EXHIBIT 10.1
THIRD AMENDMENT TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT dated as of March 19,
2001(this "AMENDMENT"), among ▇▇▇▇▇'▇ RESTAURANTS, INC AND RUBIO'S RESTAURANTS
OF NEVADA (collectively the "BORROWERS") and FLEET NATIONAL BANK formerly known
as BANKBOSTON, N.A., (the "Bank").
WHEREAS, pursuant to the Credit Agreement (as defined below), the Bank
has agreed to make Revolving Credit Loans to the Borrower as provided in the
Credit Agreement (as defined below);
WHEREAS, the Borrower and the Bank wish to revise certain provisions of
the Credit Agreement as provided below, eliminating certain covenants , changing
other covenants, making certain other changes to the Credit Agreement, and
permitting the Borrower to engage in a Secondary Offering, as defined below.
NOW, THEREFORE, in consideration of the foregoing and the agreements
contained herein, the parties hereby agree as follows:
1) REFERENCE TO CREDIT AGREEMENT.
Reference is made to the Revolving Credit and Term Loan Agreement dated
as of May 13, 1998 (as the same may be amended and restated from time to time,
the "CREDIT AGREEMENT") between the Borrower and the Bank. Capitalized terms
used herein which are defined in the Credit Agreement have the same meanings
herein as therein, except to the extent that such meanings are amended hereby.
2) AMENDMENTS.
The Borrower and the Bank agree that the Credit Agreement is hereby
amended, effective as of the date hereof, as follows:
a) The following is added to Section 1 of the Credit Agreement:
"MINIMUM REVOLVER INCURRENCE TEST" means the minimum Consolidated
EBITDA of the Borrower as set forth in Section 6.9(b) required prior to
making Loans hereunder.
"SECONDARY OFFERING" means an offering of equity to investors that does
not include the raising of capital through debt, nor the granting of
liens or security interests in Borrower's assets to such investors.
b) The following is hereby substituted for Section 2.1 (a) of the Credit
Agreement:
2.1 REVOLVING CREDIT COMMITMENTS.
(a) REVOLVING CREDIT LOANS. Subject to the terms and
conditions set forth herein, including without limitation a certificate
from a Senior Officer stating that the Borrower is in compliance with
Section 6.9 (b), the Bank agrees to make Revolving Credit Loans to the
-1-
Borrower from time to time during the Revolving Credit Availability
Period in an aggregate principal amount that will not result in the
aggregate of all Revolving Credit Loans plus Letters of Credit issued
and outstanding to exceed the Revolving Credit Commitment.
Notwithstanding the forgoing, the Bank shall not make any Revolving
Credit Loan which does not comply with the use of proceeds set forth in
Section 5.10 of this Agreement. Within the foregoing limits and subject
to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Revolving Credit Loans until maturity. The
Revolving Credit Loans shall be evidenced by a Amended and Restated
Revolving Credit Note in the form appended hereto as EXHIBIT A.
c) Section 2.8 (a) of the Credit Agreement is amended in its
entirety to read as follows:
(a) The Borrower agrees to pay to the Bank on the daily
average unused amount of the respective Revolving Credit Commitment,
during each fiscal quarter commencing on the date hereof an unused
commitment fee equal to .500% per annum in any fiscal quarter in which
Consolidated EBITDA does not equal or exceed $6,500,000 and .375% in
each quarter in which Consolidated EBITDA equals or exceeds $6,500,000.
Such unused commitment fee as may accrue from and after the date hereof
shall be payable in arrears on each Quarterly Date commencing on the
first such date occurring after the date hereof. All unused commitment
fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day
but excluding the last day).
d) Section 6.5 of the Credit Agreement is amended in its entirety
to read as follows:
6.5 INVESTMENTS
The Borrower will not make or permit to remain outstanding any
Investment, except:
(i) Permitted New Restaurants;
(ii) Permitted Investments;
(iii) Checking and deposit accounts with banks used in the
ordinary course of business; and
(iv) an account receivable not to exceed $300,000 in the
aggregate due from ▇▇▇▇▇ ▇▇▇▇▇ and arising solely from amounts related
to the development and implementation of the opening and operating a
not-for-profit Restaurant for training high school students in
restaurant management and operations and further providing for a long
term payout of such account receivable.
-2-
e) Section 6.8 of the Credit Agreement is amended in its entirety
to read as follows:
6.8 DISTRIBUTIONS. The Borrower shall not issue additional
shares of any class except as provided ins SCHEDULE 6.8
hereof, provided that Borrower may consummate the Secondary
Offering.
f) Section 6.9 of the Credit Agreement is amended in its entirety
to read as follows:
6.9 CERTAIN FINANCIAL COVENANTS. All of the following
covenants shall be measured at the end of each fiscal quarter
of the Borrower, based on the four immediately preceding
fiscal quarters of the Borrower, except as otherwise set forth
below.
(a) FIXED CHARGE COVERAGE RATIO. The Borrower shall not permit
the ratio of Consolidated Cash Flow Plus Rental Expense on the
last day of each fiscal quarter for the four quarters then
ended to Consolidated Financial Obligations plus Rental
Expense to be at the end of:
At the end of the fourth fiscal quarter ending in
fiscal year 2000 and at the end of each fiscal
quarter of fiscal year 2001, to be less than 1.35 to
1.00
At the end of each fiscal quarter ending in fiscal
year 2002 and thereafter to be less than 1.30 to 1.00
(b) REVOLVING INCURRENCE TEST: The Bank shall not advance any
additional Loan during any of the periods set forth below
unless a Senior Officer can certify at the time the Loan is
requested that the Consolidated EBITDA equals or exceeds the
following minimums:
---------------------------------------------- ------------------------------------------------------
Period Minimum Consolidated EBITDA
---------------------------------------------- ------------------------------------------------------
First Fiscal Quarter of Fiscal Year 2001 for $5,600,000
the four fiscal quarter then ended
---------------------------------------------- ------------------------------------------------------
Second Fiscal Quarter of Fiscal Year 2001 $5,900,000
for the four fiscal quarter then ended
---------------------------------------------- ------------------------------------------------------
Third Fiscal Quarter of Fiscal Year 2001 and $6,500,000
each Fiscal Quarter thereafter for the four
fiscal quarters then ended.
---------------------------------------------- ------------------------------------------------------
(c) MAXIMUM TOTAL LEVERAGE RATIO. The ratio of Consolidated
Funded Indebtedness to Consolidated EBITDA shall not exceed
2.25:1.00 for each quarter starting October, 2000 and
thereafter.
(d) CAPITAL EXPENDITURES. The Borrower shall not incur Capital
Expenditures in any fiscal year commencing with fiscal year
2001 which exceed: $12,000,000; provided that the Borrower
shall not build any additional stores unless the ratio of
Consolidated Funded Indebtedness to Consolidated EBITDA does
not exceed 1.25 to 1.00 and on a pro forma basis will not
exceed 1.25 to 1.00 after such capital
-3-
expenditure. Up to 50% of the total amount of Capital
Expenditures permitted hereunder which is not used in any
fiscal year may be carried forward to the next fiscal year,
but not thereafter.
(e) MINIMUM EBITDA. The Borrower shall have minimum
Consolidated EBITDA at the end of each fiscal period as
follows:
Fiscal Period Minimum EBITDA
------------- --------------
Fourth Fiscal Quarter of Fiscal Year 2000 $5,000,000
for the four fiscal quarters then ended.
First Fiscal Quarter of Fiscal Year 2001 for the $5,000,000
four fiscal quarters then ended.
Second Fiscal Quarter of Fiscal Year 2001 for the $5,500,000
four fiscal quarters then ended.
Third Fiscal Quarter of Fiscal Year 2001 for the $6,500,000
four fiscal quarters then ended. and at the end of
each fiscal quarter thereafter for the four fiscal
quarters then ended.
g) Section 8.1 is amended in its entirety to read as follows:
8.1 NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all
notices and other communications provided for herein shall be in
writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇'▇ Restaurants,
Inc. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, fax number (760)
929-8203 with a copy to ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇.
(b) if to the Bank, to Fleet National Bank, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Director (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to Pepe
& Hazard LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq. (Fax No. ▇▇▇-▇▇▇-▇▇▇▇).
Any party hereto may change its address or telecopy number for notices
and other communications hereunder by written notice to the other
parties hereto. All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.
3) AFFIRMATION OF SECURITY AGREEMENTS AND INTELLECTUAL PROPERTY SECURITY
AGREEMENTS.
-4-
a) The Borrowers affirm that the Security Agreements (as defined in the
Credit Agreement) remain in full force and effect and secure all of the
Obligations either current or future due to the Bank.
b) The Borrower has delivered this date revised Perfection Certificates
for each of them, which are true and correct.
c) The Borrowers affirm that the Intellectual Property Security Agreements
(as defined in the Credit Agreement) remain in full force and effect
and secure all of the Obligations either current or future due to the
Bank.
d) The Borrowers have delivered this date revised Schedules for the
Intellectual Property Security Agreement, which are true and correct.
4) NO DEFAULT; REPRESENTATIONS AND WARRANTIES, ETC.
The Borrower hereby confirms that: (a) the representations and
warranties of the Borrower contained in th the Credit Agreement are true on and
as of the date hereof as if made on such date (except to the extent that such
representations and warranties expressly relate to an earlier date), as modified
by any amendment of Schedules presented herewith; (b) the Borrower is in
compliance in all material respects with all of the terms and provisions set
forth in the Credit Agreement on their part to be observed or performed; and (c)
after giving effect to this Amendment, no Event of Default, nor any event which
with the giving of notice or expiration of any applicable grace period or both
would constitute such an Event of Default, shall have occurred and be
continuing.
5) CONDITIONS TO THIS AMENDMENT.
This Second Amendment shall not become effective until the date on
which each of the following conditions is satisfied:
a) COUNTERPARTS OF AGREEMENT. The Bank shall have received from each party
hereto a counterpart of this Agreement signed on behalf of such.
b) CORPORATE MATTERS. The Bank shall have received such documents and
certificates as the Bank may reasonably request relating to the
organization, existence and good standing of the Borrower, the
authorization of the Transactions and any other legal matters relating
to the Borrower, this Agreement, the other Loan Documents or the
Transactions, all in form and substance reasonably satisfactory to the
Bank and its counsel.
c) PERFECTION CERTIFICATES. The Borrower has delivered to the Bank
updated Perfection Certificate
d) FEES AND EXPENSES. The Bank shall have received all fees and other
amounts due and payable at or prior to the Closing Date, including, all
out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder (including reasonable attorneys' fees and costs).
e) Projections. The Bank has received for the current fiscal year an
annual operating budget for the Borrower for each fiscal quarter in the
current fiscal year, together with supporting
-5-
assumptions which were reasonable when made, as at the end of each
fiscal month or year, as applicable, all prepared in good faith in
reasonable detail and consistent with the Borrower's past practices in
preparing projections and otherwise reasonably satisfactory in scope to
the Bank and certified by the Chief Financial Officer of the Borrower;
f) OTHER DOCUMENTS. The Bank shall have received such other documents
as the Bank and its counsel shall have reasonably requested.
6) MISCELLANEOUS.
a) Except to the extent specifically amended hereby, the Credit Agreement,
the Loan Documents and all related documents shall remain in full force
and effect. Whenever the terms or sections amended hereby shall be
referred to in the Credit Agreement, Loan Documents or such other
documents (whether directly or by incorporation into other defined
terms), such defined terms shall be deemed to refer to those terms or
sections as amended by this Amendment.
b) This Amendment may be executed in any number of counterparts, each of
which, when executed and delivered, shall be an original, but all
counterparts shall together constitute one instrument.
c) This Amendment shall be governed by the laws of the Commonwealth of
Massachusetts and shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
which shall be deemed to be a sealed instrument as of the date first above
written.
▇▇▇▇▇'▇ RESTAURANTS, INC.
By_____________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President
▇▇▇▇▇'▇ RESTAURANTS OF NEVADA, INC.
By_____________________________________
Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: President
-6-
FLEET NATIONAL BANK formerly known
as BankBoston, N.A.
By_____________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Director
-7-
