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EXHIBIT 10(q)
THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This Third Amended and Restated Revolving Credit Agreement dated as of
January 7, 2000 (the "Agreement"), is between Max & Erma's Restaurants, Inc., a
Delaware corporation (the "Company"), and The Provident Bank (the "Bank") amends
and restates in its entirety the Second Amended and Restated Revolving Credit
Agreement between the parties dated October 29, 1999. The parties agree as
follows:
SECTION 1
AMOUNT AND TERMS OF THE CREDIT
1.1 Commitment of the Bank.
(a) Commitment. The Bank agrees, on the terms and conditions
of this Agreement and provided that no Event of Default or Default (the
definitions of those and other capitalized terms used herein have the meanings
provided in Section 9) then exists, to make Loans to the Company at the main
office of the Bank, 0 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx, from time to time on
and after the date hereof but prior to October 31, 2007 (the "Maturity Date").
(b) Maximum Commitment. The Bank agrees to lend to the Company
up to an amount (the "Maximum Commitment") equal to the lesser of (a) the Bank's
Baseline Commitment, or (b) the Residual Commitment. The "Baseline Commitment"
of the Bank is $40,000,000. Any amounts outstanding under the Baseline
Commitment as of October 31, 2000 (the "Initial Term Loan") shall be payable by
the Company to the Bank in 28 equal quarterly installments of principal and
interest commencing January 31, 2001 and terminating on the Maturity Date
pursuant to the terms of the Note and Section 1.4 of this Agreement. As of
October 31, 2001, the Residual Commitment (the "Secondary Term Loan") shall be
payable by the Company to the Bank in 24 equal quarterly installments of
principal and interest commencing January 31, 2002 and terminating on the
Maturity Date pursuant to the terms of the Note and Section 1.4 of this
Agreement. The "Residual Commitment" shall equal the Baseline Commitment less
the Initial Term Loan. As of the date of the closing of the Secondary Term Loan,
the Bank shall have no further obligation to fund any Loans under this
Agreement. The maximum amount of all outstanding Loans of the Bank to the
Company under this Agreement shall not exceed the Maximum Commitment of the
Bank. The Maximum Commitment of the Bank as adjusted from time to time is
hereinafter called the "Commitment" of the Bank. No Commitment shall become
effective until each of the parties hereto shall have executed this Agreement or
a counterpart hereof.
1.2 Cancellation or Reduction of the Commitment by the Company. During
the period from and including the date of this Agreement to but excluding the
Maturity Date, the
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Commitment of the Bank may, subject to the payment of the Interest Preservation
Amount described in Section 1.5, be cancelled or may be reduced permanently from
time to time by the Company in the amount of $100,000 or any larger amount which
is a whole multiple of $100,000 upon 10 Banking Days' written notice to the Bank
of the Company's election to do so, which notice shall specify the date when
such cancellation or reduction shall be effective and on the effective date of
such reduction the Commitment of the Bank shall be reduced; provided that-
(a) any such cancellation or reduction shall be irrevocable;
(b) in the event of a cancellation of the Commitment of the
Bank, (i) the Note shall be paid in full, (ii) all Commitment Fees due to the
date of cancellation shall be paid in full and (iii) all expenses due pursuant
to Section 10.7 hereof shall be paid in full; and
(c) in the event of a reduction of the Commitment of the Bank
to an amount less than the principal amount then outstanding hereunder, the Note
shall be prepaid so that the unpaid aggregate principal amount of the then
outstanding Loans does not exceed the Commitment of the Bank as so reduced.
1.3 Fees.
(a) Commitment Fee. As consideration for the Commitment of the
Bank, the Company shall pay to the Bank a Commitment Fee on the daily average
unused portion of the Bank's Commitment at a rate per annum equal to 1/2 of 1%,
commencing with the effective date hereof (calculated on the basis of the actual
number of days elapsed over a year of 360 days). The Commitment Fee shall be
payable quarterly on the date for payment of interest pursuant to Section 1.4
commencing with the first such date after the effective date hereof.
(b) Closing Fee. As consideration for the Commitment of the
Bank, the Company paid the Bank $100,000 on July 6, 1999 an additional Closing
Fee of $75,000 on October 29, 1999. The Company shall pay to The Huntington
National Bank a fee of $25,000 upon the execution of this Agreement. The Company
hereby agrees to pay an additional Closing Fee equal to 0.25% of any new funds
above the amount of the Maximum Commitment made available to the Company by the
Bank in the future. Any such new funds shall be subject to the terms of this
Agreement as amended from time to time.
(c) Agency Fee. As consideration for the Bank agreeing to
serve as agent and participate a portion of the Commitment, the Company shall
pay to the Bank an Agency Fee of (1) $50,000 upon the execution of this
Agreement and (2) $25,000 on each November 1 thereafter until the Maturity Date.
1.4 The Note.
(a) Form. The Loans made by the Bank pursuant hereto shall be
evidenced by a Revolving Credit Note of the Company substantially in the form of
Exhibit A-3, with appropriate insertions (the "Note"), payable to the order of
the Bank and representing the
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obligation of the Company to pay the amount of the Commitment or, if less, the
aggregate unpaid principal amount of all Loans made by the Bank, with interest
thereon as prescribed in this Section 1.4. The Note shall (i) be dated the date
of this Agreement- (ii) be stated to mature on the Maturity Date; and (iii) bear
interest at the applicable interest rate per annum as provided in, and payable
as specified in this Section 1.4. Each Loan made by the Bank and each payment
made on account of principal on the Note shall be recorded by the Bank, on its
books and records or endorsed on the grid attached to the Note, such books and
records or endorsements to constitute prima-facie evidence of the amount of all
Loans and payments; provided, however, that the failure of the Bank to make such
recordation shall not limit or otherwise affect the obligations of the Company
under the Note.
(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:
Ratio at quarter end Rate for following quarter
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Less than 2.0:1.0 Either the Prime Rate minus 25 basis points or the
LIBOR Rate plus 250 basis points.
2.01 through 2.5:1.0 Either the Prime Rate plus 25 basis points or the
LIBOR Rate plus 300 basis points
Greater than 2.51:1.0 Either the Prime Rate plus 75 basis points or the
LIBOR Rate plus 350 basis points
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 this
Note 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
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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 Index 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 this Note be more than the
maximum rate allowed by applicable law.
(c) Interest Payments. Interest on the Loans shall be payable
quarterly on the last day of each January, April, July, and October, commencing
on the first such date following the initial Loan. To the extent permitted by
applicable law, the Bank may charge interest at the foregoing rates on all
interest and other amounts owing hereunder which are not paid when due.
(d) Principal. Principal on the Loans shall be due and payable
pursuant to the terms of the Note and shall be due and payable in full on the
Maturity Date; provided, however, that any Excess Cash Flow payments the Company
makes shall be applied to principal reduction of the Initial Term Loan and the
Secondary Term Loan in the inverse order of maturity. The Company shall be
required to pay any Excess Cash Flow to the Bank. "Excess Cash Flow" of the
Company means, for any fiscal year, the difference between (i) the sum of net
income plus depreciation plus amortization minus (ii) the sum of required
principal debt payments plus required capital lease payments plus the cash
balance required to maintain compliance with all covenants of the Agreement plus
Unfunded Capital Expenditures. "Unfunded Capital Expenditures" means the sum of
(a)(i) the number of Company restaurants that have been open more than one year
as of the date this covenant is calculated multiplied by (ii) $47,000 plus (b)
Capital Expenditures that are not intended to be financed in a Permitted
Sale/Leaseback with an Approved Sale/Leaseback Creditor.
1.5 Prepayments and Right to Reborrow. Except as set forth below,
outstanding Loans may be prepaid in whole at any time or in part from time to
time without premium or penalty. No prepayment shall affect the Company's right
to reborrow from the Bank under the Commitment of the Bank up to the permissible
amount hereunder prior to the Maturity Date. The Company may prepay all or any
portion of the principal amount of the Loans bearing interest at a LIBOR Rate,
provided that if the Company makes any such prepayment other than on the last
day of an Interest Period, the Company shall pay all accrued interest on the
principal amount prepaid with such prepayment and, on demand, shall reimburse
the Bank and hold the Bank harmless from all losses and expenses incurred by the
Bank as a result of such prepayment, including, without limitation, any losses
and expenses arising from the liquidation or reemployment of deposits acquired
to fund or maintain the principal amount prepaid. Such
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reimbursement shall be calculated as though the Bank funded the principal amount
prepaid through the purchase of U.S. Dollar deposits in the London, England
interbank market having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the LIBOR Rate for such Interest Period,
whether in fact that is the case or not. The Bank 's determination of the amount
of such reimbursement shall be conclusive in the absence of manifest error.
1.6 Loans. Each Loan shall be made pursuant to the Bank's Automated
Line of Credit Service. Further, the Bank will, at the request of the Company
repay prior Loans pursuant to the Automated Line of Credit service. The Company
may request the Bank to make Loans by written or telephonic request made prior
to 2:00 p.m. Columbus, Ohio time. The proceeds of any such request will subject
to the satisfaction of the terms and conditions of this Agreement, promptly made
available to the Company by the Bank at the office of the Bank by crediting the
account of the Company on the books of such office of the Bank.
1.7 Letters of Credit.
(a) The Company may request a Letter of Credit by completing
the Bank's then standard application for a Letter of Credit and delivering the
application to the Bank at least two days before the date on which the Letter of
Credit is to be issued. On the date the Letter of Credit is to be issued, the
Bank shall deliver the Letter of Credit to the Company, or to the Person
designated by the Company. No Letter of Credit shall be issued with an
expiration date after the Maturity Date or which is payable in a currency other
than United States dollars. Except as otherwise provided herein, all the terms
of the Letter of Credit and such standard application shall govern the Letter of
Credit. The amount of each Letter of Credit must be approved by the Bank
(provided that there shall never be more than $500,000 in face amount of Letters
of Credit outstanding), and the Bank may disapprove a Letter of Credit request
at any time for any reason. The Commitment shall be reduced by the face amount
of any Letter of Credit.
(b) The Company shall immediately reimburse the Bank for the
amount paid on all drafts drawn under Letters of Credit issued hereunder. If,
notwithstanding the foregoing sentence, the Company should fail to so
immediately reimburse the Bank, then, in addition to any other remedy which the
Bank may have with respect to such failure, any amount paid by the Bank on any
draft under a Letter of Credit shall be treated as a Loan (bearing interest as
provided in Section 1.4).
SECTION 2
GENERAL TERMS
2.1 Payments. The Company shall make all payments of principal,
interest and Commitment Fees to the Bank as payee at its main office, 0 Xxxx
Xxxxxx Xxxxxx, Xxxxxxxxxx, Ohio, in immediately available funds prior to 3:00
p.m., Cincinnati, Ohio time, on the date such payments shall become due in
accordance with the terms hereof and of the Note.
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2.2 Payment on Non-Banking Days. Whenever any payment to be made
hereunder or under the Note shall be stated to be due on a day other than a
Banking Day, such payment shall be made on the next succeeding Banking Day and
such extension of time shall in such case be included in the computation of
payment of interest hereunder or under the Note or the Commitment Fees
hereunder, as the case may be.
2.3 Setoffs. Upon the occurrence of any Event of Default, the Bank
shall ha the right to setoff against all obligations of the Company to the Bank
hereunder, under the Note or under any of the Loan Documents, whether matured or
unmatured, all amounts owing to the Company by the Bank or any Affiliate of the
Bank, whether or not then due and payable, and all other funds or property of
the Company on deposit with or otherwise held by or in the custody of the Bank
or any Affiliate of the bank for the beneficial account of the Company.
2.4 Capital Adequacy. If, on or after the date hereof, the Bank shall
have determined that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return below that achieved on the date of this Agreement on the Bank's
capital as a consequence of its obligations hereunder to a level below that
which the bank could have achieved but for such adoption, change or compliance
(taking into consideration the Bank's policies with respect to capital adequacy)
by an amount deemed by the Bank to be material, then, sixty days after the Bank
delivers notice to the Company regarding such circumstances, the Company shall
pay to the Bank such additional amount or amounts as will compensate the Bank
for such reduction.
2.5 Interest After Maturity. Whenever any payment to be made hereunder,
under the Note or under any of the Loan Documents shall become due and payable,
whether at the stated maturity thereof, by acceleration or otherwise, interest
thereon shall thereafter be payable at the interest rate per annum then in
effect plus 300 basis points.
2.6 Security. The obligations of the Company hereunder are secured
pursuant to the Security Agreements.
SECTION 3
CONDITIONS OF BORROWING
The obligation of the Bank to make the Loans to the Company provided
for hereunder shall be subject to the following conditions.
3.1 Conditions Precedent to Initial Loan. Prior to the initial Loan,
the Company shall furnish to the Bank all of the following, each dated the date
hereof (unless otherwise indicated) in form and substance satisfactory to the
Bank:
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(a) Note. A properly executed Revolving Credit Note, drawn to
the order of the Bank in the principal amount of the Bank's Commitment.
(b) Security Agreements. A properly executed Third Amended and
Restated Security Agreement in the form attached hereto as Exhibit B-1 (the
"Personal Property Security Agreement") and a properly executed Amended and
Restated Intellectual Property Security Agreement in the form attached hereto as
Exhibit B-2 (the "Intellectual Property Security Agreement" and, collectively
with the Personal Property Security Agreement, the "Security Agreements").
(c) Financing Statements, Assignments, Etc. Copies of duly
completed and executed Uniform Commercial Code financing statements and/or
statements of assignment and/or statements of amendment with respect to the
property covered by the Security Agreements in proper form for filing in all
jurisdictions in which such filing is necessary or appropriate to establish,
perfect, protect and preserve the rights, titles, interests, remedies, powers,
privileges and Liens of the Bank in such property.
(d) Liens and Other Searches. Results of record searches by a
Person satisfactory to the Bank, of the Uniform Commercial Code filings which
may have been filed with respect to the personal property of the Company in the
state and county filing offices and real estate records in each of the
jurisdictions requested by the Bank, and of judgment and tax Liens with respect
to the Company.
(e) Certified Resolutions of Company. A certified copy of the
resolutions of the Board of Directors of the Company authorizing the execution,
delivery and performance of this Agreement, the Note issued hereunder, and the
Security Agreements.
(f) Opinion of Counsel. The counsel for the Company
("Counsel"), shall deliver a revised version of its October 29, 1999 opinion,
addressed to the Bank and each of the participants, and in a form and scope
satisfactory to the Bank, to the following effect-
(g) Payments Due at Closing. The Company shall pay the
Closing Fee described in Section 1.3(b), and the out-of-pocket expenses of the
Bank incurred in connection with the closing, including, without limitation,
legal fees and lien search expenses.
3.2 Conditions Precedent to Each Loan. The obligation of the Bank to
make any Loan hereunder (including the initial Loan) shall be subject to the
further condition precedent that, at the time of each Loan, the Company shall be
in compliance with all of the provisions, warranties, covenants and conditions
contained in this Agreement, and there shall exist no Default or Event of
Default as set forth in Section 7. Each borrowing hereunder shall be deemed to
be a representation and warranty by the Company on the date of such borrowing
that the
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representations and warranties contained in Section 4 are true and correct, and
that the Company is then in compliance with the covenants contained in Sections
5 and 6.
SECTION 4
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank, which representations
and warranties will survive the execution and delivery of this Agreement and the
Note, as follows:
4.1 Organization and Authority. The Company is a corporation duly
incorporated, and is existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite power and authority,
corporate or otherwise, to own or lease its properties and to carry on its
business as now conducted. The Company has all requisite power and authority,
corporate or otherwise, to enter into and perform all of its obligations under
this Agreement, the Note, and the Security Agreements. The execution, delivery
and performance of this Agreement, the Note and each of the Loan Documents have
been duly authorized by the Company by appropriate corporate action, there is no
prohibition, either in law, in its Certificate of Incorporation or Bylaws, in
any order, writ, injunction or decree of any court or arbitrator presently in
effect having applicability to the Company, or in any agreement to which it is a
party, which in any way prohibits or would be violated by the execution and
carrying out of this Agreement, the Note or any of the Loan Documents in any
respect; this Agreement, the Note and each of the Loan Documents have been duly
executed and delivered and are the legal, valid and enforceable obligations of
the Company, except as enforceability hereof or thereof may be limited by
bankruptcy, insolvency or laws affecting creditors' rights generally.
4.2 Qualification. The Company is duly qualified or licensed and in
good standing as a foreign corporation duly authorized to do business in each
jurisdiction in which the character of the properties owned or leased or the
nature of the activities conducted makes such qualifications or licensing
necessary.
4.3 Financial Statements. The Company has furnished to the Bank audited
financial statements of the Company including (a) an audited balance sheet as at
October 25 , 1998; (b) an audited statement of operations for the year ended
October 25, 1998, (c) an audited statement of shareholders' equity for the year
ended October 25 , 1998; and (d) an audited statement of cash flow for the year
ended October 25 , 1998. The Company has also furnished to the Bank unaudited
financial statements for the interim period ending on, and as of August 1, 1999.
Except as disclosed to the Bank in writing prior to the date hereof, such
financial statements are complete and correct in all material respects, and
fairly reflect the financial condition of the Company as at such dates and the
results of operations of the Company for the periods ended on such dates. Since
August 1, 1999, no material or adverse change has occurred in the businesses
property or condition (financial or other) of the Company except as disclosed to
the Bank in writing prior to the date hereof.
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4.4 Tax Returns and Payments. The Company has filed all tax returns
required by law to be filed and has paid all taxes, assessments and other
governmental charges levied upon any of its properties, assets, income or
franchises, other than those not yet delinquent. The charges, accruals and
reserves on the books of the Company in respect to income taxes for all fiscal
periods are adequate in the opinion of the Company, and the Company knows of no
unpaid assessment for additional income taxes for any fiscal period or of any
basis therefor.
4.5 Titles to Properties: Liens. The Company has good and marketable
title to all of its properties, in each case including the properties and assets
reflected in the balance sheet as of August 1, 1999 except properties held under
leases which are capitalized in accordance with GAAP and except properties and
assets disposed of since the date of such balance sheet in the ordinary course
of business, and none of such properties or assets is subject to any Lien except
as permitted by Section 6.1 (a). The Company enjoys peaceful and undisturbed
possession under all leases under which it operates, and all of such leases are
valid, subsisting and in full force and effect. None of such leases contains any
provision restricting incurrence of Indebtedness by the Company, or any
provision which materially adversely affects or in the future may (so far as the
Company can now foresee) materially adversely affect the operations of the
Company under any such lease.
4.6 Litigation, Etc. There is no action, proceeding or investigation
pending or, to the Company's knowledge, threatened (or any basis therefor known
to the Company) which questions the validity of this Agreement, the Note or any
of the Loan Documents, or any action taken or to be taken pursuant hereto or
thereto, or which might result, either in any case or in the aggregate, in any
material adverse change in the business, operations, affairs or condition of the
Company or its properties and assets or in any material liability on the part of
the Company except as set forth on Schedule 4.6.
4.7 Compliance with Other Instruments, Etc. The Company is not in
violation of any provision of its Certificate of Incorporation or Bylaws, as
amended to date, or to the Company's knowledge, of any agreement, instrument,
judgment, decree, order, statute or governmental law, rule or regulation
applicable to the Company and the execution, delivery and performance of this
Agreement, the Note or any of the Loan Documents will not result in any such
violation or be in conflict with or constitute a default under any such
provisions or result in the creation of any Lien upon any of the properties or
assets of the Company which now or in the future may (so far as the Company can
now foresee) materially and adversely affect the business, operations, affairs
or condition of the Company or its properties or assets.
4.8 ERISA. Without in any way limiting the scope of Section 4.7, the
Company has not (a) incurred any material accumulated funding deficiency within
the meaning of the Employee Retirement Income Security Act of 1974, as amended
from time to time ("ERISA")- (b) incurred any material liability to the Pension
Benefit Guaranty Corporation established under ERISA (or any successor thereto
under ERISA) in connection with any employee benefit plan established or
maintained by the Company; nor (c) had any tax assessed against it by the
Internal Revenue Service for any alleged violation under Section 4975 of the
Internal Revenue Code.
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4.9 Patents, Trademarks, Etc. The Company owns or possesses all the
patents, trademarks, service marks, trade names, copyrights, licenses and rights
in respect of the foregoing, necessary for the conduct of its business as now
conducted, without any known conflict with the rights of others except such
conflicts which would not materially and adversely affect the business of the
Company.
4.10 Liabilities. The Company has no material Liabilities, direct or
contingent except (a) as disclosed in the balance sheet of the Company as of
AUGUST 1, 1999; (b) as disclosed to the Bank in writing prior to the execution
of this Agreement; and (c) debt, contractual commitments, canceled purchase
orders, and accruals, all arising out of the ordinary course of business.
4.11 Subsidiaries and Affiliates. The Company has no Subsidiaries or
Affiliate except those set forth on Schedule 4.11 attached hereto.
4.12 Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to the Bank or to special counsel for the
Bank by the Company or its counsel in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading. There is no fact known to the Company which
materially and adversely affects or in the future may (so far as the Company can
now foresee) materially and adversely affect the business, operations, affairs
or condition of the Company or any of its properties or assets which has not
been set forth in this Agreement or in the other documents, certificates or
statements furnished to the Bank by or on behalf of the Company prior to the
date hereof in connection with the transactions contemplated hereby.
4.13 No Governmental Approvals. No authorization, consent, approval or
exemption of, or registration, qualification or filing with, any governmental
authority is required to permit the execution, delivery and performance by the
Company of this Agreement, the Note, or the Security Agreements. The Company is
not an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
4.14 Investments, Loans and Advances. The Company (a) is not a general
partner in any partnership or a member in any joint venture other than as
disclosed on Schedule 4.11, (b) does not own or hold the assets, stocks, bonds,
notes or other evidence of Indebtedness or any other security of any Person
other than as disclosed on Schedule 4.11 or in the financial statements
delivered to the Bank pursuant to Section 4.3, nor (c) is a party to any
agreement relating to commodity futures, financial futures or similar
investments.
4.15 Insurance. All of the properties and operations of the Company of
a character usually insured by Persons of established reputation engaged in the
same or a similar business similarly situated are adequately insured, by
financially sound and reputable insurers, against loss or damage of the kinds
and in the amounts customarily insured against by such Persons; and the Company
carries, with such insurers in customary amounts, such other insurance,
including public and product liability insurance, as is usually carried by
Persons of established reputation engaged in the same or a similar business
similarly situated.
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4.16 Environmental Matters. To the best of the Company's knowledge,
there are no materials presently located- on any real property owned by, leased
to or operated by the Company which are radioactive or toxic, or which under
federal, state or local law, statute, ordinance or regulations, or court or
administrative order or decree, or private agreement (the "Environmental
Requirements") require special handling in collection, storage, treatment or
disposal ("Hazardous Materials") which are not being handled in accordance with
the Environmental Requirements and no part of such real property has been
contaminated by any Hazardous Materials.
4.17 Security. The Note is entitled to the benefits of, and is secured
by valid Liens created by the Security Agreements.
4.18 Perfection. The provisions of the Security Agreements are
effective to create in favor of the Bank legal, valid and enforceable security
interests in all right, title and interest of the Company in the Collateral, as
defined therein. All necessary filings, recordings and actions have been taken
so that the security interests created by the Security Agreements constitute
perfected security interests in all right, title and interest of the Company in
the Collateral superior in right to any "Collateral Interest" (as defined
below), existing or future, which the Company or any third Person may have
against the Collateral or interests therein except as expressly permitted under
this Agreement or the Security Agreements, and such filings are the only filings
necessary to give constructive notice to third Persons of the security interest
created thereby. The term "Collateral Interest" shall include Liens created
under the Uniform Commercial Code, Liens of record, and consensual Liens created
by the Company which are not of record.
SECTION 5
AFFIRMATIVE COVENANTS
Until all Loans and other sums due and owing under this Agreement to
the Bank have been paid in full and the Company no longer has any right to
borrow hereunder, the Company covenants and agrees 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 stocks is $20,000,000.
5.2 Periodic Financial Statements. The Company shall furnish to the
Bank:
(a) Within 45 days after the end of its first three quarterly
accounting periods of its fiscal year (i) a balance sheet of the Company as at
the close of such period; (ii) a statement of operations for the Company for
such period and for the year to date; and (iii) a statement of cash flows as at
the close of such period; all in reasonable detail, prepared in accordance with
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GAAP and certified as complete and correct, subject to changes resulting from
year-end adjustments, by the chief financial officer of the Company.
(b) On or before the 15th day of each four week accounting
period a statement of operations for each of the Company's restaurants for the
preceding month, prepared in accordance with GAAP and certified as complete and
correct, subject to changes resulting from year-end adjustments, by the chief
financial officer of the Company.
(c) Within 45 days after the end of each quarterly accounting
periods of the Company's fiscal year, a report that lists (i) all new store
openings in such quarter, (ii) the addresses of all new stores (including the
county where such store is located) and (iii) the proceeds used by the Company
from Loans made hereunder to acquire assets that are intended to be financed in
a Permitted Sale/Leaseback with an Approved Sale/Leaseback Creditor.
5.3 Annual Financial Statements. The Company shall furnish to the Bank
within 90 days after the close of each fiscal year a complete annual audit
report, including (a) a balance sheet of the Company as at the end of such
fiscal year; and (b) statements of operations, shareholders' equity and cash
flow for such fiscal year; all in reasonable detail and prepared in accordance
with GAAP and accompanied by an unqualified opinion thereon of Deloitte &
Touche, or other independent auditors of recognized national standing selected
by the Company and acceptable to the Bank.
5.4 Quarterly Compliance Certificate. The quarterly and annual
financial statements furnished pursuant to Sections 5.2 and 5.3 shall be
accompanied by a certificate of the chief financial officer of the Company:
(a) No Event of Default. Stating that except as disclosed in
the certificate, such officer, after reasonable investigation, has no knowledge
of any (i) Event of Default or (ii) Default;
(b) Financial Ratios. Setting forth, in summary form,
calculations showing the financial status of the Company (at the end of, or, in
the case of incurrence tests, during such accounting Period) in respect of the
restrictions contained in Sections 6.1(a)(v), 6.1(b)(iii), 6.2 and 6.3 hereof;
and
(c) Interest Rate. Setting forth, in summary form,
calculations showing the ratio set forth in Section 1.4(b).
5.5 Notice of Event of Default. In addition to the certificate
furnished pursuant to Section 5.4, the Company shall furnish to the Bank,
forthwith upon any executive officer of the Company obtaining knowledge of any
Default or Event of Default, a certificate specifying the nature and period of
the existence thereof, and what action the Company has taken or is taking or
proposes to take in respect thereof.
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5.6 Auditors' Certificate. The annual audit report called for by
Section 5.3 shall be accompanied by a certificate prepared by the Company's
independent auditors stating that except as disclosed in the certificate they
have knowledge of any Event of Default or Default which relates to the financial
and accounting matters set forth in Sections 6 and 7.
5.7 Maintenance of Properties and Insurance. The Company shall at all
times maintain in good repair, working order and condition all properties used
or useful in the business of the Company and from time to time will make all
appropriate repairs, renewals and replacements thereof- maintain insurance upon
its property of such character and amounts as are usually maintained by
companies engaged in like business; furnish to the Bank, upon request, a
statement of its insurance coverage.
5.8 Inspection. Upon request of the Bank, the Company shall allow any
authorized representatives of the Bank to visit and inspect any of its
properties, to examine and make copies of and from its books of record and
account and to discuss its affairs, finances and accounts with its officers,
employees and independent accountants, and shall furnish to the Bank any
information regarding its business affairs and financial condition within a
reasonable time after receipt of a written request therefor. Except (i) as the
Bank deems it necessary in connection with the enforcement of its rights arising
out of any Default or as required by law or with respect to disclosures to bank
regulatory authorities or the independent auditors or counsel or the employees,
officers or directors of the Bank, (ii) disclosure to any actual or potential
participant or assignee of the Bank's rights under this Agreement, or (iii) as
consented to by the Company, the Bank will not publish or disclose to any third
Person any information gained under any inspection conducted pursuant to this
Section 5.8 unless and until such information is or becomes a matter of public
knowledge.
5.9 Payment of Taxes and Claims. The Company shall promptly pay and
discharge all taxes and assessments levied and assessed or imposed upon its
property or upon its income as well as all claims which, if unpaid, might by law
become a Lien upon its property; provided, however, that nothing herein
contained shall require the Company to pay any such taxes, assessments or claims
so long as the Company shall in good faith contest the validity and stay the
execution and enforcement thereof.
5.10 Reports, Etc. The Company shall furnish to the Bank copies of all
material which the Company shall send to any class of its security holders or
file with the Securities and Exchange Commission or any national securities
exchange including, but not limited to, all registration statements, annual
reports on Form 10-K, quarterly reports on Form 10-Q, reports on Form 8-K, proxy
material and annual reports to shareholders, and any and all amendments thereof
or supplements thereto, within 15 days after mailing or filing such materials.
5.11 Preservation of Corporate Existence, Etc.: Business. Subject to
the provisions of Section 6.1(d) hereof, the Company shall, at all times
preserve and keep in full force and effect its corporate existence, rights and
franchises. The Company will engage primarily in a business of the same general
character as that now conducted.
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5.12 Compliance with Laws, Etc. The Company shall comply in all
material respects with all statutes, laws, ordinances and governmental rules,
regulations and orders to which it is subject or which are applicable to its
business, properties and assets.
5.13 Books and Records. The Company shall keep adequate records and
books of account in which complete entries will be made in accordance with
generally accepted accounting procedures consistently applied, reflecting all
financial transactions.
5.14 Notice of Litigation. The Company shall notify the Bank in writing
promptly of any litigation, arbitration proceeding or administrative
investigation, inquiry or other proceeding to which the Company is or hereafter
may become a party which may involve any risk of any material judgment or
liability which would exceed the amounts covered by insurance by $100,000 or
more or which may otherwise result in any materially adverse change in the
business or assets or in the condition (financial or otherwise) of the Company
or which may impair the ability of the Company to perform this Agreement.
5.15 ERISA. The Company shall comply in all material respects with the
applicable provisions of ERISA. The Company shall furnish to the Bank (a) as
soon as possible, and in any event within one Banking Day after any executive
officer of the Company knows or has reason to know that any Reportable Event (as
described in ERISA) with respect to any plan of the Company has occurred, a
statement of the chief financial officer of the Company setting forth details as
to such Reportable Event and the action which is proposed to be taken with
respect thereto, together with a copy of the notice of such Reportable Event
given to the Pension Benefit Guaranty Corporation, (b) promptly after filing
with the Internal Revenue Service, copies of each annual report with respect to
each plan subject to ERISA, (c) promptly upon filing with the Pension Benefit
Guaranty Corporation, a copy of any notice from the Company or the administrator
of any such plan to the Pension Benefit Guaranty Corporation that any such plan
is to be terminated, (d) promptly after receipt thereof, a copy of any notice
the Company, any such plan or the administrator of any such plan may receive
from the Pension Benefit Guaranty Corporation to terminate any such plan or to
appoint a trustee to administer any such plan, (e) promptly after receipt
thereof, a copy of any notice the Company or the administrator of such plan may
receive from the Internal Revenue Service relating to the disqualification of
any previously qualified plan, and (f) promptly after any executive officer of
the Company knows or has reason to know that the Company will be involved in a
withdrawal or partial withdrawal from a multiemployer plan, a statement to that
effect and setting forth the details of such withdrawal or partial withdrawal,
including the estimated liability of the Company with respect thereto.
5.16 Performance of Contracts. The Company shall perform and comply
with all of its agreements if non-performance thereof could materially adversely
affect the business or credit of the Company or could impair the ability of the
Company to perform this Agreement, the Note or any of the Loan Documents.
5.17 Environmental Matters. If at any time the Company obtains notice
that any real property owned by, leased to or operated by the Company has
located therein Hazardous
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Materials, the Company shall, within 30 days after receipt of such notice, take
or cause to be taken, at its sole expense, such actions as may be necessary to
comply with all Environmental Requirements.
5.18. Landlord Waivers. Immediately after execution hereof, the Company
shall use its best efforts to obtain from its landlords, in those jurisdictions
where such landlords are given a statutory Lien superior to or pari passu with
the Lien granted to the Bank under the Loan Documents, a Landlord's Waiver and
Consent in a form acceptable to the Bank.
5.19. Management. The Company shall retain Xxxx X. Xxxxxx in the
capacity of Chairman of the Board and Chief Executive Officer of the Company, or
replaced by an individual performing similar duties who shall be satisfactory to
the Bank within 180 days from the date Xx. Xxxxxx shall cease to function in
such capacity.
5.20. Bank Accounts. The Company will establish and maintain the Bank
as its principal bank of account and primary depositary. The Company will, at
all times, maintain a compensating balance of at least $100,000 in its
depository account maintained at the Bank.
5.21. Interest Rate Protection. The Company shall maintain an interest
rate protection agreement concerning a minimum of $20,000,000 of the Commitment
in a form substantially similar to the interest rate swap described in the
letter agreement dated December 1, 1999 between the Company and National City
Bank.
SECTION 6
NEGATIVE COVENANTS
Until all Loans and other sums due and owing under this Agreement to
the Bank have been paid and the Company no longer has the right to borrow
hereunder, unless the Bank shall have otherwise agreed in writing, the Company
covenants and agrees as follows.
6.1 Restrictions. The Company will not either directly or indirectly:
(a) Liens. Create, assume, or suffer to exist any mortgage,
pledge, encumbrance, security interest, lien or charge of any kind
(collectively, "Liens") upon any of its property or assets, whether now owned or
hereafter acquired, or assign or otherwise convey any right to receive income,
except.
(i) Liens securing taxes, assessments, fees or
other governmental charges or levies or
securing the claims of materialmen,
mechanics, carriers, warehousemen, landlords
and other similar persons, the payment of
which is not at the time required by Section
5.9;
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(ii) Liens incurred or deposits made in the
ordinary course of business (A) in
connection with workers' compensation,
unemployment insurance, social security and
other similar laws, or (B) to secure the
performance of bids, tenders, sales,
contracts, public or statutory obligations,
surety, customs, appeal and performance
bonds and other similar obligations not
incurred in connection with the borrowing of
money, the obtaining of advances or the
payment of the purchase price of property;
(iii) Attachment, judgment and other similar Liens
arising in connection with court
proceedings, provided, however, that the
execution or other enforcement of such Liens
is effectively stayed and the claims secured
thereby are currently being contested in
good faith by appropriate proceedings and as
to which the Company shall have set aside on
its books adequate reserves in accordance
with GAAP;
(iv) Easements, rights of way, restrictions,
leases, installations of public utilities,
title imperfections and restrictions,
reservations in land patents, zoning
ordinances and other similar encumbrances
affecting real or tangible personal
property, which in the aggregate do not
materially detract from the value of such
property or materially impair its use in the
operations of the business of the Company
taken as a whole;
(v) Liens securing purchase money obligations
respecting personal property of the Company
so long as such Liens apply only to the
personal property being purchased or leased;
(vi) Other Liens existing on the date hereof to
the extent shown in Schedule 6.1 attached
hereto;
(vii) Liens securing the repayment of Indebtedness
owed by the Company to the Bank;
(viii) Existing Liens of General Electric Capital
Corporation encumbering not more than four
(4) restaurant locations which shall secure
Indebtedness of the Company incurred in a
Permitted Sale/Leaseback; and
(ix) Liens related to Indebtedness incurred in a
Permitted Sale/Leaseback.
(b) Subsidiaries. Create or suffer to exist any Subsidiaries
other than those listed on Schedule 4.11 hereof unless such Subsidiaries sign
the appropriate documentation
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subjecting each such Subsidiary to the terms and conditions of this Agreement
including, without limitation, terms which evidence that the repayment of the
Indebtedness is secured by all of the assets of such Subsidiary.
(c) Contingent Liabilities. Assume, guarantee, endorse,
contingently agree to purchase or otherwise become liable upon the obligation of
any one or more Persons if the amount of all such guaranties, endorsements, and
other contingent Liabilities at any one time outstanding exceeds $100,000 except
those liabilities associated with the establishment of a new wholly-owned
subsidiary, the sole purpose of which is to operate one or more Italian theme
restaurants, or become a general partner in any partnership other than (i) those
partnerships reflected in Schedule 6.1(c) or (ii) those partnerships established
to own and operate one or more Max & Erma's restaurants as long as the
partnership(s) are consolidated into the financial statements of the Company
provided to the Bank pursuant to Sections 5.2 and 5.3 hereof and such
partnerships and the Company execute documents, in form and substance acceptable
to the Bank, that allow the Bank to obtain a first priority security interest in
the assets of the partnerships, prohibit transfers of assets from the Company to
the partnerships and prohibit the assumption of partnership Indebtedness by the
Company.
(d) Merger, Consolidation and Sale of Assets; Change of
Control; Change of Management. Merge or consolidate with any other corporation,
or liquidate, or sell, lease, transfer or otherwise dispose of (whether in one
transaction or in a series of transactions) all or a substantial part of its
assets; provided, however, that a Permitted Sale/Leaseback with an Approved
Sale/Leaseback Creditor shall be permitted. The Company shall not suffer a
Change of Control to occur. "Change of Control" means that the individuals
serving as the officers and the Board of Directors of the Company as of the date
of this Agreement fail to own at least 30% of the outstanding common stock of
the Company or the composition of the Board of Directors of the Company changes
so that at least 6 (which 6 Directors must include Xxxx X. Xxxxxx, Xxxx X.
Xxxxxxx and Xxxxxxx X. Xxxxxxx, Xx.) of the 8 Directors sitting in such office
as of the date of this Agreement are not serving as a Director of the Company
without the prior written consent of the Bank. The Company shall not suffer a
change in management of the Company such that Xxxx X. Xxxxxx is no longer the
President and either Xxxx X. Xxxxxxx or Xxxxxxx X. Xxxxxxx, Xx. is no longer an
officer of the Company, without the prior written consent of the Bank.
(e) Sale and Leaseback. Enter into any agreement with any
Person providing for the leasing by the Company of real or personal property
which has been or is to be sold or transferred by the Company to such Person or
of real or personal property intended to be used for substantially the same
purpose as the property sold or transferred by the Company; provided, however,
that any future sale and leaseback transaction with Franchise Finance
Corporation of America, General Electric Capital Corporation or any other
creditor that issues a commitment (in form and substance satisfactory to the
Bank) to provide sale/leaseback financing to the Company (an "Approved
Sale/Leaseback Creditor") shall be deemed to be permitted hereunder if it meets
all the following conditions: (1) no Default or Event of Default exists
hereunder and (2) the Company has received reasonably equivalent value in the
transaction (a "Permitted Sale/Leaseback").
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(f) Accounts Receivable. Discount or sell any of its notes or
accounts receivable.
(g) Investments. Acquire or purchase the assets of any Person
or acquire or purchase the outstanding securities of any Person, or make any
additional investments in or capital contributions to any Person; provided,
however, that this prohibition shall not apply to the following: (i) purchases
of (A) U. S. Government securities directly or pursuant to repurchase agreements
with the Bank, (B) certificates of deposit of the Bank and (C) commercial paper
rated A-1 or P-1 if all of such investments have a maturity of one year or less;
or (ii) any such purchase or acquisition of assets for the sole purpose of
establishing or converting such assets into one or more Max & Erma's restaurants
as long as (A) the assets are consolidated into the financial statements of the
Company provided to the Bank pursuant to Sections 5.2 and 5.3 hereof and (B) the
Company executes documents, in form and substance acceptable to the Bank, that
allow the Bank to obtain a first priority security interest in such assets,
prohibit the transfer of assets from the Company to any entity owning the assets
and prohibit the assumption of Indebtedness by the Company in connection with
the acquisition of such assets; or (iii) the investment or capital contribution
of up to $2,500,000 in a new wholly owned subsidiary established to operate one
or more Italian theme restaurants. The investment limitation for this subsidiary
shall no longer apply after the Company has provided certification to the Bank
along with any supporting documentation which the Bank may reasonably request
that for the six months immediately preceding the date of such certification (A)
a minimum of four such restaurants have been in existence, and (B) the aggregate
Net Income for all such restaurants as evidenced by the restaurant Income
Statements for the six month period prepared in the form attached hereto as
Exhibit 6.1(g) is equal to or in excess of $250,000.
(h) Loans and Advances. Make any loans or advances in excess
of an aggregate of $100,000 at any one time outstanding.
6.2 Financial Ratios. The Company will not:
(a) Current Ratio. After November 1, 1999, permit the ratio of
Current Assets to Current Liabilities at any time to be less than 0.35 to 1.
(b) Liabilities/Tangible Net Worth Ratio. Permit the ratio of
Liabilities to Tangible Net Worth at any time to exceed (i) 17.0 to 1 on October
31, 2001, (ii) 10.0 to 1 on October 31, 2002, (iii) 7.5 to 1 on October 31,
2003, (iv) 5.0 to 1 on October 31, 2004, (v) 3.5 to 1 on October 31, 2005 and
thereafter.
(c) Fixed Charge Coverage Ratio. Permit the ratio of Fixed
Charge Coverage Ratio at the end of any fiscal quarter commencing with the
fiscal quarter ending on October 31, 1999 for the immediately preceding four
fiscal quarters to be less than 1.15 to 1. "Fixed Charge Coverage Ratio" means,
for the Company during the four fiscal quarter 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)
depreciation plus (iii) accrued interest expense plus (iv)
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income taxes payable during such period plus (v) amortization minus (vi) 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)
either (1) before October 31, 2000 , the amount of Indebtedness outstanding
under the Note on the fiscal quarter end date this ratio is being measured
divided by seven or (2) after October 31, 2000 but before October 31, 2001, (A)
the amount of long term Indebtedness of the Company outstanding under the
Initial Term Loan that matured in the prior 12 months plus (B) the amount of
long term Indebtedness of the Company outstanding under the Residual Commitment
on the fiscal quarter end date this ratio is being measured divided by six or
(3) after October 31, 2001, the amount of long term Indebtedness of the Company
outstanding under the Initial Term Loan on the fiscal quarter end date this
ratio is being measured plus the amount of long term Indebtedness of the Company
outstanding under the Secondary Term Loan on the fiscal quarter end date this
ratio is being measured plus (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 as of
the fiscal quarter end date this ratio is being measured multiplied by (ii)
$47,000 or (B) the actual Capital Expenditures on such restaurants during the
preceding four fiscal quarters.
(d) Earnings Before Taxes. As of each fiscal quarter end,
permit the sum of its net income before taxes plus one time non-cash charges
reflected within net income for the then-present fiscal quarter and the one
immediately preceding fiscal quarter to be less than $0.
(e) Tangible Net Worth. Permit its Tangible Net Worth to be
less than (i) $3,000,000 from the date hereof through October 31, 2001, (ii)
$4,500,000 from November 1, 2001 through October 31, 2002, (iii) $6,000,000 from
November 1, 2002 through October 31, 2003, (iv) $7,500,000 from November 1, 2003
through October 31, 2004, (v) $9,000,000 from November 1, 2004 through October
31, 2005, (vi) $10,500,000 from November 1, 2005 through October 31, 2006 and
(vii) $12,000,000 from November 1, 2006 the Maturity Date.
(f) Interest Coverage Ratio. As of each fiscal quarter end for
the immediately preceding four fiscal quarters, permit the ratio of (a) (i) the
Company's net income plus (ii) interest plus (iii) taxes plus (iv) one time
non-cash charges reflected within net income to (b) the Company's interest
expense to be less than 2.5 to 1.0.
(g) Senior Debt to EBITDA. Permit the ratio of (i) the
Company's Indebtedness to (ii) the Company's EBITDA (excluding one time charges
in an amount up to $2,000,000 related to the termination of the Ironwoods Cafe
concept) to be greater than 3.0 at the end of any fiscal quarter commencing with
the fiscal quarter ending on October 31, 1999 for the immediately preceding four
fiscal quarters.
6.3 Dividends and Purchases. The Company will not declare or pay any
dividends on, or make any distribution with respect to, any shares of capital
stock of the Company of any class.
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6.4 Transactions with Affiliates. The Company will not enter into any
transaction, including, without limitation, the purchase, sale or exchange of
any property or the rendering of any service, with any Affiliate of the Company
except in the ordinary course of and pursuant to the reasonable requirements of
the business of the Company and upon fair and reasonable terms no less favorable
to the Company than would obtain in an arm's length transaction with a Person
not an Affiliate of the Company.
6.5 Limitation on Store Openings; Notice of Store Openings. The Company
will not open more than ten new stores per fiscal year. The company will notify
the Bank of each new store opening by delivering an updated Exhibit C that
contains a complete list of all borrower's operating stores.
SECTION 7
EVENTS OF DEFAULT AND REMEDIES
If any of the following events ("Events of Default") shall occur and be
continuing:
(a) Principal Payments. The Company shall default in the
payment of the principal of the Note when and as the same shall become due and
payable, after having received written notification of such payment being due,
whether at the due date thereof or by acceleration or otherwise;
(b) Interest Payments and Fees. The Company shall default in
the payment of interest on the Note, or the payment of any Commitment Fee, when
and as the same shall become due and payable, whether at the due date thereof or
by acceleration or otherwise, provided such default shall continue for a period
of 10 days;
(c) Representations and Warranties. Any representation or
warranty made by the Company in this Agreement or in connection with any Loans
hereunder, or in any Loan Document, agreement, report, certificate, financial
statement, or other instrument furnished in connection with this Agreement or
the Loans hereunder shall prove to be false or misleading in any material
respect;
(d) Negative Covenants. The Company shall fail to observe or
perform any covenant, condition or agreement in Section 6 of this Agreement;
(e) Other Covenants. The Company shall fail to observe or
perform any covenant, condition or agreement (other than those mentioned in
Section 6) to be observed or performed pursuant to the terms hereof or the terms
of any Loan Document, provided such default shall continue unremedied for 30
days after written notice thereof to the Company by the Bank;
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(f) Cross Default. (i) The Company or any Subsidiary shall
default with respect to the payment of any Indebtedness other than Indebtedness
represented by the Note, or (ii) any event or condition shall occur which
enables the holder of any Indebtedness (other than Indebtedness represented by
the Note) or any Person acting on such holder's behalf to accelerate the
maturity thereof, or (iii) the holder of any Indebtedness other than
Indebtedness represented by the Note shall accelerate the maturity of such
Indebtedness; provided no Default under this Section 7(f) shall be deemed to
occur where the amount, individually or in the aggregate, of such Indebtedness
does not exceed $200,000;
(g) Judgments. One or more judgments from which no appeal may
be taken or with respect to which the time to appeal has expired for the payment
of money aggregating $200,000 or more shall be rendered against the Company
and/or any Subsidiary and the same shall remain undischarged for a period of 30
consecutive days during which the execution shall not be effectively stayed;
(h) Bankruptcy, Etc. The Company shall (i) apply for or
consent to the appointment of a receiver, trustee or liquidator for it or for
any of its property- (ii) admit in writing its inability to pay its debts as
they mature; (iii) make a general assignment for the benefit of creditors; (iv)
be adjudicated a bankrupt or insolvent; or (v) file a voluntary petition in
bankruptcy, or a petition or an answer seeking reorganization or an arrangement
with creditors or to take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or
answer admitting the material allegations of a petition filed against it in any
proceeding under any such law or if corporate action shall be taken by the
Company for the purpose of effecting any of the foregoing;
(i) Reorganization, Receiver, Etc. An order, judgment or
decree shall be entered without the application, approval or consent of the
Company by any court of competent jurisdiction, approving a petition seeking
reorganization of the Company or appointing a receiver, trustee or liquidator of
the Company or of all or a substantial part of the assets thereof, and such
order, judgment or decree shall continue unstayed and in effect for any period
of 60 days,
(j) ERISA. A Reportable Event (as defined in ERISA) shall have
occurred with respect to any Plan (as defined therein) and, within 30 days after
the reporting of such Reportable Event to the Bank, the Bank shall have notified
the Company in writing that (i) it has made a determination that, on the basis
of such Reportable Event, there are reasonable grounds for the termination of
such Plan by the Pension Benefit Guaranty Corporation or for the appointment by
the appropriate United States District Court of a trustee to administer such
Plan; and (ii) as a result thereof an Event of Default exists hereunder; or a
trustee shall be appointed by a United States District Court to administer any
Plan; or the Pension Benefit Guaranty Corporation shall institute proceedings to
terminate any Plan;
(k) Collateral Default. Any default shall occur pursuant to
the terms of any of the Loan Documents, then (i) the Bank at any time thereafter
during the continuance of any such Event of Default specified above (other than
in Section (h) or (i)), may, by written notice to the
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Company terminate the Commitment of the Bank (if still in existence), and
declare the entire principal amount of the Note to be due and payable forthwith,
whereupon the Note including all principal and interest and all other amounts
payable hereunder or under any Loan Document shall forthwith become due and
payable; and (ii) automatically upon the occurrence of any of the events
specified in Section (h) or (i) the Commitment of the Bank shall terminate (if
still in existence) and the Note, including all principal and interest and all
other amounts payable hereunder or under any Loan Document shall become
immediately due and payable, in either case without presentment, demand,
protest, or notice of any kind, all of which are hereby expressly waived,
anything contained herein or in the Note or the Loan Documents to the contrary
notwithstanding.
SECTION 8
ASSIGNMENTS/PARTICIPATIONS
8.1 Assignment by the Company. The Company may not assign its rights or
obligations hereunder or under the Note without the prior written consent of the
Bank.
8.2 Assignments by the Bank. The Bank may assign any of the Loans, the
Note, or its Commitment without the prior consent of the Company.
8.3 Participations. The Bank may sell or agree to sell to one or more
other Persons a participation in all or any part of any Loans held by it or any
Loan made or to be made by it.
8.4 Information. Upon the request of the Bank, the Company shall
furnish any information concerning the Company required to be furnished under
this Agreement to assignees and participants (including prospective assignees
and participants).
SECTION 9
DEFINITIONS
9.1 Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified.
"Affiliate" with respect to any Person shall mean each Person
that directly or indirectly (through one or more intermediaries or otherwise),
controls, is controlled by, or is under common control with such Person.
"Agreement" is defined in the preamble.
"Approved Sale/Leaseback Creditor" is defined at Section
6.1(e).
"Bank" is identified in the preamble.
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"Banking Days" shall mean days other than Saturdays, Sundays
and other legal holidays or days on which the principal office of the Bank is
closed.
"Baseline Commitment" is defined at Section 1.1 (b).
"Capital Expenditures" shall mean, as to any Person, for any
period, expenditures (including the aggregate amount due under capital leases
incurred during such period but excluding such amounts under capital leases of
assets as to which inclusion of which would cause such amount to be double
counted for such period) made by such Person to acquire or construct fixed
assets, plant and equipment (including renewals, improvements and replacements)
during such period, computed in accordance with GAAP.
"Commitment" is defined at Section 1.1 (b).
"Commitment Fee" is defined at Section 1.3.
"Company" is identified in the preamble.
"Counsel" is identified at Section 3.1 (f).
"Current Assets" shall mean all assets which may properly be
classified as current assets in accordance with GAAP.
"Current Liabilities" shall mean all Liabilities as may
properly be classified as current Liabilities in accordance with GAAP and, prior
to the Maturity Date, shall include the amount of all Loans which are
outstanding hereunder which are due within the next twelve months.
"Default" shall mean any condition or event which constitutes
an Event of Default or which would become an Event of Default with the giving of
notice or lapse of time or both (unless cured or waived).
"EBITDA" shall mean earnings of the Company before interest,
taxes, depreciation and amortization, as determined in accordance with GAAP.
"Environmental Requirements" is defined at Section 4.16.
"ERISA" is defined at Section 4.8.
"Events of Default" is defined at Section 7.
"GAAP" means generally accepted accounting principles
consistently applied, as reflected in the financial statements delivered
pursuant to Section 4.3 hereof.
"Hazardous Materials" is defined at Section 4.16.
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"Indebtedness" shall mean any Liabilities representing
obligations for borrowed money or the deferred purchase price of property or
services (except accruals and trade accounts payable arising in the ordinary
course of business) including, without limitation, capitalized lease
obligations, and Liabilities similar to the foregoing of other Persons which are
secured by a Lien on any asset of the Company, or guaranteed directly or
indirectly by the Company; provided, however, that Indebtedness shall not
include any Capital Expenditures which qualify for a Permitted Sale/Leaseback
with an Approved Sale/Leaseback Creditor.
"Initial Term Loan" is defined at Section 1.1(b).
"Inventory" shall mean all raw materials, work in process,
finished goods and materials and supplies of any kind, nature or description
which are or might be used or consumed in the business of the Company or used in
connection with the manufacturing, packing, shipping, advertising, selling or
finishing of such goods, merchandise and other personal property, and all goods,
merchandise and other personal property wherever located, to be furnished by the
Company under any contract or contract for service or held for sale or lease,
whether now owned or hereafter acquired, and all documents of title or other
documents representing the foregoing.
"Letter of Credit" means a commercial letter of credit issued
hereunder by the Bank pursuant to this Agreement on behalf of the Company.
"Liabilities" as applied to any Person, shall mean (a) all
items (except items of capital stock of capital surplus, of general contingency
reserves or of retained earnings and amounts attributable to minority interest,
if any) which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person as
at the date as of which Liabilities are to be determined, including specifically
capitalized lease obligations and the reimbursement obligations under a Letter
of Credit and (b) all obligations secured by any Lien or conditional sale or
other title retention agreement to which any property or asset owned or held by
such Person is subject, whether or not the obligations secured thereby shall
have been assumed (excluding non-capitalized leases which may amount to title
retention agreements).
"Liens" are identified at Section 6.1(a).
"Loan" shall mean a loan made by the Bank pursuant to
Section 1.
"Loan Documents" shall mean the Note, the Security Agreements
and all other documents, instruments and certificates to be delivered hereunder
or thereunder.
"Maturity Date" is defined at Section 1.1(a).
"Maximum Commitment" is defined at Section 1.1(b).
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"Net Income" shall mean for any period the net income (loss)
of the Company incurred during such period as determined in accordance with.
"Note" is defined at Section 1.4(a).
"Permitted Sale/Leaseback" is defined at Section 6.1(e).
"Person" shall mean and include an individual, partnership,
corporation, trust, unincorporated organization, a government or any department
or agency thereof or any other entity.
"Prime Rate" is defined at Section 1.4(b).
"Residual Commitment" is defined at Section 1.1(b).
"Secondary Term Loan" is defined at Section 1.1(b).
"Security Agreements" is defined at Section 3.1(b).
"Subordinated Debt" shall mean all unsecured Indebtedness of
the Company maturing more than 12 months from the date of determination thereof
which in each case shall be subordinated to all Loans and all other amounts owed
to the Bank, all on specific terms and conditions satisfactory to and approved
in writing by the Bank prior to the incurrence thereof.
"Subsidiary" shall mean any corporation which is incorporated
under the laws of the United States or Canada at least a majority of the
outstanding voting stock of which shall, at the time as of which any
determination is being made, be owned by the Company either directly or through
Subsidiaries.
"Tangible Net Worth" shall mean the total of the capital stock
(net of treasury stock), paid in surplus and retained earnings (deficit) as
determined in accordance with GAAP, minus the following items (without
duplication of deductions), if any, appearing on the balance sheet of the
Company:
(a) all deferred charges (net of amortization);
(b) the book amount of all assets which would be treated as
intangibles (including capital leases) under GAAP, including, without
limitation, such items as good will, unamortized debt discount and
expense and corporate organization expenses, treasury stock, trademarks,
trademark applications, trade names, service marks, brand names,
copyrights, patents, patent applications and licenses, and rights with
respect to the foregoing; and
(c) any write-up in the book amount of any asset resulting
from a revaluation thereof from the book amount entered upon
acquisition.
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"Unsubordinated Indebtedness" as applied to any Person, shall
mean all Indebtedness of such Person less Subordinated Debt of such Person.
"Wholly Owned Subsidiary" shall mean a Subsidiary, all of the
voting stock (other than directors' qualifying shares) of which and all other
stock and equity securities of which are owned by the Company, or by the Company
and one or more Wholly Owned Subsidiaries.
9.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP consistent with those applied
in the preparation of the financial statements of the Company at the date
hereof.
SECTION 10
MISCELLANEOUS
10.1 Term of Agreement: Successors and Assigns. This Agreement and all
covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by the Bank of
the Loans and the execution and delivery to the Bank of the Note and shall
continue in full force and effect until the termination of the Commitment or
until payment in full of the Note, whichever is later. Whenever in this
Agreement either of the parties hereto are referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
terms and provisions of this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective permitted successors and
assigns.
10.2 Notices. Notices, demands and communications shall be deemed to
have been properly given to the Company when deposited in the United States
mail, registered or certified, postage prepaid, and addressed to the Company at
X.X. Xxx 000000, 0000 Xxxxxxxxx Xxxxx, Xxxxxxxx, XX 00000, Attention- Chief
Financial Officer, whether or not the same are actually received by the Company.
Except for purposes of notification of an Event of Default hereunder, such
communication shall be effective only upon receipt by the Company at the address
indicated. Any communication to the Bank shall be deemed properly given if
similarly mailed and addressed to The Provident Bank, 0 Xxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000.
10.3 No Implied Waivers. No delay on the part of the bank in exercising
any right, power or privilege granted hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof. The rights and
remedies herein expressly specified are cumulative and not exclusive of any
other rights and remedies which the Bank would otherwise have.
10.4 Amendments, Modifications, Etc. No amendment, modification,
termination, or waiver of any provision of this Agreement or of the Note nor
consent to any departure by the
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Company therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No notice or demand on the Company in any case shall entitle the Company
to any other or further notice or demand in similar or other circumstances.
10.5 Applicable Law. This Agreement and the Note shall be deemed to be
contracts made under the laws of the State of Ohio, and for all purposes shall
be construed in accordance with the laws of such state.
10.6 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
10.7 Expenses. All legal fees, costs or expenses, incurred by the Bank
in connection with the preparation, execution, delivery and enforcement of this
Agreement, the Note or any of the Loan Documents shall be paid by the Company.
10.8 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto were upon the
same instrument. Complete sets of counterparts shall be lodged with the Company
and the Bank.
10.9 Merger. This Agreement, the Note and the Loan Documents reflect
the entire understanding of the parties with respect to their subject matter and
supersede all prior agreements or understandings with respect thereto in their
entirety.
10.10 Headings. Headings of the sections of this Agreement are for
convenience only and shall not affect the construction of this Agreement.
10.11 Effective Date. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties.
The parties hereto have caused this Agreement to be duly executed by
their respective duly authorized officers as of the date first above written.
MAX & ERMA'S RESTAURANTS, INC. THE PROVIDENT BANK
By: /s/ XXXXXXX X. XXXXXXX, XX. By: /s/ XXXXXXX X. XXXXXXXX
---------------------------- ------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx. Name: Xxxxxxx X. Xxxxxxxx
Its: Chief Financial Officer Its: Senior Vice President
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EXHIBIT A-3
REVOLVING CREDIT NOTE
DOCUMENT #192053
29
EXHIBIT B-1
THIRD AMENDED AND RESTATED PERSONAL PROPERTY SECURITY AGREEMENT
DOCUMENT #192054
30
EXHIBIT B-2
AMENDED AND RESTATED INTELLECTUAL PROPERTY SECURITY AGREEMENT
DOCUMENT #192055
31
EXHIBIT C
MAX & ERMA'S RESTAURANTS, INC.
AT THE FOLLOWING LOCATIONS:
ADDRESS COUNTY
0000 Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxx Franklin
000 X. Xxxxx Xx., Xxxxxxxx, Xxxx 00000 Franklin
0000 Xxxx Xxxx Xxxxx, Xxxxxxxx, Xxxx 00000 Franklin
0000 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxx 00000 Xxxxxxxxxx
0000 Xxxxxxxx Xxxx, Xxxxxxxxxxxx, XX 00000 Xxxxxx
0000 Xxxxx Xxxx, Xxxxxxxx, Xxxx 00000 Franklin
00000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxxx Xxxxx, XX 00000 Oakland
0000 X. Xxxxxx-Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000 Franklin
0000 XX 00 Xxxxx, Xxxxxxxxxxxx, XX 00000 Xxxxxx
000 Xxxxxxx Xx., Xxxxxxxxxx, XX 00000 Allegheny
00 X. Xxxxx Xxxx, Xxxxxxxxx Xxxxx, XX 00000 Oakland
00000 Xxx Xxxx Xxxx, Xxxxxxx, XX 00000 Xxxxx
000 Xxxxx Xxxxx Xxxxx, Xxxxxx, Xxxx 00000 Franklin
0000 Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 Allegheny
0000 Xxxxxxx Xxxx, Xxxxxxxxxx, XX 00000 Allegheny
000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 Oakland
0000 Xxxx 00xx Xxxxxx, Xxxxxxxxxxxx, XX 00000 Xxxxxx
000 Xxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxxx 00000 Franklin
000 X. Xxxxxxxxxx Xxxx., Xxxxx 0, Xxx Xxxxx, XX 00000 Washtenaw
0000 Xxx Xxxxx Xxxx, Xxxxxxxxx, Xxxx 00000 Cuyahoga
000 Xxxx Xxxx, Xxxxxxxxx Xxxxxxx, XX 00000 Xxxx
0000 X. Xxxxxx Xx., Xxxxxxxx, Xxxx 00000 Summit
00000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000 Cuyahoga
0000 Xxxxxxxxx Xxxxxxx, Xxxxxxxxxxx, XX 00000 Xxxxxx
000 X. Xxxxxxxxx Xxx., Xxxxxx Xxxxx, XX 00000 Lake
0000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxx 00000 Xxxxxxxx
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00000 Xxxx Xxxx, #X000, Xxxx, XX 00000 Oakland
0000 00xx Xx., XX, Xxxxx Xxxxxx, XX 00000 Kent
0000 X. 00xx Xxxxxx, Xxxxxxxxx, Xxx 00000 DuPage
0000 Xxxxxxx Xxxx, Xxxxxxx Xxxxxxx, XX 00000 Xxxx
0000 Xxxxxxxx Xxxx, Xxxxxxx, XX 00000 Franklin
0000 X.X. Xxxx Xxxx., Xxxxxxxxx, XX 00000 Mecklenburg
0000 Xxxxxx Xxxx, Xxxxxx, Xxxx 00000 Xxxxxxxxxx
000 Xxxxxxxx Xxxxx, Xxxx, XX 00000 Allegheny
000 X. Xxxxxxxxx Xxxxx, Xxxx Xxxxx, XX 00000 DuPage
00000 Xxxxx Xxxx, Xxxxx, XX 00000 Cuyahoga
0000 Xxxxx Xxxxxx, Xxxxxx, XX 00000 Lake
0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 Fayette
000 Xxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 Allegheny
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxxx, XX 00000 Xxxxx
0000 Xx. Xxxxxx Xxxxxxx, Xxxxxxx, XX 00000 Xxxxxx
0000 Xxxxx Xxxxxxxx Xxxx., Xxxxxx, XX 00000 Gwinnett
00 Xxxxxx Xxxxx, Xxxxxxxxxx XX 00000 Greenville
0000 Xxxxxxx Xxxxxxx, Xxxxxxxx, XX 00000 Franklin
0000 Xxxxxxxx Xxxx, Xxxxxxxx, XX 00000 Franklin
0000 Xxxxxxxxx Xxxxx, Xxxxxx, XX 00000 Xxxxx
00000 Xxxxx Xxxx, Xxxxxxxxxxx, XX 00000 DuPage
0000 Xxxxxxxx Xxx, Xxxxxxxxx, XX 00000 Fayette
0000 Xxxxx Xxxx, Xxxxxxxxxx Xxxxxxx, XX 00000 Cuyahoga
0000 Xxxxxxx Xxxx, Xxxxxxxxxxx, XX 00000 Allegheny
0000 Xxxxxxxxxxx Xxxx, Xxxx XX 00000 Erie
0000 Xxxxxxx Xxxxx, Xxxx Xxxxxxx, XX 00000 Xxxxxx
