Amendment No. 1 to Fifth Amended and Restated Revolving Credit Agreement between Max & Erma's Restaurants, Inc. and The Provident Bank

Summary

This amendment updates the terms of a revolving credit agreement between Max & Erma's Restaurants, Inc. and The Provident Bank. It revises how interest rates are calculated, adjusts principal repayment terms based on the company's net income, and modifies financial ratio requirements the company must meet. The changes are effective as of December 31, 2003, and are intended to clarify and update the financial obligations and covenants under the original agreement.

EX-10.T 2 l11340aexv10wt.txt EXHIBIT 10(T) EXHIBIT 10(t) AMENDMENT NO. 1 TO FIFTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT DATED AS OF SEPTEMBER 22, 2003 THIS AMENDMENT NO. 1 ("Amendment No. 1") dated as of December 31, 2003 between MAX & ERMA'S RESTAURANTS, INC., a Delaware corporation (the "Company"), and THE PROVIDENT BANK, an Ohio banking corporation (the "Bank"). WITNESSETH: WHEREAS, the Company and the Bank, parties to the Fifth Amended and Restated Revolving Credit Agreement, dated as of September 22, 2003 (the "Agreement"), have agreed to amend the Agreement by this Amendment No. 1 on the terms and conditions hereinafter set forth. Terms not otherwise defined herein are used as defined in the Agreement as amended hereby. NOW, THEREFORE, the Company and the Bank hereby agree as follows: Section 1. Amendment of the Agreement. The Agreement is, effective the date hereof, hereby amended as follows: 1.1. Section 1.4 (b) is amended and restated in its entirety as follows: (b) Interest. Each Loan shall bear interest on the unpaid principal balance of all Loans made by the Bank for each day from the day such Loan is made until it becomes due, at a fluctuating rate per annum which rate will be immediately adjusted upon the execution of this Amendment. Thereafter such rate will be adjusted based upon the Company's submission of financial information pursuant to Section 5.2 herein beginning with the quarter ending November, 1999. The interest rate adjustment will be effective the first Monday following receipt by the Bank of the Quarterly Compliance Certificate pursuant to Section 5.4(c) herein. The interest rate will be established according to the following schedule based upon the ratio of the Indebtedness of the Company to EBITDA of the Company during the immediately preceding twelve month period as of the date of each fiscal quarter end:

1 ;provided, however, that the interest rate will be Either the Prime Rate plus 75 basis points or the LIBOR Rate plus 350 basis points until the Company achieves a Fixed Charge Coverage Ratio of 1.25 to 1.0 as further described in Section 6.2(c). Interest on all Loans shall be calculated on the basis of the actual number of days elapsed over a year of 360 days. As used in this Agreement, the term "Prime Rate" on any day shall mean the rate published or announced by the Bank as its prime rate which rate may not be the Bank's lowest rate. Any change in the interest rate on a Loan due to a change in the Prime Rate shall take effect on the date of such change in the Prime Rate. "LIBOR Rate" shall mean the offered rate for U.S. Dollar deposits of not less than $1,000,000.00 for a period of time equal to each Interest Period as of 11:00 A.M. City of London, England time two London Business Days prior to the first date of each Interest Period of the Notes as shown on the display designated as "British Bankers Assoc. Interest Settlement Rates" on the Telerate System ("Telerate"), Page 3750 or Page 3740, or such other page or pages as may replace such pages on Telerate for the purpose of displaying such rate; provided, however, that if such rate is not available on Telerate then such offered rate shall be otherwise independently determined by the Bank from an alternate, substantially similar independent source available to the Bank or shall be calculated by the Bank by a substantially similar methodology as that theretofore used to determine such offered rate in Telerate. "London Business Day" means any day other than a Saturday, Sunday or a day on which banking institutions are generally authorized or obligated by law or executive order to close in the City of London, England. Each change in the rate to be charged hereunder will become effective without notice on the commencement of each Interest Period based upon the LIBOR Rate then in effect. "Interest Period" means each consecutive one, two, three or six month period (the first of which shall commence on the date of this Agreement) effective as of the first day of each Interest Period and ending on the last day of each Interest Period, provided that if any Interest Period is scheduled to end on a date for which there is no numerical equivalent to the date on which the Interest Period commenced, then it shall end instead on the last day of such calendar month. Under no circumstances will the interest rate on the Notes be more than the maximum rate allowed by applicable law. 1.2. Section 1.4(d) is amended and restated in its entirety as follows: (d) Principal. Principal on the Loans shall be due and payable pursuant to the terms of the Notes and shall be due and payable in full on the respective Maturity Dates; provided, however, that any Excess Cash Flow payments the Company makes shall be applied to principal reduction of the Term Note in the inverse order of maturity. The Company shall be required to make additional principal 2 payments on the Term Loan based on the annual Net Income of the Company, commencing for the fiscal year ending in 2003. The Company shall pay an amount (the "Excess Cash Flow") equal to fifty percent (50%) of the Company's annual Net Income that exceeds the amount of principal paid by the Company on the Term Loans during such fiscal year ; provided, however, that such payment shall never be greater than $500,000 for any fiscal year. The Company shall pay the Excess Cash Flow on the February 1 occurring immediately after each fiscal year end. The Company shall be required to pay any Excess Cash Flow to the Bank. 1.3. Section 6.2(c) is amended and restated in its entirety as follows: (c) Fixed Charge Coverage Ratio. Permit the ratio of Fixed Charge Coverage Ratio at the end of any Fiscal Period (as defined in Section 9) to be less than (I) 1.10 to 1.0 for the Fiscal Period ending February 15, 2004, (II) 1.15 to 1.0 for the Fiscal Period ending May 19, 2004, (III) 1.15 to 1.0 for the Fiscal Period ending August 1, 2004 and (IV) 1.25 to 1 for each Fiscal Period thereafter "Fixed Charge Coverage Ratio" means, for the Company during the Fiscal Period being measured, the quotient of (a) the sum of (i) net income (adjusted upward to the extent non-recurring, non-cash charges are reflected therein and adjusted downward to the extent non-recurring, non-cash gains are reflected therein), plus (ii) amortization and depreciation plus (iii) accrued interest expense plus (iv) income taxes payable during such period minus (v) one time non-cash charges reflected within net income, divided by (b) the sum of (v) current maturities of other long term indebtedness plus (w) current maturities of capitalized lease obligations plus (x) accrued interest expense plus (y) during the Fiscal Period this ratio is being measured, 20% of the Revolving Credit Usage (as defined below), and (z) Store Capital Expenditures in the prior 12 months. "Store Capital Expenditures" means the greater of (A) the product of (i) the number of Company restaurants that have been open more than one year during the Fiscal Period this ratio is being measured multiplied by (ii) $47,000 or (B) the actual Capital Expenditures on such restaurants during the Fiscal Period. "Revolving Credit Usage" means the amount of Revolving Loans outstanding under the Revolving Note on the last day of the Fiscal Period that is being measured. 1.4. Section 6.2(e) is amended and restated in its entirety as follows: (e) Tangible Net Worth. Permit its Tangible Net Worth to be less than (i) $7,500,000 from November 1, 2002 through October 31, 2003, (ii) $10,000,000 from November 1, 2003 through October 31, 2004, (iii) $11,500,000 from November 1, 2004 through October 31, 2005, and (iv) $13,000,000 from November 1, 2005 to the later of the Revolving Credit Maturity Date, the Draw Loan Maturity Date or the Term Loan Maturity Date. 3 1.5. Section 6.2(f) is amended and restated in its entirety as follows: (f) Interest Coverage Ratio. As of the end for each Fiscal Period commencing on February 15, 2004, permit the ratio of (a) (i) the Company's net income during the Fiscal Period being measured plus (ii) interest of the Company during the Fiscal Period being measured plus (iii) taxes of the Company during the Fiscal Period being measured plus (iv) one time non-cash charges reflected within net income for the Company during the Fiscal Period being measured to (b) the Company's interest expense during the Fiscal Period being measured to be less than 2.25 to 1.0 for each fiscal quarter end. 1.6. Section 6.2(g) is amended and restated in its entirety as follows: (g) Senior Debt to EBITDA. At the end of any Fiscal Period commencing on October 31, 2004, permit the ratio of (i) the Company's Indebtedness during the Fiscal Period being measured to (ii) the Company's EBITDA during the Fiscal Period being measured to be greater than 2.5 to 1.0. 1.7. Exhibit C-4 attached hereto amends and restates in its entirety Exhibit C-3. Section 2. Governing Law. This Amendment No. 1 shall be governed by and construed in accordance with the laws of the State of Ohio. Section 3. Costs and Expenses. The Company hereby agree to pay on demand all reasonable costs and expenses of the Bank in connection with the preparation, execution and delivery of this Amendment No. 1 and the other documents to be delivered in connection herewith, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel to the Bank with respect thereto. Section 4. Counterparts. This Amendment No. 1 may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Section 5. Warrant of Attorney. The undersigned and all indorsers authorize any attorney at law, including an attorney engaged by the holder, to appear in any court of record in Columbus, Ohio, after the indebtedness evidenced hereby, or any part thereof, becomes due and waive the issuance and service of process and confess judgment against any one or more than one of the undersigned and all indorsers in favor of the holder, for the amount then appearing due, together with costs of suit and, thereupon, to release all errors and waive all rights of appeal and stay of execution, but no such judgment or judgments against any one of the undersigned shall be a bar to a subsequent judgment or judgments against any one or more than one of such persons against whom judgment has not been obtained hereon. The foregoing warrant of attorney shall survive any judgment; and if any judgment be vacated for any reason, the holder hereof nevertheless may thereafter use the foregoing warrant of attorney to obtain an additional 4 judgment or judgments against the undersigned and all indorsers or any one or more of them. The undersigned and all indorsers hereby expressly waive any conflict of interest that the holder's attorney may have in confessing such judgment against such parties and expressly consent to the confessing attorney receiving a legal fee from the holder for confessing such judgment against such parties. Section 6. Conditions Precedent. Simultaneously with the execution hereof, the Bank shall receive all of the following, each dated the date hereof, in form and substance satisfactory to the Bank: 6.1. The certificate of an officer of the Company certifying the resolutions of the board of directors of the Company evidencing authorization of the execution, delivery, and performance of this Amendment No. 1 and all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the Loan Documents, or the transactions contemplated. 6.2. Executed versions of Amendment No. 1. 6.3. Payment of a $30,000 amendment fee. 6.4. Such other documents as the Bank may, in its reasonable discretion, so require. Section 7. Reaffirmation of Representations and Warranties; No Defaults. The Company hereby expressly acknowledges and confirms that the representations and warranties of the Company set forth in Section 4 of the Agreement, as amended, are true and accurate on this date with the same effect as if made on and as of this date; that no financial condition or circumstance exists which would inevitably result in the occurrence of an Event of Default under Section 7 of the Agreement; and that no event has occurred or no condition exists which constitutes, or with the running of time or the giving of notice would constitute an Event of Default under Section 7 of the Agreement. Section 8. Reaffirmation of Documents. Except as herein expressly modified, the parties hereto ratify and confirm all of the terms, conditions, warranties and covenants of the Agreement, and all security agreements, pledge agreements, mortgage deeds, assignments, subordination agreements, or other instruments or documents executed in connection with the Agreement, including provisions for the payment of the Notes pursuant to the terms of the Agreement. The parties hereto agree that this Amendment No. 1 does not constitute the extinguishment of any obligation or indebtedness previously incurred nor does it in any manner affect or impair any security interest granted to the Bank, all of such security interests to be continued in full force and effect until the indebtedness described herein is fully satisfied. 5 The parties have executed this Amendment No. 1 as of the date first above written. WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE. MAX & ERMA'S RESTAURANTS, INC. THE PROVIDENT BANK By: /s/ William C. Niegsch, Jr. By: /s/ Robert C. Mason ---------------------------------- ---------------------------- Name: William C. Niegsch, Jr. Name: Robert C. Mason Its: Chief Financial Officer Its: Vice President Address for Notices: Address for Notices: 4849 Evanswood Drive 10 West Broad Street Columbus, OH 43229 Columbus,OH 43215 Attn: William C. Niegsch, Jr. Attention: Thomas E. Hannaford Telephone No.: 614 ###-###-#### Telephone No.: 614 ###-###-#### Telecopy No.: 614 ###-###-#### 6 EXHIBIT C-4 MAX & ERMA'S RESTAURANTS, INC. AT THE FOLLOWING LOCATIONS: