Amendment No. 3 to Fifth Amended and Restated Revolving Credit Agreement between Max & Erma's Restaurants, Inc. and The Provident Bank
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This amendment updates the terms of a revolving credit agreement between Max & Erma's Restaurants, Inc. and The Provident Bank. It revises the interest rate structure, adjusts how loan proceeds can be used (including limits on stock repurchases), and modifies certain financial ratio requirements the company must meet. The changes are effective as of December 17, 2004, and are intended to clarify and update the financial and operational obligations under the existing credit facility.
EX-10.V 4 l11340aexv10wv.txt EXHIBIT 10(V) EXHIBIT 10 (v) AMENDMENT NO. 3 TO FIFTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT DATED AS OF SEPTEMBER 22, 2003 THIS AMENDMENT NO. 3 ("Amendment No. 3") dated as of December 17, 2004 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, as amended by Amendment No.1 dated as of December 31, 2003, and as amended by Amendment No. 2 dated as of May 17, 2004 (the "Agreement"), have agreed to amend the Agreement by this Amendment No. 3 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. From the date of Amendment No. 3 to the Agreement until October 30, 2005, 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 equal to (at the option of the Company) either (i) the Prime Rate plus 75 basis points or (ii) the LIBOR Rate plus 350 basis points. 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 October 31, 2005. 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 Financial Ratio (as defined in Section 6.2(h) hereof) of the Company during the immediately preceding twelve month period as of the date of each fiscal quarter end:
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 5.1 is amended and restated in its entirety as follows: 5.1 Use of Proceeds. The Company shall use the Loan proceeds disbursed pursuant to this Agreement for (a) repayment of term indebtedness owing to the Bank, (b) store expansion, (c) common stock repurchases and (d) general working capital purposes; provided, however, that the maximum amount of Loan proceeds that may be used to repurchase common stock is $20,000,000; provided further, however, that the maximum amount of Loan proceeds that may be used to repurchase common stock is $1,000,000 from the effective date of Amendment No. 3 through October 31, 2005. 1.3. Section 6.2(c) is amended and restated in its entirety as follows: (c) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio shall not be less than (1) 1.00 to 1.00 from November 1, 2004 to April 30, 2005, (2) 1.05 to 1.00 from May 1, 2005 to July 31, 2005, (3) 1.10 to 1.00 from August 1, 2005 to October 31, 2005, (4) 1.15 to 1.00 from November 1, 2005 to February 28, 2006, and (5) 1.20 to 1.00 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(d), entitled "Earnings Before Taxes," is hereby eliminated. 1.5. Section 6.2(f), entitled "Interest Coverage Ratio," is hereby eliminated. 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 (1) on the date hereof and ending on October 30, 2005, 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 2.50 to 1.00 and (2) on October 31, 2005 and thereafter, 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 2.25 to 1.0. 1.7. A new Section 6.2(h) has been added as follows: (h) Financial Ratio Test. Permit the Financial Ratio (1) to be more than 5.75 to 1.00 from November 1, 2004 through October 30, 2005, then (2) to be more (i) than 5.50 to 1.00 from October 31, 2005 through October 29, 2006, and (3) to be more than 5.25 to 1.00 thereafter. "Financial Ratio" shall mean the sum of the Senior Indebtedness of the Company plus the product of the Company's Current Year Future Minimum Rental Commitments multiplied by eight (8), as such sum is divided by EBITDAR. "Company's Current Year Future Minimum Rental Commitments" means the sum of the payments owing by the Company for the current fiscal year under the non-cancelable term of the operating leases including any residual payments guaranteed by the Company. "EBITDAR" means EBITDA plus Rental Expense of the Company. 1.8. Exhibit C-6 attached hereto amends and restates in its entirety Exhibit C-5. Section 2. Governing Law. This Amendment No. 3 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. 3 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. 3 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 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. 3 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. 3. 6.3. Payment of a waiver and restructuring fee of $36,000. 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. 3 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. The parties have executed this Amendment No. 3 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/ Douglas E. Houser _________________________________ _________________________________ Name: William C. Niegsch, Jr. Name: Douglas E. Houser Its: Chief Financial Officer Its: Senior Vice President Address for Notices: Address for Notices: 4849 Evanswood Drive 155 East Broad Street Columbus, OH 43229 Columbus, OH 43215 Attn: William C. Niegsch, Jr. Attention: Douglas E. Houser Telephone No.: 614 ###-###-#### Telephone No.: 614 ###-###-#### Telecopy No.: 614 ###-###-#### EXHIBIT C-5 [BORROWER TO EDIT TO ADD NEW LOCATIONS AND DELETE ANY CLOSED LOCATIONS] MAX & ERMA'S RESTAURANTS, INC. AT THE FOLLOWING LOCATIONS:
[BORROWER TO EDIT TO ADD NEW LOCATIONS AND DELETE ANY CLOSED LOCATIONS]
