Credit Agreement [Amendment No. 2] - Rubio's Restaurants, Rubio's Restaurants of Nevada and Fleet National Bank
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT dated as of August
15, 2000 (this "Amendment"), among RUBIO'S 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 and a Term Loan 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 the Term Loan,
setting a performance grid for interests rate, and permitting the Borrower to
engage in a Secondary Offering (as defined below) and making certain other
changes to the Credit Agreement.
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 definitions in Section 1.1 Defined Terms are added or amended
in their entirety as follows:
"APPLICABLE MARGIN" means, for any Payment Period (as defined below),
the respective percentages indicated below for Revolving Credit Loans,
as applicable, based on the ratio of the Consolidated Total Funded Debt
to Consolidated EBITDA (the "Leverage Ratio") for such Payment Period:
<TABLE>
<CAPTION>
APPLICABLE MARGIN (% PER ANNUM)
========================================================== ============== ==============
LEVERAGE RATIO ADJUSTED ADJUSTED
BASE RATE LIBOR
LOANS LOANS
========================================================== ============== ==============
<S> <C> <C>
Level I 1.00% 2.50%
less than 1.50 to 1
========================================================== ============== ==============
Level II 1.50% 3.00%
greater than or equal to 1.50 to 1 but less than
2.00 to 1
========================================================== ============== ==============
Level III greater than 2.00 to 1 2.00% 3.50%
========================================================== ============== ==============
</TABLE>
<PAGE>
For purposes hereof, a "Payment Period" means (i) initially, the period
(the "Initial Payment Period") commencing on the date hereof to the
date of the actual receipt by the Bank of the report required under
Section 5.1 hereof for the fiscal quarter ending after the date hereof
and (ii) thereafter, the period commencing on the day immediately
succeeding the last day of the prior Payment Period to but not
including the first day of the calendar month immediately succeeding
the earlier of (x) the due date of the next report under Section 5.1
hereof or (y) the date of the actual receipt by the Bank of such
report. If the report under Section 5.1 hereof is not received on the
date required hereunder the Applicable Margin shall increase to Level
III until such time as the Event of Default arising from failure to
deliver such report is cured by Borrower to the reasonable satisfaction
of the Lender. The Applicable Margin shall be set for the Initial
Payment Period at Level I.
"CLASS" when used in reference to any Loan, Borrowing or Commitment,
refers to Revolving Credit Loans.
"COMPLIANCE CERTIFICATE" means a certificate required to be delivered
by the Borrower to the Bank pursuant to Section 5.1(d) signed by a
Senior Officer, in substantially the form of the revised compliance
certificate designated EXHIBIT I hereto.
"LOANS" means the Revolving Credit Loans.
"PERMITTED NEW RESTAURANTS" shall mean restaurants which can be
constructed under the limitations provided in Section 6.9 (d) of the
Credit Agreement.
"POST-DEFAULT RATE" has the meaning provided in Section 2.9 (c) of the
Credit Agreement.
"REVOLVING CREDIT COMMITMENT" means an amount not to exceed
$12,000,000.
"REVOLVING CREDIT MATURITY DATE" means the earlier of July 31, 2004 or
the date upon which the Borrower receives notice of redemption under
any series of preferred stock issued by the Borrower, unless extended
in accordance with Section 2.3(a), in which case the "Revolving Credit
Maturity Date" shall be such extended date.
"REVOLVING CREDIT NOTE" means the amended and restated revolving credit
note substantially in the form appended hereto as EXHIBIT A.
"SECONDARY OFFERING" means any additional offering on the public
markets of the common stock of the Borrower.
b) All references to Term Loan Commitment, Term Note or Term Loan in the Credit
Agreement are deleted in their entirety and the parties agree that the Term Loan
Commitment is fully discharged.
c) The following is hereby substituted for Section 2.9 (a) and (b) of the Credit
Agreement:
(a) The Loans comprising Revolving Credit Loans at the Base Rate shall
bear interest at a rate per annum equal to the Adjusted Base Rate plus
the Applicable Margin.
(b) The Loans comprising Revolving Credit Loans at the LIBO Rate shall
bear interest of a rate per annum equal to the Adjusted LIBO Rate plus
the Applicable Margin.
d) Section 3.4 (a) of the Credit Agreement is amended in its entirety to read as
follows:
(a) The Borrower has heretofore delivered to the Bank the following
financial statements:
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(i) The audited balance sheet and statement of earnings
(loss), stockholder's deficit and cash flows of the Borrower,
as of and for fiscal years ending December 26, 1999,
accompanied by an opinion of Deloitte, Touche LLP, independent
public accountants;
(ii) the unaudited balance sheet and statements of earnings
(loss), stockholders' deficit and cash flows of the Borrower
as of and for the six months ending four-week periods ended
June 25, 2000, certified by a Senior Officer that such
financial statements fairly present (subject to normal
year-end audit adjustments) the financial condition of the
Borrower as at such dates and the results of the operations of
the Borrower for the periods ended on such dates and that all
such financial statements, including the related schedules and
notes thereto have been prepared in accordance with GAAP
applied consistently throughout the periods involved; and
e) Section 3.4 (c) of the Credit Agreement is amended in its entirety to read as
follows:
(c) The Borrower has furnished to the Bank annual combined financial
projections dated as of June 2000 and covering fiscal years 2000
through 2004. Such financial projections are based on good faith
estimates and assumptions made by the Borrower and its management, and
on the Closing Date, such parties believed that the projections were
reasonable and attainable, it being recognized by the Bank, however,
that projections as to future events are not to be viewed as facts and
that actual results during the period or periods covered by the
projections may differ from the projected results and that the
differences may be material.
f) Section 5.10 of the Credit Agreement is amended in its entirety to read as
follows:
5.10 USE OF PROCEEDS. The proceeds of the Loans will be used only as
follows: (i) no more than $1,000,000 outstanding at any one time of the
Revolving Loans may be used for working capital and general corporate
purposes of the Borrower, (ii) to fund Letters of Credit, and (iii) the
balance of the Revolving Loans may be used for Permitted New
Restaurants. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations U and X.
g) 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 fiscal quarters
then ended to Consolidated Financial Obligations plus Rental
Expense indicated below to be not less than the following at
the end of:
Each fiscal quarter ending in fiscal year 2000 and
fiscal year 2001, to be less than 1.55 to 1.00
Each fiscal quarter ending in fiscal year 2002 and
thereafter to be less than 1.5 to 1.00
(b) MINIMUM INTEREST COVERAGE RATIO. The Borrower will not
permit the ratio of Consolidated EBITDA on the last day of
each fiscal quarter for the four fiscal quarters then ending
to Consolidated Interest Expense during the fiscal year 2000
and thereafter to be less than 5.00 to 1.00.
(c) MAXIMUM TOTAL LEVERAGE RATIO. The Borrower will not permit
the ratio of Consolidated Funded Indebtedness to Consolidated
EBITDA at the end of each fiscal quarter for the four fiscal
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<PAGE>
quarters then ended to exceed 2.25 to 1.00 for all of the
fiscal quarters ending on and after March 30, 2000.
(d) CAPITAL EXPENDITURES. The Borrower shall not incur Capital
Expenditures in each of the following fiscal years which
exceed: $18,000,000 in fiscal year 2000, $19,000,000 in fiscal
year 2001, $20,000,000 in fiscal year 2002, $22,000,000 in
fiscal year 2003 and $23,000,000 in fiscal year 2004; 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 proforma basis
will not exceed 1.25 to 1.00 after such capital 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) The Borrower shall have minimum Consolidated EBITDA at the
end of each fiscal period as follows:
<TABLE>
<CAPTION>
Fiscal Period Minimum Ebitda
------------- --------------
<S> <C>
Third Fiscal Quarter of Fiscal Year 2000 $ 6,800,000
Fourth Fiscal Quarter of Fiscal Year 2000 $ 6,900,000
First Fiscal Quarter of Fiscal Year 2001 $ 7,700,000
Second Fiscal Quarter of Fiscal Year 2001 $ 8,200,000
Third Fiscal Quarter of Fiscal Year 2001 $ 8,900,000
Fourth Fiscal Quarter of Fiscal Year 2001 $ 9,400,000
At the end of each Fiscal Quarter in Fiscal Year 2002 $10,000,000
for the four fiscal quarters then ended.
At the end of each Fiscal Quarter in Fiscal Year 2003 $13,500,000
for the four fiscal quarters then ended.
At the end of each Fiscal Quarter in Fiscal Year 2004 $18,000,000
for the four fiscal quarters then ended.
</TABLE>
(d) AMENDMENT OF SECTION 6.4 OF THE CREDIT AGREEMENT. Section 6.4 of the Credit
Agreement is amended by adding the following to the end thereof:
Notwithstanding the foregoing, a Secondary Offering shall not
be a violation of any of the provisions of this Section 6.4
h) Section 6.8 of the Credit Agreement is amended to read as follows:
6.8 DISTRIBUTIONS. The Borrower shall not issue additional
shares of any class except as provided in Schedule 6.8 hereof
or in conjunction with any Secondary Offering.
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i) AMENDMENT OF SECTION 7.1 (m) OF THE CREDIT AGREEMENT. Section 7.1(m) of the
Credit Agreement is amended to read as follows:
(m) the failure of the current holders of the common stock of
the Borrower (x) to own collectively, beneficially and of
record, at least 66% of the capital stock of the Borrower or
(y) to control at least 66% of the voting rights in the
Borrower; provided that upon the death of any of the
foregoing, no Event of Default shall occur if such stock or
interest is transferred to members of the deceased's immediate
family or such person's personal representative and it shall
not be an Event of Default if the common stock ownership is
reduced after and as part of any Secondary Offering.
j) 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 Joseph N. Stein, Rubio's Restaurants, Inc.
1902 Wright Place, Suite 300 Carlsbad, CA 92008, fax number (760)
929-8203 with a copy to Ray Nopper 1902 Wright Place, Suite 300
Carlsbad, CA 92008.
(b) if to the Bank, to Fleet National Bank, 100 Federal Street, Mail
Code 01-09-05, Boston, Massachusetts 02110, Attention: Thomas P. Tansi,
Director (Fax No. (617) 434-0637), with a copy to Lane Altman & Owens
LLP, 100 Federal Street, Boston, Massachusetts 02110, Attention:
Richard S. Rosenstein, Esq. (Fax No. 617-345-0400).
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.
2) AFFIRMATION OF SECURITY AGREEMENTS AND INTELLECTUAL PROPERTY SECURITY
AGREEMENTS.
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.
3) NO DEFAULT; REPRESENTATIONS AND WARRANTIES, ETC.
The Borrower hereby confirms that: (a) the representations and
warranties of the Borrower contained in 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.
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4) 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) NOTE. The Bank shall have received the Revolving Credit Note duly
completed and executed by the Borrower.
c) CORPORATE MATTERS. The Bank shall have received such documents and
certificates as the Bank or Special Counsel 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.
d) SECURITY INTERESTS. The Bank shall have received the results of UCC
searches in every jurisdiction in which the Borrower operates or
intends to operate in the next twelve months and has determined that
the Bank either has or upon filing a financing statement will have a
First Priority on all of the assets of the Borrower in each of those
states which can be perfected by filing of a financing statement.
Provided that all additional financing statements must be filed within
10 days of the date of this Amendment.
e) PERFECTION CERTIFICATES. The Borrower has delivered to the Bank
updated Perfection Certificates.
f) LANDLORD WAIVERS. The Borrower will use all of its best efforts to
deliver Landlord Waivers in the form appended hereto as Exhibit G for
the locations listed on Schedule 3.5 as revised through the date of
closing of this Second Amendment. Provided that all such Landlord
Waivers must be delivered no later than sixty (60) days after the date
of this Amendment.
g) EVIDENCE OF INSURANCE. The Bank shall have received a certificate
from the Borrower's insurance broker or other evidence satisfactory to
it that all insurance required to be maintained pursuant to Section 5.5
is in full force and effect and that the Bank has been named as
additional insured and loss payee thereunder to the extent required
under Section 5.5.
h) NECESSARY GOVERNMENTAL AUTHORIZATIONS AND CONSENTS. The Borrower
shall have obtained all permits, licenses, authorizations or consents
from all Governmental Authorities and all consents of other Persons
with respect to Material Indebtedness, Liens and agreements listed on
Schedule 3.14 (and so identified thereon) annexed hereto, in each case
that are necessary or advisable in connection with the Loan Documents
and the continued operation of the business conducted by the Borrower,
in substantially the same manner as presently conducted, and each of
the foregoing shall be in full force and effect, in each case other
than those the failure to obtain or maintain which, either individually
or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
i) NO MATERIAL ADVERSE EFFECT. There shall have occurred no Material
Adverse Effect (in the reasonable opinion of the Bank) as to the
Borrower taken as a whole.
j) OPINION OF COUNSEL TO BORROWER. The Bank shall have received a
favorable written opinion (addressed to the Bank and dated the Closing
Date) of Brobeck, Phleger & Harrison, LLP, counsel to the Borrower
covering such matters relating to the Borrower, this Agreement, the
other Loan Documents or the Transactions as the Bank shall reasonably
request (and the Borrower hereby requests such counsel to deliver such
opinion).
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k) FEES AND EXPENSES. The Bank shall have received all fees and other
amounts due and payable at or prior to the Closing Date, including, a
the closing fee and all out-of-pocket expenses required to be
reimbursed or paid by the Borrower hereunder and payment of fees and
expenses due to Special Counsel and all of Special Counsel's out of
pocket expenses.
l) FINANCIAL STATEMENTS. The Bank shall have received the financial
statements for fiscal year ending December 26, 1999, as audited by
Borrower's Accountant.
m) Other Documents. The Bank shall have received such other documents
as the Bank or any Lender or Special Counsel shall have reasonably
requested.
5) 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.
RUBIO'S RESTAURANTS, INC.
By /s/ Ralph Rubio
------------------------------------
Name: Ralph Rubio
Title: President
RUBIO'S RESTAURANTS OF NEVADA, INC.
By /s/ Richard Rubio
------------------------------------
Name: Richard Rubio
Title: President
FLEET NATIONAL BANK
formerly known as
BankBoston, N.A.
By /s/ Thomas Tansi
------------------------------------
Name: Thomas Tansi
Title: Director
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