Exhibit 10.23
January 3, 1997
Mr. Thomas M. Mishoe, Jr.
Chief Financial Officer
Eskimo Pie Corporation
901 Moorefield Park Drive
Richmond, VA 23235
Dear Tom:
On behalf of Crestar Bank (the "Bank"), I am pleased to advise you that the Bank
has approved the request of Eskimo Pie Corporation (the "Company"), to waive the
covenant defaults under the existing Letter Agreement and to reinstate the line
of credit for the purposes and subject to the terms and conditions set forth
below.
1. Amount and Purpose. Upon acceptance of this letter, the Bank will provide a
revolving line of credit of $10,000,000 to the Company for general
corporate purposes. Advances under the line will be evidenced by the
Company's master note in the amount of the line.
2. Repayment. All loans shall be payable no later than the expiration date of
this line of credit.
3. Interest. Interest shall be computed on the aggregate unpaid principal
balance of the loans from time to time outstanding at a rate equal to the
Bank's overnight Money Market Rate plus .75% on the basis of a 360-day year
for the actual number of days elapsed. The interest rate will be changed on
the same day a change occurs in the rate. Accrued interest shall be billed
or debited monthly.
4. Guaranty. All advances shall be guaranteed, by all present and future
subsidiaries of the Company.
5. Commitment Fee. The Company agrees to pay the Bank a non-refundable
commitment fee of .25% per annum on the unused amount of the commitment
payable quarterly in arrears.
6. Expiration of Line. Unless extended in writing at the sole option of the
Bank, the line of credit shall expire on April 30, 1998.
7. General and Special Conditions.
A) Capital Expenditures. Without the prior consent of the Bank, capital
expenditures for fixed assets as defined by generally accepted
accounting principles known as GAAP (exclusive of the current
accounting system upgrade) of the Company during the term of this
line of credit shall be limited to $1,750,000.
B) Additional Debt. The Company shall not incur or assume more than
$7,000,000 of additional debt for borrowed funds in excess of the
amounts or facilities already existing as of December 31, 1996,
without the prior written consent of the Bank.
C) Minimum Shareholders' Equity. The Company shall, at its fiscal year
ending December 31, 1996, and at all times thereafter, maintain
shareholders' equity, as defined by GAAP, of not less than
$20,500,000 plus an amount equal to 50% of the Company's positive
net income after taxes determined in accordance with GAAP.
D) Maximum Leverage Ratio. The Company shall, at all times, maintain a
ratio of Total Liabilities to Net Worth not to exceed 1.25 to 1.00.
E) Minimum Cash Coverage Ratio. Cash Coverage Ratio is defined as
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") less CAPEX divided by the sum of interest expense plus
principal payments (principal payments refers to required repayments
of long-term debt and/or capital leases but does not include
borrowings under the line of credit contemplated by this note). For
the fiscal period ending March 31, 1997 (covering 3 months), the
Company shall maintain a minimum Cash Coverage Ratio of 1.0; for the
fiscal periods ending June 30, 1997 (covering 6 months) and
September 30, 1997 (covering 9 months), the Company shall maintain a
minimum Cash Coverage Ratio of 1.3; and for the fiscal period ending
December 31, 1997, and all fiscal periods thereafter, the Company
shall maintain a minimum Cash Coverage Ratio (on rolling 4 quarter
basis) of 1.5.
F) Loan Documents. The line will be governed by this letter agreement
and by the other loan documents required by the Bank, including the
master note, guarantees, and corporate borrowing resolution. All
loan documents must be in form and substance satisfactory to the
Bank.
G) Expenses. The Company shall pay all of the Bank's out-of-pocket
expenses, including all filing fees and all fees and expenses of the
Bank's counsel, in connection with the making of loans from
acceptance of this commitment.
H) Financial Statements. The Company must furnish to the Bank (1)
within 90 days after the end of its fiscal year, a copy of its
audited financial statements containing the unqualified report of
its independent certified public accountants; (2) within 60 days
after the end of each of its fiscal quarters, a copy if its interim
quarterly financial statements in form satisfactory to the Bank; and
(3) such other information as the Bank may from time to time
request.
I) Negative Pledge. The loans will be unsecured, but the Company hereby
agrees not to pledge any of its assets to secure future indebtedness
without the prior written consent of the Bank. This condition is not
meant to apply to liens existing on the date hereof and disclosed in
writing to the Bank, liens arising through the ordinary course of
business, statutory liens or liens arising by operation of law so
long as such liens are either inchoate or being contested in good
faith.
8. Non-Assignability. The Commitment is personal to Eskimo Pie Corporation and
is not assignable by operation of law or otherwise, and any assignment
shall be null and void and of no force and effect.
9. Governing Law. This commitment shall be governed by the internal laws of
the Commonwealth of Virginia and applicable federal laws.
10. Events of Default. Those outlined in Crestar Bank's standard commercial
note form and failure of the borrower to comply with any term of any
agreement with Crestar Bank or its other existing lenders.
Should you have any questions, please do not hesitate to call me at 782-5449.
Otherwise, if the terms and conditions of this letter are satisfactory, please
signify your acceptance by signing and returning the enclosed copy of this
letter no later than February 21, 1997, when this commitment will otherwise
expire.
We appreciate this opportunity to work with you and wish you continued success.
Sincerely yours,
CRESTAR BANK
By: /s/ T. Patrick Collins
------------------------
T. Patrick Collins
Vice President
Accepted and agreed to this 21st day of February, 1997.
/s/ Thomas M. Mishoe, Jr.
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By: Thomas M. Mishoe, Jr.
Title: Chief Financial Officer