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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:
<TABLE>
<CAPTION>
Ratio at
quarter end
Less than
Rate for following quarter
---------
--------------------------
<S>
<C>
4.25:1.0
Either the Prime Rate minus 25 basis points or the LIBOR Rate
plus
250 basis points
4.25 through
Either the Prime Rate plus 25 basis
5.0:1.0
points or the LIBOR Rate plus 300 basis
points
Greater than
Either the Prime Rate plus 75 basis
5.0:1.0
points or the LIBOR Rate plus 350 basis
points
</TABLE>
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
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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
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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 follo
