July 31, 1998
Xx. Xxxxx Xxxxxxxx
Rocky Mountain Chocolate Factory
000 Xxxxxx Xx.
Xxxxxxx, XX 00000
VIA FAX 000-000-0000 AND FIRST CLASS MAIL
Subject: SEVENTH AMENDMENT TO TERM LOAN AND CREDIT AGREEMENT
Dear Xxxxx:
Rocky Mountain Chocolate Factory, Inc. ("RMCF") and Norwest Bank Colorado,
N.A. (the "Bank") are parties to a certain Loan Agreement dated April 5, 1996
as amended six previous times (collectively, the "Agreement"). The purpose
of this amendment (the "Seventh Amendment") is to make further changes to the
Agreement as follows:
The Revolving Line of Credit shall be increased from $2,000,000 to $3,000,000.
Acceptable Accounts Receivable shall include receivables from Sam's Club less
than 120 days old.
Borrowing Base shall include 50% of Acceptable Inventory. The limit of
$500,000 shall be deleted.
Maintain quarterly a ratio of Indebtedness to Tangible Net Worth of not more
than 1.6 to 1.
Maintain quarterly a ratio of Current Assets to Current Liabilities of not
less than 1.3 to 1.
Maintain quarterly a minimum Cash Flow Coverage Ratio of more than 1.25 to 1.
Cash Flow Coverage Ratio shall mean the ratio of earnings before interest,
taxes, depreciation and amortization ("EBITDA") divided by the sum of all
principal and interest payments.
Maintain quarterly a Tangible Net Worth of more than $6,000,000.
Maintain quarterly Working Capital of more than $1,500,000.
Capitalized terms not further defined herein are defined in the Agreement. All
other terms conditions shall remain the same.
ACCEPTED AND AGREED
BANK
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx, V.P.
RMCF
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx, CFO
