agent as may be
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 4.01)
each affected Lender shall receive an amount equal to the sum it would have
received had no such deduction been made, and (ii) Southland shall make
such deductions and shall pay the full amount deducted to the relevant
taxing authority or other authority in accordance with applicable law. To
the extent that the amount of any Japanese Royalties actually received from
Seven-Eleven Japan has been the subject of Japanese withholding tax at a
rate greater than ten percent, Southland shall pay such additional amounts
18
to the Paying Agent hereunder as may be required to indemnify the Lenders
for the reduction of such receipts attributable to Japanese tax being
payable thereon at a rate in excess of ten percent. Such amounts shall be
payable by Southland by direct payments in Yen (or in Dollars if the Paying
Agent or the affected Lender hereunder certifies that the Indemnifiable Tax
or Other Tax was incurred in a currency other than Yen) to the Southland
Account on or before each Repayment Date after the tax law change which
increases the required rate of withholding. Southland authorizes and
directs the Paying Agent to debit the Southland Account by the amount of
indemnity due hereunder on each such Repayment Date and to pay and apply
such amount in the same manner as amounts to be paid on such date from the
New Lock Box Account. In the event that the Paying Agent is required to
make a gross-up payment to the Swap Provider in accordance with Section
2(d)(i)(4) or Section 2(d)(ii) of the ISDA Master Agreement governing the
Swap, Southland shall, subject to the limitation on recourse specified in
Section 4.01(e), reimburse the Paying Agent for the full amount of such
payment.
(b) In addition, subject to the limitation on recourse specified
in Section 4.01(e), Southland agrees to pay any present or future stamp or
documentary taxes or any excise or property taxes, filing fees or similar
levies (excluding, however, any tax or charge on net income) which arise
from any payment made hereunder or from the execution, perfection,
performance or enforcement of, or otherwise with respect to, this Agreement
or the Security Documents or with respect to the property interest of the
Collateral Agent or the Creditors in the Collateral (hereinafter referred
to as "Other Taxes").
(c) Southland shall indemnify the Lenders for the full amount of
Indemnifiable Taxes or Other Taxes (including without limitation any
Indemnifiable Taxes or Other Taxes imposed on amounts payable under this
Section 4.01) paid by the Lenders or any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether
or not such Indemnifiable Taxes or Other Taxes were correctly or legally
asserted. Such indemnification shall be made within 30 days from the date
the Paying Agent makes written demand therefor. To the extent practicable
in the circumstances, the Paying Agent shall give Southland Notice of any
payment of Indemnifiable Taxes or Other Taxes to be made hereunder with
respect to which Southland shall have an indemnity obligation, but the
failure of the Paying Agent to give any such Notice shall not limit the
Lenders' right to receive indemnification hereunder. The Paying Agent
shall use reasonable efforts to cooperate with Southland in seeking a
refund of any such tax payment which, in the opinion of Southland's
independent certified public accountants, has not been correctly and
legally asserted; PROVIDED, HOWEVER, that the Paying Agent shall be
entitled to advances from Southland with respect to costs and expenses
(including without limitation reasonable counsel fees and expenses) likely
to be incurred by the Paying Agent in such refund application and
proceedings. Within 30 days after the date of any payment of Indemnifiable
Taxes or Other Taxes, Southland shall furnish to the Paying Agent the
original or a certified copy of a receipt evidencing payment thereof.
(d) Each Lender that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the
District of Columbia (a "Non-U.S. Lender") shall deliver, on or prior to
the Drawdown Date, to the Paying Agent, Southland and the Swap Provider the
tax
19
documentation specified below. IF THE NON-U.S. LENDER IS A BANK, then such
Non-U.S. Lender shall deliver EITHER (i) an accurate, complete and duly
executed Internal Revenue Service Form 1001 and a Form W-8 confirming that
such Lender is entitled to receive interest hereunder without deduction of
U.S. withholding taxes by virtue of a tax treaty OR (ii) an accurate,
complete and duly executed Internal Revenue Service Form 4224 confirming
that such Lender is entitled to receive interest hereunder and payments
under the Swap without deduction of U.S. withholding taxes because such
interest and such payments will be effectively connected with the conduct
by such Lender of a trade or business in the United States. IF THE NON-
U.S. LENDER IS NOT A BANK, then such Lender shall deliver EITHER (x) the
documentation specified in clause (i) or clause (ii) of the immediately
preceding sentence OR (y) a certificate to the effect that such Lender is
not licensed to conduct a banking business or to accept deposits,
accompanied by an accurate, complete and duly executed Internal Revenue
Service Form W-8 (Certificate of Foreign Status). In addition, each Non-
U.S. Lender that delivers an Internal Revenue Service Form 1001 and/or Form
W-8 on or prior to the Drawdown Date agrees, to the extent permitted by
law, to deliver to the Paying Agent, Southland and the Swap Provider within
15 days prior to January 1, 2001 and each third anniversary of such date
(or more often if required by law), two accurate, complete and duly
executed copies of an Internal Revenue Service Form 1001 and/or Form W-8
(or any successor or substitute form or forms required under Internal
Revenue Laws); and each Non-U.S. Lender that delivers an Internal Revenue
Service Form 4224 on or prior to the Drawdown Date agrees, to the extent
permitted by law, to deliver to the Paying Agent, Southland and the Swap
Provider within 15 days prior to the beginning of each subsequent taxable
year of such Non-U.S. Lender (or more often if required by law) two
accurate, complete and duly executed copies of an Internal Revenue Service
Form 4224 (or any successor or substitute form or forms required under
Internal Revenue Laws). Southland shall not be required to pay any
additional amounts under Section 4.01(a) or to make indemnification
payments under Section 4.01(c) to any Non-U.S. Lender in respect of any
Tax that would not have been imposed but for a failure by such Lender to
deliver the forms required by this Section 4.01(d); PROVIDED, HOWEVER, that
a Non-U.S. Lender shall not be excluded from the benefit of Section 4.01(a)
or Section 4.01(c) if a change of law precludes confirming in a
subsequently delivered form or a substitute or successor form the matters
required in the original form delivered hereunder.
(e) Without prejudice to the survival of any other agreement of
Southland hereunder, the agreements and obligations of Southland contained
in this Section 4.01 shall survive the repayment of the Loans and the
payment of accrued interest thereon. The obligations of Southland pursuant
to this Section 4.01 are obligations with respect to which recourse is
limited to the Japanese Royalties and, if necessary, to the Collateral.
Each Lender agrees to act in good faith to mitigate the indemnification
obligations of Southland pursuant to this Section 4.01, including without
limitation, if appropriate, the assignment of its rights and obligations
hereunder with Southland's consent to an affiliate of such Lender or to any
other person upon Southland's reimbursing any costs and expenses incurred
or liabilities assumed by such Lender with respect to such assignment. In
order to limit Southland's indemnification obligations pursuant to this
Section 4.01, Southland shall have the right to find a willing assignee of
a Lender's rights and obligations hereunder and such Lender shall be
obligated to execute such assignment upon Southland's reimbursing any costs
and expenses incurred or liabilities assumed by such Lender with respect to
such assignment.
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4.02. COMPLIANCE COSTS
(a) If (i) compliance by any Lender with any applicable law,
regulation or condition imposed or changed after the date of this Agreement
on any Lender with respect to the making or maintaining of the Loans or
obtaining funds to meet or maintain its obligations hereunder, including
without limitation any reserve, special deposit, capital adequacy or
similar requirement and any restraint, guideline or policy not having the
force of law with which such Lender may comply, or (ii) any change imposed
after the date of this Agreement in the basis of taxation of payments to
any Lender hereunder (other than changes in the rate of tax imposed on the
overall net income of such Lender) shall (A) increase the cost to such
Lender of advancing or maintaining its Loan, (B) reduce any amount received
or receivable by such Lender hereunder, or (C) reduce such Lender's return
on capital attributable to the transactions contemplated by this Agreement,
then such Lender shall furnish to Southland a statement of the nature and
amount of such cost or reduction and Southland shall pay to the Paying
Agent for the benefit of such Lender on the next succeeding Repayment Date
such additional amounts as may be necessary to compensate such Lender for
such additional cost or reduction.
(b) The obligations of Southland pursuant to this Section 4.02
are obligations with respect to which recourse is limited to the Japanese
Royalties and, if necessary, to the Collateral. Each Lender shall act in
good faith to mitigate the indemnification obligations of Southland
pursuant to this Section 4.02, including without limitation, if
appropriate, the assignment of its rights and obligations hereunder with
Southland's consent to an affiliate of such Lender or to any other person
upon Southland's reimbursing any costs and expenses incurred or liabilities
assumed by such Lender with respect to such assignment. In order to limit
Southland's indemnification obligations pursuant to this Section 4.02,
Southland shall have the right to find a willing assignee of a Lender's
rights and obligations hereunder and such Lender shall be obligated to
execute such assignment upon Southland's reimbursing any costs and expenses
incurred or liabilities assumed by such Lender with respect to such
assignment.
4.03. YIELD PROTECTION PREPAYMENT
If Southland is required to pay any amount to any Lender pursuant
to Section 4.01 or Section 4.02, Southland shall have the right on any
Repayment Date within 90 days of the date of such payment, upon not less
than 30 days prior written notice to the Paying Agent and the affected
Lender, to prepay the Loan of such Lender then outstanding in whole but not
in part, together with accrued interest thereon. If Southland elects to
prepay an affected Lender, Southland shall also pay the Funding Costs of
such Lender and the Swap Breakage Costs allocable to that portion of the
Loans.
4.04. YEN AND DOLLAR TRANSACTION
This is an international financial transaction in which (i) the
specification of Yen and payment in Tokyo with respect to certain payments
due hereunder and (ii) the specification of Dollars and payment in New York
with respect to certain other payments due hereunder, are of the
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essence, and Yen and Dollars shall, respectively, be the currency of
account and of payment with respect to such payments. The payment
obligations hereunder shall not be discharged by an amount paid in another
currency or in another place, whether pursuant to a judgment or otherwise,
to the extent that the amount so paid on prompt conversion to Yen and
transfer to Tokyo or to Dollars and transfer to New York, as the case may
be, under normal banking procedures does not yield the amount of Yen or
Dollars due hereunder. In the event that any payment, whether pursuant to
a judgment or otherwise, upon such conversion and transfer does not result
in payment of such amount of Yen in Tokyo or such amount of Dollars in New
York, the Lenders shall be entitled to immediate payment of, and shall have
a separate cause of action for, the Yen deficiency or the Dollar
deficiency, as the case may be, in respect of the payment due to them.
5. FEES AND EXPENSES
5.01. ARRANGER
Southland shall pay to the Arranger an arrangement fee in an
amount as separately agreed between Southland and the Arranger. The
arrangement fee shall be payable in Yen on the Drawdown Date and shall be
deducted by the Paying Agent from the advance of the Loans and paid to the
Arranger or as otherwise agreed between Southland and the Arranger.
5.02. AGENTS
Southland shall pay to the Paying Agent an agency fee as
separately agreed between Southland and the Paying Agent. Southland shall
pay to the Collateral Agent an agency fee as separately agreed between
Southland and the Collateral Agent.
5.03. EXPENSES
(a) Within 30 days of the Paying Agent's invoice therefor,
Southland shall, whether or not the Commitment is utilized, promptly
reimburse the Agents and the Arranger for the reasonable fees and expenses
of New York and Japanese counsel to the Agents and the Lenders and for all
expenses of printing, communication, publicity, travel and all other out-
of-pocket expenses incurred by the Agents and the Arrangers (i) in
connection with the negotiation, preparation and execution of this
Agreement and the documentation required hereunder, and (ii) in connection
with any amendments, waivers or consents relating to this Agreement or the
transactions or any document contemplated hereby required during the term
hereof. Without limitation of the foregoing, Southland shall be
responsible for payment of Japanese registration taxes in connection with
the registration or renewal of the Japanese Trademarks pursuant to the
Assignment of Japanese Trademarks during the term of this Agreement.
(b) Southland shall also reimburse the Paying Agent on demand
for all expenses incurred by the Agents and the Arrangers (including
without limitation the reasonable fees and expenses of New York and
Japanese counsel and other professional advisors) (i) in the determination
22
of whether there has occurred a Termination Event, and (ii) in the
administration and enforcement of this Agreement from and after the
occurrence of such a Termination Event. Such expenses shall be reimbursed
whether or not they arise during the term of this Agreement and whether or
not the Paying Agent gives Notice of such Termination Event or takes other
action to enforce the provisions of this Agreement or any related
documentation. Notwithstanding the foregoing, expenses incurred in the
enforcement of any obligation hereunder or under the Security Documents
with respect to which recourse is limited to the Japanese Royalties and, if
necessary, the other Collateral shall be recoverable by the Paying Agent on
a similar limited recourse basis including interest thereon at the rate
then applicable to the Loans pursuant to Section 2.06.
6. REPRESENTATIONS AND WARRANTIES
Southland hereby represents and warrants to the Lenders as
follows:
6.01. ORGANIZATION, POWER AND AUTHORITY
Southland is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas and has full legal
right, power and authority to execute, deliver and perform its obligations
under this Agreement and each of the Security Documents. Southland is duly
qualified to do business and is in good standing in each jurisdiction in
which such qualification is required by ownership of property or for the
conduct of its business except where the failure to so qualify would not
have or is not likely to have a material adverse effect on the ability of
Southland to perform its obligations hereunder, under the Master Agreement
or under any of the Security Documents.
6.02. COMPLIANCE WITH LAW AND OTHER AGREEMENTS
There is no law, regulation, decree or similar authority, no
provision of the Articles of Incorporation or By-laws of Southland and,
subject to the consents required pursuant to the Existing Yen Facility, no
provision of any existing contract, agreement or instrument to which
Southland is a party or by which any of its properties or assets is bound
which has been or would be contravened, or which would result in the
imposition of any mortgage, lien, charge or encumbrance on any of its
properties or assets, by reason of the execution and delivery of this
Agreement or any of the Security Documents or by reason of the performance
or observance by Southland of any of the terms and conditions hereof or
thereof.
6.03. AUTHORIZATION
The execution, delivery and performance by Southland of this
Agreement and each of the Security Documents have been duly authorized by
all appropriate corporate action on the part of Southland, including
without limitation its Board of Directors.
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6.04. REGISTRATIONS AND APPROVALS
All consents, approvals, licenses and authorizations of, and all
filings and registrations with, any governmental agency or authority
necessary for the due execution and delivery of this Agreement have been
obtained, and all consents, approvals, licenses, authorizations, filings
and registrations necessary for the due execution and delivery of the
Security Documents and for the performance or enforceability hereof and
thereof (other than the registrations of the trademark assignments
contemplated by the Assignment of Japanese Trademarks with the Japanese
Registry of Patents and Trademarks) shall have been obtained and shall be
in full force and effect prior to the Drawdown Date.
6.05. AGREEMENT BINDING
This Agreement constitutes, and each of the Security Agreements
when executed and delivered hereunder will constitute, the legal, valid and
binding obligation of Southland or Seven-Eleven Japan (as relevant),
enforceable in accordance with their respective terms (subject to
applicable bankruptcy or similar laws affecting creditors' rights generally
and to general principles of equity). Southland's obligations under each
of such agreements to which it is a party, other than those obligations
with respect to which recourse is limited to the Collateral, are general
obligations of Southland ranking PARI PASSU in priority of payment with all
other unsubordinated obligations of Southland.
6.06. OTHER OBLIGATIONS
Southland is not (i) in default in respect of any material
indebtedness including, without limitation, under the Existing Yen Facility
or (ii) in default under any agreement, obligation or duty to which it is a
party or by which it or any of its properties or assets is bound which
default would have or is likely to have a material adverse effect on the
ability of Southland to perform its obligations under the Master Agreement,
this Agreement or any of the Security Documents.
6.07. LITIGATION
There is no pending or, to the knowledge of Southland, threatened
legal action, arbitration or other legal or administrative proceeding to
which Southland is a party and, to the knowledge of Southland, no pending
or threatened legal action, arbitration or other legal or administrative
proceeding to which Seven-Eleven Japan or any other person is a party,
which, if adversely determined, could (i) impair the ability of Southland
to perform any of its obligations under the Master Agreement or any of the
Security Documents or any of the obligations of Seven-Eleven Japan under
the Assignment of Japanese Trademarks, (ii) affect the ability of Seven-
Eleven Japan or Southland to pay or receive any amounts due under the
Master Agreement, this Agreement or any of the Security Documents or (iii)
affect the validity or enforceability of the Master Agreement, this
Agreement or any of the Security Documents.
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6.08. TAXES
All required consolidated tax returns and reports of Southland
and of each of its subsidiaries (if any) which is not consolidated for tax
purposes have been timely filed and all taxes, assessments, fees and other
governmental charges thereupon and upon their respective properties,
assets, income and franchises have been paid when due and payable, in
either case which tax returns and reports, if not timely filed and which
taxes, assessments, fees and other governmental charges if not paid when
due, would have or are likely to have a material adverse effect on
Southland's ability to perform its obligations hereunder, under the Master
Agreement or under any of the Security Documents or on Seven-Eleven Japan's
ability to perform its obligations under the Assignment of Japanese
Trademarks. Southland has no knowledge of any proposed tax assessment
against it or any of its subsidiaries which would have or is likely to have
a material adverse effect upon Southland's ability to perform its
obligations under the Master Agreement, this Agreement or any of the
Security Documents or on Seven-Eleven Japan's ability to perform its
obligations under the Assignment of Japanese Trademarks.
6.09. ERISA
Southland is in substantial compliance with the provisions of
ERISA and there are no liabilities or other obligations of Southland
thereunder which would have or are likely to have a material adverse effect
on the ability of Southland to perform its obligations under the Master
Agreement, this Agreement or any of the Security Documents or on Seven-
Eleven Japan's ability to perform its obligations under the Assignment of
Japanese Trademarks. For the purposes of this Section 6.09, the term
"Southland" shall mean Southland, any affiliate of Southland and each trade
or business (whether or not incorporated) which together with Southland
would be treated as a single employer under the provisions of Title I or IV
of ERISA.
6.10. INFORMATION; FINANCIAL STATEMENTS
The information furnished by Southland in writing to the Lenders
relating to Southland, Seven-Eleven Japan, 7-Eleven convenience store
operations in Japan and the Master Agreement is true, complete and accurate
in all material respects, contains no misleading statement and does not
omit to state any material fact necessary to make the statements contained
therein, in light of the circumstances in which they were made, not
misleading; PROVIDED, HOWEVER, that with respect to estimates and
projections furnished by Southland to the Lenders (including without
limitation projected Japanese Royalties during the term of this Agreement)
Southland represents and warrants only that such estimates and projections
have been made in good faith in reliance upon information which Southland
reasonably believes to be complete and accurate. The most recent audited
consolidated financial statements of Southland provided to the Paying Agent
are complete and correct and accurately and fairly present the consolidated
financial condition and results of operations of Southland as at the dates
stated therein and for the periods then ended in accordance with generally
accepted accounting principles in the United States, consistently applied.
Since the date of such financial statements, there has been no material
adverse change in the consolidated financial condition or results of
operations of Southland except as heretofore disclosed in writing to the
Paying Agent.
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6.11. SUFFICIENT CAPITAL
Southland has sufficient capital to conduct its business and is
able to pay its debts as they mature.
6.12. TRADEMARK AND OTHER RIGHTS
Southland beneficially owns, is licensed or otherwise has the
lawful right to use all patents, trademarks, tradenames, copyright,
technology, know-how and processes (including, without limitation, the
Japanese Trademarks) used in or necessary for the performance of its
obligations under the Master Agreement and for the receipt of the Japanese
Royalties thereunder. To Southland's knowledge, the use of such patents,
trademarks, tradenames, copyrights, technology, know-how and processes by
Southland and Seven-Eleven Japan does not infringe the rights of any
person. Pursuant to the terms of the Master Agreement and subject to the
terms of the Trademark Security Agreement executed in connection with the
Existing Yen Facility, the trademarks constituting the Japanese Trademarks
are registered in Japan in the name of Seven-Eleven Japan or Tokyo Leasing
Co., Ltd. and are held for the benefit of Southland, and such Japanese
Trademarks are to be assigned as security to, and provisionally registered
in the name of, the Collateral Agent, SUBJECT AND SUBORDINATE TO THE PRIOR
PERFECTED SECURITY INTEREST OF THE EXISTING YEN FACILITY LENDERS. On the
Drawdown Date none of Southland's rights with respect to the Japanese
Trademarks will be the subject of any assignment, pledge or other security
interest other than the security interest in favor of the Existing Yen
Facility Lenders and the security interest in the Japanese Trademarks
established or to be established pursuant to the terms and conditions of
the Security Documents. The security interest in the Japanese Trademarks
so established by the Security Documents shall, on the date of registration
on the Japanese Trademark Register of the assignments contemplated by the
Security Documents, constitute a valid second ranking perfected security
interest in the Japanese Trademarks in accordance with Japanese law, and on
the Existing Yen Facility Repayment Date such security interest shall
constitute a valid first ranking perfected security interest in the
Japanese Trademarks in accordance with Japanese Law.
6.13. MASTER AGREEMENT
The copies of the agreements constituting the Master Agreement
heretofore delivered by Southland to the Paying Agent are true and correct
copies of such agreements as amended to date, and there exists no other
agreement between Southland and Seven-Eleven Japan or any of their
affiliates regarding their respective rights and obligations with respect
to the ownership and operation of 7-Eleven convenience stores in Japan
which could affect the performance of Southland's obligations hereunder
(including without limitation the duration, amount or conditionality of the
obligation of Seven-Eleven Japan to pay the Japanese Royalties). The
Master Agreement constitutes the legal, valid and binding obligation of the
parties thereto, enforceable in accordance with its terms (subject to
applicable bankruptcy, or similar laws affecting creditors' rights
generally and to general principles of equity). All consents, approvals,
licenses and authorizations of, and all
26
filings and registrations with, any governmental agency or authority with
respect to the Master Agreement or to the parties' performance of their
respective obligations thereunder have been duly obtained and continue in
full force and effect. No event has occurred and no circumstance or
condition exists which would entitle (or, with the giving of notice or the
passing of time, or both, would entitle) either party to the Master
Agreement to terminate the Master Agreement, to seek damages thereunder
against the other party or to give notice of an event of FORCE MAJEURE. No
substantial dispute exists between Southland and Seven-Eleven Japan with
respect to the Master Agreement or any of their respective rights and
obligations thereunder or with respect to the operation of 7-Eleven
convenience stores in Japan.
6.14. JAPANESE ROYALTIES
Southland owns the Japanese Royalties free and clear of any
adverse claim other than the security interest in favor of the Existing Yen
Facility Lenders. On making the Loans and subject to filing the financing
statements referred to in Section 9.01(f), the Collateral Agent on behalf
of the Creditors shall, in accordance with the provisions of the Security
Documents, have a valid second ranking perfected security interest in
Southland's rights in the Master Agreement and the Japanese Royalties
SUBJECT AND SUBORDINATE TO THE PRIOR EXISTING FIRST PRIORITY SECURITY
INTEREST OF THE EXISTING YEN FACILITY LENDERS. No effective financing
statement or other instrument similar in effect covering the Master
Agreement or any of the Japanese Royalties or the proceeds thereof shall at
any time on or after the Drawdown Date be on file in any relevant recording
office except the financing statements in favor of the Existing Yen
Facility Lenders with respect to the Existing Yen Facility and the
financing statement in favor of the Collateral Agent for the benefit of the
Creditors with respect to this Agreement and the Security Documents. On
the Existing Yen Facility Repayment Date the security interests in the
Master Agreement and the Japanese Royalties granted pursuant to the
Security Documents shall become first priority perfected security interests
and no effective financing statement or other instrument similar in effect
covering the Master Agreement or any of the Japanese Royalties or the
proceeds thereof shall at any time be on file in any relevant recording
office except the financing statements in favor of the Collateral Agent for
the benefit of the Creditors with respect to this Agreement and the
Security Documents.
6.15. RECORDS
The chief place of business and chief executive offices of
Southland and the office at which its corporate records are kept are 0000
Xxxxx Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000.
7. COVENANTS
In addition to the other undertakings herein, Southland hereby
covenants with the Agents and the Lenders that during the term of this
Agreement Southland shall act as follows and shall perform the following
obligations:
7.01. PERFORMANCE OF OBLIGATIONS
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Southland shall punctually pay all amounts due under this
Agreement and the Security Documents at the places and times and on the
dates specified herein or therein as limited by the provisions hereof
limiting recourse against Southland and its assets with respect to certain
of such payments. Southland shall perform all of its other obligations,
undertakings and covenants under this Agreement, each of the Security
Documents and under, and with respect to, the Master Agreement.
7.02. FINANCIAL STATEMENTS; OTHER INFORMATION
Southland shall maintain an accounting system in accordance with
generally accepted accounting principles in the United States and shall
furnish to the Paying Agent the following:
(i) as soon as available but not later than 120 days after the
end of each of its fiscal years (A) a consolidated balance
sheet and statement of earnings and changes in financial
position of Southland and its subsidiaries as at and for
the accounting period then ended, accompanied by a report
thereon of Coopers & Xxxxxxx (or successor) or other
independent certified public accountants of recognized
national standing in the United States of America
reasonably satisfactory to the Paying Agent, which report
shall state that such financial statements fairly present
the consolidated financial position of Southland and its
subsidiaries as at the dates indicated in conformity with
generally accepted accounting principles, without material
exception or qualification relating to Southland's ability
to perform its obligations under the Master Agreement or
any of the Security Documents, and further stating that
the examination by such accountants in connection with
such financial statements has been made in accordance with
generally accepted auditing standards, and (B) a copy of
Southland's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for such fiscal year if
Southland is required by the terms of the Securities
Exchange Act of 1934 to file such report for that fiscal
year;
(ii) within 5 days after receipt from Seven-Eleven Japan by
Southland after the end of each of Seven-Eleven Japan's
fiscal years, a consolidated balance sheet and statement
of earnings and changes in financial position of Seven-
Eleven Japan and its subsidiaries as at and for the
accounting period then ended;
(iii) as soon as available but not later than 60 days after the
end of each fiscal quarter (other than the fourth quarter
in each fiscal year) (A) comparable unaudited consolidated
financial statements of Southland as at and for the
accounting period then ended, certified as true and
correct by the chief financial officer of Southland, and
(B) a copy of Southland's Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission for such
fiscal quarter if Southland is required by the terms of
the Securities Exchange Act of 1934 to file such report
for such fiscal quarter;
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(iv) upon receipt, (i) a copy of each report and statement of
account submitted by Seven-Eleven Japan to Southland
pursuant to the Master Agreement and (ii) a copy of each
monthly report showing the amount of the Japanese
Royalties dispensed to the Existing Yen Facility Lenders
as payment of principal and interest under the Existing
Yen Facility and the outstanding balance thereunder;
(v) as soon as available but not later than 120 days after the
end of each of its fiscal years, a statement certified by
Southland's independent certified public accountants
setting forth, on the basis of their audit examination of
Southland, (A) the Japanese Royalties for such fiscal year
payable by Seven-Eleven Japan derived on the basis of the
statements of account provided by Seven-Eleven Japan to
Southland pursuant to the Master Agreement and (B) actual
payments received on account thereof;
(vi) not later than December 15 in each year, projections
prepared by Southland setting forth projected Japanese
Royalties on a monthly basis for the following calendar
year in such form and detail as the Paying Agent may
reasonably request (it being acknowledged by the Paying
Agent that Southland shall prepare such projections on the
basis of the operating budgets and store growth
projections provided by Seven-Eleven Japan pursuant to the
Master Agreement and that Southland shall have no
liability to the Lenders with respect to the accuracy of
such projections);
(vii) on a semi-annual basis, a compliance report showing the
amount of Japanese Royalties received in the New Lock Box
Account during its two previous fiscal quarters and a
calculation of the percentage of the New Yen Facility
Payment Amount received during such period; and
(viii) such other information respecting the business, properties,
condition or operations, financial or otherwise, of
Southland as the Paying Agent may from time to time
reasonably request. Southland shall permit
representatives of the Paying Agent from time to time
during Southland's normal business hours to inspect, audit
and make copies of any and all of Southland's records.
7.03 PERFORMANCE AND NOTICE
Southland shall promptly give Notice to the Paying Agent of (i)
any substantial dispute between Southland and Seven-Eleven Japan or any of
their respective affiliates with respect to the Master Agreement, (ii) any
substantial labor dispute of which Southland has knowledge threatening the
continued normal business operations of Seven-Eleven Japan, (iii) any
notice received from Seven-Eleven Japan or given by Southland to Seven-
Eleven Japan under the notice provisions of the Master Agreement, or
received from the Existing Yen Facility Lenders or given by Southland to
the Existing Yen Facility Lenders, including, without limitation, any
notice regarding a default or
29
alleged default thereunder by any of the parties thereto or regarding the
occurrence of an event of FORCE MAJEURE, (iv) any proposed amendment to, or
other modification of, the Master Agreement or the agreements comprising
the Existing Yen Facility, (v) the assertion of any claim or the
commencement of any litigation or proceeding (whether by service of process
or by attachment or arrest of any property or asset) against Southland or
(upon its obtaining knowledge thereof) against Seven-Eleven Japan or any
other person challenging the validity of the Master Agreement or the
Japanese Trademarks or claiming that the operation of 7-Eleven convenience
stores in Japan as contemplated by the Master Agreement constitutes an
infringement of the trademark, tradename, copyright or other intellectual
property rights of any person, (vi) the assertion of any claim or the
commencement of an action under or the giving of any notice of any failure
of performance in respect of the Existing Yen Facility; (vii) the
occurrence of any Termination Event or event that, with the giving of
notice or the passing of time, or both, would constitute a Termination
Event, or (viii) the occurrence of any condition or event which would have
or is likely to have a material adverse effect on Southland's ability to
perform its obligations hereunder, under the Master Agreement or under any
of the Security Documents or, to the knowledge of Southland, on Seven-
Eleven Japan's ability to perform its obligations under the Assignment of
Japanese Trademarks.
7.04. MORTGAGES; LIENS
(a) On and after the Drawdown Date Southland shall not create,
assume, incur or suffer to exist, or permit to be created, assumed,
incurred or suffered to exist, any mortgage, lien, pledge, security
interest or other charge or encumbrance or other preferential arrangement
of any kind upon or with respect to any part of the Collateral or any
rights of Southland or any of its subsidiaries or affiliates relating to
the operation of 7-Eleven convenience stores in Japan, whether now owned or
hereafter acquired, or upon or with respect to any right to receive income,
now or hereafter existing, in connection therewith, other than the security
interest in favor of the Existing Yen Facility Lenders with respect to the
Existing Yen Facility and security interests in the Collateral established
pursuant to the terms and conditions of the Security Documents without the
prior written consent of the Collateral Agent (which consent may be
withheld or conditioned by the Collateral Agent in its absolute
discretion). For the avoidance of doubt the parties hereto confirm that
the rights of first refusal in the Japanese Trademarks established in favor
of Seven-Eleven Japan pursuant to the Master Agreement do not constitute a
preferential arrangement with respect to the Japanese Trademarks which is
violative of the provisions of this Section 7.04(a).
(b) On and after the Drawdown Date Southland shall not assign or
transfer any right, title or interest of Southland in or relating to the
Collateral or any after-acquired property which constitutes Collateral;
PROVIDED, HOWEVER, that Southland may transfer its rights in the Japanese
Trademarks and the Japanese Royalties to a wholly-owned subsidiary of
Southland subject to the conditions that: (i) Southland shall have given 30
days prior Notice of the transfer to the Agents and shall have consulted
with and explained the business reasons for such transfer to the Agents;
(ii) the transfer of interests shall be subject to the prior right of the
Agents and the Creditors granted in this Agreement and the Security
Agreements; (iii) the subsidiary shall have executed an agreement of
assignment and assumption expressly acknowledging that the assigned rights
are subject
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to the claims of the Agents and the Creditors pursuant to this Agreement
and the Security Documents; and (iv) the Agents shall have received
opinions of counsel including New York and Japanese counsel concluding
without material qualification that the rights transferred are subject to
the rights, interests and liens of the Collateral Agent for the benefit of
the Creditors and that such rights may be enforced against the transferee
to the same extent as they were enforceable against Southland prior to the
transfer.
(c) If at any time during the term of this Agreement Southland
shall acquire or otherwise come into possession of any rights not in
existence on the date of this Agreement regarding the operation of 7-Eleven
convenience stores in Japan (within the territorial boundaries of Japan
existing on the date of this Agreement) which could effect in any way the
amount of Japanese Royalties received by Southland, including without
limitation any patents, 7-Eleven trademarks, 7-Eleven tradenames,
copyright, technology, know-how or processes hereafter used in the
operation of such convenience stores, Southland shall grant to the
Collateral Agent for the benefit of the Creditors, or shall use reasonable
efforts to cause to be granted to the Collateral Agent for the benefit of
the Creditors, if prior to the Existing Yen Facility Termination Date, a
valid second ranking security interest therein SUBJECT AND SUBORDINATE TO
THE PERFECTED FIRST RANKING SECURITY INTEREST OF THE EXISTING YEN FACILITY
LENDERS, and thereafter, a first ranking security interest therein, to
further secure Southland's obligations hereunder on terms substantially
similar to those set forth in the Security Documents and in any event on
terms as to form and substance satisfactory to the Collateral Agent and its
counsel. In the event that the Master Agreement shall terminate while any
portion of the Loans or accrued interest thereon remains outstanding and
Southland shall enter into a new agreement with Seven-Eleven Japan, any of
its affiliates or any other person for the licensing of the 7-Eleven System
(as described in the Master Agreement) and for the operation of convenience
stores in Japan, whether or not such convenience stores shall utilize the
Japanese Trademarks, Southland shall grant to the Collateral Agent, or
shall use reasonable efforts to cause to be granted to the Collateral
Agent, if prior to the Existing Yen Facility Termination Date, a valid
second ranking security interest therein SUBJECT AND SUBORDINATE TO THE
FIRST RANKING SECURITY INTEREST OF THE EXISTING YEN FACILITY LENDERS and
thereafter a first ranking security interest therein to further secure
Southland's obligations hereunder on terms substantially similar to those
set forth in the Security Documents and in any event on terms as to form
and substance satisfactory to the Collateral Agent and its counsel.
7.05. MAINTENANCE AND CONTINUITY OF BUSINESS
Southland (i) shall maintain its corporate existence under and in
material compliance with all applicable corporate and tax laws, (ii) shall
maintain its corporate rights, privileges and franchises which are in any
way relevant to the performance of its obligations, or the receipt of any
benefits hereunder, under the Master Agreement and under the Security
Documents or to the collateral security, for its obligations under this
Agreement the Security Documents, and (iii) shall conduct its business
with respect to the Master Agreement, 7-Eleven convenience store operations
in Japan and the Security Documents in material compliance with all
applicable laws and with all regulations and governmental guidelines having
the force of law.
7.06. MAINTENANCE OF GOVERNMENTAL APPROVALS
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Southland shall maintain or shall cause to be maintained in full
force and effect all governmental consents, approvals, licenses,
authorizations, filings and registrations obtained in connection with the
Master Agreement, this Agreement or any of the Security Documents and shall
take or shall cause to be taken all such additional action as may be proper
or advisable in connection therewith. Southland undertakes to obtain and
to effect or to cause to be maintained and effected any new or additional
consents, approvals, licenses, authorizations, filings and registrations as
become necessary for the performance and enforceability of all of the terms
and conditions of each such agreement, document and instrument. Subject to
its obligations under the Existing Yen Facility, Southland shall cooperate
with the Collateral Agent to effect the assignments, filings and
registration of the Japanese Trademarks contemplated by the Assignment of
Japanese Trademarks. Southland shall renew the registrations and
assignments of the Japanese Trademarks as required by Japanese Law and the
Master Agreement; PROVIDED, HOWEVER, that Southland shall have no liability
hereunder for any failure by the Collateral Agent timely to effect such
registrations or the renewals thereof.
7.07. TAXES
Southland shall pay and discharge all taxes and governmental
charges upon it or any of its properties or assets prior to the date after
which penalties attach for failure to pay, the non-payment of which might
have a material adverse effect upon Southland's ability to perform any of
its obligations, or to receive any benefits, under the Master Agreement,
this Agreement or any of the Security Documents or upon the priority of the
security interests in the Master Agreement, the Japanese Trademarks and the
Japanese Royalties, except to the extent that Southland shall be contesting
in good faith its obligation to pay such taxes or charges, adequate
reserves having been set aside for the payment thereof. Southland shall
make timely filings of all tax returns and governmental reports required to
be filed or submitted under any applicable laws or regulations.
7.08. ERISA
(a) Southland shall pay and discharge promptly any liability
imposed upon it pursuant to the provisions of Title IV of ERISA, PROVIDED,
HOWEVER, that Southland shall not be required to pay any such liability if
(i) the amount, applicability or validity thereof shall be diligently
contested in good faith by appropriate proceedings, and (ii) Southland
shall have set aside on its books reserves which, in the opinion of
Southland's independent certified public accountants, are adequate with
respect thereto.
(b) To the extent the following events may have a material
adverse effect on Southland's ability to perform its obligations, or
receive any benefits under, the Master Agreement, this Agreement or any of
the Security Documents or upon the priority of the security interests in
the Master Agreement, the Japanese Trademarks or the Japanese Royalties,
Southland shall not (i) engage in any transaction in connection with which
Southland could be subject to either a material civil penalty assessed
pursuant to the provisions of Section 502 of ERISA or a material tax
imposed under the provisions of Section 4975 of the Internal Revenue Code,
(ii) without the prior written consent of the Paying Agent terminate any
employee pension benefit plan (as defined in Section 3(2) of
32
ERISA) in a "distress termination" under Section 4041 of ERISA or take any
other action which could result in a material liability of Southland to
participants, beneficiaries or the Pension Benefit Guaranty Corporation, or
(iii) fail to make payment when due of all amounts which, under the
provisions of any employee pension benefit plan, Southland is required to
pay as contributions thereto, or, with respect to any employee pension
benefit plan, permit to exist any material "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA and Section 412 of the Internal
Revenue Code), whether or not waived with respect thereto, (iv) permit the
"amount of unfunded benefit commitments" (as defined in Section 4001(a)(18)
of ERISA) under all employee pension benefit plans (excluding employee
pension benefit plans with assets greater than vested benefits) to exceed
$5,000,000, or (v) incur any liability in an aggregate amount greater than
$5,000,000 to any multiemployer plan (as defined in Section 4001(a)(3) of
ERISA) that Southland may be required to make under any agreement relating
to such multiemployer plan or any law pertaining thereto.
(c) For the purposes of this Section 7.08, the term "Southland"
shall mean Southland, any affiliate of Southland and each trade or business
(whether or not incorporated) which together with Southland would be
treated as a single employer under the provisions of Title I or IV of
ERISA.
7.09. MAINTENANCE OF RECORDS
(a) Southland shall maintain all such records as may be
necessary or advisable for the administration, servicing and collection of
the Japanese Royalties by the Paying Agent (including without limitation
duplicate records and system redundancy so as to enable the reconstruction
of essential records in the event of any reasonably foreseeable casualty).
(b) Any records maintained by Southland in accordance with this
Section 7.09 shall be held in trust for the Paying Agent, and Southland
shall maintain the records and its other business records in a manner such
that the Japanese Royalties are segregated from all other accounts and
royalties and are readily identifiable.
7.10. PROTECTION OF SECURITY INTERESTS
(a) Southland shall, from time to time, do and perform any and
all acts and execute any and all documents (including, without limitation,
the execution, amendment or supplementation of any financing statements and
continuation statements for filing under the provisions of the Uniform
Commercial Code of any applicable jurisdiction and of any documents
appropriate for filing under the provisions of applicable law) to perfect
and protect the security interests in the Collateral in any jurisdiction in
which the Uniform Commercial Code is not in effect, including the
execution, amendment or supplementation of any instrument of transfer and
the making of notations in the records as may be necessary, or as may be
reasonably requested by the Collateral Agent, in order to effect the
purposes of the Security Documents to protect the security interests in the
Collateral against all persons whomsoever and to effect collection of the
Japanese Royalties. Southland shall cooperate with the Collateral Agent to
effect the registrations of the Japanese Trademarks contemplated by the
Assignment of Japanese Trademarks and to effect renewals of such
registrations;
33
PROVIDED, HOWEVER, that Southland shall have no liability hereunder for any
failure by the Collateral Agent timely to effect such registrations or the
renewals thereof. Southland hereby irrevocably constitutes and appoints
the Collateral Agent as its true and lawful attorney-in-fact, with full
power of substitution, during the term of this Agreement to execute and
deliver any and all documents and to do and perform any and all acts
referred to in, or contemplated by, this Section 7.10 upon Southland's
failure so to do in Southland's name, place and stead, Southland hereby
ratifying and confirming all that its said attorney-in-fact shall lawfully
do hereunder and pursuant hereto. Southland acknowledges that its said
attorney-in-fact shall have no duty, by virtue of this Section 7.10, to
execute and deliver any of such documents or to do and perform any of such
acts and that the failure of said attorney-in-fact to do so shall not
excuse Southland of its obligations hereunder with respect to such
documents and acts.
(b) Southland shall not change its name, identity or corporate
structure (within the meaning of Section 9-402(7) of the Uniform Commercial
Code) unless it shall have given the Collateral Agent at least 30 days'
prior Notice thereof.
(c) Southland shall not relocate its chief place of business or
its chief executive offices unless it has given the Collateral Agent at
least 30 days' prior Notice thereof.
(d) To the fullest extent permitted by applicable law, the
Collateral Agent shall be permitted to sign and file financing and
continuation statements with respect to its interest in the Collateral and
amendments thereto without Southland's execution thereof. The Collateral
Agent shall promptly send to Southland copies of any such documents so
signed and filed, provided that no failure by the Collateral Agent to send
such copies to Southland shall affect the validity or effectiveness of any
such document.
7.11. MASTER AGREEMENT
(a) Southland shall, subject to the other provisions of this
Section 7.11, use reasonable efforts to ensure the performance by Seven-
Eleven Japan of its obligations under the Master Agreement, including
without limitation ensuring that Seven-Eleven Japan receives timely notice
of the Existing Yen Facility Repayment Date and its obligation to make
timely payments of the Japanese Royalties to the New Lock Box Account.
(b) Southland shall not (i) amend, otherwise modify or waive the
benefit of any of the provisions of the Master Agreement which could
materially and adversely affect the rights and interests of the Creditors
in the Collateral, (ii) consent to any sublicense, assignment, delegation,
mortgage or transfer of any of Seven-Eleven Japan's rights, privileges,
duties or obligations under the Master Agreement which could release Seven-
Eleven Japan from any material obligation thereunder, or (iii) grant any
rebate, refund, credit or other adjustment in any month in excess of the
Yen equivalent of $100,000 with respect to any Japanese Royalties, without
in each such case obtaining the prior written consent of the Collateral
Agent.
(c) Southland shall not exercise any right of termination under
the Master Agreement,
34
consent to a termination of the Master Agreement by Seven-Eleven Japan or
take any other enforcement action thereunder (including giving notice of
any event of FORCE MAJEURE) without the prior written consent of the
Collateral Agent. The Collateral Agent hereby agrees that it will consult
with Southland and shall give consideration to the views expressed by
Southland (without in any way being obligated to act in accordance with
such views) should Southland desire to exercise any such right under the
Master Agreement.
(d) Southland shall give prompt Notice to the Paying Agent,
immediately upon becoming aware thereof, that any of the Japanese Royalties
will not be timely paid in full by Seven-Eleven Japan, and such Notice
shall state, to the best of Southland's knowledge, the reasons such
Japanese Royalties will not be timely paid in full.
(e) Upon the occurrence of a default by Seven-Eleven Japan in
the performance of any of its obligations under the Master Agreement or the
Assignment of Japanese Trademarks, Southland shall take such enforcement or
remedial action under the Master Agreement with respect thereto and to the
collection of the Japanese Royalties for the benefit of the Creditors as
the Collateral Agent may direct.
(f) During the term of this Agreement, Southland shall (in
accordance with the Seven-Eleven Japan Notice) irrevocably direct Seven-
Eleven Japan to make all payments of Japanese Royalties due under the
Master Agreement in Yen to the New Lock Box Account after the Existing Yen
Facility Termination Date and should Seven-Eleven Japan make any payment
with respect to the Japanese Royalties or any Japanese Royalties directly
to Southland rather than to the New Lock Box Account, Southland shall hold
such payment in trust for the Agent and shall immediately deposit such
payment, or cause such payment to be deposited, to the New Lock Box
Account.
7.12. EXISTING YEN FACILITY
Southland shall not amend or modify any of the provisions of the
Existing Yen Facility or any of the agreements or documents governing the
loans thereunder or the repayment of or security for such loans if such
amendment or modification (i) would increase the obligations of Southland
thereunder or the amount or duration of the loans thereunder, (ii) would
diminish, subordinate or postpone exercise of the rights of the Creditors
in the Collateral or (iii) could materially and adversely affect the rights
and interests of the Creditors.
8. SWAP
8.01. THE SWAP
The Lenders have agreed to enter this Agreement and to give their
commitments to make the Loans for the fixed interest rate provided herein
on the condition and subject to the concurrent execution of the Swap
pursuant to which the Swap Provider will make floating rate payments to the
35
Paying Agent as provided in the Swap in exchange for fixed rate payments
equal to the amounts of the fixed interest payments payable by Southland
hereunder. Prior to the Existing Yen Facility Repayment Date the Swap
Provider will make floating rate payments to the Paying Agent for the
benefit of the Lenders in exchange for the accrual of the fixed rate
payments due the Swap Provider (and interest thereon) at a fixed rate equal
to the interest rate for the Loans hereunder, which shall be payable from
the Japanese Royalties deposited in the New Lock Box Account after the
Existing Yen Facility Repayment Date as provided herein and in the Swap.
The Paying Agent has entered the Swap on the date hereof on behalf of and
for the benefit of the Lenders. As provided in the Swap, on each Repayment
Date after the Expected Existing Yen Facility Repayment Date, the fixed
rate payment specified on Schedule II for such date as interest due
hereunder shall be paid to the Swap Provider by the Paying Agent and the
Swap Provider shall pay to the Paying Agent, for distribution to the
Lenders, a floating rate payment equal to the sum of the then applicable
Yen LIBOR plus the Margin. The Swap provides that payments shall be made
on a net basis, and the Lenders hereby instruct the Paying Agent to apply
the payments received in and to make the payments from the Japanese
Royalties paid into the New Lock Box Account in accordance with the
provisions hereof and the Swap to fulfill the obligations of the Paying
Agent and the Swap Provider under the Swap for payment on a net basis, as
applicable.
8.02. COLLATERAL SHARING
Southland acknowledges that the Lenders have entered into this
Agreement on the condition and subject to the concurrent execution of the
Swap. In order to fulfill the condition imposed by the Lenders that they
receive floating rate interest without the Lenders having recourse
obligations under the Swap, Southland agrees to grant security interests in
the Collateral to the Collateral Agent for the benefit of both the Lenders
and the Swap Provider as contemplated by the Security Documents. In
reliance on the Security Documents and the Collateral Sharing Agreement and
the grant of security interests in the Collateral for its benefit PARI
PASSU with the Lenders, the Swap Provider has agreed to enter into the Swap
with counterparty recourse limited to the rights to receive payments under
this Agreement, the Security Documents, the Collateral Sharing Agreement
and to rights of enforcement in respect of the Collateral. The Lenders
acknowledge that the Swap has been entered into for their benefit and
therefore agree to enter into the Collateral Sharing Agreement and consent
to the grant by Southland of the security interests in the Collateral to
the Collateral Agent for the benefit of the Lenders and the Swap Provider
on a PARI PASSU basis.
9. CONDITIONS PRECEDENT AND SUBSEQUENT
9.01. CONDITIONS PRECEDENT
The obligations of the Lenders to advance the Loans on the
Drawdown Date are subject to (i) the fulfillment, as determined solely by
the Paying Agent and its counsel, of the following conditions precedent on
the date hereof or, as to those conditions which are to be fulfilled on the
Drawdown Date, on such date, and (ii) to the continued fulfillment of such
conditions precedent on the Drawdown Date.
36
(a) AUTHORIZATIONS. The Paying Agent shall have received, in
form and substance satisfactory to it and to its counsel:
(i) certified copies of the Articles of Incorporation of
Southland together with a good standing certificate
from the Secretary of State of the State of Texas, each
to be dated with a recent date prior to the Drawdown
Date;
(ii) a copy of the By-laws of Southland, certified as of the
Drawdown Date by the Secretary or an Assistant
Secretary of Southland;
(iii) a copy of the resolutions of the Board of Directors of
Southland authorizing the execution, delivery and
performance of each of this Agreement and Security
Documents, certified as of the Drawdown Date by the
Secretary or an Assistant Secretary of Southland; and
(iv) a certificate of the Secretary or an Assistant
Secretary of Southland certifying as of the Drawdown
Date the names and specimen signatures of each person
duly authorized to execute and deliver this Agreement
and each of the Security Documents on behalf of
Southland and to execute any Notices, statements or
certificates required hereunder or thereunder. The
Lenders shall be entitled to rely on the authenticity
of such authorization, and Southland shall be bound by
the signature of any such person regardless of the
actual powers of such person.
(b) ASSIGNMENT AND SECURITY AGREEMENT. The Collateral Agent
shall have received the Assignment and Security Agreement SUBJECT AND
SUBORDINATE TO THE ASSIGNMENT OF THE COLLATERAL TO THE EXISTING YEN
FACILITY LENDERS, duly executed by Southland.
(c) ASSIGNMENT OF JAPANESE TRADEMARKS. The Assignment of
Japanese Trademarks shall have been duly executed by the parties thereto
SUBJECT AND SUBORDINATE TO THE ASSIGNMENT OF THE COLLATERAL TO THE EXISTING
YEN FACILITY LENDERS, and evidence satisfactory to the Collateral Agent and
its counsel shall have been received of the registrations and filings in
Japan contemplated by the Assignment of Japanese Trademarks.
(d) ASSIGNMENT OF JAPANESE ROYALTIES. The Collateral Agent
shall have received the Assignment of Japanese Royalties SUBJECT AND
SUBORDINATE TO THE ASSIGNMENT OF THE COLLATERAL TO THE EXISTING YEN
FACILITY LENDERS, duly executed by Southland.
(e) ASSIGNMENT OF NEW LOCK BOX ACCOUNT. The Collateral Agent
shall have received the Assignment of New Lock Box Account, duly executed
by Southland.
(f) NOTICES OF ASSIGNMENT AND CONSENTS TO ASSIGNMENT. The
Collateral Agent shall have received the Notices of Assignments and the
Consents to Assignment, which shall have been duly executed by Southland,
Seven-Eleven Japan and Citibank, N.A., Tokyo Branch as depositary of the
37
New Lock Box Account, and duly notarized as required by Japanese law.
(g) UNIFORM COMMERCIAL CODE REQUIREMENTS. The Collateral Agent
shall have received, in form and substance satisfactory to it and to its
counsel:
(i) acknowledgment copies of proper financing statements
(Form UCC-1) as filed with the Secretary of State of
the State of Texas, dated on or prior to the Drawdown
Date, naming Southland as the debtor with respect to
the Collateral and the Collateral Agent for the
benefit of the Creditors as the secured party, and
such other similar instruments or documents as may be
necessary or desirable in the opinion of the
Collateral Agent under the laws of any jurisdiction in
order to perfect the security interests of the
Collateral Agent for the benefit of the Creditors in
the Collateral;
(ii) certified copies of requests for information or copies
(Form UCC-11), dated a date reasonably near to the
Drawdown Date, or other evidence acceptable to the
Collateral Agent listing all effective financing
statements (including those referred to in Section
9.01(g)(i)) which name Southland as debtor and which
are filed in the jurisdictions in which filings are
made pursuant to Section 9.01(g)(i), together with
copies of such financing statements or such other
similar instruments or documents, none of which (other
than those filed pursuant to Section 9.01(g)(i) and
pursuant to the Existing Yen Facility) shall cover the
Collateral.
(h) SWAP AND COLLATERAL SHARING AGREEMENT. The Swap and the
Collateral Sharing Agreement shall have been duly executed by the parties
thereto.
(i) GOVERNMENT AND CONTRACTUAL APPROVALS. The Paying Agent
shall have received, in form and substance satisfactory to it and to its
counsel:
(i) certified copies of each consent, approval, license or
authorization of, and each filing or registration
with, any relevant government agency (if any)
necessary in connection with the execution, delivery
and performance of each of this Agreement and the
Security Documents;
(ii) certified copies of each consent, approval or
authorization of any Person to which Southland is
contractually obligated and which is, in accordance
with the terms of such obligation, necessary in
connection with the execution, delivery and
performance of each of this Agreement and the Security
Documents, including without limitation such consents
as are required under the Existing Yen Facility.
(j) MASTER AGREEMENT. The Paying Agent shall have received from
Southland certified
38
copies of each agreement constituting the Master Agreement, as amended to
date, certified as of the Drawdown Date by the Secretary or an Assistant
Secretary of Southland and copies of such evidence of the due authorization
of each such agreement by Seven-Eleven Japan and the other parties thereto
and any related legal opinions in Southland's possession which were
obtained by Southland upon the original execution and delivery of each of
such agreements.
(k) LEGAL OPINIONS. The Paying Agent shall have received on or
prior to the Drawdown Date:
(i) the legal opinion of Xxxxx X. Xxxxx, Xx., Senior Vice
President and General Counsel of Southland, dated as
of the Drawdown Date, substantially in the form of
Exhibit G annexed hereto and in form and substance
satisfactory to the Paying Agent and its counsel;
(ii) the legal opinion of Nagashima & Ohno, special
Japanese counsel to the Agents, dated as of the
Drawdown Date, substantially in the form of Exhibit H
annexed hereto and in form and substance satisfactory
to the Agents; and
(iii) the legal opinion of Xxxxxx, Xxxxx & Bockius, special
New York counsel to the Agents and the Lenders, dated
as of the Drawdown Date, substantially in the form of
Exhibit I annexed hereto and in form and substance
satisfactory to the Agents.
(l) BOOK ENTRIES. The Paying Agent shall have established the
Loan Registry as required by Section 2.11 and there shall be recorded in
such Loan Registry on the Drawdown Date the record ownership interests of
the Lenders.
(m) OTHER DOCUMENTS. The Lenders shall have received such other
approvals, opinions and documents as the Agents may reasonably request on
their behalf.
(n) REPRESENTATIONS AND WARRANTIES. Southland's representations
and warranties contained in this Agreement shall remain true and correct as
of the Drawdown Date.
(o) NO EVENT. No Termination Event and no Cash Reserve Event
and no event that, with the giving of notice or the passing of time, or
both, would constitute either a Termination Event or a Cash Reserve Event
shall have occurred and be continuing.
9.02. CONDITIONS SUBSEQUENT
Not later that 30 days following the Existing Yen Facility
Repayment Date, Southland shall deliver to the Collateral Agent (i)
acknowledgment copies of Form UCC-3 evidencing recordation of the release
by the Existing Yen Facility Lenders of their security interests in the
Master Agreement, the Japanese Trademarks and the Japanese Royalties in
each jurisdiction in the United
39
States in which a financing statement has been filed with respect thereto
by or on behalf of the Existing Yen Facility Lenders and (ii) copies of the
filings and registrations contemplated by the Assignment of Japanese
Trademarks to take place on the Existing Yen Facility Repayment Date.
10. TERMINATION EVENTS
10.01. TERMINATION EVENTS
If any of the following events (hereinafter referred to as a
"Termination Event") shall have occurred and be continuing:
(a) Southland shall fail to perform any obligation under the
Master Agreement or there shall occur any event, circumstance or condition
which would entitle (or, with the giving of notice or the passing of time,
or both, would entitle) Seven-Eleven Japan to terminate the Master
Agreement, to damages thereunder against Southland, to give notice of an
event of FORCE MAJEURE or to reduce any Japanese Royalties otherwise
payable thereunder or to withhold or withdraw any intellectual property
rights licensed under the Master Agreement;
(b) Southland shall fail to make any payment hereunder which
constitutes a general obligation of Southland within 5 days of the due date
therefor;
(c) Southland shall default in the performance of any agreement
or undertaking hereunder (other than as provided in Section 10.01(a) and
(b) above) and such default shall continue unremedied for 30 days after
Notice thereof has been given to Southland by the Collateral Agent;
(d) any representation, warranty, certification or statement
made by Southland in this Agreement or in any of the Security Documents or
in any certificate or other document delivered pursuant to this Agreement
or in any of the Security Documents shall prove to have been incorrect in
any material respect when made;
(e) Southland shall fail to request renewal of any consent,
approval, license or authorization or any registration or filing required
in connection with the Master Agreement, this Agreement or any of the
Security Documents 30 days prior to the expiration thereof or any such
required consent, approval, license, authorization, or registration expires
or is terminated or revoked or is modified in any manner unacceptable to
the Collateral Agent;
(f) it becomes unlawful for Southland to perform any obligation
under this Agreement, any of the Security Documents or the Master Agreement
or for Seven-Eleven Japan to perform any obligation under the Master
Agreement or the Assignment of Japanese Trademarks, or Southland shall seek
to repudiate its obligations under this Agreement, any of the Security
Documents, the Master Agreement or the Assignment of Japanese Trademarks;
(g) the Japanese Trademarks or any material portion thereof
shall be determined to be
40
invalid or unenforceable or there shall be commenced against Southland or
Seven-Eleven Japan any proceeding alleging that the Japanese Trademarks or
any material portion thereof is invalid or unenforceable or infringes the
rights of any person and such proceeding shall not have been dismissed
within 60 days of the filing thereof;
(h) Southland or any of its subsidiaries shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to
the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate action to
authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be commenced
against Southland or any of its subsidiaries seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, or other similar official
of it or any substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of 60
days, or an order for relief shall be entered against Southland or any such
subsidiary under the federal bankruptcy laws in the United States as now or
hereafter in effect; or
(j) a termination event occurs under the Existing Yen Facility
Credit Agreement as that term is defined therein for which (i) the rights
relating to the enforcement of collateral have been exercised pursuant to
Section 9.02 thereof or (ii) a curative prepayment has not been made by
Southland pursuant to Section 9.03 thereof;
then, and in any such event,
(i) if such event is a Termination Event specified in
Section 10.01(h) or (i) above, the Commitments
shall automatically terminate, without any notice
to Southland or any other action by the Agents;
(ii) if such an event is any other Termination Event,
the Paying Agent may by notice to Southland
declare the Commitments terminated, in which event
the Commitments shall thereupon terminate; or
(iii) the Collateral Agent may, and at the direction of
the Majority Lenders shall, by Notice to Southland
declare the outstanding balance of the Loans and
all accrued and unpaid interest thereon to be
immediately due and payable and, at any time
thereafter, without further demand or Notice other
than as required in the Security Documents and
subject to the rights of the Existing Yen Facility
Lenders, enforce the security interests in the
41
Collateral or exercise any remedies provided in
the Security Documents (subject to the right of
first refusal of Seven-Eleven Japan). Except for
any amount due as a general obligation of
Southland as provided herein, the Lenders shall
have no right to pursue any deficiency judgment
against Southland after the enforcement of rights
in the Collateral, and any remaining Loans shall
be canceled after the exhaustion of the remedies
in respect of the Collateral.
10.02. CASH RESERVE EVENTS
If any of the following events (hereinafter referred to as a
"Cash Reserve Event") shall have occurred and be continuing, then
distributions of any portion of Japanese Royalties to Southland shall be
suspended in the manner and for the duration described below:
(a) Seven-Eleven Japan shall fail to make any payment due under
the Master Agreement or Seven-Eleven Japan shall fail to perform any
obligation under the Master Agreement or there shall occur any event,
circumstance or condition which would entitle (or, with the giving of
notice or the passing of time, or both, would entitle) Southland to
terminate the Master Agreement or to withhold or withdraw any intellectual
property rights licensed under the Master Agreement;
(b) Seven-Eleven Japan shall fail to request renewal of any
consent, approval, license or authorization or any registration or filing
required in connection with the Master Agreement or the payment of Japanese
Royalties thereunder or any such required consent, approval, license,
authorization, or registration expires or is terminated or revoked and such
modification materially and adversely affects the rights of the Creditors;
(c) Southland or Seven-Eleven Japan shall fail, with respect to
any indebtedness in an aggregate amount in excess of $15,000,000 or its
equivalent in any other currency (other than indebtedness under this
Agreement), (i) to pay when due any portion of such indebtedness or any
interest or premium thereon or (ii) to perform any agreement or instrument
evidencing or securing or relating to any such indebtedness when required
to be performed, if the effect of such failure is to accelerate or to
permit the acceleration of the maturity of such indebtedness;
(d) any final judgment or decree for money damages or for a fine
or penalty in excess of $5,000,000 or its equivalent in any other currency
is entered against Southland and is not paid, discharged or fully bonded
within 60 days;
(e) a Termination Event shall occur and be continuing;
(f) any of the events, actions and proceedings regarding
bankruptcy, insolvency or liquidation referred to in Sections 10.01(h) and
(i) shall occur or otherwise become applicable to, Seven-Eleven Japan; or
(g) on any Repayment Date, Japanese Royalties paid into the New
Lock Box Account since
42
the prior Repayment Date, or in the case of the first Repayment Date
following the Expected Existing Yen Facility Repayment Date, since the
Existing Yen Facility Repayment Date, shall be in an amount which is less
than 105% of the New Yen Facility Payment Amount for such Repayment Date;
then, and so long as such Cash Reserve Event shall continue and
shall not have been waived by the Collateral Agent with the consent of the
Majority Lenders and the Swap Provider, or cured, as determined by the
Collateral Agent with the consent of the Majority Lenders and the Swap
Provider ("waived or cured"),
(i) if such event is a Cash Reserve Event specified in
Section 10.02(g), then the distribution of excess
Yen amounts received in the New Lock Box Account
to Southland shall be suspended and no
distributions of excess amounts shall be made to
Southland until on any succeeding Repayment Date
either (x) the Yen amount received is greater than
110% of the applicable New Yen Facility Payment
Amount for such Repayment Date, whereupon any such
excess amount held in the New Lock Box Account
shall be released to Southland, or (y) the amounts
contained in the New Lock Box Account before
distribution to the Lenders exceed 110% of the New
Yen Facility Payment Amount for the subsequent
Repayment Date, whereupon any amounts held in the
New Lock Box Account before distribution to the
Lenders in excess of 110% of the New Yen Facility
Payment Amount for such subsequent Repayment Date
shall be released to Southland; provided that if
the Yen amount received on any such succeeding
Repayment Date is less than the New Yen Facility
Payment Amount (plus any New Yen Facility
Cumulative Deficiency) payable on such Repayment
Date any amount held in the New Lock Box Account
required to cover such deficiency shall be used to
cover such deficiency with the balance remaining
in the New Lock Box Account for application as set
forth above on the subsequent Repayment Date;
(ii) if such Cash Reserve Event is an event specified in
Section 10.02(a), (b), (c), (d) or (e), then the
distribution of Yen amounts received in the New
Lock Box Account to Southland shall be suspended,
no distributions of excess amounts of Japanese
Royalties shall be made to Southland and such
excess amounts retained in the New Lock Box
Account shall be invested in Permitted Investments
and if on any Repayment Date thereafter the Yen
amount received is less than the New Yen Facility
Payment Amount (plus any New Yen Facility
Cumulative Deficiency) due on such Repayment Date,
then any amount held in cash reserve shall be used
to cover such deficiency; provided that if any
such Cash Reserve Event is waived or cured, or
upon the payment of all amounts due hereunder, any
amounts held in cash reserve shall be released to
Southland.
(iii) if such Cash Reserve Event is a Cash Reserve Event
specified in Section
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10.02(f), then the distribution of Yen amounts
shall be suspended and all amounts received in the
New Lock Box Account shall be applied on each
Repayment Date to the obligations respectively due
to the Lenders and the Swap Provider in accordance
with clauses (i) through (v) of Section 2.07(a)
and to prepay the amount of the Loans or to pay
Swap Breakage Cost due or to become due under the
Swap, as the Paying Agent shall determine (pro
rata in accordance with Section 3.02 of the
Collateral Sharing Agreement), until the payment
in full of all New Yen Facility Payment Amounts
and indemnities due to the Lenders and all amounts
of fixed rate payments and Swap Breakage Costs due
to the Swap Provider; if any such Cash Reserve
Event shall be waived or cured or if, with the
consent of the Collateral Agent at the direction
of the Majority Lenders and the Swap Provider, any
successor, transferee or new party shall assume
the obligations of Seven-Eleven Japan under the
Master Agreement or any amendment, successor
agreement or new agreement licensing the Japanese
Trademarks, then any amounts held in cash reserve
shall be released to Southland.
11. THE AGENTS
11.01. PAYING AGENT.
Each Lender hereby appoints the Paying Agent to act as its agent
for the purposes set forth in this Agreement and the Swap and irrevocably
authorizes the Paying Agent to exercise such powers as are specifically
delegated to it hereunder or are reasonably incidental thereto and to take,
or refrain from taking, such actions as agent on its behalf as are
delegated to the Paying Agent by the terms hereof. The Paying Agent shall
administer all payments and shall keep the loan amount and record of all
inflows and outflows of Japanese Royalties and all payments to the Swap
Provider and the Lenders in respect of the Swap and the Loans at their
respective accounts as shown on the Loan Registry maintained by the Paying
Agent. The Paying Agent shall maintain the Loan Registry as the book-entry
system to record the ownership of the Loans, and the Paying Agent shall
record all assignments and transfers of ownership of the Loans pursuant to
an assignment as permitted hereunder. The Paying Agent shall provide
Southland with a complete list of record ownership from the Loan Registry.
The Paying Agent shall give Notices to the Lenders and the Swap Provider
from time to time as required herein and in the Collateral Sharing
Agreement, and the Paying Agent shall process requests for any amendment or
waiver of this Agreement or of any other agreement relating to this
transaction for which approval of the Creditors (or a portion thereof) is
required. In performing its functions and duties under this Agreement, the
Paying Agent shall act solely as agent for the Lenders and shall not assume
nor be deemed to have assumed any obligation or relationship of agency or
trust with Southland or any other party to an agreement relating to this
transaction. For the benefit of the Paying Agent, each Lender hereby makes
each of the representations and warranties contained in subsections (i),
(ii) and (iii) of paragraph 7 contained in the Confirmation (as defined
therein) governing the Swap.
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11.02. COLLATERAL AGENT.
Each Lender hereby appoints the Collateral Agent to act as its
agent for the purposes set forth in this Agreement, the Swap, the
Collateral Sharing Agreement and the other Security Documents and
irrevocably authorizes the Collateral Agent to exercise such powers as are
specifically delegated hereunder or thereunder or are reasonably incidental
thereto and to take, or refrain from taking, such actions as agent on its
behalf as are delegated to the Collateral Agent by the terms hereof and
thereof. The Collateral Agent shall hold the Collateral and shall preserve
and protect the interests of the Creditors in the Collateral and maintain
records of the Collateral. Subject to the terms and conditions of the
Collateral Sharing Agreement, the Collateral Agent will take such action to
enforce the rights of the Creditors in the Collateral as shall be directed
by the Lenders (or, as applicable, the Creditors) or as may be determined
by the Collateral Agent to be appropriate and necessary, subject to the
other provisions of this Section 11 relating to indemnification and
protection of the Collateral Agent for its action or its failure to act.
In performing its functions and duties under this Agreement, the Collateral
Agent shall act solely as agent for the Creditors and shall not assume nor
be deemed to have assumed any obligation or relationship of agency or trust
with Southland or any other party to an agreement relating to this
transaction other than as expressly set forth herein or in any other
agreement relating hereto, including the obligation assumed by the
Collateral Agent in acting as a depositary of funds of Southland.
11.03. DIRECTION BY THE LENDERS.
The Agents will, to the extent practicable under the
circumstances, advise and consult with each Lender prior to taking action
on behalf of the Lenders under this Agreement. The Agents shall not take
any action contrary to the written direction of the Majority Lenders and
shall take any lawful action in accordance with the provisions of this
Agreement prescribed in a written direction of the Majority Lenders. The
Agents may decline to take any action except upon the written direction of
the Majority Lenders, and the Agents may obtain a ratification by the
Majority Lenders of any action taken by either of them under this
Agreement. In each case, the Agents shall have no liability for any
failure to act unless such Agent has been instructed to act by the Majority
Lenders. The action of the Majority Lenders shall in each case bind all of
the Lenders. Notwithstanding anything herein to the contrary, neither
Agent need take any action on behalf of the Lenders unless and until it is
indemnified to its satisfaction for any and all consequences of such
action.
11.04. REIMBURSEMENT FOR EXPENSES.
Each Lender agrees, PRO RATA to its share of the Loans, to
reimburse the Agents for expenses incurred by the Agents in the
arrangement, administration or enforcement of this Agreement and the
Security Documents to the extent such expenses are not paid or reimbursed
by Southland. Each Agent shall promptly reimburse the Lenders PRO RATA to
the extent such expenses are subsequently paid or reimbursed by Southland.
11.05. LIABILITY AND CREDIT APPRAISAL.
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Each Lender hereby represents and warrants to the Agents and the
Arrangers that it has made its own independent credit investigation and
appraisal of Southland and of this limited recourse transaction, and that
it has entered into this Agreement on the basis of such independent
appraisal and review of such documents and financial statements as it has
deemed appropriate. None of the Agents or the Arrangers, nor any of their
respective officers, directors, employees or agents, shall be liable to the
Lenders for any action taken or omitted by any of such exculpated parties
under or in connection with this Agreement or the transactions contemplated
hereby, except for its or their own gross negligence or wilful misconduct.
None of the Agents or the Arrangers shall be liable for the execution,
effectiveness, genuineness, validity or enforceability of this Agreement or
any of the Security Documents, or any other documents or certificates
furnished in connection with this transaction.
11.06. RELIANCE BY AGENTS.
The Agents shall be entitled to rely on any communication or
document believed by either of them to be genuine and correct and to have
been signed or sent by the proper person or persons, and the Agents may act
upon the advice of counsel and other experts selected by either Agent
concerning all matters (including its duties and responsibilities)
pertaining to this Agreement and the transactions contemplated herein, and
the Agents shall not be liable to any of the Lenders or to the Swap
Provider for the consequences of such reliance.
11.07. INDEMNIFICATION BY LENDERS.
Each Lender severally agrees, PRO RATA to its share of the
Obligations (as defined in the Collateral Sharing Agreement) then due and
owing, to indemnify and hold the Agents and their respective officers,
directors, employees and agents harmless from and against any and all
liabilities, damages, judgments, proceedings, expenses and other costs of
any kind imposed on, incurred by or asserted against any such indemnified
person in respect of its acts or the performance of the Agents' duties
under this Agreement, except as may arise from any such indemnified
person's gross negligence or wilful misconduct. Each Agent shall promptly
reimburse the Lenders PRO RATA to the extent any such damages, expenses and
other costs are subsequently recovered.
11.08. ADVANCE OF LOANS.
Each Lender acknowledges that on the Drawdown Date, the Paying
Agent may, unless notified by any Lender that its Loan will not be
advanced, make available to Southland the full amount of the drawdown
without prior confirmation of actual receipt of funds from each Lender. In
the event any Lender shall not make available its Commitment, such Lender
agrees to pay to the Paying Agent the amount of the costs reasonably
incurred in obtaining and maintaining funds to cover the deficiency and
such Lender agrees that during the period when the cost of such funding is
borne by another party, that party shall be entitled to the interest on the
Loans unless and until the funding and costs of funding are paid to the
satisfaction of the Paying Agent by the Lender which has breached its
Commitment.
46
11.09. RIGHTS OF AGENTS.
Either Agent, the Arranger and any affiliate thereof may be or
become a Lender with the same rights and powers with respect to the Loans
as any other Lender and may exercise the same rights as though it were not
an Agent, Arranger hereunder or an affiliate thereof. Each Agent, or
Arranger and each affiliate thereof may, without liability to disclose or
account to the Lenders, engage in any kind of banking, trust or other
business with Southland or with any other party or affiliate of any other
party to the transactions contemplated herein.
11.10 PAYMENTS AND COMMUNICATIONS TO LENDERS.
(a) The Paying Agent shall, on the same day when received (if
funds are timely received to make this practicable, or otherwise as
promptly as possible), distribute to each Lender in the same currency and
funds such Lender's share of all amounts of interest, principal and other
amounts received by the Paying Agent for distribution to the Lenders.
(b) Transfers of funds by the Paying Agent to the Lenders
shall be to the accounts Notified to the Paying Agent and recorded on the
Loan Registry. Account information may be changed by Notice to the Paying
Agent, but neither Agent shall have any liability to any person if the
Paying Agent makes payments to each Lender at the accounts for such Lender
recorded in the Loan Registry.
(c) Each Agent shall provide each Creditor with copies of
Notices and other documents or reports which it receives from Southland
which relate to the transactions contemplated herein, and each Agent shall
provide any Lender or the Swap Provider with a response to any request for
a document or information promptly after such request is transmitted to
such Agent by any Lender. In the event that either Agent receives notice
or obtains actual knowledge of a Termination Event or a Cash Reserve Event
or an event which, with the giving of notice or the passing of time, or
both, may constitute a Termination Event, such Agent shall give immediate
Notice thereof to the Lenders and to the Swap Provider.
(d) The Paying Agent shall distribute to each Lender and to
Southland on a reasonable periodic basis information relevant to it from
the loan account maintained on the books of the Paying Agent to record the
amounts paid and payable to the Lenders in respect of their Loan, and the
Paying Agent shall consult with any Lender with a view toward reconciling
to the satisfaction of such Lender any error that such Lender may bring to
the attention of the Agent.
11.11 AGENCY FEES AND REIMBURSEMENT.
Each Agent shall be entitled to receive an agency fee or
commission as provided in the separate fee arrangements referred to in
Section 5.02 without any liability to disclose or account therefor to any
of the other Lenders. The Agents shall be entitled to receive
reimbursement for their expenses as provided in Section 5.03, without any
liability to disclose or account therefor to any of the other Lenders. The
47
Lenders acknowledge that they are not entitled to reimbursement of their
expenses in relation to the arrangement of this transaction but only to
expenses specifically provided to be reimbursed in Section 5.03.
11.12. SUCCESSOR AGENTS.
Subject to the appointment and acceptance of a successor agent as
provided below, either Agent may resign at any time by giving Notice to the
Lenders and Southland. Either Agent may be removed at any time with or
without cause by the Majority Lenders after Notice to such Agent and the
Swap Provider. Prior to any such resignation or removal, the Majority
Lenders, with the consent of Southland, may designate a successor agent to
either the Paying Agent or the Collateral Agent. Each successor agent
shall be a commercial bank (or a subsidiary thereof) with a banking office
in Tokyo (in the case of the Collateral Agent) and in Tokyo and New York
(in the case of the Paying Agent). Upon the acceptance of any appointment
as Agent hereunder, a successor agent shall thereupon succeed to and become
vested with all the rights, powers and duties of the retiring Agent
(including entitlement to fees), and the retiring Agent shall be discharged
from its duties and obligations. After the retiring Agent's resignation or
removal, the provisions of this Agreement shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken while it was
acting as Agent hereunder. If no successor agent shall have been appointed
by the Majority Lenders with the consent of Southland within 30 days after
the retiring Agent's Notice of resignation, then the retiring Agent may
appoint a successor agent to serve until a successor shall be appointed by
the Majority Lenders with the consent of Southland.
11.13. SHARING.
In the event that any Lender shall at any time directly receive
from the Southland, the Swap Provider, or Seven-Eleven Japan any payment in
violation of provisions requiring payments to be made to the New Lock Box
Account, the Agent Account or directly to the Paying Agent for distribution
by the Paying Agent, then such Lender shall be deemed to have received such
payment as agent for and on behalf of the Creditors and shall immediately
advise the Paying Agent and promptly transmit the full amount thereof to
the Paying Agent for prompt application among the Creditors as required by
this Agreement and the Security Documents. This provision shall not apply
to any amounts paid to or received or applied by a Lender in the exercise
of legal rights provided or permitted to be exercised by a Lender hereunder
during the continuance of any Termination Event.
12. LOAN ADMINISTRATION
12.01. TERM
The term of this Agreement shall commence on the date first set
forth above and shall end on the date of termination of the Commitments
hereunder or, if later, upon the repayment of the Loans and the payment in
full of accrued interest thereon and all other sums payable hereunder. The
indemnities of Southland shall survive the repayment of the Loans and the
48
payment of interest accrued thereon; PROVIDED, HOWEVER, that any such
indemnity which is a limited recourse obligation of Southland shall be
payable only from the Japanese Royalties from the date such indemnity
obligation arises until paid in full and from the other Collateral.
12.02. ENTIRE AGREEMENT
This Agreement and the documents referred to herein constitute
the entire agreement of the parties hereto with respect to the subject
matter hereof and shall supersede any prior expressions of intent or
understandings with respect to this transaction. This Agreement may be
amended only by an instrument in writing signed by the Collateral Agent and
by Lenders constituting Majority Lenders; provided that the consent of all
Lenders shall be required for any amendment or waiver which purports to (i)
change the amount of any payment due hereunder, (ii) postpone any date for
payment of any amount due hereunder, (iii) release or substitute any of the
Collateral provided herein or under the Security Documents or (iv) change
the definition of the term "Majority Lenders".
12.03. WAIVER; CUMULATIVE RIGHTS
The failure or delay of either Agent, the Lenders or any other
person to require performance by Southland or Seven-Eleven Japan of any
provision hereunder or of any of the Security Documents or the Master
Agreement shall not affect its right to require performance of such
provision unless and until such performance has been waived in writing by
such Agent, the Lenders or such person, as the case may be, in accordance
with the terms hereof. Each and every right granted to the Agents or the
Lenders or such person hereunder or under any other document or instrument
delivered hereunder or in connection herewith, or allowed to it at law or
in equity, shall be cumulative and may be exercised in part or in whole
from time to time.
12.04. ASSIGNMENT OF LOAN INTERESTS.
(a) This Agreement shall be binding upon and shall be
enforceable by Southland, the Agents and each Lender and their respective
successors and permitted assigns, except that Southland shall have no right
to assign or otherwise transfer its rights or obligations hereunder other
than as expressly set forth in Section 7.04(b). Each Lender acknowledges
and agrees that (i) it will not assign or transfer any record or beneficial
interest in its Loan except as restricted and conditioned in this Section
and (ii) the Loan of each Lender will be evidenced only by the book-entry
on the Loan Registry maintained by the Paying Agent so that no record
ownership can be transferred by any instrument of assignment or by delivery
of a Certificate of Loan Interest until and unless such transfer is
recorded on the Loan Registry. In this Section the successor to, or
purchaser of, an interest in the Loans shall be referred to as a "Loan
Assignee."
(b) Any assignment by a Lender of its Loan shall be an
assignment of all of its outstanding Loan or a portion which shall be on
the date of assignment not less than 500,000,000 yen and in increments of
100,000,000 yen. Each assignment of a Loan shall be effected by delivery
to the Paying Agent of a Loan Assignment and Acceptance substantially in
the form of Exhibit F hereto together
49
with a processing fee of 50,000 yen and is subject to the prior consent of
Southland and fulfillment of the further conditions and restrictions of
this Section.
(c) The assigning Lender shall execute the Loan Assignment and
Acceptance as Assignor and the new Lender shall execute the Loan Assignment
and Acceptance as accepting Loan Assignee.
(d) Prior to the proposed effective date for a Loan Assignment
and Acceptance, a copy thereof shall be transmitted to Southland, together
with the applicable forms referenced in Section 12.04(e), and the Paying
Agent shall not process the proposed assignment or sale unless and until
Southland shall consent thereto.
(e) Each Loan Assignee that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the
District of Columbia a ("Non-U.S. Loan Assignee") shall provide the
appropriate forms described in Section 4.01(d) and shall thereafter provide
such additional forms as may be required by Section 4.01(d). In addition,
Southland shall not be required to pay any additional amounts under Section
4.01 or make indemnification payments under Section 4.01 to any such Non-
U.S. Loan Assignee in respect of any Tax that would not have been imposed
but for a failure by such Loan Assignee to deliver the forms required by
Section 4.01; PROVIDED, HOWEVER, that a Non- U.S. Loan Assignee shall not
be excluded from the benefit of Section 4.01 if a change of law precludes
confirming in a substitute or successor form the matters required in the
original form delivered hereunder.
(f) Upon any assignment or sale of an interest in the Loans
becoming effective, the Paying Agent shall record the ownership interest of
such Loan Assignee on the Loan Registry. Thereafter the Agent shall issue
a new Certificate of Loan Interest to such Loan Assignee.
(g) Each Lender may grant participations in or a portion of its
rights and obligations under this Agreement to such persons (referred to in
this Section as a "Participant") and on such terms as it shall agree with
the Participant. Each Lender agrees and undertakes with respect to the
grant of any participations, as follows: (i) the obligations of such
Lender under this Agreement shall not be reduced or modified by any such
participation; (ii) such Lender shall remain the owner of such Loan for all
purposes of this Agreement; (iii) the Participant shall have no rights in
respect of this Agreement as a third-party beneficiary or otherwise; (iv)
the Participant will have no right to claim for increased costs,
withholding taxes or other yield protection payments as such payments may
be claimed only by Lenders pursuant to Section 4; (v) Southland and the
Agents shall continue to deal solely and exclusively with such Lender in
connection with such Lender's Loan and rights under this Agreement; and
(vi) such Lender shall not agree with any Participant that the consent,
waiver or approval by such Lender under this Agreement will in any
circumstances be conditioned upon the consent, waiver or approval of the
Participant.
(h) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation in its Loan, disclose
to the intended Loan Assignee or Participant any
50
information relating to this transaction which is in the possession of the
Lender provided that such intended Loan Assignee or Participant has agreed
in writing to preserve the confidentiality of any Confidential Information
received by it.
(i) Notwithstanding the restrictions on transfers of Loan
interests hereunder, any Lender may at any time create a security interest
or transfer an interest in all or any portion of its rights under this
Agreement to any Federal Reserve Bank in accordance with Regulation A of
the Board of Governors of the Federal Reserve System.
12.05. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
12.06. SUBMISSION OF JURISDICTION.
(a) SOUTHLAND HEREBY IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION
OR PROCEEDING AGAINST IT OR ANY OF ITS PROPERTIES OR ASSETS WITH RESPECT TO
ANY OF THE OBLIGATIONS ARISING HEREUNDER OR RELATING TO ANY OF THE SECURITY
DOCUMENTS MAY BE BROUGHT IN THE TOKYO DISTRICT COURT, ANY COURT OF THE
STATE OF NEW YORK OR ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA
LOCATED IN XXX XXXX XXX XXXXX XX XXX XXXX, XXXXXX XXXXXX OF AMERICA AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT SOUTHLAND HEREBY IRREVOCABLY
SUBMITS TO AND ACCEPTS WITH REGARD TO ANY SUCH ACTION OR PROCEEDING, FOR
ITSELF AND IN RESPECT OF ITS PROPERTIES AND ASSETS, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS.
SOUTHLAND HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS (i) KOHNO &
CO., PRESENTLY LOCATED AT XXXXX 000, XXXXXX-XXX XXXX XXXXXXXX, 0-00,
XXXXXXX 2-CHOME, MINATO-KU, TOKYO 107, JAPAN, ATTENTION: AKIRA KOHNO, AS
ITS AGENT TO RECEIVE FOR AND ON ITS BEHALF SERVICE OF PROCESS IN JAPAN IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO ANY OF THE SOUTHLAND
AGREEMENTS AND (ii) CT CORPORATION SYSTEM PRESENTLY LOCATED AT 0000
XXXXXXXX, XXX XXXX, XXX XXXX AS ITS AGENT TO RECEIVE FOR AND ON ITS BEHALF
SERVICE OF PROCESS IN THE STATE OF NEW YORK IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO ANY OF THE SOUTHLAND AGREEMENTS. A COPY OF ANY
SUCH PROCESS SERVED ON SUCH AGENT SHALL BE PROMPTLY FORWARDED BY AIRMAIL BY
THE PERSON COMMENCING SUCH PROCEEDING TO SOUTHLAND AT ITS ADDRESS SET FORTH
IN SECTION 12.09, BUT THE FAILURE OF SOUTHLAND TO RECEIVE SUCH COPY SHALL
NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS AS AFORESAID. SOUTHLAND
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
AIRMAIL, POSTAGE PREPAID, TO SOUTHLAND AT ITS
51
ADDRESS SET FORTH IN SECTION 12.09. THE FOREGOING, HOWEVER, SHALL NOT
LIMIT THE RIGHTS OF THE AGENTS TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING ANY LEGAL ACTION OR PROCEEDING OR TO OBTAIN
EXECUTION OF JUDGMENT IN ANY JURISDICTION.
(b) EACH OF SOUTHLAND, THE AGENTS AND EACH LENDER HEREBY WAIVES
ANY RIGHT IT MAY HAVE UNDER THE LAWS OF ANY JURISDICTION TO COMMENCE BY
PUBLICATION ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OF THE SECURITY DOCUMENTS AND ANY RIGHT IT MAY HAVE TO A JURY TRIAL
UNDER THE LAWS OF ANY JURISDICTION WITH RESPECT TO ANY LEGAL ACTION OR
PROCEEDING REGARDING ANY OF THE SECURITY DOCUMENTS.
(c) SOUTHLAND HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
SECURITY DOCUMENTS IN THE STATE OF NEW YORK AND HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM THAT THE STATE OF NEW YORK IS NOT A CONVENIENT FORUM FOR
ANY SUCH SUIT, ACTION OR PROCEEDING.
12.07. CONFIDENTIALITY
The Lenders shall hold all non-public information obtained from
Southland pursuant to the requirements of this Agreement and which has been
identified as such by Southland in accordance with the customary procedures
of commercial banks for handling confidential information of this nature
and in accordance with safe and sound banking practices; PROVIDED, HOWEVER,
that each Lender may disclose any such information to any potential
assignee or other transferee of any of its interest in the Loan pursuant to
Section 12.04, as required or requested by any governmental authority or
pursuant to legal process. Each Lender shall obtain from any potential
assignee or transferee a confidentiality undertaking in favor of Southland
on terms substantially identical to this Section 12.07. Each Lender and
each such assignee or transferee shall use such non-public information only
for the purpose of evaluating their participation in the transactions
contemplated by this Agreement and the performance of Southland and Seven-
Eleven Japan with respect thereto, and for no other purpose whatsoever.
Unless specifically prohibited by applicable law or court order, the
Lenders and each such assignee or transferee shall notify Southland of any
request by any governmental authority (other than any such request in
connection with an examination of the financial condition of the Agent,
such Lender or such assignee or transferee by a governmental authority) for
disclosure of such confidential information prior to the disclosure
thereof.
12.08. NOTICES
Any notice required or permitted to be given hereunder shall be
in writing and shall be (i) personally delivered, (ii) transmitted by
postage prepaid registered mail (airmail if international),
52
(iii) transmitted by internationally recognized courier service, or (iv)
transmitted by facsimile to the parties as follows, as elected by the
party giving such notice.
To Southland: The Southland Corporation
0000 Xxxxx Xxxxxxx Xxxxxx - Xxx 000
Xxxxxx, Xxxxx 00000
U.S.A.
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Vice President and Treasurer
WITH A COPY TO:
Southland Legal Department
0000 Xxxxx Xxxxxxx Xxxxxx - Xxx 000
Xxxxxx, Xxxxx 00000
U.S.A.
To the Paying Agent
or the Collateral Agent: Citibank, N.A., Tokyo Branch
Citicorp Center
0-0-00, 00xx Xxxxx
Xxxxxxx-Xxxxxxxxx
Xxxxxxxxx-Xx
Xxxxx, 000 Xxxxx
Phone: 00-0-0000-0000
Facsimile: 00-0-0000-0000
Attention: Xx. Xxxxx Xxxxxxxx
WITH A COPY TO:
Xxxxxx, Xxxxx & Bockius
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. XxXxxx
53
Except as otherwise specified herein, all notices and other
communications shall be deemed to have been duly given on (i) the date of
receipt if delivered personally or if transmitted by facsimile without
confirmation of receipt, (ii) the date five days after posting if
transmitted by mail, (iii) the date three days after delivery to the
courier if sent by internationally recognized courier service, or (iv) the
date of transmission with confirmation of receipt if transmitted by
facsimile, whichever shall first occur. Each party may change its address
for purposes hereof by notice to the other. All notices hereunder and all
documents or instruments delivered in connection with this transaction
shall be in the English language.
12.09. USURY
All agreements between Southland and the Agents, whether now
existing or hereafter arising and whether written or oral, are hereby
expressly limited so that in no contingency or event whatsoever shall the
amount paid, or agreed to be paid, to the Agents for the benefit of the
Lenders for the use, forbearance or detention of the money to be loaned
under this Agreement or otherwise or for the performance of any covenant or
obligation contained herein or in any of the other Security Documents
exceed the maximum amount permissible under applicable law. If as a result
of any circumstances whatsoever, fulfillment of any provision hereof or of
any of the Security Documents, at the time performance of such provision
shall be due, shall involve transcending the limit of validity prescribed
by applicable usury law, then the obligation to be fulfilled shall be
reduced to the limit of such validity and if, from any such circumstance,
the Lenders shall receive interest or anything which might be deemed
interest under applicable law which would exceed the highest lawful rate,
such amount as would be excessive interest shall be applied to reduction of
the Loans and not to the payment of interest, or if such excessive interest
exceeds the Loans then outstanding, such amount shall be applied to any
other amounts then owing to the Lenders hereunder or under any of the
agreements under which Southland has obligations to the Lenders and
thereafter to Southland. All sums paid or agreed to be paid to the Agents
for the use, forbearance or detention of the money to be loaned under this
Agreement or otherwise or for the performance of any covenant or obligation
contained herein or in any of the other Security Documents shall, to the
extent permitted by applicable law, be amortized, allocated and spread
throughout the full term of such indebtedness until payment in full of the
Loans so that the interest on account of such indebtedness shall not exceed
the maximum amount permitted by applicable law. The terms and provisions
of this Section 12.09(b) shall control and supersede every other provision
of this Agreement and the other Security Documents.
12.10. COUNTERPARTS
This Agreement may be signed in any number of counterparts. Any
single counterpart or a set of counterparts signed, in either case, by all
the parties hereto shall constitute a full and original agreement for all
purposes.
54
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective duly authorized signatories as of the
day and year first written above.
BORROWER: THE SOUTHLAND CORPORATION
By: /s/ XXXXX X. XXXXX
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President and Treasurer
PAYING AGENT: CITIBANK, N.A., TOKYO BRANCH
By: /s/ XXXXXX XXXXXXX
-------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
COLLATERAL AGENT: CITIBANK, N.A., TOKYO BRANCH
By: /s/ XXXXXX XXXXXXX
---------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
LENDER: CITIBANK, N.A., TOKYO BRANCH
By: /s/ XXXXXX XXXXXXX
---------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
55
CO-AGENT AND THE SAKURA BANK, LIMITED, NEW YORK
LENDER: BRANCH
By: /s/ XXXXX XXXXX
--------------------------------
Name: Xxxxx Xxxxx
Title: Vice President and Senior Manager
CO-AGENT AND THE ASAHI BANK, LTD., NEW YORK BRANCH
LENDER:
By: /s/ XXXXXXX X. XXXXX
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
CO-AGENT AND CIBC, INC.
LENDER:
By: /s/ XXXXXXXXX XXXXXXX
------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Executive Director
LEAD MANAGER THE FUJI BANK, LIMITED, HOUSTON AGENCY
AND LENDER:
By: /s/ XXXXXX X. XXXXXXXX, III
---------------------------------
Name: Xxxxxx X. Xxxxxxxx, III
Title: Vice President and Joint Manager
56
ARRANGER: CITICORP SECURITIES, INC.
By: /s/ XXXXX X. XXXXXXX
Name: Xxxxx X. Xxxxxxx
Title: Vice President
57
SCHEDULE 1
LENDERS COMMITMENTS
----------------------------------------------------------------------
THE ASAHI BANK, LTD., NEW YORK BRANCH 2,700,000,000 yen
CANADIAN IMPERIAL BANK OF COMMERCE,
TOKYO BRANCH 2,700,000,000 yen
CITIBANK, N.A., TOKYO BRANCH 2,700,000,000 yen
THE FUJI BANK, LIMITED, HOUSTON AGENCY 1,700,000,000 yen
THE SAKURA BANK LIMITED, NEW YORK BRANCH 2,700,000,000 yen
58
SCHEDULE II
THE SOUTHLAND CORPORATION
LIMITED RECOURSE YEN LOAN AGREEMENT AMORTIZATION SCHEDULE
Southland Payments
--------------------------------------------------------------------------------------------------------------------------
Repayment New Yen Facility New Yen Facility Seven Eleven Japan Excess Returned
Dates Balance Fixed Rate Principal Interest* Payment Amount Royalty Projections to Southland
--------------------------------------------------------------------------------------------------------------------------
4/30/98 12,500,000,000 2.325% - - -
10/13/98 12,500,000,000 2.325% - - -
4/12/99 12,500,000,000 2.325% - - -
10/12/99 12,500,000,000 2.325% - - -
4/10/00 12,500,000,000 2.325% - - -
10/11/00 12,500,000,000 2.325% - - -
4/10/01 12,500,000,000 2.325% - - -
10/11/01 12,250,000,000 2.325% 250,000,000 1,038,423,213 1,288,423,213 1,743,356,730 454,933,517
4/10/02 9,413,901,000 2.325% 2,836,099,000 141,235,788 2,977,334,788 3,382,924,887 405,590,100
10/11/02 7,150,305,000 2.325% 2,263,596,000 110,336,078 2,373,932,078 2,695,290,615 321,358,537
4/10/03 6,356,776,000 2.325% 793,529,000 82,439,099 875,968,099 995,178,818 119,210,719
10/14/03 5,500,754,000 2.325% 856,022,000 75,719,652 931,741,652 1,055,824,436 124,082,785
4/12/04 4,663,534,000 2.325% 837,220,000 63,420,680 900,640,680 1,023,271,088 122,630,408
10/12/04 3,773,461,000 2.325% 890,073,000 54,362,113 944,435,113 1,072,390,553 127,955,440
4/11/05 2,888,877,000 2.325% 884,584,000 43,505,938 928,089,938 1,054,521,545 126,431,608
10/11/05 1,934,567,000 2.325% 954,310,000 33,675,204 987,985,204 1,122,194,869 134,209,665
4/10/06 994,864,000 2.325% 939,703,000 22,304,497 962,007,497 1,093,126,365 131,118,867
10/11/06 2.325% 994,864,000 11,660,351 1,006,524,351 1,151,806,808 145,282,457
---------------------------------------------------------------------------------------------------------------------
Total: 12,500,000,000 1,677,082,612 14,177,082,612 16,389,886,713 2,212,804,101
---------------------------------------------------------------------------------------------------------------------
NOTE: * The interest due on 10/11/01 is the Swap Cumulative Advance Amount
Lender Payments
----------------------------------------------------
Repayment New Yen Facility Floating
Dates Balance Principal Rate
----------------------------------------------------
4/30/98 12,500,000,000 - L+60
10/13/98 12,500,000,000 - L+60
4/12/99 12,500,000,000 - L+60
10/12/99 12,500,000,000 - L+60
4/10/00 12,500,000,000 - L+60
10/11/00 12,500,000,000 - L+60
4/10/01 12,500,000,000 - L+60
10/11/01 12,250,000,000 250,000,000 L+50
4/10/02 9,413,901,000 2,836,099,000 L+50
10/11/02 7,150,305,000 2,263,596,000 L+50
4/10/03 6,356,776,000 793,529,000 L+50
10/14/03 5,500,754,000 856,022,000 L+50
4/12/04 4,663,534,000 837,220,000 L+50
10/12/04 3,773,461,000 890,073,000 L+50
4/11/05 2,888,877,000 884,584,000 L+50
10/11/05 1,934,567,000 954,310,000 L+50
4/10/06 994,864,000 939,703,000 L+50
10/11/06 - 994,864,000 L+50
---------------------------------------------------
Total: 12,500,000,000
---------------------------------------------------
59
Schedule III to Secured
Yen Loan Agreement
NON-NEGOTIABLE CERTIFICATE
This Certificate does not represent an
obligation of the borrower to pay under the
referenced loan agreement. Transfer of
ownership of an interest in the referenced loans
may be made only in accordance with the
provisions of the referenced loan agreement.
THE SOUTHLAND CORPORATION
CERTIFICATE
of
LOAN INTEREST
1,700,000,000 yen Date: April 30, 1998
SECURED YEN LOAN AGREEMENT
THIS CERTIFICATE OF LOAN INTEREST serves as evidence that as of
the date hereof the Lender named below is the record owner of a Loan in the
amount set forth below pursuant to that certain SECURED YEN LOAN AGREEMENT
dated as of April 21, 1997 (as it may be amended, supplemented or otherwise
modified from time to time, the "Loan Agreement") among THE SOUTHLAND
CORPORATION as borrower, CITIBANK, N.A., TOKYO BRANCH as Collateral Agent
and as Paying Agent and THE FINANCIAL INSTITUTIONS NAMED ON SCHEDULE I
THERETO AS LENDERS. Capitalized terms used herein and not defined herein
shall have the meanings given to such terms in the Loan Agreement.
This Certificate of Loan Interest is one of the Certificates of
Loan Interest referred to in the Loan Agreement. The transfer of record
ownership of all or any portion of the Loan evidenced hereby is restricted
by the terms of the Loan Agreement and may only be made pursuant to the
transfer provisions or the procedures for auction set forth in the Loan
Agreement and by recordation in the book-entry Loan Registry maintained by
Citibank, N.A., Tokyo Branch, as Paying Agent.
The Loan evidenced by this Certificate of Loan Interest is a Loan
with interest payable at
60
the rate referenced in the Loan Agreement which will be repaid in scheduled
principal installments as provided in the Loan Agreement. Recourse for the
Loans is limited to recourse against the Collateral and the Loans are not
general obligations of Southland. Neither Southland nor the Paying Agent
(nor the holder hereof) has any obligation to cause a notation or
substitution of this Certificate of Loan Interest to indicate any
repayment, prepayment or reduction in the amount owed as principal of the
Loan. THIS CERTIFICATE OF LOAN INTEREST REPRESENTS EVIDENCE OF RECORD
OWNERSHIP AT THIS DATE OF A LOAN IN THE AMOUNT STATED AND DOES NOT
REPRESENT A CLAIM OR A PROMISE TO PAY BY SOUTHLAND.
Loan Amount: 1,700,000,000 yen
Record Owner: THE FUJI BANK, LIMITED,
HOUSTON AGENCY
CITIBANK, N.A., TOKYO BRANCH,
as Paying Agent
By:
---------------------------------------
Name:
Title:
61
Schedule IV
JAPANESE TRADEMARKS REGISTERED
UNDER THE NAME OF TOKYO LEASING CO., LTD.
Class Owner Registration No. Registration
Xxxx * Old Class Date
7-Eleven Class 26 * TL Co. 1428682 7/31/80
7-Eleven Class 28 * TL Co. 2005539 12/18/87
7-Eleven Class 29 * TL Co. 1521083 6/29/82
7-Eleven Class 30 * TL Co. 1434180 9/29/80
7-Eleven Class 31 * TL Co. 1404696 1/31/80
7-Eleven Class 32 * TL Co. 1228880 10/27/76
7-Eleven Class 33 * TL Co. 1235270 11/18/76
7-Eleven in Katakana Class 28 * TL Co. 2713015 3/29/96
7-Eleven in Katakana Class 26 * TL Co. 1660134 2/23/84
7-Eleven in Katakana Class 29 * TL Co. 1480508 9/30/81
7-Eleven In Katakana Class 30 * TL Co. 1528670 7/30/82
7-Eleven in Katakana Class 31 * TL Co. 1491398 12/25/81
7-Eleven in Katakana Class 33 * TL Co. 1473677 8/31/81
7-Eleven in Katakana Class 1 * TL Co. 1547237 10/27/82
7-Eleven in Katakana Class 3 * TL Co. 1622619 10/27/83
62
7-Eleven in Katakana Class 13 * TL Co. 2078352 9/30/88
7-Eleven in Katakana Class 19 * TL Co. 1988984 10/27/87
7-Eleven in Katakana Class 21 * TL Co. 1768166 5/30/85
7-Eleven in Katakana Class 24 * TL Co. 1938566 3/27/87
7-Eleven in Katakana Class 25 * TL Co. 1745788 2/27/85
7-Eleven Class 1 * TL Co. 1509432 4/30/82
7-Eleven Class 3 * TL Co. 1665076 3/22/84
7-Eleven Class 4 * TL Co. 1670247 3/22/84
7-Eleven Class 13 * TL Co. 1575955 3/28/83
7-Eleven Class 17 * TL Co. 1717953 9/26/84
7-Eleven Class 19 * TL Co. 1539896 9/30/82
7-Eleven Class 21 * TL Co. 1512588 5/25/82
7-Eleven Class 24 * TL Co. 1578677 3/28/83
7-Eleven Class 25 * TL Co. 2069145 8/29/88
7-Eleven Class 11 * TL Co. 2002731 11/20/87
7-Eleven Class 16 * TL Co. 1920604 12/24/86
7-Eleven Class 1 * TL Co. 2060965 7/22/88
7-Eleven Class 3 * TL Co. 2002985 11/20/87
7-Eleven Class 4 * TL Co. 2065466 7/22/88
7-Eleven Class 13 * TL Co. 2041415 4/26/88
63
7-Eleven Class 19 * TL Co. 1990266 10/27/87
7-Eleven Class 21 * TL Co. 2050239 5/26/88
7-Eleven Class 24 * TL Co. 2071086 8/29/88
7-Eleven Class 25 * TL Co. 2035099 3/30/88
7-Eleven Class 16 * TL Co. 2034258 3/30/88
7-Eleven in Katakana Class 16 * TL Co. 2147424 6/23/89
7-Eleven Class 35 TL Co. 3261573 2/24/97
7-Eleven Class 36 TL Co. 3056980 7/31/95
7-Eleven Class 37 TL Co. 3017345 12/22/94
7-Eleven Class 38 TL Co. 3004192 9/30/94
7-Eleven Class 39 TL Co. 3266955 3/12/97
7-Eleven Class 40 TL Co. 3017350 12/22/94
7-Eleven Class 41 TL Co. 3004958 9/30/94
7-Eleven Class 42 TL Co. 3201091 9/30/96
7-Eleven in Katakana Class 35 TL Co. 3261574 2/24/97
7-Eleven in Katakana Class 36 TL Co. 3182480 7/31/96
7-Eleven in Katakana Class 37 TL Co. 3017346 12/22/94
7-Eleven in Katakana Class 38 TL Co. 3017348 12/22/94
7-Eleven in Katakana Class 39 TL Co. 3266956 3/12/97
7-Eleven in Katakana Class 40 TL Co. 3017351 12/22/94
64
7-Eleven in Katakana Class 42 TL Co. 3237033 12/25/96
7-Eleven Class 35 TL Co. 3261575 2/24/97
7-Eleven Class 36 TL Co. 3182481 7/31/96
7-Eleven Class 37 TL Co. 3017347 12/22/94
7-Eleven Class 38 TL Co. 3017349 12/22/94
7-Eleven Class 39 TL Co. 3004193 9/30/94
7-Eleven Class 40 TL Co. 3017352 12/22/94
7-Eleven Class 41 TL Co. 3024221 2/28/95
7-Eleven Class 42 TL Co. 3079427 10/31/95
7-Eleven Class 35 TL Co. 3272542 3/12/97
7-Eleven Class 36 TL Co. 3315217 5/30/97
7-Eleven Class 37 TL Co. 3276835 4/11/97
7-Eleven Class 38 TL Co. 3270205 3/12/97
7-Eleven Class 39 TL Co. 3334004 7/25/97
7-Eleven Class 40 TL Co. 3270209 3/12/97
7-Eleven Class 41 TL Co. 3261639 2/24/97
7-Eleven Class 42 TL Co. 3322284 6/13/97
7-Eleven Class 11 TL Co. 2013752 1/26/88
7-Eleven Class 32 TL Co. 2697299 10/31/94
7-Eleven Class 11 TL Co. 2386510 3/31/92
7-Eleven Class 28 TL Co. 3226418 11/29/96
7-Eleven Class 28 TL Co. 3226419 11/29/96
7-Eleven Class 20 TL Co. 3249425 1/31/97
65
7-Eleven Class 28 TL Co. 3278040 4/11/97
7-Eleven Class 25 TL Co. 3306675 5/16/97
7-Eleven Class 25 TL Co. 3306676 5/16/97
7-Eleven Class 25 TL Co. 3306677 5/16/97
7-Eleven Class 18 TL Co. 3322307 6/13/97
7-Eleven Class 20 TL Co. 3322308 6/13/97
7-Eleven Class 20 TL Co. 3322309 6/13/97
66
