INTEGRATED BRANDS INC.
SWENSEN'S, INC.
SWENSEN'S ICE CREAM COMPANY
AND
THE CHASE MANHATTAN BANK
----------
FOURTH AMENDMENT
DATED AS OF SEPTEMBER 20, 2000
TO LOAN AGREEMENT
DATED AS OF DECEMBER 23, 1994
----------
FOURTH AMENDMENT
DATED AS OF SEPTEMBER 20, 2000
TO LOAN AGREEMENT
DATED AS OF DECEMBER 23, 1994
This Fourth Amendment Agreement is dated as of 20th day of September, 2000
and is by and among INTEGRATED BRANDS INC., a New Jersey corporation, having
its principal place of business at 4175 Veterans Highway, Ronkonkoma, New York
11779 (the "Borrower"), COOLBRANDS INTERNATIONAL INC., a Canadian corporation,
having its principal place of business at 8300 Woodbine Avenue, Markham,
Ontario, Canada L3R 9Y7 ("Coolbrands"), KAYLA FOODS INT'L (BARBADOS) INC. a
Barbados corporation, having its principal place of business at 27 Pine Road,
Belleville, St. Michael, Barbados, W.I. ("Kayla"), SWENSEN'S, INC., a Delaware
corporation, having its principal place of business at 4175 Veterans Highway,
Ronkonkoma, New York 11779 ("Swensen's"), SWENSEN'S ICE CREAM COMPANY, a
California corporation, having its principal place of business at 4175 Veterans
Highway, Ronkonkoma, New York 11779 ("Ice Cream"), EP ACQUISITION CORP., a
Virginia corporation, having its principal place of business at 4175 Veterans
Highway, Ronkonkoma, New York 11779 ("EP"), YOGEN FRUZ ACQUISITIONS INC., a
Nevada corporation, having its principal place of business at 4175 Veterans
Highway, Ronkonkoma, New York 11779 ("Yogen Fruz"), BRESLER'S INDUSTRIES, INC.,
an Illinois corporation, having its principal place of business at 4175 Veterans
Highway, Ronkonkoma, New York 11779 ("Bresler"), NORTHERN LIGHTS FROZEN
DESSERTS, INC., a Utah corporation, having its principal place of business at
4175 Veterans Highway, Ronkonkoma, New York 11779, ("Northern"), GOLDEN SWIRL
MANAGEMENT COMPANY, a Utah corporation ("Golden"), having its principal place of
business at 4175 Veterans Highway, Ronkonkoma, New York 11779 and I CAN'T
BELIEVE ITS YOGURT, LTD., a Texas partnership, ("ICB"), having its principal
place of business at 4175 Veterans Highway, Ronkonkoma, New York 11779,
(Coolbrands, Kayla, Swensen's, Ice Cream, EP, Yogen Fruz, Bresler, Northern,
Golden and ICB individually, a "Guarantor" and collectively, the "Guarantors"),
THE CHASE MANHATTAN BANK, as agent for the Lenders (as defined below), a New
York banking corporation, having an office at 4 MetroTech Center, Brooklyn, New
York 11245 (the "Agent") and THE CHASE MANHATTAN BANK, a New York banking
corporation, having an office at 4 MetroTech Center, Brooklyn, New York 11245
("Chase" or a "Lender");
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WITNESSETH:
WHEREAS, the Borrower, Swensen's, Ice Cream and Chase entered into a Loan
Agreement dated as of December 23, 1994, and amended as of September 7, 1995,
March 8, 1996 and December 31, 1997 (as amended, the "Agreement") and pursuant
to such Agreement Chase has made a Term Loan to the Borrower as evidenced by a
Term Loan Note and has made available to the Borrower certain Revolving Credit
Loans as evidenced by a Revolving Credit Note; and
WHEREAS, the Revolving Credit Note, the Term Loan Note and all other
obligations arising under the Agreement are guaranteed by Swensen's and Ice
Cream pursuant to guaranties given by each of them to Chase dated December 23,
1994, and ratified and confirmed on the dates this Agreement has been amended
(the "Guaranties"); and
WHEREAS, the Borrower has requested that Chase make certain additional
credit facilities available to it and Chase has agreed to do so provided that
(i) the Agreement be amended as provided in this Fourth Amendment and (ii) Chase
become the Agent for itself and other Lenders (as defined in the Agreement, as
amended hereby) for the credit facilities made available hereunder.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Borrower, the Guarantors (as
defined in the Agreement, as amended hereby) and Chase agree as follows:
1. Definitions. As used in this Fourth Amendment Agreement, capitalized
terms, unless otherwise defined, shall have the meanings ascribed to them in the
Agreement, as amended.
2. Representations and Warranties. As an inducement for the Bank to enter
into this Fourth Amendment Agreement, the Borrower and the Guarantors each
represent and warrant as follows:
That with respect to the Agreement and the Loan Documents:
(i) There are no defenses, offsets or counterclaims to the respective
obligations of the Borrower or either of Swensen's or Ice Cream under the
Agreement, the Loans, the Notes, the Guaranties or any of the other Loan
Documents, and if any such defenses, offsets or counterclaims exist without
the knowledge of one or more of the Borrower or such Guarantors, the same
are hereby waived.
3
(ii) All of the representations and warranties made by the Borrower
and Swensen's and Ice Cream in the Agreement or in the other Loan Documents
are true and correct in all material respects as if made on the date
hereof.
(iii) No Default or Event of Default is existing under the Agreement
or the other Loan Documents or will result from the extension of credit
contemplated hereby.
(iv) As of September 20, 2000, the outstanding principal balance of
(i) the Term Loan is $1,980,000.00, (ii) the Revolving Credit Loans is $
-0- and interest has been paid on the Term Loan and the Revolving Credit
Loans through June 30, 2000.
3. Amendment. The Agreement is hereby amended and restated to read in its
entirety as follows:
LOAN AGREEMENT
Dated as of December 23, 1994
Amended and Restated as of September 20, 2000
INTEGRATED BRANDS INC., a New Jersey corporation, having its principal
place of business at 4175 Veterans Highway, Ronkonkoma, New York 11779
("Integrated" or the "Borrower"), COOLBRANDS INTERNATIONAL INC., a Canadian
corporation, having its principal place of business at 8300 Woodbine Avenue,
Markham, Ontario, Canada L3R 9Y7 ("Coolbrands"), KAYLA FOODS INT'L (BARBADOS)
INC., a Barbados corporation, having its principal place of business at 27 Pine
Road, Belleville, St. Michael, Barbados, W.I. ("Kayla"), SWENSEN'S, INC., a
Delaware corporation, having its principal place of business at 4175 Veterans
Highway, Ronkonkoma, New York 11779 ("Swensen's"), SWENSEN'S ICE CREAM COMPANY,
a California corporation, having its principal place of business at 4175
Veterans Highway, Ronkonkoma, New York 11779 ("Ice Cream"), EP ACQUISITION
CORP., a Virginia corporation, having its principal place of business at 4175
Veterans Highway, Ronkonkoma, New York 11779 ("EP"), YOGEN FRUZ ACQUISITIONS
INC., a Nevada corporation, having its principal place of business at 4175
Veterans Highway, Ronkonkoma, New York 11779 ("Yogen Fruz"), BRESLER'S
INDUSTRIES, INC., an Illinois corporation, having its principal place of
business at 4175 Veterans Highway, Ronkonkoma, New York 11779 ("Bresler"),
NORTHERN LIGHTS FROZEN DESSERTS, INC., a Utah corporation, having its principal
place of business at 4175 Veterans Highway, Ronkonkoma, New York 11779,
("Northern"), GOLDEN
4
SWIRL MANAGEMENT COMPANY, a Utah corporation ("Golden"), having its principal
place of business at 4175 Veterans Highway, Ronkonkoma, New York 11779 and I
CAN'T BELIEVE ITS YOGURT, LTD., a Texas partnership, ("ICB"), having its
principal place of business at 4175 Veterans Highway, Ronkonkoma, New York
11779, (Coolbrands, Kayla, Swensen's, Ice Cream, EP, Yogen Fruz, Bresler,
Northern, Golden and ICB individually, a "Guarantor" and collectively, the
"Guarantors"), THE CHASE MANHATTAN BANK, as agent for the Lenders (as defined
below), a New York banking corporation, having an office at 4 MetroTech Center,
Brooklyn, New York 11245 (the "Agent") and THE CHASE MANHATTAN BANK, a New York
banking corporation, having an office at 4 MetroTech Center, Brooklyn, New York
11245 ("Chase" or a "Lender") hereby agree as follows:
(THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK)
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acquisition Loan" means a Revolving Credit Loan, the proceeds of which are
to be used for a Permitted Acquisition.
"Affiliate" means, as to any Person (i) a Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person; (ii) a Person which directly or indirectly beneficially owns or holds
five (5%) percent or more of any class of voting stock of, or five (5%) percent
or more of the equity interest in, such Person; or (iii) a Person five (5%)
percent or more of the voting stock of which, or five (5%) or more of the equity
interest of which, is directly or indirectly beneficially owned or held by such
Person. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Agent" means The Chase Manhattan Bank, or such other Lender as may succeed
to the position of Agent, as provided in this Agreement.
"Agreement" means this Loan Agreement, as amended, supplemented or modified
from time to time.
"Assignment and Assumption Agreement" means the agreement by which a Lender
assigns all, but not a part, of its Pro Rata Share of the Term Loan, its Term
Loan Note, its Revolving Credit Loans, its Revolving Credit Note, its Commitment
and this Agreement to another Lender, as provided in Section 8.07 of this
Agreement.
"Board of Governors" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Business Day" means a day of the year on which banks are not required or
authorized to close in New York City.
"Canadian Dollars" or "Canadian $" means lawful money of Canada.
6
"Capital Expenditures" means, as to any Person, the aggregate amount of any
expenditures (including purchase money Debt and the amount secured by purchase
money Liens) by such Person for assets (including fixed assets acquired under
Capital Leases) which it is contemplated will be used or usable in fiscal years
subsequent to the year of acquisition.
"Capital Lease" means a lease which has been or should be, in accordance
with GAAP, capitalized on the books of the lessee.
"Commitment" means the Lenders' obligation to make Revolving Credit Loans
to the Borrower pursuant to the terms and conditions of this Agreement.
"Consolidated Capital Expenditures" means, as to Coolbrands and its
Consolidated Subsidiaries, the aggregate amount of Capital Expenditures made by
Coolbrands and its Consolidated Subsidiaries, computed and consolidated in
accordance with GAAP.
"Consolidated EBITDA" means, as to Coolbrands and its Consolidated
Subsidiaries, for any period, the EBITDA of Coolbrands and its Consolidated
Subsidiaries for such period, computed and consolidated in accordance with GAAP.
"Consolidated Funded Debt" means, as to Coolbrands and its Consolidated
Subsidiaries, the aggregate amount of the Funded Debt of Coolbrands and its
Consolidated Subsidiaries, computed and consolidated in accordance with GAAP.
"Consolidated Senior Funded Debt" means, as to Coolbrands and its
Consolidated Subsidiaries, at any date, (i) Consolidated Funded Debt minus (ii)
Consolidated Subordinated Debt.
"Consolidated Subordinated Debt" means, as to Coolbrands and its
Consolidated Subsidiaries, the aggregate amount of the Subordinated Debt of
Coolbrands and its Consolidated Subsidiaries, computed and consolidated in
accordance with GAAP.
"Consolidated Subsidiaries" means, as to any Person, those Subsidiaries of
such Person which are consolidated with such Person in the financial statements
delivered pursuant to Section 5.01(b).
"Consolidated Total Assets" means, as to Coolbrands and its Consolidated
Subsidiaries, the aggregate net book value of the assets of Coolbrands and its
Consolidated Subsidiaries after all appropriate adjustments in accordance with
GAAP (including without limitation, reserves for doubtful receivables,
obsolescence,
7
depreciation and amortization and excluding the amount of any write-up or
revaluation of any asset), computed and consolidated in accordance with GAAP.
"Consolidated Total Liabilities" means, as to Coolbrands and its
Consolidated Subsidiaries, the aggregate amount of the liabilities of Coolbrands
and its Consolidated Subsidiaries, including all items which, in accordance with
GAAP would be included on the liability side of the balance sheet (other than
capital stock, capital surplus and retained earnings) computed and consolidated
in accordance with GAAP.
"Consolidated Unfunded Capital Expenditures" means Consolidated Capital
Expenditures funded other than by Debt.
"Credit Parties" means the Borrower, the Guarantors and any other Person
which is required to become a Guarantor pursuant to the provisions of Section
5.01(k) of this Agreement.
"Debt" means, as to any Person, all (i) indebtedness or liability of such
Person for borrowed money; (ii) indebtedness of such Person for the deferred
purchase price of property or services (including trade obligations); (iii)
obligations of such Person as a lessee under Capital Leases; (iv) current
liabilities of such Person in respect of unfunded vested benefits under any
Plan; (v) obligations of such Person in respect of letters of credit issued for
the account of such Person; (vi) obligations of such Person arising under
acceptance facilities; (vii) guaranties, endorsements (other than for collection
or deposit in the ordinary course of business) and other contingent obligations
to purchase, to provide funds for payment, to supply funds to invest in any
other Person, or otherwise to assure a creditor against loss; (viii) obligations
secured by any Lien on property owned by such Person whether or not the
obligations have been assumed; (ix) liabilities of such Person under interest
rate protection agreements; (x) liabilities of such Person under any preferred
stock or other preferred equity instrument which, at the option of the holder or
upon the occurrence of one or more events, is redeemable by such holder, or
which, at the option of such holder is convertible into Debt; (xi) indebtedness
of any partnership of which such Person is a general partner; and (xii) all
other liabilities recorded as such, or which should be recorded as such, on such
Person's financial statements in accordance with GAAP.
"Debt Service Coverage Ratio" means, as to Coolbrands and its Consolidated
Subsidiaries for any period, the ratio of (i) Consolidated EBITDA minus
Consolidated Unfunded Capital Expenditures to (ii) consolidated interest expense
(whether paid or
8
accrued but without duplication) plus the current portion of long term
consolidated Debt. The Debt Service Coverage Ratio shall be measured and tested
at the end of each fiscal quarter and, in the case of Consolidated EBITDA and
consolidated interest expense, for a period covering the four (4) fiscal
quarters then ended.
"Default" means any of the events specified in Section 6.01 of this
Agreement, whether or not any requirement for notice or lapse of time or any
other condition has been satisfied.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" means, as to Coolbrands and its Consolidated Subsidiaries for any
period, the sum of (i) net income (excluding extraordinary gains and
extraordinary losses) plus (ii) interest expense (whether paid or accrued but
without duplication) plus (iii) depreciation expense plus (iv) amortization of
intangible assets plus (v) federal, state and local income taxes (whether paid
or accrued but without duplication) minus (vi) the minority interest in any
Subsidiaries, in each case computed and consolidated in accordance with GAAP.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, the regulations promulgated thereunder and the
published interpretations thereof as in effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
which together with any Credit Party would be treated, with such Person, as a
single employer under Section 4001 of ERISA.
"Event of Default" means any of the events specified in Section 6.01 of
this Agreement, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
"Fixed Rate" means a rate offered by the Bank from time to time, subject to
availability, for Interest Periods of not less than fourteen (14) days and, in
the case of Revolving Credit Loans only, of not more than three hundred sixty
(360) days.
"Fixed Rate Loans" means a Loan bearing interest at the Fixed Rate.
"Fourth Amendment" means the Fourth Amendment to this Agreement, dated as
of September 20, 2000.
9
"Funded Debt" means, as to any Person, at any date, any Debt which is (i)
indebtedness or liability for borrowed money (including Subordinated Debt)
having an original maturity of one (1) year or more (including the current
portion thereof) or which is extendable at the option of the obligor to a date
more than one year from the date of such extension; (ii) indebtedness or
liability for the deferred purchase price of property (excluding trade
obligations); (iii) obligations as a lessee under Capital Leases; (iv) deferred
payment obligations to reimburse a letter of credit issuer for the amount of all
draws under letters of credit and trade acceptances; and (v) liabilities under
any preferred stock which, at the option of the holder or upon the occurrence of
one or more certain events, is redeemable by such holder, or which, at the
option of such holder is convertible into long term Debt.
"Funded Debt to EBITDA Ratio" means, as to Coolbrands and its Consolidated
Subsidiaries for any period, the ratio of (i) Consolidated Funded Debt (as of
the last day of such period) to (ii) Consolidated EBITDA for such period. The
Funded Debt to EBITDA Ratio shall be measured and tested at the end of each
fiscal quarter and, in the case of Consolidated EBITDA, for a period covering
the four (4) fiscal quarters then ended.
"GAAP" means Generally Accepted Accounting Principles.
"Generally Accepted Accounting Principles" means those generally accepted
accounting principles and practices which are recognized as such by the Canadian
Institute of Chartered Accountants (the "Institute") acting through the
Accounting Standards Board (the "Board") or other appropriate boards or
committees thereof and which are consistently applied for all periods so as to
properly reflect the financial condition, operations and cash flows of a Person,
except that any accounting principle or practice required to be changed by the
Institute or the Board (or other appropriate board or committee) in order to
continue as a generally accepted accounting principle or practice may be so
changed. Any dispute or disagreement between the Borrower and the Agent relating
to the determination of Generally Accepted Accounting Principles shall, in the
absence of manifest error, be conclusively resolved for all purposes hereof by
the written opinion with respect thereto, delivered to the Agent, of the
independent accountants selected by Coolbrands and approved by the Agent for the
purpose of auditing the periodic financial statements of Coolbrands.
"Guarantor" or Guarantors" means one or more of the Guarantors, and any
other Person required to guarantee the
10
obligations of the Borrower in accordance with Section 5.01(k) of this
Agreement.
"Guaranty" or "Guaranties" means the guaranty or guaranties executed and
delivered by the Guarantors pursuant to Section 3.01(h) or 5.01(k) or (n)of this
Agreement.
"Hazardous Materials" includes, without limit, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, or related materials defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C.
Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended
(49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Sections 6901 et. seq.), and in the regulations adopted and
publications promulgated pursuant thereto, or any other federal, state or local
environmental law, ordinance, rule or regulation.
"Highly Leveraged Transaction" means a financing transaction where the
Borrower or a Guarantor extends credit to, or invests in, a business where such
transaction involves the buyout, acquisition, or recapitalization of an existing
business and one of the following criteria is met: (i) the transaction results
in a Consolidated Total Liabilities-to-Consolidated Total Assets leverage ratio
higher than 75%, or (ii) the transaction at least doubles the Borrower's
Consolidated Total Liabilities and results in a Consolidated Total
Liabilities-to-Consolidated Total Assets leverage ratio higher than 50%, or
(iii) the transaction is designated as a "highly leveraged transaction" by a
syndication agent or a federal bank regulatory agency. The Agent reserves the
right from time to time to modify its policies regarding the definition of
"highly leveraged transactions".
"Interest Coverage Ratio" means, as to Coolbrands and its Consolidated
Subsidiaries for any period, the ratio of (i) Consolidated EBITDA minus
Consolidated Unfunded Capital Expenditures to (ii) consolidated interest expense
(whether paid or accrued but without duplication). The Interest Coverage Ratio
shall be measured and tested at the end of each fiscal quarter and, in the case
of Consolidated EBITDA and consolidated interest expense, for a period covering
the four (4) fiscal quarters then ended.
"Interest Determination Date" means the date on which Prime Rate Loan is
converted to a Fixed Rate Loan.
"Interest Payment Date" means the first Business Day of each calendar
month.
11
"Interest Period" means as to any Fixed Rate Loan, the period commencing on
the date of such Fixed Rate Loan and ending on such date as the Borrower may
elect after being advised by the Bank as to what maturities are available with
respect to the Fixed Rate Loan being requested at that time; provided, however,
(i) with respect to a Revolving Credit Loan, no Interest Period shall end later
than the Revolving Credit Maturity Date, (ii) with respect to the Term Loan, no
Interest Period shall end later than the Maturity Date, (iii) if any Interest
Period would end on a day which shall not be a Business Day, such Interest
Period shall be extended to the next succeeding Business Day, (iv) no Interest
Period in respect of a Fixed Rate Loan representing a portion of the principal
required to be paid in accordance with Section 2.04 may be selected unless the
sum of the outstanding (x) Prime Rate Loans and (y) Fixed Rate Loans for which
the relevant Interest Periods end on or prior to the date of such payment, is in
an amount which will be sufficient to make such payment, (v) interest shall
accrue from and including the first day of such Interest Period to but excluding
the date of payment of such interest and (vi) the length of Interest Periods
with respect to Fixed Rate Loans, if such Loans are available, shall be solely
in the discretion of the Bank but shall be for a minimum of fourteen (14) days
and with respect to Revolving Credit Loans only, a maximum of three hundred
sixty (360) days, and the availability of a particular Interest Period at the
time of a particular request for a Fixed Rate Loan in no way obligates the Bank
to offer a similar Interest Period with respect to Fixed Rate Loans requested on
a different occasion.
"Investment" means any stock, evidence of Debt or other security of any
Person, any loan, advance, contribution of capital, extension of credit or
commitment therefor, including without limitation the guaranty of loans made to
others (except for current trade and customer accounts receivable in the
ordinary course of business and payable in accordance with customary trade terms
in the ordinary course of business) and any purchase of (i) any security of
another Person or (ii) any business or undertaking of any Person or any
commitment or option to make any such purchase, or any other investment.
"Lender" or "Lenders" means one or more of the lenders that are, or become,
lenders under, and parties to, this Agreement.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention
12
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction to evidence any of
the foregoing.
"Loan" or Loans" means the Term Loan, the Revolving Credit Loans or all or
any of the same, including Prime Rate Loans or Fixed Rate Loans, as the context
may require.
"Loan Documents" means this Agreement, the Notes, the Guaranties and any
other document executed or delivered pursuant to this Agreement.
"Material Adverse Change" means, as to any Person, (i) a material adverse
change in the financial condition, business, operations, properties, prospects
or results of operations of such Person or (ii) any event or occurrence which
could have a material adverse effect on the ability of such Person to perform
its obligations under the Loan Documents.
"Material Subsidiary" means any direct or indirect Subsidiary of Coolbrands
which represents more than five (5%) percent of the consolidated assets or
revenues of Coolbrands.
"Maturity Date" means March 31, 2001.
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of ERISA
which covers employees of the Borrower or any ERISA Affiliate.
"Note" or "Notes" means the Term Loan Notes, the Revolving Credit Notes or
one or more of same as the context may require.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means a merger, consolidation, acquisition of stock
or assets, or other similar transaction where the Borrower or any Guarantor
acquires all or part of the business of another Person, provided that (i) the
Borrower or such Guarantor is the surviving corporate entity; (ii) the
acquisition is of more than fifty (50%) percent of the stock or assets of such
Person; (iii) the transaction has been approved by the board of directors or
other similar governing body of such Person; (iv) such Person, or the assets of
such Person, to be acquired shall be in a similar or related line of business of
the Borrower, such Guarantor or the food business; (v) the amount of Revolving
Credit Loans requested
13
by the Borrower for such acquisition shall not be in excess of $5,000,000.00;
(vi) the acquisition and the financing of such transaction shall not result in
such financing becoming a Highly Leveraged Transaction; and (vii) the Bank is
provided with such information, documents, certificates or other evidence of the
foregoing as it may reasonably request.
"Permitted Investments" means, (i) direct obligations of the United States
of America or any governmental agency thereof, or obligations guaranteed by the
United States of America, provided that such obligations mature within one year
from the date of acquisition thereof; (ii) time certificates of deposit having a
maturity of one year or less issued by any commercial bank organized and
existing under the laws of the United States or any state thereof provided that
not more than $500,000.00 shall be invested in such banks having aggregate
capital and surplus less than $100,000,000.00; (iii) money market mutual funds
having assets in excess of $2,500,000,000; (iv) commercial paper rated not less
than P-1 or A-1 or their equivalent by Moody's Investor Services, Inc. or
Standard & Poor's Corporation, respectively; (v) tax exempt securities rated
Prime 2 or better by Moody's Investor Services, Inc. or A-1 or better by
Standard & Poor's Corporation; (vi) loans or advances by the Borrower to a
Guarantor or by one Guarantor to another Guarantor; (vii) investments by any
Credit Party in the stock of, any Subsidiary (subject to compliance with Section
5.01(k) or this Agreement); (viii) stock or obligations issued in settlement of
claims of the Borrower or a Guarantor against any other Person by reason of the
bankruptcy, composition or readjustment of Debt, or reorganization of such
Person; (ix) loans or advances to employees of the Borrower, its Subsidiaries
and Affiliates in an aggregate amount outstanding at any time of not more than
$400,000.00; or (x) any other Investments not exceeding $100,000.00 in the
aggregate at any time.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, limited
liability company, joint venture or other entity or a federal, state or local
government, or a political subdivision thereof or any agency of such government
or subdivision.
"Plan" means any employee benefit plan established, maintained, or to which
contributions have been made by the Borrower or any ERISA Affiliate.
"Prime Rate" means the rate per annum announced by the Agent from time to
time as its prime rate in effect at its principal
14
office on a 360-day basis; each change in the Prime Rate shall be effective on
the date such change is announced to become effective.
"Prime Rate Loan" means a Loan bearing interest at the Prime Rate.
"Prohibited Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended from time
to time.
"Pro Rata Share" means, with respect to each Lender, its pro rata share of
the Term Loan or the Commitment, as set forth in Schedule 1.01 annexed hereto,
as the same may be modified by any assignment of all or any part of such
Lender's pro rata share.
"Required Lenders" means those Lenders having, in the aggregate, sixty six
and two-thirds (66 2/3%) percent of the Commitment.
"Regulation D" means Regulation D of the Board of Governors, as the same
may be amended and in effect from time to time.
"Regulation T" means Regulation T of the Board of Governors, as the same
may be amended and in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors, as the same
may be amended and in effect from time to time.
"Regulation X" means Regulation X of the Board of Governors, as the same
may be amended and in effect from time to time.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Revolving Credit Loans" shall have the meaning assigned to such term in
Section 2.01 of this Agreement.
"Revolving Credit Maturity Date" means June 30, 2002.
"Revolving Credit Note" means a promissory note of the Borrower payable to
the order of the Bank, in substantially the form of Exhibit B annexed hereto,
evidencing the aggregate indebtedness of the Borrower to the Bank resulting from
Revolving Credit Loans made by the Bank to the Borrower pursuant to this
Agreement.
15
"Senior Funded Debt to EBITDA Ratio" means, as to Coolbrands and its
Consolidated Subsidiaries for any period, the ratio of (i) Consolidated Senior
Funded Debt (as of the last day of such period) to (ii) Consolidated EBITDA for
such period. The Senior Funded Debt to EBITDA Ratio shall be measured and tested
at the end of each fiscal quarter and, in the case of Consolidated EBITDA, for a
period covering the four (4) fiscal quarters then ended.
"Serruya Group" means Michael Serruya, Aaron Serruya and Simon Serruya, and
members of their respective immediate families.
"Smith Group" means Richard Smith, David Smith and David Stein, and members
of their respective immediate families.
"Special Acquisition" means a Permitted Acquisition for which the amount of
Revolving Credit Loans requested by the Borrower exceeds $5,000,000.00 or which
results in the Commitment or the Loans made hereunder being classified as a
Highly Leveraged Transaction and which also meets each of the following
criteria:
(i) it shall have delivered to the Agent (x) a term sheet, acquisition
agreement or other document outlining the proposed terms and conditions of the
Special Acquisition and such other documents or agreements as the Agent may
reasonably request, (y) such financial information as the Agent may reasonably
request, including, but not limited to: (1) financial statements for the past
three (3) fiscal years for the Person to be acquired (or if such Person has not
been in existence for three (3) years, for such period of existence but not less
than one (1) fiscal year) and (2) a pro forma balance sheet and income statement
for the Borrower for a period of one (1) year following such Special Acquisition
which shall demonstrate compliance with all of the covenants of this Agreement,
and (z) a certificate from the President or Chief Financial Officer of the
Borrower certifying that the Special Acquisition shall meet all of the
conditions of this Agreement and shall not result in the Borrower failing to
meet the covenants set forth in Section 5.03; and
(ii) the Agent and the Lenders shall have approved, in their sole
discretion, such approval not to be unreasonably withheld, such Special
Acquisition. The Agent and the Lenders shall have ten (10) Business Days to
approve or disapprove such Special Acquisition after all of the information
required by (i) above shall have been delivered to the Agent.
"Subordinated Debt" means Debt of any Person, the repayment of which the
obligee has agreed in writing, on terms which have been approved by the Agent in
advance in writing, shall be subordinate
16
and junior to the rights of the Agent and the Lenders with respect to Debt owing
from such Person to the Agent and the Lenders.
"Subsidiary" means, as to any Person, any corporation, partnership, limited
liability company or joint venture whether now existing or hereafter organized
or acquired: (i) in the case of a corporation, of which a majority of the
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person or (ii) in the case of a partnership, limited
liability company or joint venture of which a majority of the partnership,
membership or other ownership interests are at the time owned by such Person
and/or one or more of its Subsidiaries.
"Term Loan" shall have the meaning assigned in Section 2.01 hereof.
"Term Loan Note" or "Term Loan Notes" means, as the context requires, one
or more of the promissory notes of the Borrower payable to the order of each
Lender, in substantially the form of Exhibit A annexed hereto, evidencing the
indebtedness of the Borrower to such Lender resulting from the Term Loan to be
made by the Lenders to the Borrower pursuant to the Agreement.
"Third Amendment" means the Third Amendment to this Agreement, dated as of
December 31, 1997.
"UCC" means the Uniform Commercial Code of the State of New York, as in
effect from time to time.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to and including".
SECTION 1.03. Accounting Terms; Construction. (a) Except as otherwise
herein specifically provided, each accounting term used herein shall have the
meaning given to it under GAAP.
(b) All references in this Agreement to "Sections" or "sub-sections" shall
be deemed, unless otherwise noted, to be references to the Sections or
sub-sections of this Agreement.
(c) All references in this Agreement to an "Exhibit" or "Exhibits" or to a
"Schedule" or "Schedules" shall be deemed, unless otherwise noted, to be
references to the Exhibits and Schedules annexed to this Agreement.
17
(d) All references to a Subsidiary shall be deemed, unless otherwise noted,
to be references to a Subsidiary of the Borrower or a Subsidiary of a Guarantor.
18
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. The Term Loan. On the date of the Third Amendment, on the
terms and conditions of this Agreement and in reliance upon the representations
and warranties set forth in this Agreement, Chase has loaned to the Borrower the
principal amount of Four Million Five Hundred Thousand ($4,500,000.00) Dollars,
and the Borrower borrowed such amount from Chase by executing and delivering to
Chase the Term Loan Note. The Term Loan, or portions thereof, shall be a Prime
Rate Loan or a Fixed Rate Loan (or a combination thereof) as the Borrower may
request subject to and in accordance with Section 2.02 hereof.
SECTION 2.02. Notice of Term Loan Designations. (a) The Borrower may elect
to designate the Term Loan (or a portion thereof) as a Prime Rate Loan or a
Fixed Rate Loan by so specifying in the irrevocable notice given pursuant to
this Section 2.02; provided, however, that each Fixed Rate Loan for any specific
Interest Period shall be in the minimum principal amount of $1,000,000.00 and in
increased integral multiples of $500,000.00.
(b) The Borrower shall give the Agent irrevocable written, telex,
telephonic (immediately confirmed in writing) or facsimile notice (i) prior to
10:00 a.m. on the day of such Loan of each election to designate the Term Loan
(or a portion thereof) as a Fixed Rate Loan (subject to availability) and (ii)
prior to 11:00 a.m. on the day of such Loan of each election to designate the
Term Loan (or a portion thereof) as a Prime Rate Loan, in each case specifying
the date (which shall be a Business Day) and the aggregate principal amount of
such Loan and, if any portion thereof is to consist of one or more Fixed Rate
Loans, the respective principal amounts and Interest Periods for each such Fixed
Rate Loan; provided that if the Borrower shall request a Fixed Rate Loan when
such Loans are not available, fail to specify the duration of the Interest
Period with regard to a requested Fixed Rate Loan or fail to specify the type of
Loan requested, the request shall be deemed to be a request for a Prime Rate
Loan.
(c) The Borrower may elect to continue Fixed Rate Loans constituting the
Term Loan from one Interest Period into a subsequent Interest Period or convert
a Prime Rate Loan into a Fixed Rate Loan (subject to availability) by giving the
Agent prior written, telex, telephonic (immediately confirmed in writing) or
facsimile irrevocable notice of its intention to do so in accordance with the
provisions of subsection (b) above. If no such election is made, or if an
election is made to continue a Fixed
19
Rate Loan at the end of its Interest Period when such Loans are not available,
such Fixed Rate Loan shall automatically convert into a Prime Rate Loan upon the
expiration of such Interest Period.
SECTION 2.03. Term Loan Note. The Term Loan shall be evidenced by the Term
Loan Note of the Borrower. The Term Loan Note shall be dated the date hereof and
shall mature on the Maturity Date at which time the entire outstanding principal
balance and all interest thereon shall be due and payable. The Term Loan Note
shall be entitled to the benefits and subject to the provisions of this
Agreement.
SECTION 2.04. Repayment of Term Loan Note. The principal balance of the
Term Loan Note shall be payable in twenty (20) quarterly installments, each due
on the first Business Day of each quarter beginning on April 1, 1996 and
continuing on the first Business Day of each calendar quarter thereafter. Each
of the first nineteen (19) such quarterly principal installments shall be in the
amount of $140,000.00 and the twentieth (20th) such quarterly principal
installment shall be in an amount equal to the then outstanding principal
balance of the Term Loan Note.
SECTION 2.05. Payment of Interest on the Term Loan Note. (a) In the case of
a Prime Rate Loan, interest shall be payable at a rate per annum (computed on
the basis of the actual number of days elapsed over a year of 360 days) equal at
all times to the Prime Rate plus one half of one (1/2%) percent. Such interest
shall be payable on each Interest Payment Date, commencing with the first
Interest Payment Date after the date of such Prime Rate Loan, on each Interest
Determination Date and on the Maturity Date. Any change in the rate of interest
on the Term Loan Note due to a change in the Prime Rate shall take effect as of
the date of such change in the Prime Rate.
(b) In the case of a Fixed Rate Loan, interest shall be payable at a rate per
annum (computed on the basis of the actual number of days elapsed over a year of
360 days) equal to the Fixed Rate. Such interest shall be payable on each
Interest Payment Date, commencing with the first Interest Payment Date after the
date of such Fixed Rate Loan, on each Interest Determination Date and on the
Maturity Date.
SECTION 2.06. Use of Proceeds. The proceeds of the Term Loan was used by
the Borrower to refinance Revolving Credit Loans outstanding on the date of the
Third Amendment. No part of the proceeds of the Term Loan may be used for any
purpose that directly or indirectly violates or is inconsistent with, the
provisions of Regulation T, U or X.
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SECTION 2.07. The Revolving Credit Loans. The Lenders agree, severally but
not jointly, on the date of this Agreement, and on the terms and conditions and
in reliance upon the representations and warranties hereinafter set forth in
this Agreement, to lend to the Borrower prior to the Revolving Credit Maturity
Date such amounts as the Borrower may request from time to time (individually, a
"Revolving Credit Loan" or collectively, the "Revolving Credit Loans"), which
amounts may be borrowed, repaid and reborrowed, provided, however, that the
aggregate amount of such Revolving Credit Loans outstanding at any one time
shall not exceed Ten Million ($10,000,000.00) Dollars (the "Commitment"), or
such lesser amount of the Commitment as may be reduced pursuant to Section 2.13
hereof.
Each Revolving Credit Loan shall be a Prime Rate Loan or a Fixed Rate Loan
(or a combination thereof) as the Borrower may request subject to and in
accordance with Section 2.08. Subject to the other provisions of this Agreement,
Revolving Credit Loans of more than one type may be outstanding at the same
time.
SECTION 2.08. Notice of Revolving Credit Loans.
The Borrower shall give the Agent irrevocable written, telex, telephonic
(immediately confirmed in writing) or facsimile notice (i) prior to 10:00 a.m.
on the day of each Revolving Credit Loan comprised in whole or in part of one or
more Fixed Rate Loans, and (ii) prior to 11:00 a.m. on the day of each Revolving
Credit Loan consisting solely of a Prime Rate Loan. Nothing herein shall require
the Agent to approve an Acquisition Loan for a Special Acquisition earlier than
within the time period set forth in the definition of "Special Acquisition".
Such notice shall specify the date of such borrowing, the amount thereof and
whether such Loan is to be (or what portion or portions thereof are to be) a
Prime Rate Loan or a Fixed Rate Loan and, if such Loan or any portion therefore
is to consist of one or more Fixed Rate Loans, the principal amounts thereof and
Interest Period or Interest Periods with respect thereto. If no election as to a
type of Loan is specified in such notice, or if no election as to the Interest
Period is specified in such notice with respect to any Fixed Rate Loan, or if a
Fixed Rate Loan is requested when such Loans are not available, then in each
such case the Borrower shall be deemed to have requested a Prime Rate Loan.
(b) The Borrower may elect, subject to the provisions of this Agreement, to
continue a Fixed Rate Loan or a portion thereof from one Interest Period into a
subsequent Interest Period by giving the Agent such notice as the Agent may, in
its sole discretion require from time to time, which notice shall be written,
telex, telephonic
21
(immediately confirmed in writing) or facsimile irrevocable notice, of its
intention to do so (subject to availability). If no such election is made, or if
an election is made to continue a Fixed Rate Loan at the end of its Interest
Period when such Loans are not available, such Fixed Rate Loan shall
automatically be converted to a Prime Rate Loan on the expiration of such
Interest Period. Such election shall be otherwise subject to the provisions of
Section 2.07(a) hereof.
SECTION 2.09. Revolving Credit Note. Each Revolving Credit Loan shall be
(i) in the case of each Prime Rate Loan in the minimum principal amount of
$100,000.00, and in increased integral multiples of $100,000.00 and (ii) in the
case of each Fixed Rate Loan in the minimum principal amount of $1,000,000.00
and in increased integral multiples of $500,000.00 (except that, if any such
Prime Rate Loan so requested shall exhaust the remaining available Commitment,
such Prime Rate Loan may be in an amount equal to the amount of the remaining
available Commitment), and shall be evidenced by the Revolving Credit Notes of
the Borrower. Each Revolving Credit Note shall be in the principal amount of
each Lender's Pro Rata Share of the Commitment, and shall mature on the
Revolving Credit Maturity Date, at which time the entire outstanding principal
balance and all interest thereon shall be due and payable. The Revolving Credit
Note shall be entitled to the benefits and subject to the provisions of this
Agreement.
At the time of the making of each Revolving Credit Loan and at the time of
each payment of principal thereon, the holder of each Revolving Credit Note is
hereby authorized by the Borrower to make a notation on the schedule annexed to
its Revolving Credit Note of the date and amount, and the type and Interest
Period of the Revolving Credit Loan or payment, as the case may be. Failure of a
Lender to make a notation with respect to any Revolving Credit Loan shall not
limit or otherwise affect the obligation of the Borrower hereunder or under such
Revolving Credit Note with respect to such Revolving Credit Loan, and any
payment of principal on a Revolving Credit Note by the Borrower shall not be
affected by the failure of a Lender to make a notation thereof on said schedule.
SECTION 2.10. Payment of Interest on the Revolving Credit Note.
(a) In the case of a Prime Rate Loan, interest shall be payable at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal at all times to the Prime Rate plus one half of one
(1/2%) percent. Such interest shall be payable on each Interest Payment Date,
commencing with the first Interest Payment Date after the date of such Prime
Rate Loan,
22
on each Interest Determination Date and on the Revolving Credit Maturity Date.
Any change in the rate of interest on the Revolving Credit Note due to a change
in the Prime Rate shall take effect as of the date of such change in the Prime
Rate.
(b) In the case of a Fixed Rate Loan, interest shall be payable at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the Fixed Rate. Such interest shall be payable on
each Interest Payment Date, commencing with the first Interest Payment Date
after the date of such Fixed Rate Loan, on each Interest Determination Date and
on the Revolving Credit Maturity Date.
SECTION 2.11. Use of Proceeds. The proceeds of the Revolving Credit Loans
shall be used by the Borrower (i) to refinance existing Debt owing from the
Borrower to the Bank under that certain Credit Agreement between the Borrower
and Manufacturers Hanover Trust Company dated as of March 27, 1990, as amended,
(ii) to finance Permitted Acquisitions and Special Acquisitions and (iii) for
working capital. No part of the proceeds of any Loan may be used for any purpose
that directly or indirectly violates or is inconsistent with, the provisions of
Regulations T, U or X.
SECTION 2.12. Commitment Fee. The Borrower agrees to pay to the Bank from
the date of this Agreement and for so long as the Commitment remains
outstanding, on the first Business Day of each calendar quarter a commitment fee
computed at the rate of one-quarter of one (1/4%) percent per annum (computed on
the basis of the actual number of days elapsed over 360 days) on the average
daily unused amount of the Commitment, such commitment fee being payable for the
calendar quarter, or part thereof, preceding the payment date.
SECTION 2.13. Reduction of Commitment. Upon at least three (3) Business
Days' written notice to the Agent, the Borrower may irrevocably elect to have
the unused Commitment terminated in whole or reduced in part provided, however,
that any such partial reduction shall be in a minimum amount of $500,000.00, or
whole multiples thereof. The Commitment, once terminated or reduced, shall not
be reinstated without the express written approval of the Agent and all of the
Lenders.
SECTION 2.14. Prepayment. (a) The Borrower shall have the right at any time
and from time to time to prepay any Prime Rate Loan, in whole or in part,
without premium or penalty on the same day on which telephonic notice is given
to the Agent (immediately confirmed in writing) of such prepayment provided,
however, that each such prepayment shall be on a Business Day and shall be in an
23
aggregate principal amount which is an integral multiple of $100,000.00.
(b) The Borrower shall have the right at any time and from time to time,
subject to the provisions hereof and of Section 2.15, to prepay any Fixed Rate
Loan, in whole or in part upon at least one (1) Business Day prior irrevocable
written notice to the Agent; provided, however, that each such prepayment shall
be on a Business Day and shall be in an aggregate principal amount which is an
integral multiple of $250,000.00.
(c) The notice of prepayment under this Section 2.14 shall set forth the
prepayment date and the principal amount of the Loan being prepaid and shall be
irrevocable and shall commit the Borrower to prepay such Loan by the amount and
on the date stated therein. All prepayments shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment. Each
prepayment under this Section 2.14 shall be applied first towards unpaid
interest on the amount being prepaid and then towards the principal in whole or
partial prepayment of Loans by the Borrower. In the absence of such
specification, amounts being prepaid shall be applied first to any Prime Rate
Loan then outstanding and then to Fixed Rate Loans in the order of the
expiration of their respective Interest Periods. In the case of the Term Loan,
all partial prepayments of Loans shall be applied to installments of principal
of the Term Loan in the inverse order of maturity.
SECTION 2.15. Reimbursement by Borrower. (a) The Borrower shall reimburse
any Lender upon such a Lender's demand for any loss incurred or to be incurred
by it in the reemployment of the funds released by any prepayment or conversion
of any Fixed Rate Loan required or permitted by this Agreement, if such Loan is
prepaid or converted (whether voluntarily or by acceleration) other than on the
last day of the Interest Period for such Loan, or if the Borrower fails to
borrow the Fixed Rate Loan (or is not able to borrow because of an Event of
Default or for any other reason hereunder) after having given the irrevocable
notice provided by Sections 2.02 or 2.08 of this Agreement. Such loss shall be
the product of (i) the difference as determined by such Lender between (x) the
rate of interest applicable to such Fixed Rate Loan being prepaid or converted
for the remainder of the Interest Period and (y) the rate of interest payable on
United States Treasury obligations in an amount and with a maturity similar to
such Loan or Loans times (ii) the aggregate amount of principal so prepaid or
converted times (iii) the number of days remaining in the applicable Interest
Period divided by 360.
24
SECTION 2.16. Increased Costs. If, after the date of this Agreement, the
adoption of, or any change in, any applicable law, regulation, rule or
directive, or any interpretation thereof by any authority charged with the
administration or interpretation thereof:
(i) subjects any Lender to any tax with respect to its Commitment, its
Notes or on any amount paid or to be paid under or pursuant to this Agreement or
its Notes (other than any tax measured by or based upon the overall net income
of such Lender);
(ii) changes the basis of taxation of payments to such Lender of any
amounts payable hereunder (other than any tax measured by or based upon the
overall net income of such Lender);
(iii) imposes, modifies or deems applicable any reserve, capital
adequacy or deposit requirements against any assets held by, deposits with or
for the account of, or loans made by, such Lender; or
(iv) imposes on such Lender any other condition affecting its
Commitment, its Notes or this Agreement; and the result of any of the foregoing
is to increase the cost to such lender of maintaining this Agreement or its
Commitment or making the Loans, or to reduce the amount of any payment (whether
of principal, interest or otherwise) receivable by such Lender or to require
such Lender to make any payment on or calculated by reference to the gross
amount of any sum received by it, in each case by an amount which such Lender in
its sole judgment deems material, then and in any such case:
(a) such Lender shall promptly advise the Agent and the Borrower of
such event, together with the date thereof, the amount of such increased
cost or reduction or payment and the way in which such amount has been
calculated; and
(b) the Borrower shall pay to such Lender, within ten (10) days after
the advice referred to in subsection (a) hereinabove, such an amount or
amounts as will compensate such Lender for such additional cost, reduction
or payment for so long as the same shall remain in effect.
The determination of each lender as to additional amounts payable
pursuant to this Section 2.16 shall be conclusive evidence of such amounts
absent manifest error.
SECTION 2.17. Capital Adequacy. If any Lender shall have determined that
the applicability of any law, rule, regulation or
25
guideline, or the adoption after the date hereof of any other law, rule,
regulation or guideline regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank (or any
lending office of such Lender) or such Lender's holding company 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 on such Lender's capital or on the capital
of such Lender's holding company, if any, as a consequence of its obligations
hereunder to a level below that which such Lender or such Lender's holding
company could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy) by an amount deemed by such
Lender to be material, then from time to time the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
SECTION 2.18. Change in Legality. (a) Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if any change after the date
hereof in law, rule, regulation, guideline or order, or in the interpretation
thereof by any governmental authority charged with the administration thereof,
shall make it unlawful for any Lender to make or maintain any Fixed Rate Loan or
to give effect to its obligations as contemplated hereby with respect to a Fixed
Rate Loan, then, by written notice to the Agent and the Borrower, such Lender
may:
(i) declare that Fixed Rate Loans will not thereafter be made by such
Lender hereunder, whereupon the Borrower shall be prohibited from
requesting such Fixed Rate Loans from such Lender hereunder unless such
declaration is subsequently withdrawn; and
(ii) require that, subject to the provisions of Section 2.15, all
outstanding Fixed Rate Loans made by such Lender be converted to a Prime
Rate Loan, whereupon all of such Fixed Rate Loans shall be automatically
converted to a Prime Rate Loan as of the effective date of such notice as
provided in paragraph (b) below.
(b) For purposes of this Section 2.18, a notice to the Agent and the
Borrower by a Lender pursuant to paragraph (a) above shall be effective, for the
purposes of paragraph (a) above, if
26
lawful, and if any Fixed Rate Loans shall then be outstanding, on the last day
of the then current Interest Period; otherwise, such notice shall be effective
on the date of receipt by the Borrower.
SECTION 2.19. Indemnity. The Borrower will indemnify the Agent and each
Lender against any loss or expense which the Agent or any Lender may sustain or
incur as a consequence of any default in payment or prepayment of the principal
amount of any Loan or any part thereof or interest accrued thereon, as and when
due and payable (at the due date thereof, by notice of prepayment or otherwise),
or the occurrence of any Event of Default, including but not limited to any loss
or expense sustained or incurred in liquidating or employing deposits from third
parties acquired to affect or maintain such Loan or any part thereof. When
claiming under this Section 2.19, the Agent or any Lender shall provide to the
Borrower a statement, signed by an officer of the Agent or such Lender,
explaining the amount of any such loss or expense (including the calculation of
such amount), which statement shall, in the absence of manifest error, be
conclusive with respect to the parties hereto.
SECTION 2.20. Change in LIBOR; Availability of Rates. In the event, and on
each occasion, that, on the day the interest rate for any Fixed Rate Loan is to
be determined, the Agent shall have determined (which determination, absent
manifest error, shall be conclusive and binding upon the Borrower) that
reasonable means do not exist for ascertaining the rate of interest to be
applied to such Fixed Rate Loan, Loans based on such rate (or rates) shall be
unavailable. The Agent shall, as soon as practicable thereafter, given written,
telex or telephonic notice of such determination of unavailability to the
Borrower and the Lenders. Any request by the Borrower for an unavailable Fixed
Rate Loan shall be deemed to be a request for a Prime Rate Loan.
SECTION 2.21. Authorization to Debit Borrower's Account. The Agent is
hereby authorized to debit the Borrower's account maintained with the Agent for
(i) all scheduled payments of principal and/or interest under the Notes, and
(ii) the commitment fee and all other amounts due hereunder; all such debits to
be made on the days such payments are due in accordance with the terms hereof.
SECTION 2.22. Late Charges, Default Interest. (a) If the Borrower shall
default in the payment of any principal installment of or interest on any Loan
or any other amount becoming due hereunder, the Borrower shall pay interest, to
the extent permitted by law, on such defaulted amount up to the date of actual
payment (after as well as before judgment) at a rate per annum (computed on
27
the basis of the actual number of days elapsed over a year of 360 days) equal to
two (2%) percent in excess of the interest rate otherwise in effect with respect
to the type of Loan in connection with which the required payments have not been
made.
(b) Upon the occurrence and during the continuation of an Event of Default,
the Borrower shall pay interest on all amounts owing under the Notes and this
Agreement (after as well as before judgment) at a rate per annum (computed on
the basis of the actual number of days elapsed over a year of 360 days) equal to
two (2%) percent in excess of the interest rate otherwise in effect hereunder.
SECTION 2.23. Payments. All payments by the Borrower hereunder or under the
Notes shall be made in U.S. dollars in immediately available funds at the office
of the Bank by 12:00 noon, New York City time on the date on which such payment
shall be due. Interest on the Notes shall accrue from and including the date of
each Loan to but excluding the date on which such Loan is paid in full or
refinanced with a Loan of a different type.
SECTION 2.24. Interest Adjustments. (a) If the provisions of this Agreement
or the Notes would at any time otherwise require payment by the Borrower to the
Lenders of any amount of interest in excess of the maximum amount then permitted
by applicable law the interest payments shall be reduced to the extent necessary
so that the Lenders shall not receive interest in excess of such maximum amount.
To the extent that, pursuant to the foregoing sentence, the Lenders shall
receive interest payments hereunder or under the Notes in an amount less than
the amount otherwise provided, such deficit (hereinafter called the "Interest
Deficit") will cumulate and will be carried forward (without interest) until the
termination of this Agreement. Interest otherwise payable to the Lenders
hereunder and under the Notes for any subsequent period shall be increased by
such maximum amount of the Interest Deficit that may be so added without causing
the Lenders to receive interest in excess of the maximum amount then permitted
by applicable law.
(b) The amount of the Interest Deficit shall be treated as a prepayment
penalty and paid in full at the time of any optional prepayment by the Borrower
to the Bank of the Term Loan. The amount of the Interest Deficit relating to the
Term Loan Note or the Revolving Credit Note at the time of any complete payment
of such Notes at that time outstanding (other than an optional prepayment
thereof) shall be cancelled and not paid.
(THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK)
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ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Making of the Term Loan and the
Initial Revolving Credit Loan. The obligation of the Lenders to make the Term
Loan and the initial Revolving Credit Loan contemplated by this Agreement is
subject to the condition precedent that the Agent and the Lenders shall have
received from the Borrower and the Guarantors on or before the date of this
Agreement the following, each dated such day, in form and substance satisfactory
to the Bank and its counsel:
(a) The Term Loan Note and the Revolving Credit Note, each duly executed
and payable to the order of each Lender.
(b) Certified (as of the date of this Agreement) copies of the resolutions
of the Board of Directors of the Borrower authorizing the Loans and authorizing
and approving this Agreement and the other Loan Documents and the execution,
delivery and performance thereof and certified copies of all documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to this Agreement and the other Loan Documents.
(c) Certified (as of the date of this Agreement) copies of the resolutions
of the Boards of Directors and the shareholders of each of the Guarantors,
authorizing and approving this Agreement, their Guaranties and any other Loan
Document applicable to the Guarantors, and the execution, delivery and
performance thereof and certified copies of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Agreement, their Guaranties and the other Loan Documents.
(d) A certificate of the Secretary or an Assistant Secretary (attested to
by another officer) of the Borrower certifying: (i) the names and true
signatures of the officer or officers of the Borrower authorized to sign this
Agreement, the Notes and the other Loan Documents to be delivered hereunder on
behalf of the Borrower; and (ii) a copy of the Borrower's by-laws as complete
and correct on the date of this Agreement.
(e) A Certificate of the Secretary or an Assistant Secretary (attested to
by another officer) of each of the Guarantors certifying (i) the names and true
signatures of the officer or officers of the Guarantors authorized to sign this
Agreement, their Guaranties and any other Loan Documents to be delivered
hereunder on behalf of the Guarantors; (ii) a copy of each of the Guarantors'
29
by-laws as complete and correct on the date of this Agreement; and (iii) the
stock ownership of each Guarantor.
(f) Copies of the certificate of incorporation and all amendments thereto
of the Borrower and the Guarantors certified in each case by the Secretary of
State (or equivalent officer) of the state of incorporation of each of the
Borrower and the Guarantors and a certificate of existence and good standing
with respect to the Borrower and the Guarantors from the Secretary of State (or
equivalent officer) of the state of incorporation of the Borrower and the
Guarantors) and from the Secretary of State (or equivalent officer) of any state
in which the Borrower or the Guarantors are authorized to do business.
(g) An opinion of Tenzer, Greenblatt, Fallon & Kaplan, Esqs., counsel for
the Borrower and the Guarantors as to certain matters referred to in Article IV
hereof and as to such other matters as the Bank or its counsel may reasonably
request.
(h) From each of the Guarantors, an executed Guaranty.
(i) From the Borrower, a copy of the consolidated balance sheet and income
statement for the Borrower and its Consolidated Affiliates for the six month
period ended June 28, 1997, together with all supporting schedules and certified
by the Borrower's Chief Financial Officer, the review of which shall be
satisfactory to the Bank in all respects.
(j) From the Borrower, a copy of the balance sheet and income statement for
the Borrower only for the six month period ended June 28, 1997, together with
all supporting schedules and certified by the Borrower's Chief Financial
Officer, the review of which shall be satisfactory to the Bank in all respects.
(k) From the Borrower, written notice to terminate the Credit Agreement
between the Borrower and Manufacturers Hanover Trust Company dated as of March
27, 1990, as amended.
(l) The following statements shall be true and the Agent shall have
received a certificate signed by the President or Chief Financial Officer of the
Borrower and each Guarantor dated the date hereof, stating that:
(a) The representations and warranties contained in Article IV of this
Agreement and in the Guaranties are true and correct on and as of such date; and
30
(b) No Default or Event of Default has occurred and is continuing, or
would result from the making of the Term Loan or the initial Revolving Credit
Loan.
(m) All legal matters incident to this Agreement and the Loan transactions
contemplated hereby shall be satisfactory to Cullen and Dykman, counsel to the
Bank.
(n) Receipt by the Agent of such other approvals, opinions or documents as
may be required or as the Bank or its counsel may reasonably request.
(o) Receipt by the Agent of all fees and expenses of the Agent incurred in
connection with this Agreement, including, without limitation, the reasonable
fees and expenses of the Agent's counsel.
SECTION 3.02. Conditions Precedent to All Revolving Credit Loans. The
obligations of the Lenders to make each Revolving Credit Loan (including the
initial Revolving Credit Loan) shall be subject to the further condition
precedent that on the date of such Revolving Credit Loan:
(1) The following statements shall be true and correct and, if requested,
the Agent shall have received a certificate signed by the President or the Chief
Financial Officer of the Borrower and each Guarantor dated the date of such
Revolving Credit Loan, stating that:
(a) The representations and warranties contained in Article IV of this
Agreement and in the Guaranties are true and correct on and as of such date as
though made on and as of such date; and
(b) No Default or Event of Default has occurred and is continuing, or
would result from such Revolving Credit Loan. Each request for a Revolving
Credit Loan shall be deemed a certification by the Borrower that the statements
in (a) and (b) are true and correct on the date of such Loan.
(2) The Agent shall have received such other approvals, opinions or
documents as may be required or as the Bank may reasonably request.
(3) If the requested Revolving Credit Loan is an Acquisition Loan for a
Permitted Acquisition or a Special Acquisition, the Agent shall have received
the information set forth in the
31
definitions of "Permitted Acquisition" or "Special Acquisition" as applicable.
(THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK)
32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. On the date hereof and on
each date that the Borrower requests a Revolving Credit Loan, the Borrower and
each of the Guarantors represent and warrant as follows:
(a) Subsidiaries. On the date hereof and on each date that the Borrower
requests a Revolving Credit Loan, the only Material Subsidiaries of the Borrower
or a Guarantor are those set forth on Schedule 4.01(a) annexed hereto, which
Schedule accurately sets forth with respect to each such Subsidiary, its name
and address, any other addresses at which it conducts business, its state of
incorporation and each other jurisdiction in which it is qualified to do
business and the identity and share holdings of its stockholders. Except as set
forth on Schedule 4.01(a), all of the issued and outstanding shares of each
Material Subsidiary which are owned by the Borrower or a Guarantor are owned by
the Borrower or such Guarantor free and clear of any mortgage, pledge, lien or
encumbrance. Except for options and similar grants given to employees, officers,
directors and advisors in the ordinary course of business, and except as
disclosed in the audited consolidated financial statements for Coolbrands and
its Consolidated Subsidiaries for the year ended August 31, 1999, there are not
outstanding any warrants, options, contracts or commitments of any kind
entitling any Person to redeem, purchase or otherwise acquire any shares of
common or capital stock or other equity interest of the Borrower, any Guarantor
or any Material Subsidiary of the Borrower or a Guarantor, nor are there
outstanding any securities which are convertible into or exchangeable for any
shares of the common or capital stock of the Borrower, any Guarantor or any
Material Subsidiary of the Borrower or a Guarantor.
(b) Organization. The Borrower and each Guarantor are each a corporation
duly incorporated, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and each has the corporate power to
own its assets and to transact the business in which it is presently engaged and
is duly qualified and is in good standing in all other jurisdictions where the
failure to so qualify or remain in good standing could result in a Material
Adverse Change in the Borrower or a Guarantor.
(c) Due Execution, etc. The execution, delivery and performance by the
Borrower and each Guarantor of the Loan Documents to which they are a party are
within the Borrower's and
33
the Guarantors' corporate power and have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval of
the stockholders of the Borrower or Guarantors other than those which have been
obtained; (ii) do not contravene the Borrower's or any of the Guarantors'
certificates of incorporation, charters or by-laws; (iii) violate any provision
of or any law, rule, regulation, contractual restriction, order, writ, judgment,
injunction, or decree, determination or award binding on or affecting the
Borrower or any Guarantor; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement, or any other agreement, lease
or instrument to which the Borrower or any Guarantor is a party or by which it
or its properties may be bound or affected; and (v) result in, or require, the
creation or imposition of any Lien upon or with respect to any of the properties
now owned or hereafter acquired by the Borrower or any Guarantor.
(d) No Authorization, etc. No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the Borrower or
any Guarantor of any Loan Document to which it is a party, except
authorizations, approvals, actions, notices or filings which have been obtained,
taken or made, as the case may be.
(e) Validity of Loan Documents. The Loan Documents when delivered hereunder
will have been duly executed and delivered on behalf of the Borrower and each
Guarantor, as the case may be, and will be legal, valid and binding obligations
of the Borrower and each Guarantor, as the case may be, enforceable against the
Borrower or such Guarantor in accordance with their respective terms.
(f) Financial Statements. The consolidated financial statements of
Coolbrands and its Consolidated Subsidiaries (other than EP) for the fiscal year
ended August 31, 1999, and for the nine (9) month period ended May 31, 2000,
copies of which have been furnished to the Bank, fairly present the financial
condition of Coolbrands and its Consolidated Subsidiaries as at such dates and
the results of operations of Coolbrands and its Consolidated Subsidiaries for
the periods ended on such date, all in accordance with GAAP, and since August
31, 1999 there has been (i) no material increase in the liabilities of any of
Coolbrands and its Consolidated Subsidiaries other than as disclosed in the
financial statements of Coolbrands and its Consolidated Subsidiaries for the
third fiscal quarter of 2000 and (ii) except as provided in Schedule 4.01(f), no
Material Adverse Change in any of the Credit Parties.
34
(g) Litigation. Except as set forth in Schedule 4.01(g) or in consolidated
and consolidating financial statements of Coolbrands and its Consolidated
Subsidiaries for the fiscal quarter ended May 31, 2000, there is no pending or
threatened action, proceeding or investigation affecting the Borrower, any
Guarantor or any Subsidiary, before any court, governmental agency or
arbitrator, which may either in one case or in the aggregate, result in a
Material Adverse Change in the Borrower, any Guarantor or any Subsidiary.
(h) Tax Returns. The Borrower and each Guarantor have filed all federal,
state and local tax returns required to be filed and have paid all taxes,
assessments and governmental charges and levies that are reflected on such
returns as due, including interest and penalties, provided that neither
Integrated nor Yogen Fruz has filed its consolidated federal or state income tax
returns for the fiscal year ended August 31, 1999, which will be filed not later
than October 31, 2000, and the Borrower represents to the Agent and the Lenders
that any unpaid taxes, interest and penalties not accrued for on the August 31,
1999 financial statements will be less than $25,000.00, in the aggregate.
(i) Licenses, etc. The Borrower, each Guarantor and each Subsidiary own, or
are taking appropriate actions to secure the ownership of (and believe in good
faith that, prior to obtaining such ownership, they are entitled to use) or are
licensed to use all trademarks, tradenames, copyrights, technology, know-how and
processes (the "Intellectual Property") that, in the aggregate, are necessary
for the conduct of their business as currently conducted except for those of
which the failure to own or license could not have a Material Adverse Effect on
the Borrower, such Guarantor or such Subsidiary. To the best of the Borrower's
and the Guarantors' knowledge, no claim is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Borrower or the
Guarantors know of any valid basis for any such claim other than claims which,
if adversely determined, would not have a Material Adverse Effect on the
Borrower, a Guarantor or such Subsidiary. The use of such Intellectual Property
does not infringe on the rights of any Person, except for such claims and
infringements that, in the aggregate, do not have a Material Adverse Effect on
the Borrower, a Guarantor or such Subsidiary.
(j) No Burdensome Agreement. Neither the Borrower nor any Guarantor is a
party to any indenture, loan or credit agreement or any other agreement, lease
or instrument or subject to any charter or corporate restriction which could
result in a Material Adverse
35
Change in the Borrower or any Guarantor and neither the Borrower nor any
Guarantor is in default of any such agreement.
(k) Margin Credit. The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation T, U or X), and no proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock or in any other way which will cause
the Borrower to violate the provisions of Regulations T, U or X.
(l) Compliance with Law. The Borrower, each Guarantor and each Subsidiary
are in all material respects in compliance with all federal and state laws and
regulations in all jurisdictions where the failure to comply with such laws or
regulations could result in a Material Adverse Change in the Borrower, any of
the Guarantors or any Subsidiary.
(m) ERISA. The Borrower, each Guarantor, each Subsidiary and each ERISA
Affiliate are in compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction has
occurred and is continuing with respect to any Plan; no notice of intent to
terminate a Plan has been filed nor has any Plan been terminated; no
circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate, a Plan, nor has the PBGC instituted any such proceedings;
neither the Borrower, any Guarantor, any Subsidiary, nor any ERISA Affiliate has
completely or partially withdrawn under Sections 4201 or 4204 of ERISA from a
Multiemployer Plan; the Borrower, each Guarantor, each Subsidiary and each ERISA
Affiliate have met their minimum funding requirements under ERISA with respect
to all of their Plans and the present fair market value of all Plan assets
exceeds the present value of all vested benefits under each Plan, as determined
on the most recent valuation date of the Plan in accordance with the provisions
of ERISA for calculating the potential liability of the Borrower, any Guarantor,
any Subsidiary or any ERISA Affiliate to PBGC or the Plan under Title IV of
ERISA; and neither the Borrower, any Guarantor, any Subsidiary nor any ERISA
Affiliate has incurred any liability to the PBGC under ERISA.
(n) Hazardous Materials. Except as set forth on Schedule 4.01(n), the
Borrower, each Guarantor and each Subsidiary are in compliance in all material
respects with all federal, state or local laws, ordinances, rules, regulations
or policies governing Hazardous Materials and neither the Borrower, any
Guarantor nor any
36
Subsidiary has used Hazardous Materials on, from, or affecting any property now
owned or occupied by the Borrower, any Guarantor or any Subsidiary in any manner
which violates federal, state or local laws, ordinances, rules, regulations or
policies governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials, and that to
the best of the Borrower's, Guarantors' and Subsidiaries' knowledge, no prior
owner of any such property or any tenant, subtenant, prior tenant or prior
subtenant have used Hazardous Materials on, from or affecting such property in
any manner which violates federal, state or local laws, ordinances, rules,
regulations, or policies governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of Hazardous
Materials.
(o) Use of Proceeds. The proceeds of the Term Loan and the Revolving Credit
Loans shall be used exclusively for the purposes set forth in Section 2.06 and
2.11 hereof.
(p) Title to Assets; Liens. The Borrower and the Guarantors have good title
to the properties and assets used in connection with their respective business
and such properties and assets are not subject to any Lien other than those
described in Section 5.02(a) hereof.
(q) Casualty. Neither the business nor the properties of the Borrower, any
Guarantor or any Subsidiary are affected by any fire, explosion, accident,
strike, hail, earthquake, embargo, act of God or of the public enemy, or other
casualty (whether or not covered by insurance), which could result in a Material
Adverse Change in the Borrower, any Guarantor or any Subsidiary.
(r) Financial Advantage. The Guarantors acknowledge they have derived or
expect to derive a financial or other advantage from the Loans obtained by the
Borrower from the Bank.
(s) Credit Agreements. Schedule 4.01(s) is a complete and correct list of
all credit agreements, indentures, purchase agreements, guaranties, Capital
Leases, and other investments, agreements and arrangements presently in effect
providing for or relating to extensions of credit (including agreements and
arrangements for the issuance of letters of credit or for acceptance financing)
in respect of which the Borrower or any Guarantor is in any manner directly or
contingently obligated, and the maximum principal or face amounts of the credit
in question, outstanding or to be outstanding, are correctly stated, and all
Liens of any nature given or agreed to be given as security therefor are
correctly described or indicated in such Schedule.
37
(THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK)
38
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any amount shall remain
outstanding under the Term Loan Notes or the Revolving Credit Notes, or so long
as the Commitment shall remain in effect, the Borrower and each of the
Guarantors will, and will cause each Subsidiary to, unless the Agent and the
Required Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders, where the failure to so comply
could result in a Material Adverse Change in the Borrower, a Guarantor or any
Subsidiary.
(b) Reporting Requirements. Furnish to the Agent and the Lenders: (i)
Annual Financial Statements. As soon as available and in any event not later
than two (2) weeks after submission to the Toronto Stock Exchange or any other
Canadian regulatory agency or authority, a copy of the audited consolidated, and
management prepared consolidating, financial statements of Coolbrands and its
Consolidated Subsidiaries for each fiscal year, including balance sheets with
related statements of income and retained earnings and statements of cash flows,
all in reasonable detail and setting forth in comparative form the figures for
the previous fiscal year, together with an unqualified opinion on such
consolidated statements, prepared by independent certified public accountants
selected by Coolbrands and satisfactory to the Agent, all such financial
statements to be prepared in accordance with GAAP. All financial reporting shall
be made to the Agent and the Lenders in Canadian dollars and Coolbrands shall
provide the Agent with the conversion rates used and the method of conversion
used.
(ii) Quarterly Financial Statements. As soon as available and in any
event not later than two (2) weeks after submission to the Toronto Stock
Exchange or any other Canadian regulatory agency or authority, a copy of the
consolidated and consolidating financial statements of Coolbrands and its
Consolidated Subsidiaries for each of the first three fiscal quarters of each
fiscal year, including a balance sheet with related statements of income and
retained earnings and a statement of cash flows, all in reasonable detail and,
with respect to the consolidated statements only, setting forth in comparative
form the figures for the comparable quarter for the previous fiscal year,
certified by the Chief Financial Officer of Coolbrands, all such financial
statements to be prepared in accordance with GAAP. All financial reporting shall
be made to the Agent and the Lenders in
39
Canadian dollars and Coolbrands shall provide the Agent with the conversion
rates used and the method of conversion used.
(iii) Management Letters. Promptly upon receipt thereof, copies of any
reports submitted to the Borrower or any Guarantor by independent certified
public accountants in connection with examination of the financial statements of
the Borrower and each Guarantor made by such accountants.
(iv) Certificate of No Default. Simultaneously with the delivery of
the financial statements referred to in Section 5.01(b)(i) and (ii), a
certificate of the President or the Chief Financial Officer of Coolbrands and
the Borrower, (1) certifying that no Default or Event of Default has occurred
and is continuing, or if a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto; and (2) with computations
demonstrating compliance with the covenants contained in Section 5.03.
(v) Accountant's Certificate. Simultaneously with the delivery of the
annual financial statements referred to in Section 5.01(b)(i), a certificate of
the independent certified public accountants who audited such statements to the
effect that, in making the examination necessary for the audit of such
statements, they have obtained no knowledge of any condition or event which
constitutes a Default or Event of Default, or if such accountants shall have
obtained knowledge of any such condition or event, they shall specify in such
certificate each such condition or event of which they have knowledge and the
nature and status thereof.
(vi) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Borrower, any Guarantor or any Subsidiary which seeks
recovery against the Borrower, a Guarantor or a Subsidiary (i) in an amount in
excess of $250,000.00 or (ii) if determined adversely to the Borrower, any
Guarantor or any such Subsidiary could result in a Material Adverse Change in
the Borrower, any Guarantor or any such Subsidiary and notice of any material
changes in any such proceedings previously reported to the Agent.
(vii) Notice of Defaults and Events of Default. As soon as possible
and in any event within five (5) days after the occurrence of each Default or
Event of Default, a written notice setting forth the details of such Default or
Event of Default and
40
the action which is proposed to be taken by the Borrower with respect thereto.
(viii) ERISA Reports. Promptly after the filing or receiving thereof,
copies of all reports, including annual reports, and notices which the Borrower,
any Guarantor or any Subsidiary, files with or receives from the PBGC or the
U.S. Department of Labor under ERISA; and as soon as possible after the Borrower
or any Guarantor knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the PBGC or
the Borrower, any Guarantor or any such Subsidiary has instituted or will
institute proceedings under Title IV of ERISA to terminate any Plan, the
Borrower or such Guarantor will deliver to the Agent a certificate of the
President or the Chief Financial Officer of the Borrower or such Guarantor
setting forth details as to such Reportable Event or Prohibited Transaction or
Plan termination and the action the Borrower or such Guarantor proposes to take
with respect thereto.
(ix) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party pursuant
to the terms of any indenture, loan, or credit or similar agreement and not
otherwise required to be furnished to the Agent pursuant to any other clause of
this Section 5.01(b).
(x) Proxy Statements, Etc. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports which
the Borrower or any Guarantor sends to its stockholders, and copies of all
regular, periodic, and special reports, and all registration statements which
the Borrower or any Guarantor files with the Toronto Stock Exchange or any other
Canadian regulatory agency or authority which may be substituted therefor, or
with any United States national securities exchange.
(xi) Material Adverse Change. Promptly upon the occurrence thereof,
notify the Agent of any Material Adverse Change in the Borrower, any Guarantor
or any Subsidiary.
(xii) Environmental Notices. Promptly after the receipt thereof, a
copy of any claim, summons, charge or other notice to a Borrower, a Guarantor or
any Subsidiary of a Borrower or a Guarantor regarding compliance (or failure to
comply) with any federal, state or local laws governing Hazardous Materials.
(xiii) Notice of Subsidiaries. Promptly after any Person becomes a
Material Subsidiary of a Borrower or a Guarantor, notice to the Agent and the
Lenders of such Material Subsidiary.
41
(xiv) General Information. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower, any Guarantor
or any Subsidiary as the Agent may from time to time reasonably request.
(c) Taxes; Claims. Pay and discharge all taxes, assessments and
governmental charges and all other charges and claims by other Persons upon it
or them, its or their income and its or their properties prior to the dates on
which such amounts are due or on which penalties are attached thereto, unless
and only to the extent that (i) such taxes or other claims shall be contested in
good faith and by appropriate proceedings by the Borrower, any Guarantor or any
Subsidiary, as the case may be, and (ii) there be adequate reserves therefor in
accordance with GAAP entered on the books of the Borrower, any Guarantor or any
Subsidiary.
(d) Corporate Existence. Preserve and maintain their corporate existence
and good standing in the jurisdiction of their incorporation and the rights,
privileges and franchises of the Borrower, each Guarantor and each Subsidiary in
each case where failure to so preserve or maintain could result in a Material
Adverse Change in the Borrower, such Guarantor or such Subsidiary.
(e) Maintenance of Properties and Insurance. (i) Keep the respective
properties and assets (tangible or intangible) that are useful and necessary in
its business, in good working order and condition, reasonable wear and tear
excepted; and (ii) maintain, and cause any Subsidiaries to maintain, insurance
with financially sound and reputable insurance companies or associations in such
amounts and covering such risks as are usually carried by companies engaged in
similar businesses and owning properties doing business in the same general
areas in which the Borrower, any Guarantors and any Subsidiaries operate.
(f) Books of Record and Account. Keep and cause any Subsidiaries to keep,
adequate records and proper books of record and account in which complete
entries will be made in a manner to enable the preparation of financial
statements in accordance with GAAP, reflecting all financial transactions of the
Borrower, the Guarantors and any Subsidiaries.
(g) Visitation. At any reasonable time, and from time to time, on
reasonable notice to the Borrower or an applicable Guarantor, permit the Agent
or any agents or representatives thereof, to examine and make copies of and
abstracts from the books and records of, and visit the properties of, the
Borrower or any Guarantor and to discuss the affairs, finances and accounts of
the Borrower or any Guarantor with any of the respective officers or
42
directors of the Borrower or such Guarantor or the Borrower's or such
Guarantor's independent accountants.
(h) Performance and Compliance with Other Agreements. Perform and comply
with each of the provisions of each and every agreement the failure to perform
or comply with which could result in a Material Adverse Change in the Borrower,
any Guarantor or any Subsidiary.
(i) Pension Funding. Comply with the following and cause each ERISA
Affiliate of the Borrower, any Guarantor or any Subsidiary to comply with the
following:
(i) engage solely in transactions which would not subject any of such
entities to either a civil penalty assessed pursuant to Section 502(i) of ERISA
or a tax imposed by Section 4975 of the Internal Revenue Code in either case in
an amount in excess of $25,000.00;
(ii) make full payment when due of all amounts which, under the
provisions of any Plan or ERISA, the Borrower, any Guarantor, any Subsidiary or
any ERISA Affiliate is required to pay as contributions thereto;
(iii) all applicable provisions of the Internal Revenue Code and the
regulations promulgated thereunder, including but not limited to Section 412
thereof, and all applicable rules, regulations and interpretations of the
Accounting Principles Board and the Financial Accounting Standards Board;
(iv) not fail to make any payments in an aggregate amount greater than
$25,000.00 to any Multiemployer Plan that the Borrower, any Guarantor, any
Subsidiary or any ERISA Affiliate may be required to make under any agreement
relating to such Multiemployer Plan, or any law pertaining thereto; or
(v) not take any action regarding any Plan which could result in the
occurrence of a Prohibited Transaction.
(j) Licenses. Maintain at all times all licenses or permits necessary to
the conduct of its business or as may be required by any governmental agency or
instrumentality thereof where the failure to obtain or maintain such licenses or
permits could result in a Material Adverse Change in the Borrower, any Guarantor
or any Subsidiary.
(k) Subsidiaries. Notify the Agent of the formation, acquisition, merger or
dissolution of any Material Subsidiary (or
43
of any existing Subsidiary becoming a Material Subsidiary) and cause any direct,
wholly owned Material Subsidiary of the Borrower or any Guarantor formed or
becoming such after the date of this Agreement to become a Guarantor of all
Debts and other obligations of the Borrower under this Agreement and become a
party to this Agreement.
(l) Intentionally Omitted.
(l) Eskimo. Not later than ten (10) days after the merger of Eskimo Pie
Corporation ("Eskimo") into EP, cause Eskimo to (i) execute a joinder agreement
pursuant to which Eskimo becomes a party to, and bound by the provisions of this
Agreement, (ii) executes a Guaranty and (iii) delivers to the Agent copies of
the documentation referred to in Section 3.01(c), (e), (f) and (h).
SECTION 5.02. Negative Covenants. So long as any amount shall remain
outstanding under the Term Loan Notes or the Revolving Credit Notes, or so long
as the Commitment shall remain in effect, neither the Borrower nor any of the
Guarantors will, nor will they permit any Subsidiary to, without the written
consent of the Agent and the Required Lenders:
(a) Liens, Etc. Create, incur, assume or suffer to exist, any Lien, upon or
with respect to any of its properties, now owned or hereafter acquired, except:
(i) Liens in favor of the Agent as a lender;
(ii) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(iii) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due, or which are removed within twenty (20) days from the attachment of
such Lien, or which are being contested in good faith by appropriate proceedings
and for which appropriate reserves have been established;
(iv) Liens under workers' compensation, unemployment insurance, Social
Security, or similar legislation;
(v) Liens, deposits, or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement),
44
public or statutory obligations, surety, stay, appeal, indemnity, performance or
other similar bonds, or other similar obligations arising in the ordinary course
of business;
(vi) Liens described in Schedule 5.02(a), provided that no such Liens
shall be renewed, extended or refinanced; and
(vii) Judgment and other similar Liens arising in connection with
court proceedings (other than those described in Section 6.01(f));
(viii) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
Borrower's, a Guarantor's or a Subsidiary's occupation, use and enjoyment of the
property or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto; and
(ix) Purchase money Liens on any property hereafter acquired or the
assumption of any Lien on property existing at the time of such acquisition, or
a Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease, provided that:
(1) Any property subject to any of the foregoing is acquired by
the Borrower, any Guarantor or any Subsidiary in the ordinary course of its
respective business and the Lien on any such property is created
contemporaneously with, or is in existence at the time of, such acquisition;
(2) The obligation secured by any Lien so created, assumed, or
existing shall not exceed 100% of lesser of cost or fair market value of the
property acquired as of the time of the Borrower, any Guarantor or any
Subsidiary acquiring the same;
(3) Each such Lien shall attach only to the property so acquired
and fixed improvements thereon; and
(4) The obligation secured by such Lien is permitted by the
provisions of Section 5.02(b) and the related expenditure is permitted by the
provisions of Section 5.03(a).
(b) Debt. Create, incur, assume, or suffer to exist, any Debt, except:
(i) Debt of the Borrower under this Agreement or the Notes or any
other Debt owing from the Borrower or a Guarantor to the Agent as a lender;
45
(ii) Debt described in Schedule 5.02(b), provided that no such Debt
shall be renewed, extended or refinanced;
(iii) Subordinated Debt;
(iv) Accounts payable to trade creditors for goods or services and
current operating liabilities (other than for borrowed money), in each case
incurred in the ordinary course of business and paid within the specified time,
unless contested in good faith and by appropriate proceedings;
(v) Debt incurred in connection with Permitted Acquisitions or a
Special Acquisition, provided such Debt (1) does not cause the Borrower to
violate (on a pro-forma basis, after giving effect to such Permitted Acquisition
or Special Acquisition) any covenant in Section 5.03, (2) result in the Loans or
the subject Acquisition becoming a Highly Leveraged Transaction or (3) otherwise
result in a Default or Event of Default;
(vi) Subordinated Debt between the Borrower and a Guarantor or between
Guarantors; and
(vii) Debt of the Borrower or any Guarantor secured by purchase money
Liens permitted by Section 5.02(a)(ix) or otherwise to finance Capital
Expenditures permitted by Section 5.03(c).
(c) Merger. Merge into, or consolidate with or into, or have merged into
it, any Person; and, for the purpose of this subsection (d), the acquisition or
sale by the Borrower or any Guarantor by lease, purchase or otherwise, of all,
or substantially all, of the common stock or the assets of any Person or of it
shall be deemed a merger of such Person with the Borrower or any Guarantor,
except for (i) the acquisition of Eskimo, (ii) Permitted Acquisitions and
Special Acquisitions, (iii) mergers or consolidations of the Borrower and any
Guarantor, provided the Borrower is the surviving entity and (iv) mergers or
consolidations among the Credit Parties other than the Borrower.
(d) Sale of Assets, Etc. Sell, assign, transfer, lease or otherwise dispose
of any assets (including a saleleaseback transaction) with or without recourse,
except for (i) inventory disposed of in the ordinary course of business and (ii)
the sale or other disposition of assets no longer used or useful in the conduct
of its business.
(e) Investments, Etc. Make any Investment other than Permitted Investments.
46
(f) Transactions With Affiliates. Except for those transactions disclosed
on the audited consolidated financial statements for Coolbrands and its
Consolidated Subsidiaries for the fiscal year ended August 31, 1999 and except
for transactions in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's, a Guarantor's or a Subsidiary's
business and upon fair and reasonable terms no less favorable to the Borrower,
or the Guarantor or the Subsidiary than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate, enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate.
(g) Prepayment of Outstanding Debt. Pay, in whole or in part, any
outstanding Debt having a maturity of one year or more (other than Debt owing to
the Agent) of the Borrower or any Guarantor, which by its terms is not then due
and payable.
(h) Guarantees. Guaranty, or in any other way become directly or
contingently obligated for any Debt of any other Person (including any
agreements relating to working capital maintenance, take or pay contracts or
similar arrangements) other than (i) the endorsement of negotiable instruments
for deposit in the ordinary course of business; (ii) guarantees existing on the
date hereof and set forth in Schedule 5.02(i) annexed hereto; (iii) guarantees
by the Borrower of Debt of a Guarantor if such Debt is permitted by Section
5.02(b); (iv) guarantees given in favor of the Agent.
(i) Change of Business. Materially alter the nature of its business.
(j) Fiscal Year. Change the ending date of its fiscal year from August 31.
(k) Accounting Policies. Change any accounting policies, except as
permitted by GAAP.
(l) Dividends, Etc. Declare or pay any dividends, purchase, redeem, retire
or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such,
whether in cash, assets, or in obligations of the Borrower or any Guarantor; or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of any shares of
its capital stock, provided that any Subsidiary may pay dividends to its parent
corporation as long as such parent corporation is the Borrower or a Guarantor.
47
(m) Change in Ownership/Management. (i) Fail at any time to have the Smith
Group and the Serruya Group own, in the aggregate, shares of stock enabling the
owners thereof to cast at least forty (40%) percent of the votes for the
election of directors of Coolbrands.
(ii) Fail to have a majority of the members of the board of directors
of Coolbrands be the nominees of either the Smith Group or the Serruya Group.
(n) Hazardous Material. Cause any property owned or occupied by the
Borrower, any Guarantor or any Subsidiary to be used to generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer, produce or process
Hazardous Materials, except in compliance with all applicable federal, state and
local laws or regulations; nor cause or permit, as a result of any intentional
or unintentional act or omission on the part of the Borrower, any Guarantor or
any Subsidiary or any tenant or subtenant, a release of Hazardous Materials onto
any property owned or occupied by the Borrower, any Guarantor or any Subsidiary
or onto any other property; nor fail to comply with all applicable federal,
state and local laws, ordinances, rules and regulations, whenever and by
whomever triggered; nor fail to obtain and comply with, any and all approvals,
registrations or permits required thereunder. The Borrower and the Guarantors
shall execute any documentation required by the Agent in connection with the
representations, warranties and covenants contained in this paragraph and
Section 4.01 of this Agreement.
SECTION 5.03. Financial Requirements. So long as any amount shall remain
outstanding under the Term Loan Notes or the Revolving Credit Notes, or so long
as the Commitment shall remain in effect:
(a) Consolidated Capital Expenditures. Coolbrands and its Consolidated
Subsidiaries will not make Consolidated Capital Expenditures in excess of
$3,000,000.00 in the aggregate during any fiscal year.
(b) Funded Debt to EBITDA Ratio. Coolbrands and its Consolidated
Subsidiaries will maintain at all times a Funded Debt to EBITDA Ratio of not
greater than 4.00 to 1.00.
(c) Interest Coverage Ratio. Coolbrands and its Consolidated Subsidiaries
will at all times maintain an Interest Coverage Ratio of not less than 3.00 to
1.00.
48
(d) Senior Funded Debt to EBITDA Ratio. Coolbrands and its Consolidated
Subsidiaries will maintain at all times a Senior Funded Debt to EBITDA Ratio of
not greater than 3.00 to 1.00.
(e) Debt Service Coverage Ratio). Coolbrands and its Consolidated
Subsidiaries will maintain at all times a Debt Service Coverage Ratio of not
less than (i) 1.25 to 1.00.
(THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK)
49
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) The Borrower shall fail to pay (i) any installment of principal
of, or interest on, any Term Loan Note or any Revolving Credit Note when due, or
(ii) any fees or other amounts owed in connection with this Agreement within
five (5) days of the date when due; or
(b) Any representation or warranty made by the Borrower or any
Guarantor herein or in the Loan Documents or which is contained in any
certificate, document, opinion, or financial or other statement furnished at any
time under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or
(c) The Borrower or any Guarantor shall fail to perform (i) any term,
covenant or agreement contained in Section 5.01 of this Agreement within fifteen
(15) days after notice of such failure has been given to the Borrower by the
Agent or (ii) any other term, covenant, or agreement contained in this Agreement
in any other Loan Document (other than the Notes); or
(d) The Borrower, any Guarantor, or any Subsidiary shall fail to pay
(i) any other Debt owing to the Agent or any Lender or (ii) one or more other
Debts in excess of $100,000.00 in principal amount in the aggregate (excluding
Debt evidenced by the Notes) of the Borrower, any Guarantor or any Subsidiary
(as the case may be), or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other default under
any agreement or instrument relating to any such Debt, or any other event shall
occur and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; or
(e) The Borrower, any Guarantor or any Subsidiary shall generally not
pay its Debts as such Debts become due, or shall
50
admit in writing its inability to pay its Debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower, any Guarantor or any Subsidiary seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its Debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property and if instituted against the Borrower,
any Guarantor or any Subsidiary shall remain undismissed for a period of 90
days; or the Borrower, any Guarantor or any Subsidiary shall take any action to
authorize any of the actions set forth above in this subsection (e); or
(f) Any judgment or order or combination of judgments or orders for
the payment of money, in excess of $500,000.00 in the aggregate, which sum shall
not be subject to full, complete and effective insurance coverage, shall be
rendered against the Borrower, any Guarantor or any Subsidiary and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(g) Any Guarantor shall fail to perform or observe any term or
provision of its Guaranty or any representation or warranty made by any
Guarantor in connection with such Guarantor's Guaranty shall prove to have been
incorrect in any material respect when made; or
(h) Any of the following events occur or exist with respect to the
Borrower, any Guarantor, any Subsidiary, or any ERISA Affiliate: (i) any
Prohibited Transaction involving any Plan; (ii) any Reportable Event with
respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution of the PBGC
of any such proceedings; (v) complete or partial withdrawal under Section 4201
or 4204 of ERISA from a Multiemployer Plan or the reorganization insolvency, or
termination of any Multiemployer Plan; and in each case above, such event or
condition, together with all other events or conditions, if any, could in the
opinion of the Bank subject the
51
Borrower, any Guarantor, any Subsidiary or any ERISA Affiliate to any tax,
penalty, or other liability to a Plan, a Multiemployer Plan, the PBGC, or
otherwise (or any combination thereof) which in the aggregate exceeds or may
exceed $500,000.00.
(i) This Agreement or any other Loan Document, at any time after its
execution and delivery and for any reason, ceases to be in full force and effect
or shall be declared to be null and void, or the validity or enforceability of
any document or instrument delivered pursuant to this Agreement shall be
contested by the Borrower, any Guarantor or any party to such document or
instrument or the Borrower, any Guarantor or any party to such document or
instrument shall deny that it has any or further liability or obligation under
any such document or instrument; or
(j) An event of default specified in any Loan Document other than this
Agreement shall have occurred and be continuing.
SECTION 6.02. Remedies on Default. Upon the occurrence and continuance of
an Event of Default the Agent may, and upon demand by the Required Lenders
shall, by notice to the Borrower, (i) terminate the Commitment, (ii) declare the
Term Loan Notes, the Revolving Credit Notes, all interest thereon and all other
amounts payable under this Agreement to be forthwith due and payable, whereupon
the Commitment shall be terminated, the Term Loan Notes and the Revolving Credit
Notes, all such interest and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower and (ii) proceed to
enforce its rights whether by suit in equity or by action at law, whether for
specific performance of any covenant or agreement contained in this Agreement or
any other Loan Document, or in aid of the exercise of any power granted in
either this Agreement or any other Loan Document or proceed to obtain judgment
or any other relief whatsoever appropriate to the enforcement of its rights, or
proceed to enforce any other legal or equitable right which the Agent may have
by reason of the occurrence of any Event of Default hereunder or under any Loan
Document, provided, however, upon the occurrence of an Event of Default referred
to in Section 6.01(e), the Commitment shall be terminated, the Term Loan Notes
and the Revolving Credit Notes, all interest thereon and all other amounts
payable under this Agreement shall be immediately due and payable without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower. Any amounts collected pursuant to
action taken under this Section 6.02 shall be applied to the payment of, first,
any costs incurred by the Agent in taking such action, including but without
limitation attorneys fees and expenses, second, to payment of the accrued
52
interest on the Notes and third, to payment of the unpaid principal of the
Notes.
SECTION 6.03. Remedies Cumulative. No remedy conferred upon or reserved to
the Agent hereunder or in any Loan Document is intended to be exclusive of any
other available remedy, but each and every such remedy shall be cumulative and
in addition to every other remedy given under this Agreement or any Loan
Document or now or hereafter existing at law or in equity. No delay or omission
to exercise any right or power accruing upon any Event of Default shall impair
any such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Agent to exercise any remedy reserved
to it in this Article VI, it shall not be necessary to give any notice, other
than such notice as may be herein expressly required in this Agreement or in any
Loan Document.
(THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK)
53
ARTICLE VII
THE AGENT; RELATIONS AMONG LENDERS AND BORROWER
SECTION 7.01. Appointment, Powers and Immunities of Agent. Each Lender
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under any other Loan Document with such powers as are specifically
delegated to the Agent by the terms of this Agreement and any other Loan
Document, together with such other powers as are reasonably incidental thereto.
The Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Loan Document, and shall not by reason of
this Agreement be a trustee or fiduciary for any Lender. The Agent shall not be
responsible to the Lenders for any recitals, statements, representations or
warranties made by the Borrower or the Guarantors, or any officer or official of
the Borrower or Guarantors, or any of them, or any other Person contained in
this Agreement or any other Loan Document, or in any certificate or other
document or instrument referred to or provided for in, or received by any of
them under, this Agreement or any other Loan Document, or for the value,
legality, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document or any other document or instrument
referred to or provided for herein or therein, except as explicitly provided
herein, or for the failure by the Borrower, the Guarantors, or any of them to
perform any of their or its respective obligations hereunder or thereunder. The
Agent may employ agents and attorneys-in-fact and shall not be responsible,
except as to money or securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. Except as otherwise explicitly provided herein, neither
the Agent nor any of its directors, officers, employees or agents shall be
liable or responsible to any Lender for any action taken or omitted to be taken
by it or them hereunder or under any other Loan Document or in connection
herewith or therewith, except for its or their own gross negligence or wilful
misconduct. The Borrower shall pay any fee agreed to by the Borrower and the
Agent with respect to the Agent's services hereunder.
SECTION 7.02. Reliance by Agent. The Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent with reasonable care. The Agent may deem and
treat each Lender as the holder of the Loan made
54
by it for all purposes hereof unless and until a notice of the permitted
transfer thereof satisfactory to the Agent and signed by such Lender shall have
been furnished to the Agent but the Agent shall not be required to deal with any
Person who has acquired a participation in any Loan from a Lender. As to any
matters not expressly provided for by this Agreement or any other Loan Document,
the Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions signed by the Required
Lenders, and such instructions of the Required Lenders and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders and any
other holder of all or any portion of any Loan.
SECTION 7.03. Defaults. The Agent shall not be deemed to have knowledge of
the occurrence of a Default or Event of Default (other than the non-payment of
principal of or interest on the Loan or the non-payment of fees due hereunder)
unless the Agent has actual knowledge of such Default or Event of Default or has
received notice from a Lender or the Borrower specifying such Default or Event
of Default and stating that such notice is a "Notice of Default." In the event
that the Agent receives such a notice of, or otherwise has actual knowledge of
the occurrence of, a Default or Event of Default, the Agent shall give prompt
notice thereof to the Lenders (and shall give each Lender prompt notice of each
such non-payment). The Agent shall (subject to Section 7.08 and Section 8.01
hereof) take such action with respect to such Default or Event of Default which
is continuing as shall be directed by the Required Lenders; provided that,
unless and until the Agent shall have received such directions, the Agent may
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Lenders; and provided further that the Agent shall not be required to take
any such action which it determines to be contrary to law.
SECTION 7.04. Rights of Agent as a Lender. With respect to the Loan made by
it, any Person which is the Agent in its capacity as a Lender hereunder shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include any Person
which is the Agent in its capacity as a Lender. The Agent or any Lender and
their respective Affiliates may (without having to account therefor to any other
Lender except as otherwise expressly provided in this Agreement) accept deposits
from, lend money to (on a secured or unsecured basis), and generally engage in
any kind of banking, trust or other business with, the Borrower, the Guarantors
or any of them (and any of their Affiliates); provided that no
55
payment or lien priority (other than purchase money liens on equipment being
financed by such Lender) shall be given to the Agent or to any Lender for any
other transaction without the express written approval of all of the other
Lenders. In the case of Chase, it may do so as if it were not acting as the
Agent, and the Agent may accept fees and other consideration from the Borrower,
the Guarantors or any of them for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders. Although the
Agent or a Lender or any of their respective Affiliates may in the course of
such relationships and relationships with other Persons acquire information
about the Borrower, the Guarantors, their Affiliates and such other Persons,
neither the Agent nor such Lender shall have any duty to the other Lenders or
the Agent to disclose such information to the other Lenders or the Agent except
as otherwise provided herein with respect to the occurrence of an Event of
Default.
SECTION 7.05. Indemnification of Agent. The Lenders agree to indemnify the
Agent and its directors, officers, employees, agents and Affiliates (the
"Indemnitees") (to the extent not reimbursed under Section 8.04 hereof or under
the applicable provisions of any other Loan Document, but without limiting the
obligations of the Borrower and Guarantors under Section 8.04 hereof or such
provisions), ratably in accordance with their Pro Rata Shares (without giving
effect to any participation in all or any portion of the Term Loan by them to
any other Person), for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Indemnitees in any way relating to or arising out of this Agreement,
any other Loan Document or any other documents contemplated by or referred to
herein or the transactions contemplated hereby or thereby (including, without
limitation, the costs and expenses which the Borrower and Guarantors are
obligated to pay under Section 8.04 hereof or under the applicable provisions of
any other Loan Document but excluding, unless a Default or Event of Default has
occurred, normal administrative costs and expenses incidental to the performance
of its agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents or instruments; provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the gross
negligence or wilful misconduct of an Indemnitee.
SECTION 7.06. Documents. It is the responsibility of the Borrower to
forward to each Lender, on or before the due dates set forth herein, a copy of
each report, notice (other than notices of borrowings and payments) or other
document required by this Agreement or any other Loan Document to be delivered
to the Agent.
56
The Agent is not responsible for forwarding such information to the Lenders.
SECTION 7.07. Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower, the Guarantors and
their Subsidiaries and its decision to enter into this Agreement and that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under this Agreement or any other Loan Document. The Agent shall not be
required to keep itself informed as to the performance or observance by the
Borrower or Guarantors of this Agreement or any other Loan Document or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Borrower, the Guarantors or any Subsidiary. Except
for notices, reports and other documents and information expressly required to
be furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to any other Lender to provide any Lender with any credit
or other information concerning the affairs, financial condition or business of
the Borrower, the Guarantors or any Subsidiary (or any of their Affiliates)
which may come into the possession of the Agent or of its Affiliates. The Agent
shall not be required to file this Agreement, any other Loan Document or any
document or instrument referred to herein or therein, or record or give notice
of this Agreement, any other Loan Document or any document or instrument
referred to herein or therein, to any Person.
SECTION 7.08. Failure of Agent to Act. Except for action expressly required
of the Agent hereunder, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall have received further
assurances (which may include cash collateral) of the indemnification
obligations of the Lenders under Section 7.05 hereof in respect of any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
SECTION 7.09. Resignation of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrower. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days
57
after the retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a
Lender which has an office in New York, New York. The Required Lenders or the
retiring Agent, as the case may be, shall upon the appointment of a Successor
Agent promptly so notify the Borrower, the Guarantors and the other Lenders.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation as Agent, the provisions of this Article 7 and
Section 8.04 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent.
SECTION 7.10. Amendments Concerning Agency Function. The Agent shall not be
bound by any waiver, amendment, supplement or modification of this Agreement or
any other Loan Document which affects its rights or duties hereunder or
thereunder unless it shall have given its prior written consent thereto.
SECTION 7.11. Liability of Agent. The Agent shall not have any liabilities
or responsibilities to the Borrower, the Guarantors or any of them on account of
the failure of any Lender to perform its obligations hereunder or to any Lender
on account of the failure of the Borrower, the Guarantors or any of them to
perform their or its obligations hereunder or under any other Loan Document.
Nothing herein shall be read to relieve any obligation that the Agent may have
to the Borrower as a Lender hereunder.
SECTION 7.12. Transfer of Agency Function. Without the consent of the
Borrower, the Guarantors or any Lender, the Agent may at any time or from time
to time transfer its functions as Agent hereunder to any of its offices located
in the New York metropolitan area, provided that the Agent shall promptly notify
the Borrower, the Guarantors and the Lenders thereof.
SECTION 7.13. Withholding Taxes. Each Lender represents that it is entitled
to receive any payments to be made to it hereunder without the withholding of
any tax and will furnish to the Agent such forms, certifications, statements and
other documents as the Agent may request from time to time to evidence such
Lender's exemption from the withholding of any tax imposed by any jurisdiction
or to enable the Agent to comply with any applicable laws or regulations
relating thereto. Without limiting the effect of the foregoing, if any Lender is
not created or organized under the laws of the United States of America or any
state thereof, in
58
the event that the payment of interest by the Borrower is treated for U.S.
income tax purposes as derived in whole or in part from sources from within the
United States, such Lender will furnish to the Agent Form 4224 or Form 1001 of
the Internal Revenue Service, or such other forms, certifications, statements or
documents, duly executed and completed by such Lender as evidence of such
Lender's exemption from the withholding of United States tax with respect
thereto. The Agent shall not be obligated to make any payments hereunder to such
Lender in respect of any Loan until such Lender shall have furnished to the
Agent the requested form, certification, statement or document.
SECTION 7.14. Several Obligations and Rights of Lenders. The failure of any
Lender to make any Loan to be made by it on the date specified therefor shall
not relieve any other Lender of its obligation to make its Loan on such date,
but no Lender shall be responsible for the failure of any other Lender to make a
Loan to be made by such other Lender.
SECTION 7.15. Pro Rata Treatment of Loans, Etc. Except to the extent
otherwise provided, each prepayment and payment of principal of or interest on
Loans of a particular type and a particular Interest Period, if any, shall be
made to the Agent for the account of the Lenders holding Loans of such type and
Interest Period, if any, pro rata in accordance with the respective unpaid
principal amounts for such Loans of such Interest Period held by such Lenders.
SECTION 7.16. Sharing of Payments Among Lenders. If a Lender shall obtain
payment of any principal of or interest on any Loans any fee due hereunder, made
by it through the exercise of any right of setoff, banker's lien, counterclaim,
or any other means, it shall share such payment with the other Lenders and the
amount of such payment shall be applied to reduce the Loans of all the Lenders
pro rata in accordance with the unpaid principal on the Loans held by each of
them, and make such other adjustments from time to time as shall be equitable to
the end that all the Lenders shall share the benefit of such payment (net of any
expenses which may be incurred by such Lender in obtaining or preserving such
benefit) pro rata in accordance with the unpaid principal and interest on the
Loans held by each of them. To such end the Lenders shall make appropriate
adjustments among themselves if such payment is rescinded or must otherwise be
restored. The Borrower agrees that any Lender so purchasing a participation (or
direct interest) in the Loans made by the other Lenders may exercise all rights
of set off, banker's lien, counterclaim or similar rights with respect to such
participation (or direct interest). Nothing contained herein shall require any
Lender to exercise any such
59
right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness of
the Borrower. Notwithstanding the foregoing or any other provision of this
Agreement, no right or remedy of any Lender relating to any assets of the
Borrowers (including real property, improvements or fixtures) not covered by
this Agreement or the other Loan Documents shall in any way be affected by this
Agreement or otherwise with respect to any other indebtedness of the Borrower to
any of the Lenders.
SECTION 7.17. Non-receipt of Funds by Agent; Payments to Lenders. (a)
Unless the Agent shall have received notice from the Borrower prior to the date
on which any payment is due to the Lenders hereunder that the Borrower will not
make such payment in full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the Agent in its sole discretion
may, but shall not be obligated to, in reliance upon such assumption, cause to
be distributed to each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent that the Borrower shall not have so
made such payment in full to the Agent, such Lender agrees to repay to the Agent
on demand such amount and if for any reason the Agent does not receive such
amount from such Lender on the day of such demand, if such demand is made before
2:00 p.m. on such day, or on the next Business Day if demand is made after 2:00
p.m. on such day, such Lender shall repay to the Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the customary rate set by the Agent
for the correction of errors among lenders for three (3) Business Days and
thereafter at the Prime Rate.
(b) If the Agent shall fail to pay any amounts owing by the Agent to a
Lender as promptly as may be required by this Agreement, the Agent shall pay to
such Lender, on its demand, interest on such delinquent amount at the customary
rate set by the Agent for the correction of errors among lenders for three (3)
Business Days and thereafter at the Prime Rate.
SECTION 7.18 Borrower Cooperation with Agent. (a) The Agent and Chase as a
Lender, reserve the right, at any time after the date of this Agreement, to
transfer all or any part of its Pro Rate Share of the Term Loan to one or more
other Lenders. The Agent may commence syndication efforts at any time after the
execution of this Agreement, and the Borrower and the Guarantors agree to
actively assist the Agent in completing a timely and orderly syndication
satisfactory to it. Such assistance shall include (i)
60
direct contact during the syndication between senior management and advisors of
the Borrower and the Guarantors, on the one hand, and the proposed Lenders, on
the other hand, (ii) assistance in the preparation of a confidential information
memorandum and other marketing materials to be used in connection with the
syndication, and (iii) the hosting, with the Agent, of one or more meetings of
prospective Lenders.
(b) It is understood and agreed that the Agent will, in consultation with
the Borrower and the Guarantors, manage all aspects of the syndication,
including selection of Lenders and determination of when the Agent will approach
potential Lenders, any naming rights, the final allocations of the Term Loan
among the Lenders and the amount and distribution of fees among the Lenders. To
assist the Agent in its syndication efforts, the Borrower and the Guarantors
agree to promptly prepare and provide to the Agent and the Lenders all such
information with respect to the Borrower, the Guarantors and any of their
subsidiaries, including financial information and projections (the
"Projections"), as they may reasonably request in connection with the
arrangement and syndication. The Borrower and the Guarantors hereby represent
and covenant that (i) all information other than the Projections (the
"Information") that has been or will be made available to any Lender or the
Agent by the Borrower, any of the Guarantors or any of their authorized
representatives is or will be, when furnished, complete and correct in all
material respects and does not or will not, when furnished, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not materially misleading in light of
the circumstances under which such statements are made, and (ii) the Projections
made available to any Lender or the Agent by the Borrower, any of the Guarantors
or any of their authorized representatives have been or will be prepared in good
faith based upon reasonable assumptions. The Borrower and the Guarantors agree
to supplement the Information and the Projections so that upon the transfer of
any part of the Term Loan, the representations in the preceding sentence remain
correct. The Borrower and the Guarantors understand that in arranging the
syndication, the Lenders and the Agent will be using and relying primarily on
the Information and the Projections without independent verification thereof.
(THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK)
61
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be amended or modified only
by an instrument in writing signed by the Borrower, the Guarantors, the Agent
and the Required Lenders, and any provision of this Agreement may be waived by
the Borrower (if such provision requires performance by the Agent or the
Lenders) or by the Agent acting with the consent of the Required Lenders (if
such provision requires performance by the Borrower); provided that no
amendment, modification or waiver shall, unless by an instrument signed by all
of the Lenders or by the Agent acting with the consent of all of the Lenders:
(a) increase or extend the term of the Commitment or any Loan, (b) extend the
date fixed for the payment of principal of or interest on any Loan, (c) reduce
the amount of any payment of principal thereof or the rate at which interest is
payable thereon or any fee payable hereunder, (d) alter the terms of this
Section 8.01, (e) amend the definition of the term "Required Lenders", (f)
change the fees payable to any Lender except as otherwise provided herein, (g)
permit the Borrower to transfer or assign any of its obligations hereunder or
under the other Loan Documents, (h) amend the provisions of Article 7 hereof,
(i) give any payment priority to any Person (including any of the Lenders) over
amounts due in connection with any Loan, (j) release any Guarantors or
collateral or (k) amend any provision of this Agreement or any other Loan
Document which requires the action of all Lenders. No failure on the part of the
Agent or any Lender to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof or preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic communication) and
mailed, telegraphed, sent by facsimile or delivered, if to the Borrower or any
Guarantor, at the address of the Borrower set forth at the beginning of this
Agreement to the attention of Gary P. Stevens, President and Chief Financial
Officer, with a copy to (i) Richard Smith, P.O. Box 43, Southampton, New York
11969 and (ii) Benjamin Raphan, Esq., Blank, Rome, Tenzer, Greenblatt, LLP, 405
Lexington Avenue, New York, New York 10174 and if to the Agent, at the address
of the Agent set forth at the beginning of this Agreement to the attention of
Coolbrands International Inc. Relationship Manager, or, as to each party, at
such other address as shall be designated by such party
62
in a written notice complying as to delivery with the terms of this Section 7.02
to the other parties. All such notices and communications shall be effective
when mailed, telegraphed or delivered, except that notices shall not be
effective until received.
SECTION 8.03. No Waiver, Remedies. No failure on the part of the Agent to
exercise, and no delay in exercising, any right, power or remedy under any Loan
Document, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided in
the Loan Documents are cumulative and not exclusive of any remedies provided by
law.
SECTION 8.04. Costs, Expenses and Taxes. The Borrower agrees to pay on
demand all reasonable costs and expenses of the Agent in connection with the
preparation, execution, delivery and administration of this Agreement, the Notes
and any other Loan Documents, including, without limitation, the fees and
expenses of counsel for the Agent with respect thereto and with respect to
advising the Bank as to its rights and responsibilities under this Agreement,
and all costs and expenses, if any (including counsel fees and expenses), in
connection with the enforcement of this Agreement, the Notes and any other Loan
Documents. The Borrower shall at all times protect, indemnify, defend and save
harmless the Agent from and against any and all claims, actions, suits and other
legal proceedings, and liabilities, obligations, losses, damages, penalties,
judgments, costs, expenses or disbursements which the Agent may, at any time,
sustain or incur by reason of or in consequence of or arising out of the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. The Borrower acknowledges that it is the
intention of the parties hereto that this Agreement shall be construed and
applied to protect and indemnify the Agent against any and all risks involved in
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, all of which risks are hereby assumed by the
Borrower, including, without limitation, any and all risks of the acts or
omissions, whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority, provided that the Borrower shall not
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct. The Agent agrees to use
its best efforts to notify the Borrower before it incurs any expenses which are
reimbursable by the Borrower under this Section 8.04 if such expenses equal or
exceed $5,000.00, but any failure of the Agent to
63
so notify the Borrower will not relieve the Borrower of its obligations
hereunder. The provisions of this Section 8.04 shall survive the payment of the
Notes and the termination of this Agreement.
SECTION 8.05. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender, or any Affiliate of such Lender to or for the credit or the account of
the Borrower or the Guarantors against any and all of the obligations of the
Borrower or the Guarantors now or hereafter existing under this Agreement and
the Notes, irrespective of whether or not the Agent shall have made any demand
under this Agreement or the Notes and although such obligations may be
unmatured. The rights of the Agent and the Lenders under this Section are in
addition to all other rights and remedies (including, without limitation, other
rights of set-off) which they may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower, the Guarantors, the Agent and the
Lenders.
SECTION 8.07. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
otherwise transfer any of its rights or obligations under this Agreement without
the prior written consent of the Agent and all Lenders.
(b) Any Lender may at any time grant to one or more lenders or other
institutions (each a "Participant") participating interests in its Pro Rata
Share of the Commitment or the Loans. In the event of any such grant by a Lender
of a participating interest to a Participant, whether or not upon notice to the
Borrower or the Agent, such Lender shall remain responsible for the performance
of its obligations hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement pursuant to which any
Lender may grant such a participating interest shall provide that such Lender
shall retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement. The
Borrower agrees that each Participant shall, to
64
the extent provided in its participation agreement, be entitled to the benefits
of this Article VIII hereof with respect to its participating interest. An
assignment or other transfer which is not permitted by subsection (c) or (d)
below shall be given effect for purposes of this Agreement only to the extent of
a participating interest granted in accordance with this subsection (b).
(c) (i) Any Lender may at any time, with the express written consent of the
Agent, assign to one or more lenders or other institutions (each an "Assignee")
all, but not a part of its Pro Rata Share of its Commitment and the Loans, and
of its rights and obligations under this Agreement and its Notes, and such
Assignee shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit B hereto executed by
such Assignee and such transferor Lender, with the subscribed consent of the
Agent, and with, so long as no Default or Event of Default has occurred and is
continuing, (and subject to) the subscribed consent of the Borrower, which shall
not be unreasonably withheld. Upon execution and delivery of such instrument and
payment by such Assignee to such transferor Lender of an amount equal to the
purchase price agreed between such transferor Lender and such Assignee, such
Assignee shall be a Lender party to this Agreement and shall have all the rights
and obligations of a Lender hereunder, and the transferor Lender shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required.
(ii) Upon the consummation of any assignment pursuant to this
subsection (c), the transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that new Notes are issued to the Assignee. In
connection with any such assignment, the transferor Lender shall pay to the
Agent an administrative fee for processing such assignment in the amount of
$3,500.00. If an Assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall deliver to the Borrower and the
Agent certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 7.13 hereof.
(d) Any Lender may at any time assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank. No such assignment
shall release the transferor Lender from its obligations hereunder.
SECTION 8.08. Further Assurances. The Borrower and each Guarantor agree at
any time and from time to time at its expense,
65
upon request of the Agent or its counsel, to promptly execute, deliver, or
obtain or cause to be executed, delivered or obtained any and all further
instruments and documents and to take or cause to be taken all such other action
the Agent may deem desirable in obtaining the full benefits of, this Agreement
or any other Loan Document.
SECTION 8.09. Section Headings, Severability, Entire Agreement. Section and
subsection headings have been inserted herein for convenience only and shall not
be construed as part of this Agreement. Every provision of this Agreement and
each Loan Document is intended to be severable; if any term or provision of this
Agreement, any Loan Document, or any other document delivered in connection
herewith shall be invalid, illegal or unenforceable for any reason whatsoever,
the validity, legality and enforceability of the remaining provisions hereof or
thereof shall not in any way be affected or impaired thereby. All exhibits and
schedules to this Agreement shall be annexed hereto and shall be deemed to be
part of this Agreement. This Agreement and the exhibits and schedules attached
hereto embody the entire Agreement and understanding among the Borrower, the
Guarantors, the Agent and the Lender and supersede all prior agreements and
understandings relating to the subject matter hereof.
SECTION 8.10. Governing Law. This Agreement, the Term Loan Notes and all
other Loan Documents shall be governed by, and construed in accordance with, the
laws of the State of New York, without regard to principles of conflict of laws.
SECTION 8.11. WAIVER OF JURY TRIAL. THE BORROWER, EACH GUARANTOR, THE AGENT
AND THE LENDERS WAIVE ALL RIGHTS TO TRIAL BY JURY ON ANY CAUSE OF ACTION
DIRECTLY OR INDIRECTLY INVOLVING THE TERMS, COVENANTS OR CONDITIONS OF THIS
AGREEMENT OR ANY LOAN DOCUMENT.
SECTION 8.12. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
END OF AMENDED AND RESTATED LOAN AGREEMENT
66
EXHIBIT A
TERM LOAN NOTE
Garden City, New York
$4,500,000.00 March 8, 1996
FOR VALUE RECEIVED, INTEGRATED BRANDS INC., a New Jersey corporation,
having its principal place of business at 4175 Veteran's Memorial Highway,
Ronkonkoma, New York 11779 (the "Borrower") promises to pay to the order of
CHEMICAL BANK ("Bank") at its office located at 1 Pierrepont Plaza, Brooklyn,
New York 11201, the principal amount of FOUR MILLION FIVE HUNDRED THOUSAND
($4,500,000.00) DOLLARS, or, if less, the unpaid principal amount of the Term
Loan (as defined in the Agreement, as defined below) made by the Bank to the
Borrower pursuant to the Agreement.
The principal balance of this Note shall be payable in twenty (20)
quarterly principal installments, due on the first Business Day of each calendar
quarter, commencing on April 1, 1996, the first nineteen (19) of such
installments being in the principal amount of $140,000.00 and the twentieth
(20th) such installment being in the remaining principal amount of this Note.
Borrower shall pay interest on the unpaid principal balance of this Note
from time to time outstanding, at said office at the rates of interest, at the
times and for the periods set forth in the Agreement.
All payments including prepayments on this Note shall be made in lawful
money of the United States of America in immediately available funds. Except as
otherwise provided in the Agreement, if a payment becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
This Note is the Term Loan Note referred to in that certain Loan Agreement
among Borrower, certain Guarantors and Bank dated as of December 23, 1994 as
amended and restated as of March 8, 1996 (the "Agreement"), as such Agreement
may be further amended from time to time, and is subject to prepayment and its
maturity is subject to acceleration upon the terms contained in said Agreement.
All capitalized terms used in this Note and not defined herein shall have the
meanings given them in the Agreement.
If any action or proceeding be commenced to collect this Note or enforce
any of its provisions, Borrower further agrees to pay
all costs and expenses of such action or proceeding and attorneys' fees and
expenses and further expressly waives any and every right to interpose any
counterclaim (other than mandatory counterclaims) in any such action or
proceeding. Borrower hereby submits to the jurisdiction of the Supreme Court of
the State of New York and agrees with Bank that personal jurisdiction over
Borrower shall rest with the Supreme Court of the State of New York for purposes
of any action on or related to this Note, the liabilities, or the enforcement of
either or all of the same. Borrower hereby waives personal service by manual
delivery and agrees that service of process may be made by postpaid certified
mail directed to Borrower at Borrower's address designated in the Agreement or
at such other address as may be designated in writing by Borrower to Bank in
accordance with Section 7.02 of the Agreement, and that upon mailing of such
process such service be effective with the same effect as though personally
served. Borrower hereby expressly waives any and every right to a trial by jury
in any action on or related to this Note, the liabilities or the enforcement of
either or all of the same.
Bank may transfer this Note and may deliver the security or any part
thereof to the transferee or transferees, who shall thereupon become vested with
all the powers and rights above given to Bank in respect thereto, and Bank shall
thereafter be forever relieved and fully discharged from any liability or
responsibility in the matter. The failure of any holder of this Note to insist
upon strict performance of each and/or all of the terms and conditions hereof
shall not be construed or deemed to be a waiver of any such term or condition.
Borrower authorizes Bank to complete this Note as to any terms not set
forth herein at the time of delivery hereof.
Borrower and all endorsers and guarantors hereof waive presentment and
demand for payment, notice of non-payment, protest, and notice of protest.
This Note shall be construed in accordance with and governed by the laws of
the State of New York.
INTEGRATED BRANDS INC.
By
-------------------------------------
Name: Gary P. Stevens
Title: President
EXHIBIT B
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$10,000,000.00 Garden City, New York
___________, 1997
FOR VALUE RECEIVED, on the Maturity Date, INTEGRATED BRANDS INC., a New
Jersey corporation, having its principal place of business at 4175 Veteran's
Memorial Highway, Ronkonkoma, New York 11779 (the "Borrower"), promises to pay
to the order of THE CHASE MANHATTAN BANK ("Bank") at its office located at 1
Pierrepont Plaza, Brooklyn, New York 11201, the principal sum of the lesser of:
(a) Ten Million ($10,000,000.00) Dollars; or (b) the aggregate unpaid principal
amount of all Revolving Credit Loans made by Bank to Borrower pursuant to the
Agreement (as defined below).
Borrower shall pay interest on the unpaid principal balance of this Note
from time to time outstanding, at said office, at the rates of interest, at the
times and for the periods set forth in the Agreement.
All payments including prepayments on this Note shall be made in lawful
money of the United States of America in immediately available funds. Except as
otherwise provided in the Agreement, if a payment becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
Borrower hereby authorizes Bank to enter from time to time the amount of
each Loan to Borrower and the amount of each payment on a Loan on the schedule
annexed hereto and made a part hereof. Failure of Bank to record such
information on such schedule shall not in any way effect the obligation of
Borrower to pay any amount due under this Note.
This Note is the Revolving Credit Note referred to in that certain Loan
Agreement among Borrower, certain Guarantors, and Bank dated December 23, 1994,
as amended and restated as of March 8, 1996 and as of _____, 1997 (the
"Agreement"), as such Agreement may be further amended from time to time, and is
subject to prepayment and its maturity is subject to acceleration upon the terms
contained in said Agreement. All capitalized terms used in this Note and not
defined herein shall have the meanings given them in the Agreement.
If any action or proceeding be commenced to collect this Note or enforce
any of its provisions, Borrower further agrees to pay all costs and expenses of
such action or proceeding and attorneys' fees and expenses and further expressly
waives any and every right to interpose any counterclaim (other than mandatory
counterclaims) in any such action or proceeding. Borrower hereby submits to the
jurisdiction of the Supreme Court of the State of New York and agrees with Bank
that personal jurisdiction over Borrower shall rest with the Supreme Court of
the State of New York for purposes of any action on or related to this Note, the
liabilities, or the enforcement of either or all of the same. Borrower hereby
waives personal service by manual delivery and agrees that service of process
may be made by post-paid certified mail directed to the Borrower at the
Borrower's address set forth above or at such other address as may be designated
in writing by the Borrower to Bank in accordance with Section 7.02 of the
Agreement, and that upon mailing of such process such service be effective with
the same effect as though personally served. Borrower hereby expressly waives
any and every right to a trial by jury in any action on or related to this Note,
the liabilities or the enforcement of either or all of the same. Bank may
transfer this Note and may deliver the security or any part thereof to the
transferee or transferees, who shall thereupon become vested with all the powers
and rights above given to Bank in respect thereto, and Bank shall thereafter be
forever relieved and fully discharged from any liability or responsibility in
the matter. The failure of any holder of this Note to insist upon strict
performance of each and/or all of the terms and conditions hereof shall not be
construed or deemed to be a waiver of any such term or condition.
Borrower and all endorsers and guarantors hereof waive presentment and
demand for payment, notice of non-payment, protest, and notice of protest.
This Note shall be construed in accordance with and governed by the laws of
the State of New York.
INTEGRATED BRANDS INC.
By
-------------------------------------
Name: Gary P. Stevens
Title: President
Schedule of Revolving Credit Loans
Amount of Name of
Principal Principal
Making Amount of Paid or Unpaid Person Making
Date Loan Prepaid Balance Notation
- ------ --------- --------- ------- -------------
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
4. Ratification and Reaffirmation. Except as hereby amended, the Agreement
and all other Loan Documents executed in connection therewith, are, in all
respects, ratified and confirmed. The obligations of all Guarantors under their
respective Guaranties are reaffirmed.
5. Execution in Counterparts. This Fourth Amendment Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Fourth
Amendment Agreement as of the year and date first above written.
INTEGRATED BRANDS INC.
By /s/ Gary P. Stevens
-------------------------------------
Name: Gary P. Stevens
Title: President
COOLBRANDS INTERNATIONAL INC.
By
-------------------------------------
Name: David J. Stein
Title: President
KAYLA FOODS INT'L (BARBADOS) INC.
By
-------------------------------------
Name: David J. Stein
Title: President
SWENSEN'S, INC.
By
-------------------------------------
Name: David J. Stein
Title: President
SWENSEN'S ICE CREAM COMPANY
By
-------------------------------------
Name: David J. Stein
Title: President
4. Ratification and Reaffirmation. Except as hereby amended, the Agreement
and all other Loan Documents executed in connection therewith, are, in all
respects, ratified and confirmed. The obligations of all Guarantors under their
respective Guaranties are reaffirmed.
5. Execution in Counterparts. This Fourth Amendment Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Fourth
Amendment Agreement as of the year and date first above written.
INTEGRATED BRANDS INC.
By
-------------------------------------
Name: Gary P. Stevens
Title: President
COOLBRANDS INTERNATIONAL INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
KAYLA FOODS INT'L (BARBADOS) INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
SWENSEN'S, INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
SWENSEN'S ICE CREAM COMPANY
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
EP ACQUISITION CORP.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
YOGEN FRUZ ACQUISITIONS INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
BRESLER'S INDUSTRIES, INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
NORTHERN LIGHTS FROZEN DESSERTS, INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
GOLDEN SWIRL MANAGEMENT COMPANY
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
I CAN'T BELIEVE ITS YOGURT, LTD.
By Kayla Foods, Inc.
General Partner
By
-------------------------------------
Name: David J. Stein
Title: President
THE CHASE MANHATTAN BANK, AS AGENT
By
-------------------------------------
Name: Malachy J. Mulligan
Title: Vice President
THE CHASE MANHATTAN BANK, AS LENDER
By
-------------------------------------
Name: Malachy J. Mulligan
Title: Vice President
EP ACQUISITION CORP.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
YOGEN FRUZ ACQUISITIONS INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
BRESLER'S INDUSTRIES, INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
NORTHERN LIGHTS FROZEN DESSERTS, INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
GOLDEN SWIRL MANAGEMENT COMPANY
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
I CAN'T BELIEVE ITS YOGURT, LTD.
By Kayla Foods, Inc.
General Partner
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
THE CHASE MANHATTAN BANK, AS AGENT
By
-------------------------------------
Name: Malachy J. Mulligan
Title: Vice President
THE CHASE MANHATTAN BANK, AS LENDER
By
-------------------------------------
Name: Malachy J. Mulligan
Title: Vice President
EP ACQUISITION CORP.
By
-------------------------------------
Name: David J. Stein
Title: President
YOGEN FRUZ ACQUISITIONS INC.
By
-------------------------------------
Name: David J. Stein
Title: President
BRESLER'S INDUSTRIES, INC.
By
-------------------------------------
Name: David J. Stein
Title: President
NORTHERN LIGHTS FROZEN DESSERTS, INC.
By
-------------------------------------
Name: David J. Stein
Title: President
GOLDEN SWIRL MANAGEMENT COMPANY
By
-------------------------------------
Name: David J. Stein
Title: President
I CAN'T BELIEVE ITS YOGURT, LTD.
By Kayla Foods, Inc.
General Partner
By
-------------------------------------
Name: David J. Stein
Title: President
THE CHASE MANHATTAN BANK, AS AGENT
By /s/ Malachy J. Mulligan
-------------------------------------
Name: Malachy J. Mulligan
Title: Vice President
THE CHASE MANHATTAN BANK, AS LENDER
By /s/ Malachy J. Mulligan
-------------------------------------
Name: Malachy J. Mulligan
Title: Vice President
FIFTH AMENDMENT
DATED AS OF MARCH 31, 2003
TO LOAN AGREEMENT
DATED AS OF DECEMBER 23, 1994
This Fifth Amendment is dated as of 31 day of March, 2003 by and among
INTEGRATED BRANDS INC., a New Jersey corporation, having its principal place of
business at 4175 Veterans Highway, Ronkonkoma, New York 11779 (the "Borrower"),
COOLBRANDS INTERNATIONAL INC., a Canadian corporation, having its principal
place of business at 8300 Woodbine Avenue, Markham, Ontario, Canada L3R 9Y7
("Coolbrands"), KAYLA FOODS INT'L (BARBADOS) INC. a Barbados corporation, having
its principal place of business at 27 Pine Road, Belleville, St. Michael,
Barbados, W.I. ("Kayla"), SWENSEN'S, INC., a Delaware corporation, having its
principal place of business at 4175 Veterans Highway, Ronkonkoma, New York 11779
("Swensen's"), SWENSEN'S ICE CREAM COMPANY, a California corporation, having its
principal place of business at 4175 Veterans Highway, Ronkonkoma, New York 11779
("Ice Cream"), EP ACQUISITION CORP., a Virginia corporation, having its
principal place of business at 4175 Veterans Highway, Ronkonkoma, New York 11779
("EP"), YOGEN FRUZ ACQUISITIONS INC., a Nevada corporation, having its principal
place of business at 4175 Veterans Highway, Ronkonkoma, New York 11779 ("Yogen
Fruz"), BRESLER'S INDUSTRIES, INC., an Illinois, corporation, having its
principal place of business at 4175 Veterans Highway, Ronkonkoma, New York 11779
("Bresler"), NORTHERN LIGHTS FROZEN DESSERTS, INC., a Utah corporation, having
its principal place of business at 4175 Veterans Highway, Ronkonkoma, New York
11779, ("Northern"), GOLDEN SWIRL MANAGEMENT COMPANY, a Utah corporation
("Golden"), having its principal place of business at 4175 Veterans Highway,
Ronkonkoma, New York 11779 and I CAN'T BELIEVE ITS YOGURT, LTD., a Texas
partnership, ("ICB"), having its principal place of business at 4175 Veterans
Highway, Ronkonkoma, New York 11779, (Coolbrands, Kayla, Swensen's, Ice Cream,
EP, Yogen Fruz, Bresler, Northern, Golden and ICB individually, a "Guarantor"
and collectively, the "Guarantors"), JPMORGAN CHASE BANK, formerly known as The
Chase Manhattan Bank, as agent for the Lenders (as defined below), a New York
banking corporation, having an office at 4 MetroTech Center, Brooklyn, New York
11245 (the "Agent") and JPMORGAN CHASE BANK, formerly known as The Chase
Manhattan Bank, a New York banking corporation, having an office at 4 MetroTech
Center, Brooklyn, New York 11245 ("Chase" or a "Lender");
1
WITNESSETH:
WHEREAS, the Borrower, Swensen's, Ice Cream and Chase entered into a Loan
Agreement dated as of December 23, 1994, and amended as of September 7, 1995,
March 8, 1996, December 31, 1997 and September 20, 2000 (as so amended, the
"Agreement") and pursuant to such Agreement Chase has made available to the
Borrower, among other things, certain Revolving Credit Loans as evidenced by a
Revolving Credit Note; and
WHEREAS, the Revolving Credit Note and all other obligations arising under
the Agreement are guaranteed by the Guarantors pursuant to guaranties given by
each of them to Chase, and ratified and confirmed on the dates this Agreement
has been amended (the "Guaranties"); and
WHEREAS, Chase has heretofore extended the Revolving Credit Maturity Date
at the request of the Borrower; and
WHEREAS, the Borrower has requested that Chase agree to extend the
Revolving Credit Maturity Date to November 30, 2003 on the terms and conditions
herein contained.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Borrower, the Guarantors (as
defined in the Agreement, as amended hereby) and Chase agree as follows:
1. Definitions. As used in this Fifth Amendment, capitalized terms, unless
otherwise defined, shall have the meanings ascribed to them in the Agreement, as
amended.
2. Representations and Warranties. As an inducement for the Bank to enter
into this Fifth Amendment, the Borrower and the Guarantors each represent and
warrant as follows:
That with respect to the Agreement and the Loan Documents:
(i) There are no defenses, offsets or counterclaims to the respective
obligations of the Borrower or the Guarantors under the Agreement, the
Loans, the Notes, the Guaranties or any of the other Loan Documents, and if
any such defenses, offsets or counterclaims exist without the knowledge of
one or more of the Borrower or such Guarantors, the same are hereby waived.
(ii) All of the representations and warranties made by the Borrower
and the Guarantors in the Agreement or in the
2
other Loan Documents are true and correct in all material respects as if
made on the date hereof.
(iii) No Default or Event of Default is existing under the Agreement
or the other Loan Documents or will result from the extension of credit
contemplated hereby.
(iv) As of the date hereof, the outstanding principal balance of the
Revolving Credit Loans is $ -0- and interest has been paid on the Revolving
Credit Loans through ___________, 200_.
3. References to Agent and Bank. All references to the Agent, the Bank and
The Chase Manhattan Bank contained in the Loan Documents shall be deemed
references to JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank.
4. Amendment. The definition of Revolving Credit Maturity Date is hereby
amended to read in its entirety as follows:
"'Revolving Credit Maturity Date' means November 30, 2003."
5. Ratification and Reaffirmation. Except as hereby amended, the Agreement
and all other Loan Documents executed in connection therewith, are, in all
respects, ratified and confirmed. The obligations of all Guarantors under their
respective Guaranties are reaffirmed.
6. Execution in Counterparts. This Fifth Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
3
IN WITNESS WHEREOF, the parties hereto have duly executed this Fifth
Amendment as of the year and date first above written.
INTEGRATED BRANDS INC.
By /s/ Gary P. Stevens
-------------------------------------
Name: Gary P. Stevens
Title: President
COOLBRANDS INTERNATIONAL INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
KAYLA FOODS INT'L (BARBADOS) INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
SWENSEN'S INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
SWENSEN'S ICE CREAM COMPANY
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
EP ACQUISITION CORP.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
YOGEN FRUZ ACQUISITIONS INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
4
BRESLER'S INDUSTRIES, INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
NORTHERN LIGHTS FROZEN DESSERTS, INC.
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
GOLDEN SWIRL MANAGEMENT COMPANY
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
I CAN'T BELIEVE ITS YOGURT, LTD.
By Kayla Foods, Inc.
General Partner
By /s/ David J. Stein
-------------------------------------
Name: David J. Stein
Title: President
JPMORGAN CHASE BANK, AS AGENT
By /s/ Malachy Mulligan
-------------------------------------
Name: Malachy Mulligan
Title: Vice President
JPMORGAN CHASE BANK, AS LENDER
By /s/ Malachy Mulligan
-------------------------------------
Name: Malachy Mulligan
Title: Vice President
5
SIXTH AMENDMENT, JOINDER AND REAFFIRMATION
TO LOAN AGREEMENT AND GUARANTIES
SIXTH AMENDMENT, JOINDER AND REAFFIRMATION TO LOAN AGREEMENT AND
GUARANTIES (this "Amendment"), dated March 25, 2005, among INTEGRATED BRANDS,
INC., a New Jersey corporation, (the "Borrower"), each of the entities listed on
Exhibit A hereto (the "2000 Guarantors" and each, a "2000 Guarantor"), each of
the entities listed on Exhibit B hereto (the "Additional Guarantors" and each,
an "Additional Guarantor"; COOLBRANDS DAIRY INC., a Delaware corporation
("Dairy"), and each of the entities listed on Exhibit C hereto (the "Other
Guaranty Parties"), JPMORGAN CHASE BANK, N.A. (f/k/a JPMorgan Chase Bank), a
national banking association, as agent (the "Agent") for the Lenders (as defined
in the Loan Agreement (as defined below)) and JPMORGAN CHASE BANK, N.A. (f/k/a
JPMorgan Chase Bank), a national banking association, as a Lender (the "Lender")
hereby agree as follows:
WITNESSETH
WHEREAS, the Borrower, certain of the 2000 Guarantors, the Agent and
the Lender entered into a certain Loan Agreement dated as of December 23, 1994,
as amended by the First Amendment to Loan Agreement, dated as of September 7,
1995, a Second Amendment to Loan Agreement, dated as of March 8, 1996, a Third
Amendment to Loan Agreement, dated as of December 31, 1997, a Fourth Amendment
to Loan Agreement, dated as of September 20, 2000 (which amended and restated
the said Agreement in its entirety), a Fifth Amendment to Loan Agreement, dated
as of March 31, 2003 (as so amended, "Loan Agreement");
WHEREAS, Kayla and Coolbrands (as such terms are defined in the Loan
Agreement) each executed a General Guaranty dated September 20, 2000 and the
2000 Guarantors (other than Kayla and Coolbrands) and the Other Guaranty Parties
executed a General Guaranty dated September 20, 2000 (the "All Other Guarantors
Guaranty");
WHEREAS, the Term Loan has been repaid and may not be reborrowed;
WHEREAS, the Borrower has requested that the Lender (i) further extend
the "Revolving Credit Maturity Date" (as defined in the Loan Agreement) to
November 1, 2005 and (ii) make a new loan to the Borrower (the "New Loan")
pursuant to separate documentation, which loan is to be used to finance an
acquisition ("Acquisition") of certain assets of Kraft Foods Global, Inc. by
Dairy pursuant to the Asset Purchase Agreement (defined herein), and which loan
will be guaranteed by Dairy, the Additional Guarantors, the 2000 Guarantors and
the Other Guaranty Parties (the "New Loan Guaranty"); and
WHEREAS, the Agent and the Lender have agreed to so amend the Loan
Agreement and make the New Loan, provided that, among other things, the Loan
Agreement be amended as set forth in this Amendment;
NOW, THEREFORE, in good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the 2000 Guarantors,
the Additional Guarantors, Dairy, the Other Guaranty Parties, the Agent and the
Lender hereby agree as follows:
1. Definitions. Except as otherwise stated, capitalized terms defined
in the Loan Agreement and used herein without definition shall have the
respective meanings assigned to them in the Loan Agreement.
2. Amendments.
(a) The following definitions are hereby added to the Loan
Agreement, in alphabetical order:
"Additional Guarantors" has the meaning given to such term in the
Sixth Amendment.
"Dairy" has the meaning given to such term in the Sixth
Amendment.
"Group One Guarantors" means the Original Guarantors, Dairy, the
Additional Guarantors and any Guarantor who joins in the Loan Agreement after
the date of the Sixth Amendment pursuant to Section 5.01(k) thereof.
"New Loan" has the meaning given to such term in the Sixth
Amendment.
"New Loan Guaranty" has the meaning given to such term in the
Sixth Amendment.
"Other Guaranty Parties" has the meaning given to such term in
the Second Amendment.
"Security Agreement" means the Security Agreement of even date
herewith made by Dairy in favor of the Lender (and the other "Secured Parties",
as defined therein), securing among other things, the obligations of Dairy under
the New Loan Guaranty and as a Group One Guarantor with respect to the Loan
Agreement and the Term Loan Note.
"Sixth Amendment" means the Sixth Amendment, Joinder and
Reaffirmation to Loan Agreement and Guaranties by and among the Borrower, the
Original Guarantors, Dairy, the Additional Guarantors, the Other Guaranty
Parties, the Agent and the Lender, dated March 21, 2005.
(b) The terms "Guarantor" and "Guarantors" as used in the Loan
Agreement shall be changed to "Group One Guarantor" and "Group One Guarantors",
respectively, throughout the Loan Agreement, except in Section 3.01(h) and in
any other place where the reference in question is specifically to a party to
one of the Guaranties.
(c) The term "Loan Documents" in Section 1.01 shall be amended to
add the New Loan Guaranty and the Security Agreement to the documents comprised
by such term.
2
(d) The term "Permitted Acquisitions" appearing in Section 1.01
of the Loan Agreement is amended by (i) renumbering subsection "(vii)" thereof
as subsection "(viii)" and (ii) adding a new subsection "(vii)" that shall read
"(vii) the acquisition is not hostile;" and (iii) by adding the following
proviso at the end thereof: "; provided, however, that the aggregate amount of
total Permitted Acquisitions shall not exceed $10,000,000.00 (plus the
consideration paid to acquire the "Acquired Assets" under and as defined in a
certain Asset Purchase Agreement by and between Kraft Foods Global, Inc. and
Dairy dated as of December 22, 2004 ["Asset Purchase Agreement"]) for the period
commencing on the date of the Second Amendment and ending on the Maturity Date."
(e) The term "Revolving Credit Loans" appearing in Section 1.01
of the Loan Agreement is amended by replacing the number "2.01" in the second
line thereof with the number "2.07".
(f) Section 2.07 of the Loan Agreement shall be amended by
replacing the phrase "Ten Million ($10,000,000.00) Dollars" in the eleventh line
therein with the phrase "Five Million Dollars ($5,000,000.00)."
(g) Section 5.03(a) of the Loan Agreement shall be amended by
replacing the amount "$3,000,000.00" in the third line thereof with the amount
"$15,000,000.00".
(h) Section 5.03(b) of the Loan Agreement shall be amended by
replacing the number "4.00" in the third line thereof with the number "2.75".
(i) Section 5.03(d) of the Loan Agreement shall be deleted in its
entirety and replaced with the phrase "[Intentionally Omitted]".
(j) For purposes of determining compliance with the provisions of
Sections 5.01 and 5.02 of the Loan Agreement, (i) Americana Foods, L.P. shall
not be deemed to be a "Guarantor" or a "Subsidiary" under and as defined in the
Loan Agreement, and (ii) the Borrower's or Coolbrands guaranty of certain debt
of Americana Foods, L.P., as described on Exhibit D attached hereto, shall be
permitted Debt under the Loan Agreement.
3. Representations and Warranties. The Borrower, Dairy, each
Additional Guarantor and each Original Guarantor hereby represents and warrants
to the Lender that:
(a) No default or Event of Default has occurred and is continuing
under the Loan Agreement or any of the other Loan Documents.
(b) All of the representations and warranties in the Loan
Agreement remain true and correct in all material respects on and as of the date
of this Amendment.
(c) Coolbrands has heretofore furnished to the Bank the financial
statements required pursuant to Section 5.01(b)(i) of the Loan Agreement. Such
financial statements were prepared in conformity with GAAP, and present fairly
and accurately the financial condition of Coolbrands and its Subsidiaries as of
the dates of such financial
3
statements; and between the date of the most recent such statements and the date
hereof, no Material Adverse Change has occurred with respect to Coolbrands and
its Subsidiaries.
(d) Dairy has heretofore furnished to the Bank a pro forma
balance sheet of Dairy which presents fairly and accurately the anticipated
financial condition of Dairy as of the closing date under the Asset Purchase
Agreement (other than changes in the normal course of the business being
acquired and subject to final allocation of the purchase price in connection
with the Acquisition) and between the date of delivery of such balance sheet and
the date hereof, no Material Adverse Change has occurred with respect to Dairy
as so presented nor do any of undersigned have any knowledge of any matter which
is likely to result in any Material Adverse Change in the financial condition of
Dairy on or prior to the closing date for the purchase and sale under the Asset
Acquisition Agreement (as defined in the Security Agreement).
(e) There is no obligation or liability, contingent or otherwise
of Coolbrands and its Subsidiaries (including Dairy) which is material in amount
and which is not reflected in the financial statements referred to in the
foregoing subsections (b), (c) and (d), as applicable.
(f) The Borrower is indebted under the Loan Agreement in the
amount of $975,000 (standby letter of credit) on account of the aggregate
outstanding Revolving Credit Loans, without defense, setoff or counterclaim of
any kind whatsoever.
4. Joinder. (a) Each of Dairy and the Additional Guarantors hereby
agrees to become a Guarantor as set forth in Section 5.01(k) of the Loan
Agreement and, by executing and delivering this Amendment, does hereby join in
the Loan Agreement (as amended hereby) as a Guarantor and a Group One Guarantor,
and joins in the All Other Guarantors Guaranty, as an "undersigned" thereunder.
Each of Dairy and the Additional Guarantors hereby agrees to comply with, and be
bound by, all of the terms and conditions of the foregoing agreements and
documents in which it has joined, as if it was an original signatory thereto.
(b) Without limiting the foregoing, each of Dairy and the
Additional Guarantors hereby expressly consents to the terms and conditions of
Sections 8.10 (Governing Law) and Section 8.11 (Waiver of Jury Trial) of the
Loan Agreement (as amended hereby).
(c) Simultaneously herewith, each of Dairy and the Additional
Guarantors is delivering to the Agent a certificate signed by an officer
thereof, certifying and attaching true and accurate copies of its (i)
certificate of incorporation (or equivalent), (ii) by-laws, (iii) resolutions of
its board of directors approving the transactions contemplated hereby (including
the New Loan), (iv) a certificate of incumbency of their respective approved
signatories, and (v) a good standing certificate from the Secretary of the State
in which it was organized, as well as other documentation as the Agent may
reasonably request.
(d) All of the undersigned agree that the joinder contemplated by
this Section 4 shall be deemed to be, and is hereby made a part of, the Loan
Agreement and the Guaranty as if set forth therein in full.
4
5. Reaffirmation.
(a) All Loan Documents which refer to the Loan Agreement are
deemed amended hereby to be references to as the Loan Agreement as amended
hereby and as the same may hereafter be amended, extended, supplemented,
restated, joined in or otherwise modified or replaced. The Borrower and each
Group One Guarantor hereby reaffirm all of their respective obligations and
liabilities under the Loan Agreement, Guaranties and other Loan Documents to
which such Person is a party.
(b) The Other Guaranty Parties hereby reaffirm all of their
respective obligations and liabilities under the All Other Guarantors Guaranty.
6. Full Force and Effect. As expressly modified by this Amendment, all
of the terms and provisions of the Loan Agreement and the other Loan Documents
shall continue in full force and effect, and all parties hereto shall be
entitled to the benefits thereof. The agreements herein contained are limited
specifically to the matters set forth above and do not constitute directly or by
implication an amendment or waiver of any other provision of the Loan Agreement
or any of the other Loan Documents which has not been expressly amended or
waived herein.
7. Incorporated Terms. The provisions of Sections 1.02, 1.03, 8.09,
8.10, 8.11 and 8.12 of the Loan Agreement are incorporated by reference, mutatis
mutandis, into this Amendment to the extent this Amendment is construed as an
agreement separate and independent from the Loan Agreement and the other Loan
Documents.
8. Amendment. This Amendment may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.
[Signatures appear on the following pages.]
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the date set forth above.
INTEGRATED BRANDS INC.
By:
----------------------------------
Name: Gary P. Stevens
Title: President
ESKIMO PIE FROZEN DISTRIBUTION INC.
By: /s/ David J. Stein
----------------------------------
Name: David J. Stein
Title: Chief Executive Officer
KAYLA FOODS INT'L (BARBADOS) INC.
SWENSEN'S ICE CREAM COMPANY
YOGEN FRUZ ACQUISITIONS INC.
NORTHERN LIGHTS FROZEN DESSERTS, INC.
COOLBRANDS INTERNATIONAL, INC.
ESKIMO PIE CORPORATION
SUGAR CREEK FOODS INC.
SWENSEN'S, INC.
EP ACQUISITION CORP.
BRESLER'S INDUSTRIES, INC.
GOLDEN SWIRL MANAGEMENT COMPANY
I CAN'T BELIEVE ITS YOGURT, LTD.
By Kayla Foods, Inc., its General Partner
JH ACQUISITION CORP.
STEVE'S HOMEMADE ICE CREAM CORP.
STEVE'S GOURMET ICE CREAM, INC.
STEVE'S HOMEMADE ICE CREAM OF FLORIDA, INC.
HEIDI'S FROZEN YOGURT, INC.
COOLBRANDS DIARY, INC.
SWENSEN'S MANUFACTURING
SWENSEN'S OPERATING COMPANY, INC.
SWENSON'S ICE CREAM COMPANY OF NEVADA
LOEL OF FLORIDA INC.
SWENSEN'S ICE CREAM FRANCHISE COMPANY INC.
AMERICAN GLACE, INC.
SWENSEN'S ICE CREAM OPERATING CO.
SWENSEN'S REAL ESTATE CORPORATION
SWENSEN'S OF ARIZONA, INC.
SWENSON'S DISTRIBUTING
LARRY'S INDUSTRIES, INC.
SWENSEN'S LAS VEGAS, INC.
SCHRAFFT'S OF NEVADA, INC.
KAYLA FOODS, INC.
GOLDEN SWIRL FRANCHISE COMPANY
BRESLER MALLS, INC.
YOGEN FRUZ USA FRANCHISE COMPANY INC.
LARRY'S LEASING, INC.
BRESLER'S STORES OF LAKE COUNTY, INC.
WINSTON MALLS, INC.
EXCHEQUER ACCEPTANCE CORP.
CHURNS HOLDING CORP.
CHURN FRANCHISING CORP.
By: /s/ David J. Stein
----------------------------------
Name: David J. Stein
Title: President
6th Amendment
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the date set forth above.
INTEGRATED BRANDS INC.
By: /s/ Gary P. Stevens
----------------------------------
Name: Gary P. Stevens
Title: President
ESKIMO PIE FROZEN DISTRIBUTION INC
By:
----------------------------------
Name: David J. Stein
Title: Chief Executive Officer
KAYLA FOODS INT'L (BARBADOS) INC.
SWENSEN'S ICE CREAM COMPANY
YOGEN FRUZ ACQUISITIONS INC.
NORTHERN LIGHTS FROZEN DESSERTS, INC.
COOLBRANDS INTERNATIONAL, INC.
ESKIMO PIE CORPORATION
SUGAR CREEK FOODS INC.
SWENSEN'S, INC.
EP ACQUISITION CORP.
BRESLER'S INDUSTRIES, INC.
GOLDEN SWIRL MANAGEMENT COMPANY
I CAN'T BELIEVE ITS YOGURT, LTD.
By Kayla Foods, Inc., its General Partner
JH ACQUISITION CORP.
STEVE'S HOMEMADE ICE CREAM CORP.
STEVE'S GOURMET ICE CREAM, INC.
STEVE'S HOMEMADE ICE CREAM OF FLORIDA, INC.
HEIDI'S FROZEN YOGURT, INC.
COOLBRANDS DIARY, INC.
SWENSEN'S MANUFACTURING
SWENSEN'S OPERATING COMPANY, INC.
SWENSON'S ICE CREAM COMPANY OF NEVADA
LOEL OF FLORIDA INC.
SWENSEN'S ICE CREAM FRANCHISE COMPANY INC.
AMERICAN GLACE, INC.
SWENSEN'S ICE CREAM OPERATING CO.
SWENSEN'S REAL ESTATE CORPORATION
SWENSEN'S OF ARIZONA, INC.
SWENSON'S DISTRIBUTING
LARRY'S INDUSTRIES, INC.
SWENSEN'S LAS VEGAS, INC.
SCHRAFFT'S OF NEVADA, INC.
KAYLA FOODS, INC.
GOLDEN SWIRL FRANCHISE COMPANY
BRESLER MALLS, INC.
YOGEN FRUZ USA FRANCHISE COMPANY INC.
LARRY'S LEASING, INC.
BRESLER'S STORES OF LAKE COUNTY, INC.
WINSTON MALLS, INC.
EXCHEQUER ACCEPTANCE CORP.
CHURNS HOLDING CORP.
CHURN FRANCHISING CORP.
By:
----------------------------------
Name: David J. Stein
Title: President
6th Amendment
JPMORGAN CHASE BANK, N.A., AS AGENT JPMORGAN CHASE BANK, N.A., AS LENDER
By: /s/ Peter J. D'Agostino By: /s/ Peter J. D'Agostino
---------------------------------- ----------------------------------
Name: PETER J. D'AGOSTINO Name: PETER J. D'AGOSTINO
Title: Senior Vice President/ Title: Senior Vice President/
Division Manager Division Manager
JPMorgan Chase Bank, N.A. JPMorgan Chase Bank, N.A.
2nd Amendment
Exhibit A
Original Guarantors
COOLBRANDS INTERNATIONAL INC., a Canadian corporation
KAYLA FOODS INT'L (BARBADOS) INC., a Barbados corporation
SWENSEN'S, INC., a Delaware corporation
SWENSEN'S ICE CREAM COMPANY, a California corporation
EP ACQUISITION CORP.
YOGEN FRUZ ACQUISITIONS INC., a Nevada corporation
BRESLER'S INDUSTRIES, INC.,
NORTHERN LIGHTS FROZEN DESSERTS, INC.
GOLDEN SWIRL MANAGEMENT COMPANY
I CAN'T BELIEVE ITS YOGURT, LTD.
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Exhibit B
Additional Guarantors
SUGAR CREEK FOODS INC., a Virginia corporation
ESKIMO PIE FROZEN DISTRIBUTION INC, a Delaware corporation
ESKIMO PIE CORPORATION, a Delaware corporation
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Exhibit C
Other Guaranty Parties
JH ACQUISITION CORP.
STEVE'S HOMEMADE ICE CREAM CORP.
STEVE'S GOURMET ICE CREAM, INC.
STEVE'S HOMEMADE ICE CREAM OF FLORIDA, INC.
HEIDI'S FROZEN YOGURT, INC.
AMERICAN GLACE, INC.
SWENSEN'S ICE CREAM OPERATING CO., INC.
SWENSEN'S REAL ESTATE CORPORATION
SWENSEN'S OF ARIZONA INC.
SWENSON'S DISTRIBUTING
SWENSEN'S MANUFACTURING
SWENSEN'S OPERATING COMPANY INC.
SWENSON'S ICE CREAM COMPANY OF NEVADA
LOEL OF FLORIDA INC.
SWENSEN'S ICE CREAM FRANCHISE COMPANY INC.
SWENSEN'S LAS VEGAS, INC.
SCHRAFFT'S OF NEVADA, INC.
KAYLA FOODS, INC.
GOLDEN SWIRL FRANCHISE COMPANY INC.
BRESLER MALLS, INC.
LARRY'S INDUSTRIES, INC.
LARRY'S LEASING, INC.
BRESLER'S STORES OF LAKE COUNTY, INC.
WINSTON MALLS, INC.
YOGEN FRUZ USA FRANCHISE COMPANY INC.
EXCHEQUER ACCEPTANCE CORP.
CHURNS HOLDING CORP.
CHURN FRANCHISING CORP.
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Exhibit D
Permitted Debt
A guaranty, now or hereafter existing, made by Integrated Brands Inc. or
Coolbrands International Inc. to Regent Bank of 50% of the obligations of
American Foods L.P. to Regents Bank in connection with a mortgage loan in the
principal amount of up to $5,500,000 secured by premises owned by American
Foods, L.P. in Dallas, Texas
A guaranty, now or hereafter existing, made by Integrated Brands Inc. or
Coolbrands International Inc. to Regent Bank of 100% of the obligations of
American Foods L.P. to Regents Bank in connection with a Revolving Credit
Facility in an aggregate principal amount of up to $9,000,000.00.
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WAIVER, SEVENTH AMENDMENT, JOINDER AND REAFFIRMATION
TO LOAN AGREEMENT, GUARANTIES AND SECURITY AGREEMENT
WAIVER, SEVENTH AMENDMENT, JOINDER AND REAFFIRMATION TO LOAN
AGREEMENT, GUARANTIES AND SECURITY AGREEMENT (this "Amendment"), dated as of
August 31, 2005, among INTEGRATED BRANDS, INC., a New Jersey corporation, (the
"Borrower"), each of the Group One Guarantors (as defined in the Loan Agreement
(as defined below)) listed on Exhibit A hereto and each of the entities listed
on Exhibit B hereto (the "Other Guaranty Parties"), JPMORGAN CHASE BANK, N.A.
(f/k/a JPMorgan Chase Bank), a national banking association, as agent (the
"Agent") for the Lenders (as defined in the Loan Agreement) and JPMORGAN CHASE
BANK, N.A. (f/k/a JPMorgan Chase Bank), a national banking association, as a
Lender (the "Lender").
WITNESSETH
WHEREAS, the Borrower, certain of the Group One Guarantors, the Agent
and the Lender entered into a certain Loan Agreement dated as of December 23,
1994 (the "Original Loan Agreement"), as amended by the First Amendment to Loan
Agreement, dated as of September 7, 1995, a Second Amendment to Loan Agreement,
dated as of March 8, 1996, a Third Amendment to Loan Agreement, dated as of
December 31, 1997, a Fourth Amendment to Loan Agreement, dated as of September
20, 2000 (which amended and restated the said Agreement in its entirety), and a
Fifth Amendment to Loan Agreement, dated as of March 31, 2003, and the Borrower,
the Group One Guarantors and the Other Guaranty Parties (together with the Group
One Guarantors, the "Guarantors") entered into a Sixth Amendment, Joinder and
Reaffirmation to Loan Agreement and Guaranties dated March 25, 2005 (the "Sixth
Amendment"; said Original Loan Agreement, as so amended through the Sixth
Amendment, the "Loan Agreement");
WHEREAS, (i) Kayla and Coolbrands (as such terms are defined in the
Loan Agreement) each executed a General Guaranty dated September 20, 2000 and a
Guaranty of Payment dated March 25, 2005, as amended by the 2005 Loan Amendment
(defined below; both such guaranties being, collectively, the "Foreign Entity
Guaranties") and (ii) certain of the Group One Guarantors and the Other Guaranty
Parties executed a General Guaranty dated September 20, 2000 (the "All Other
Guarantors Guaranty") and, pursuant to the Sixth Amendment, Coolbrands Dairy,
Inc. joined in the All Other Guarantors Guaranty, and (iii) the Group One
Guarantors (except Kayla and Coolbrands) and the Other Guaranty Parties executed
a Guaranty of Payment dated March 25, 2005, as amended by the 2005 Loan
Amendment (the "2005 Domestic Entity Guaranty");
WHEREAS, Yogen Fruz Canada, Inc. ("Yogen") is executing a Guaranty of
Payment dated the date of this Amendment (the "Yogen Guaranty" and, together
with the Foreign Entity Guaranties, the All Other Guarantors Guaranty and the
2005 Domestic Entity Guaranty, the "Guaranties");
WHEREAS, concurrently herewith (i) the Borrower, the Group One
Guarantors, the Other Guaranty Parties, the Agent and the Lender are entering
into a Waiver, Third Amendment, Joinder and Reaffirmation to Loan Agreement,
Guaranties and Security Agreement
(the "2000 Loan Amendment") with respect to a certain credit facility extended
to the Borrower pursuant to a Loan Agreement dated as of September 20, 2000 (as
amended through the date hereof, the "2000 Loan Agreement"), and (ii) the
Borrower, the Group One Guarantors, the Other Guaranty Parties and the Lender
are entering into a Waiver, First Amendment and Reaffirmation to Note,
Guaranties and Security Agreement (the "2005 Loan Amendment" and together with
the 2000 Loan Amendment, the "Other Amendments") with respect to a loan made to
the Borrower by the Lender and evidenced by the Borrower's Promissory Note dated
March 25, 2005 (the "2005 Note");
WHEREAS, certain Events of Default have occurred under the Loan
Agreement, which Events of Default are set forth on Schedule I to this Amendment
(the "Existing Events of Default"); and
WHEREAS, the Borrower and the Guarantors have requested that the Agent
and the Lender waive the Existing Events of Default; and the Agent and the
Lender are willing to waive the Existing Events of Default, but only on the
terms and conditions provided in this Amendment and in the Security Agreements
(as defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Guarantors, the
Agent and the Lender hereby agree as follows, effective as of August 31, 2005:
1. Definitions. Except as otherwise stated, capitalized terms defined
in the Loan Agreement and used herein without definition shall have the
respective meanings assigned to them in the Loan Agreement.
2. Amendments.
(a) The following definitions are hereby added to the Loan
Agreement, in alphabetical order:
"Allowable Expenses" shall have the meaning given to such term in
Section 5.02(d).
"Account Party" shall have the meaning given to such term in
Section 5.04.
"Americana" shall mean Americana Foods, L.P.
"Applicable Margin" means (a) for Eurodollar Loans, for the
period commencing on August 31, 2005 and ending on the Revolving Credit Maturity
Date, 4.50%; and (b) for Prime Rate Loans, for the period commencing August 31,
2005 and ending on the Revolving Credit Maturity Date, 2.50%.
"Applicable Percentage" shall have the meaning given to such term
in Section 5.02(d).
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"Canadian Security Agreements" means, collectively, the Security
Agreement made by Coolbrands in favor of the Agent and the Lender and the
Security Agreement made by Yogen in favor of the Agent and the Lender, each of
even date herewith.
"Capital Stock" shall have the meaning given to such term in
Section 5.02(d).
"Cash Collateral" means the $10,000,000 deposit made by the
Borrower into a deposit account at the Lender on or before the date of the
Seventh Amendment, which deposit account shall be under the exclusive dominion
and control of the Lender. The Cash Collateral shall constitute a portion of the
"Collateral" under the 2005 New Security Agreement.
"Collateral" means, collectively, the "Collateral" as defined in
the Dairy Security Agreement, in the Canadian Security Agreements and in the
2005 New Security Agreement.
"Dairy Security Agreement" means the Security Agreement dated
March 25, 2005 made by Dairy in favor of the Agent and the Lender.
"Depositary" shall have the meaning given to such term in Section
5.04 of this Agreement.
"Lockbox Accounts" shall have the meaning given to such term in
Section 5.04 of this Agreement.
"Lockbox Agreement" means, collectively, the blocked account
control agreements among some or all of the Agent, the Lender, the Depositary
and each Account Party, in form acceptable to the Agent and the Depositary, with
respect to the Lockbox Accounts, as contemplated by (and consistent with the
terms of) Section 5.04 of this Agreement.
"Net Proceeds" shall have the meaning given to such term in
Section 5.02(d).
"Permitted Dispositions" shall have the meaning given to such
term in Section 5.02(d).
"Seventh Amendment" means the Waiver, Seventh Amendment, Joinder
and Reaffirmation to Loan Agreement, Guaranties and Security Agreement by and
among the Borrower, the Group One Guarantors, the Other Guaranty Parties, the
Agent and the Lender, dated as of August 31, 2005.
"Stock Sale" shall have the meaning given to such term in Section
5.02(d).
"2005 New Security Agreement" means the Security Agreement of
even date herewith made by the Borrower and the Group One Guarantors (other than
Dairy, Coolbrands and Yogen) in favor of the Agent (and the other "Secured
Parties", as defined
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therein), securing, among other things, the respective obligations of the
Borrower and the Group One Guarantors under this Agreement and the other Loan
Documents.
"Security Agreements" means, collectively, the Dairy Security
Agreement, the Canadian Security Agreements and the 2005 New Security Agreement.
(b) The term "Loan Documents" in Section 1.01 of the Loan
Agreement is amended by (i) deleting the term "Security Agreement" and replacing
it with the term "Security Agreements" and (ii) adding the Lockbox Agreement and
the Yogen Guaranty.
(c) The terms "Permitted Acquisitions" and "Special Acquisition"
in Section 1.01 of the Loan Agreement are deleted in their entirety and all
references to such terms in the Loan Agreement (including, without limitation,
in Section 5.02(c) thereof) are also deleted; it being understood that from and
after the date of the Seventh Amendment, no Permitted Acquisitions (or Special
Acquisition) will be allowed under the Loan Agreement, without the Lender's
prior written consent which may be withheld in the Lender's sole and absolute
discretion.
(d) The term "Prime Rate Loan" in Section 1.01 of the Loan
Agreement is amended to read in its entirety as follows:
"Prime Rate Loan" shall mean a Loan bearing interest at the Prime
Rate plus the Applicable Margin.
(e) The term "Revolving Credit Maturity Date" in Section 1.01 of
the Loan Agreement is amended to read in its entirety as follows:
"Revolving Credit Maturity Date' means January 3, 2006."
(f) Each of Sections 2.05 and 2.10 of the Loan Agreement are
amended by deleting the phrase "the Prime Rate plus one half of one (1/2%)
percent" and replacing it with the following: "the Prime Rate plus the
Applicable Margin".
(g) Section 2.07 of the Loan Agreement is amended to provide
that: (i) the Commitment shall be reduced to $975,000; (ii) no Revolving Credit
Loan may be borrowed from and after August 30, 2005, unless the Lender expressly
consents thereto in its sole discretion and an outstanding $975,000 standby
letter of credit issued by the Lender (at the request of the Borrower or a
Guarantor) with respect to worker's compensation insurance shall be terminated
and repaid, if drawn, as required under the application and agreement pursuant
to which such letter of credit was issued; and (iii) the making of any new
Revolving Credit Loan (or any other extension of credit) will be at the sole
discretion of the Lender, and the Lender will have no obligation of any kind to
make any requested Revolving Credit Loan (or any other extension of credit).
(h) Section 4.01(f) of the Loan Agreement is deleted in its
entirety and replaced with the language in Section 3(c) of this Amendment.
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(i) Section 4.01(g) of the Loan Agreement is amended to delete
the reference to May 31, 2000 and replace it with "May 31, 2005".
(j) Section 4.01(h) of the Loan Agreement is deleted in its
entirety and replaced with the following:
"(h) Tax Returns. The Borrower and each Guarantor have
filed all federal, state (or province) and local tax returns
required to be filed and have paid all taxes, assessments and
governmental charges and levies that are reflected on such
returns, as due, including interest and penalties."
(k) A new Section 4.01(t) shall be added to the Loan Agreement
and shall read as follows:
"(t) The proper legal name of the Borrower and each of
the Group One Guarantors and the jurisdiction in which each such
Person was formed is as set forth on Exhibit A attached to the
Seventh Amendment and incorporated herein by this reference."
(1) Section 5.01(g) is amended to add the following sentence at
the end thereof:
"The cost incurred by the Agent on account of any of the
foregoing activities taken by any agent or representative of the
Agent shall be borne by the Borrower."
(m) A new Section 5.01(m) is added to the Loan Agreement which
reads as follows:
"(m) Other Reports. Use best efforts to provide the Agent
and the Lender, as soon as available and in no event later than (i)
the third Monday of each calendar month, commencing with September
2005, consolidated financial information concerning accounts
receivable and inventory for such preceding calendar month, in the
form of Exhibit 5.01(m)(i), and (ii) by Wednesday of each calendar
week, commencing on September 14, 2005, "flash reports" in the form of
Exhibit 5.01(m)(ii) with respect to cash (on a consolidated basis),
accounts receivable, accounts payables, sales and inventory with
respect to the Borrower and Eskimo Pie Frozen Distribution Inc., for
the calendar week ending prior to the immediately preceding calendar
week. In addition, within 45 days after the end of each calendar month
beginning with August 2005, the Borrower and the Guarantors shall use
their best efforts to provide the Agent and the Lender with
information concerning Consolidated EBITDA
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and accounts payable in such calendar month, in the form of Exhibit
5.01(m)(iii)."
(n) Section 5.02(b) is amended by deleting therefrom clause (iii)
in its entirety and replacing it with the following:
"(iii) Subordinated Debt incurred on or prior to May 31,
2005."
(o) Section 5.02 (d) is deleted in its entirety and is replaced
with the following:
"(d) Sale of Assets, Capital Stock, Etc. Except for a Stock
Sale (defined below) by Coolbrands, sell, assign, transfer, lease or
otherwise dispose of (including, without limitation, by way of any
sale-leaseback transaction) any assets or any Capital Stock of the
Borrower or of any Group One Guarantor (or any of their respective
Subsidiaries), including by way of a sale of treasury stock (or other
equity interests) or issuance of any new or additional shares of
capital stock (or other equity interests) including, without
limitation, options, warrants or other rights entitling the owner
thereof to acquire any such interests (capital stock (or other equity
interests), options, warrants and other such rights being,
collectively, "Capital Stock"), with or without recourse.
Notwithstanding the foregoing (i) sales of inventory in the ordinary
course of business, and (ii) the sale or other disposition of assets
no longer used or useful in the conduct of its business (provided that
the purchase price for such sale or other disposition shall not exceed
an aggregate amount of $500,000, for all such sales by the Borrower,
the Group One Guarantors and their respective Subsidiaries combined,
in any one calendar year) shall be permitted (sales or dispositions
permitted under clause (i) and (ii) being, collectively, "Permitted
Dispositions"); and provided, further, that so long as the transaction
in question does not violate Section 5.02(f): (a) the Borrower, each
of the Group One Guarantors, and any of their respective Subsidiaries
may sell such Person's own Capital Stock or issue new Capital Stock in
itself (each a "Stock Sale"); and (b) the Borrower and each Group One
Guarantor (other than Coolbrands), or any of the Subsidiaries of the
Borrower or of any Group One Guarantor, may sell their own respective
assets, provided that in any such case (under either (a) or (b)) the
Applicable Percentage of Net Proceeds from any such asset sale or such
Stock Sale (other than a Stock Sale by Coolbrands of its own Capital
Stock, for which no payment will be required) are immediately paid
over to the Lender to be applied to reduce the principal balance of
any loan (whether or not made pursuant to this Agreement) made to the
Borrower, any Group One Guarantor or any of their respective
Subsidiaries by the Lender (or, upon payment in full of all such
loans, to cash collateralize any letter of credit reimbursement
obligation to the
6
Lender of the Borrower, any Group One Guarantor or any of their
respective Subsidiaries). As used herein the term (A) "Net Proceeds"
shall mean with respect to any Group One Guarantor (other than
Coolbrands), the Borrower or any of the Subsidiaries of the Borrower
or of any Group One Guarantor, the gross sales price paid in any form
in respect of such Stock Sale or asset sale (other than a Permitted
Disposition), net of Allowable Expenses; (B) "Allowable Expenses"
shall mean the sum of (i) all reasonable fees and out-of-pocket
expenses paid by the Borrower, the applicable Group One Guarantor or
any of their responsive Subsidiaries, as applicable, to third parties
(other than any of their Affiliates) in connection with such Stock
Sale or asset sale, and (ii) the amount of all taxes paid (or
reasonably estimated to be payable) by the Borrower, the applicable
Group One Guarantor or any of their respective Subsidiaries in
connection with such Stock Sale or asset sale; and (C) "Applicable
Percentage" shall mean (I) 67%, in the case of Dairy, and (II) 50% in
the case of the Group One Guarantors (other than Coolbrands and
Dairy), the Borrower or any of the Subsidiaries of the Borrower or any
Group One Guarantor (other than Dairy)." Notwithstanding the language
in the Sixth Amendment which effectively excludes Americana as a
Subsidiary for purposes of this Section 5.02(d), it is expressly
agreed that the Borrower and the Guarantors shall promptly pay to the
Lender an amount equal to 50% of any distribution on account of Net
Proceeds (for this purpose calculated as if Americana were to be
treated as a Subsidiary) made to any of them resulting from an asset
sale (other than a Permitted Disposition; for this purpose, such term
will be deemed to apply to Americana as if it were to be treated as a
Subsidiary) or a Stock Sale by Americana, for application by the
Lender as set forth above with respect to Net Proceeds.
(p) Section 5.02(m)(ii) of the Loan Agreement is deleted in its
entirety.
(q) Each of Sections 5.03 (a), (b), (c) and (e) of the Loan
Agreement is deleted in its entirety and is replaced with the following:
"Intentionally Omitted."
(r) A new Section 5.03(f) is added to the Loan Agreement which
reads as follows:
"(f) Liquidity. The Borrower and the Group One Guarantors
shall maintain cash and cash equivalents (including the Cash
Collateral) in an amount at least equal to an aggregate amount of
$20,000,000, as measured on a weekly basis and certified to the Agent
weekly by electronic mail sent by the Borrower's Chief Financial
Officer to Peter.DAgostino@JPMorgan.com. Such certification shall be
accompanied by such other evidence of the liquid assets as the Agent
may request."
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(s) A new Section 5.04 is added to the Loan Agreement which reads
as follows:
"5.04 Lockbox. Each of Eskimo Pie Frozen Distribution Inc.
and Eskimo Pie Corporation (including, without limitation, its Value
America and EP Food Services divisions) and the Borrower (each, an "Account
Party") shall: (a) on or before September 30, 2005, establish an account
(each such account being a "Lockbox Account") at JPMorgan Chase Bank, N.A.
(the "Depositary") in which all Accounts Receivable (as defined in the 2005
New Security Agreement) shall thereafter be deposited; (b) (x) in the case
of Eskimo Pie Frozen Distribution Inc. and the Borrower, on or before
September 30, 2005, and (y) in the case of Eskimo Pie Corporation by
October 31, 2005, advise all of their respective Account Debtors (as
defined in the 2005 New Security Agreement) that they are required to make
all payments in respect of Accounts Receivable to the applicable Lockbox
Account; and (c) on or before September 30, 2005, enter into the Lockbox
Agreements. The Lockbox Agreements shall provide, among other things, (x)
that unless and until an Event of Default has occurred (i) resulting from a
default in the payment of any obligation of Borrower or any Guarantor to
the Agent or the Lender (including, without limitation any payment
obligation under Section 5.02(d)), (ii) under Section 6.01(e) of this
Agreement, (iii) resulting from a default under Section 5.03(f), or (iv)
resulting from a failure to comply with Section 6(h) of the Seventh
Amendment, the Depositary shall honor (unless the Lender expressly directs
otherwise in writing) all withdrawal or other instructions from the
applicable Account Party concerning the Lockbox Account, and (y) that on
and after the occurrence and during the continuance of any such Event of
Default, the Agent or the Lender (and without the consent of the Borrower
or any other Account Party), shall have the exclusive right to give all
withdrawal and other instructions to the Depositary concerning any Lockbox
Account. In such event, neither the Borrower nor any other Account Party
shall have any right to cause any withdrawal or transfer of funds from any
Lockbox Account, unless the Lender expressly directs otherwise in writing.
(For the avoidance of doubt, the Borrower hereby confirms that (A) the term
"Accounts Receivable" includes amounts paid or payable to the Borrower by
Kraft Foods Global, Inc., pursuant to documents made in connection with the
Acquisition (as defined in the Sixth Amendment), on account of sales of
Dairy's inventory, and (B) nothing in this Section 5.04 is intended to
limit any of the Agent's or the Lender's rights and remedies not pertaining
to the Lockbox Accounts by reason of the occurrence of an Event of Default
other than those enumerated in clauses (i) through (iv) above; the Lender
hereby confirming that only such enumerated items shall constitute a basis
for the Lender to exercise such control over any Lockbox Account.)
(t) Sections 6.01(h) and (j) are amended by adding "; or" at the
end thereof (and deleting the period in each case).
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(u) A new Section 6.01(k) is added to the Loan Agreement which
reads as follows:
"(k) Except as permitted under this Agreement, any Lien
granted pursuant to any of the Security Agreements shall for any
reason cease to be a valid and perfected first priority lien on and
security interest in the Collateral purported to be covered thereby;
or"
(v) Section 8.02 is amended to change the address for notices and
other communications to the Borrower and the Guarantors to be to the attention
of David Stein, with a copy to Lori Smith, Esq., Goodwin Procter LLP, 599
Lexington Avenue, New York 10022.
3. Representations and Warranties. The Borrower and each Group One
Guarantor hereby represents and warrants to the Lender that:
(a) After giving effect to the waivers embodied in this
Amendment, there is no Event of Default under the Loan Agreement or the Loan
Documents, or any Default that shall become and Event of Default thereunder with
the passage of time, existing or continuing on the date hereof other than the
Existing Events of Default.
(b) Except for those representation and warranties under Sections
4.01(a), (b), and (s) which are to be brought down to date pursuant to Section
6(j) of this Amendment, as of the date of this Amendment all of the
representations and warranties in the Loan Agreement (as modified by this
Amendment) remain true and correct in all material respects on and as of the
date of this Amendment.
(c) Coolbrands has heretofore furnished to the Lender the
financial statements required pursuant to Section 5.01(b)(ii) of the Loan
Agreement for the fiscal quarter ended May 31, 2005. Such financial statements
were prepared in conformity with GAAP, and present fairly and accurately the
financial condition of Coolbrands and its Consolidated Subsidiaries as of the
dates of such financial statements; and between the date of the most recent such
statements and the date hereof, no Material Adverse Change has occurred with
respect to Coolbrands and its Consolidated Subsidiaries. In this connection, the
Lender is aware of the financial projections for Coolbrands and its Consolidated
Subsidiaries for the fiscal year ended August 31, 2005, the Lender having
received the same on June 29, 2005.
(d) There is no obligation or liability, contingent or otherwise
of Coolbrands and its Subsidiaries which is material in amount and which is not
reflected in the financial statements referred to in the foregoing subsection
(c).
(e) The Borrower is indebted under the Loan Agreement in the
amount of $975,000.00 (with respect to the single standby letter of credit
referred to in Section 2(f) of this Amendment) without defense, setoff or
counterclaim of any kind whatsoever. There are no outstanding Revolving Credit
Loans.
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4. Waivers. Upon the effectiveness of this Amendment, the Lender and
the Agent hereby waive the Existing Events of Default. The waiver set forth in
the foregoing sentence is limited specifically to the Existing Events of Default
and does not constitute, directly or by implication, a waiver of any other
provision of the Loan Agreement or any of the other Loan Documents (before or
after the effectiveness of this Amendment), or of any other right, power, or
privilege of the Lender, or of any Default or Event of Default which may occur,
or may have occurred (other than the Existing Events of Default), before or
after the effectiveness of this Amendment, or otherwise.
5. Conditions of Effectiveness of this Amendment. This Amendment shall
be effective as of the date (on or before September 2, 2005) when the following
have been received by the Agent and the Lender (or their counsel), all in form
and substance satisfactory to the Agent and the Lender (the "Effective Date"):
(a) Amendment. Counterparts of this Amendment and the Other
Amendments, duly executed by the Borrower, the Group One Guarantors and the
Other Guaranty Parties.
(b) Security Agreements. The 2005 New Security Agreement duly
executed by the Borrower and the Group One Guarantors (except Dairy, Coolbrands
and Yogen) and the Canadian Security Agreements duly executed by Coolbrands and
Yogen, respectively.
(c) Yogen Guaranty. The Yogen Guaranty, duly executed by Yogen.
(d) Resolutions. Certified copies of resolutions of the Borrower
and Coolbrands authorizing their execution, delivery and performance of this
Amendment, the 2000 Loan Amendment, the 2005 Loan Amendment and the Security
Agreements, to the extent such Person is a party thereto or bound thereby, and a
certificate of an officer (or equivalent) of the Borrower and Coolbrands,
certifying the names of the Person(s) authorized to sign this Amendment, the
2000 Loan Amendment, the 2005 Loan Amendment, the applicable Canadian Security
Agreement, and the 2005 New Security Agreement, or by which it is bound,
together with a sample of the true signature of each such Person (it being
understood that the Agent and the Lender may conclusively rely on each such
certificate until formally advised by a like certificate of any changes
therein).
(e) Fees. Payment of all accrued and unpaid legal fees and
disbursements of the Agent's and the Lender's counsel in connection with all
matters pertaining to this Amendment and the Other Amendments.
(f) Cash Collateral. Delivery to the Lender of the Cash
Collateral.
6. Post Closing Undertaking: On or before September 30, 2005 (the
"Post-Closing Delivery Date"), the following documents (collectively, the
"Post-Closing Documents") shall have been delivered to the Agent and the Lender
(or their counsel), all in form and substance satisfactory to the Agent and the
Lender.
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(a) Resolutions. Certified copies of resolutions of the Group One
Guarantors (other than Coolbrands) authorizing and ratifying their execution,
delivery and performance of this Amendment, the Other Amendments, the Security
Agreements (to the extent such Person is a party thereto or bound thereby) and,
with respect to Yogen, the Yogen Guaranty.
(b) Good Standing Certificate, Organizational Documents,
Consents, Etc. (i) Corporate (or equivalent) good standing certificates for the
Borrower and each of the Group One Guarantors, (ii) certified copies of the
organizational documents of the Borrower and each of the Group One Guarantors
(or, for any of the Borrower and Group One Guarantors for which organizational
documents were delivered to the Lender in March 2005, any amendment to such
organizational documents since March 25, 2005 and a certified statement that
except for any such amendments there have been no other changes in such
organizational documents since March 25, 2005); and true copies of any documents
evidencing all necessary third-party consents and governmental approvals (if
any) required for the execution, delivery and performance by the Borrower and
the Group One Guarantors of this Amendment, the Other Amendments and the
applicable Security Agreements.
(c) Incumbency and Signature Certificates. A certificate of an
officer (or equivalent) of the Group One Guarantors (other than Coolbrands),
certifying the names of the Person(s) authorized to sign this Amendment, the
Other Amendments and the applicable Security Agreements (as applicable), or by
which it is bound, together with a sample of the true signature of each such
Person (it being understood that the Agent and the Lender may conclusively rely
on each such certificate until formally advised by a like certificate of any
changes therein).
(d) Lockbox Account Agreements. Fully executed counterparts of
the Lockbox Agreements, together with evidence reasonably satisfactory to the
Agent that the Borrower and Eskimo Pie Frozen Distribution Inc. have advised
their Account Debtors (as defined in the respective Security Agreements) to make
all payments with respect to Accounts Receivable to the applicable Lockbox
Account.
(e) Perfection Certificates. A completed perfection certificate,
signed by an officer of the Borrower and each of the Group One Guarantors, in
the form attached to the 2005 New Security Agreement (and such perfection
certificate attached to the 2005 New Security Agreements shall be deemed to
state thereon "to be completed by the Borrower and each applicable Group One
Guarantor on or prior to the Post-Closing Delivery Date"). Coolbrands and Yogen
shall also provide perfection certificates in a similar form with reference to
the "Secured Property" under the Canadian Security Agreements, by the
Post-Closing Delivery Date.
(f) Insurance Certificates. Certificates confirming that all
insurance required under the Security Agreements, the Loan Agreement and the
2000 Loan Agreement is in full force and effect.
11
(g) Lien Searches. Lien searches and Patent and Trademark Office
searches (to the extent not attached to the 2005 New Security Agreement on the
date of this Amendment) against the Borrower and the Group One Guarantors
showing no Liens other than Liens permitted under the Loan Agreement, the 2000
Loan Agreement and the 2005 Note.
(h) Air Products UCC-3. UCC-3 financing statement(s) terminating
all UCC financing statements filed by Air Products and Chemicals, Inc. with
respect to the Borrower's assets (or an amendment to such financing statement(s)
pursuant to which Air Products and Chemicals, Inc.'s security interest in the
Borrower's assets is limited to the nitrogen tunnels owned by Air Products and
Chemicals, Inc., in each case, together with a letter from Air Products and
Chemicals, Inc. authorizing the filing thereof by the Agent or the Lender.
(i) Opinions. Opinion(s) from counsel for the Borrower and each
of the Group One Guarantors which has been organized in New Jersey, Delaware,
New York or Virginia (as shown on Exhibit A attached hereto and incorporated
herein by this reference), in substantially the same form as the opinion letter
provided by Goodwin Procter LLP in connection with the 2005 Note, with regard to
the due organization, authorization and execution of this Amendment, the Other
Amendments, the 2005 New Security Agreement, the Yogen Guaranty and the Canadian
Security Agreements, the enforceability of this Amendment, the Other Amendments
and the Security Agreements (and, in the case of the Dairy Security Agreement,
reaffirmed by Dairy in this Amendment and the Other Amendments), and the
perfection of the Liens granted to the Lender under the Security Agreements
(including, without limitation, an opinion from Canadian counsel for Coolbrands
and Yogen with respect to each of the foregoing matters).
(j) Certificate of Representations. A certificate of the Borrower
and each of the Group One Guarantors certifying that each of the representations
and warranties in Article IV of each of the Loan Agreement and the 2000 Loan
Agreement and in the Guaranties, is true and correct on and as of a date not
earlier than as of the date of this Amendment, in each case, except to the
extent set forth in a supplemental schedule attached to and made a part of such
certificate, which supplemented schedule will, among other things, restate such
representation and warranties to refer to matters arising after May 31, 2005.
(k) Fees. Payment of the Lender's legal fees and disbursements
and other out-of-pocket expenses, if any, in connection with this Amendment, the
Other Amendments and post-closing matters with respect hereto and thereto, which
fees and disbursements were not paid upon the execution and delivery of this
Amendment.
The failure of the Agent or the Lender (or their counsel) to receive any of the
Post-Closing Documents on or prior to the Post-Closing Delivery Date shall be an
Event of Default under the Loan Agreement.
7. Joinder. (a) Yogen hereby agrees to become a Group One Guarantor
(referred to in the Loan Agreement prior to the Sixth Amendment as a
"Guarantor") as set forth in Section 5.01(k) of the Loan Agreement and, by
executing and delivering this Amendment, does hereby join in the Loan Agreement
(as amended hereby) as a Group One Guarantor. Yogen
12
hereby agrees to comply with, and be bound by, all of the terms and conditions
of the Loan Agreement (as amended hereby) as if it was an original signatory
thereto.
(b) Without limiting the foregoing, Yogen hereby expressly
consents to the terms and conditions of Sections 8.10 (Governing Law) and
Section 8.11 (Waiver of Jury Trial) of the Loan Agreement (as amended hereby).
(c) All of the undersigned agree that the joinder contemplated by
this Section 7 shall be deemed to be, and is hereby made a part of, the Loan
Agreement,
8. Reaffirmation.
(a) All of the Loan Documents which refer to the Loan Agreement
are deemed amended hereby to be references to the Loan Agreement as amended
hereby and as the same may hereafter be amended, extended, supplemented,
restated, joined in or otherwise modified or replaced. The Borrower and each of
the Group One Guarantors hereby reaffirm all of their respective obligations and
liabilities under the Loan Agreement, the Guaranties, the Security Agreements
and other Loan Documents to which such Person is a party.
(b) The Other Guaranty Parties hereby reaffirm all of their
respective obligations and liabilities under the All Other Guarantors Guaranty.
9. Full Force and Effect. As expressly modified by this Amendment, all
of the terms and provisions of the Loan Agreement and the other Loan Documents
shall continue in full force and effect, and all parties hereto shall be
entitled to the benefits thereof. The agreements herein contained are limited
specifically to the matters set forth above and do not constitute directly or by
implication an amendment or waiver of any other provision of the Loan Agreement
or any of the other Loan Documents which has not been expressly amended or
waived herein.
10. Incorporated Terms. The provisions of Sections 1.02, 1.03, 8.09,
8.10, 8.11 and 8.12 of the Loan Agreement are incorporated by reference, mutatis
mutandis, into this Amendment to the extent this Amendment is construed as an
agreement separate and independent from the Loan Agreement and the other Loan
Documents.
11. Amendment. This Amendment may not be changed orally, but only by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
[Signatures appear on the following pages.]
13
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the date set forth above.
INTEGRATED BRANDS INC.
By: /s/ Gary P. Stevens
------------------------------------
Name: Gary P. Stevens
Title: President
ESKIMO PIE FROZEN DISTRIBUTION INC.
By:
------------------------------------
Name: David J. Stein
Title: Chief Executive Officer
YOGEN FRUZ CANADA INC.
By:
------------------------------------
Name:
Title:
KAYLA FOODS INT'L (BARBADOS) INC.
SWENSEN'S ICE CREAM COMPANY
YOGEN FRUZ ACQUISITIONS INC.
NORTHERN LIGHTS FROZEN DESSERTS, INC.
COOLBRANDS INTERNATIONAL, INC
ESKIMO PIE CORPORATION
SUGAR CREEK FOODS INC.
SWENSEN'S, INC.
BRESLER'S INDUSTRIES, INC.
GOLDEN SWIRL MANAGEMENT COMPANY
I CAN'T BELIEVE ITS YOGURT, LTD.
By Kayla Foods, Inc., its General Partner
JH ACQUISITION CORP.
STEVE'S HOMEMADE ICE CREAM CORP.
STEVE'S GOURMET ICE CREAM, INC.
STEVE'S HOMEMADE ICE CREAM OF FLORIDA, INC.
HEIDI'S FROZEN YOGURT, INC.
COOLBRANDS DIARY, INC.
SWENSEN'S MANUFACTURING
SWENSEN'S OPERATING COMPANY, INC.
SWENSON'S ICE CREAM COMPANY OF NEVADA
LOEL OF FLORIDA INC.
SWENSEN'S ICE CREAM FRANCHISE COMPANY INC.
AMERICAN GLACE, INC.
SWENSEN'S ICE CREAM OPERATING CO.
SWENSEN'S REAL ESTATE CORPORATION
SWENSEN'S OF ARIZONA, INC.
SWENSON'S DISTRIBUTING
LARRY'S INDUSTRIES, INC.
SWENSEN'S LAS VEGAS, INC.
SCHRAFFT'S OF NEVADA, INC.
KAYLA FOODS, INC.
GOLDEN SWIRL FRANCHISE COMPANY
BRESLER MALLS, INC.
YOGEN FRUZ USA FRANCHISE COMPANY INC.
LARRY'S LEASING, INC.
BRESLER'S STORES OF LAKE COUNTY, INC.
WINSTON MALLS, INC.
EXCHEQUER ACCEPTANCE CORP.
CHURNS HOLDING CORP.
CHURN FRANCHISING CORP.
YOGEN FRUZ CANADA INC.
By:
------------------------------------
Name: David J. Stein
Title: President
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the date set forth above.
INTEGRATED BRANDS INC.
By:
------------------------------------
Name: Gary P. Stevens
Title: President
ESKIMO PIE FROZEN DISTRIBUTION INC.
By: /s/ David J. Stein
------------------------------------
Name: David J. Stein
Title: Chief Executive Officer
YOGEN FRUZ CANADA INC.
By: /s/ Illegible
------------------------------------
Name:
Title:
KAYLA FOODS INT'L (BARBADOS) INC.
SWENSEN'S ICE CREAM COMPANY
YOGEN FRUZ ACQUISITIONS INC.
NORTHERN LIGHTS FROZEN DESSERTS, INC.
COOLBRANDS INTERNATIONAL, INC
ESKIMO PIE CORPORATION
SUGAR CREEK FOODS INC.
SWENSEN'S, INC.
BRESLER'S INDUSTRIES, INC.
GOLDEN SWIRL MANAGEMENT COMPANY
I CAN'T BELIEVE ITS YOGURT, LTD.
By Kayla Foods, Inc., its General Partner
JH ACQUISITION CORP.
STEVE'S HOMEMADE ICE CREAM CORP.
STEVE'S GOURMET ICE CREAM, INC.
STEVE'S HOMEMADE ICE CREAM OF FLORIDA, INC.
HEIDI'S FROZEN YOGURT, INC.
COOLBRANDS DIARY, INC.
SWENSEN'S MANUFACTURING
SWENSEN'S OPERATING COMPANY, INC.
SWENSON'S ICE CREAM COMPANY OF NEVADA
LOEL OF FLORIDA INC.
SWENSEN'S ICE CREAM FRANCHISE COMPANY INC.
AMERICAN GLACE, INC.
SWENSEN'S ICE CREAM OPERATING CO.
SWENSEN'S REAL ESTATE CORPORATION
SWENSEN'S OF ARIZONA, INC.
SWENSON'S DISTRIBUTING
LARRY'S INDUSTRIES, INC.
SWENSEN'S LAS VEGAS, INC.
SCHRAFFT'S OF NEVADA, INC.
KAYLA FOODS, INC.
GOLDEN SWIRL FRANCHISE COMPANY
BRESLER MALLS, INC.
YOGEN FRUZ USA FRANCHISE COMPANY INC.
LARRY'S LEASING, INC.
BRESLER'S STORES OF LAKE COUNTY, INC.
WINSTON MALLS, INC.
EXCHEQUER ACCEPTANCE CORP.
CHURNS HOLDING CORP.
CHURN FRANCHISING CORP.
YOGEN FRUZ CANADA INC.
By: /s/ David J. Stein
------------------------------------
Name: David J. Stein
Title: President
JPMORGAN CHASE BANK, N.A., AS AGENT JPMORGAN CHASE BANK, N.A., AS LENDER
By: /s/ Patrick J. Faccon By: /s/ Patrick J. Faccon
---------------------------------- -----------------------------------
Name: PATRICK J. FACCON Name: PATRICK J. FACCON
Title: SVP Title: SVP
Exhibit A
Group One Guarantors
COOLBRANDS INTERNATIONAL INC., a Canadian corporation
KAYLA FOODS INT'L (BARBADOS) INC., a Barbados corporation
SWENSEN'S, INC., a Delaware corporation
SWENSEN'S ICE CREAM COMPANY, a California corporation
YOGEN FRUZ ACQUISITIONS INC., a Nevada corporation
BRESLER'S INDUSTRIES, INC., an Illinois corporation
NORTHERN LIGHTS FROZEN DESSERTS, INC., a Utah corporation
GOLDEN SWIRL MANAGEMENT COMPANY, a Utah corporation
I CAN'T BELIEVE ITS YOGURT, LTD., a Texas limited partnership
SUGAR CREEK FOODS INC., a Virginia corporation
ESKIMO PIE FROZEN DISTRIBUTION INC, a Delaware corporation
ESKIMO PIE CORPORATION, a Virginia corporation
COOLBRANDS DAIRY, INC., a Delaware corporation
YOGEN FRUZ CANADA INC., an Ontario Business Corporation
Exhibit B
Other Guaranty Parties
JH ACQUISITION CORP.
STEVE'S HOMEMADE ICE CREAM CORP.
STEVE'S GOURMET ICE CREAM, INC.
STEVE'S HOMEMADE ICE CREAM OF FLORIDA, INC.
HEIDI'S FROZEN YOGURT, INC.
AMERICAN GLACE, INC.
SWENSEN'S ICE CREAM OPERATING CO., INC.
SWENSEN'S REAL ESTATE CORPORATION
SWENSEN'S OF ARIZONA INC.
SWENSON'S DISTRIBUTING
SWENSEN'S MANUFACTURING
SWENSEN'S OPERATING COMPANY INC.
SWENSON'S ICE CREAM COMPANY OF NEVADA
LOEL OF FLORIDA INC.
SWENSEN'S ICE CREAM FRANCHISE COMPANY INC.
SWENSEN'S LAS VEGAS, INC.
SCHRAFFT'S OF NEVADA, INC.
KAYLA FOODS, INC.
GOLDEN SWIRL FRANCHISE COMPANY INC.
BRESLER MALLS, INC.
LARRY'S INDUSTRIES, INC.
LARRY'S LEASING, INC.
BRESLER'S STORES OF LAKE COUNTY, INC.
WINSTON MALLS, INC.
YOGEN FRUZ USA FRANCHISE COMPANY INC.
EXCHEQUER ACCEPTANCE CORP.
CHURNS HOLDING CORP.
CHURN FRANCHISING CORP.
Exhibit 5.01(m)(i)
Consolidated Financial Information Concerning
Accounts Receivable and Inventory
[Exhibit begins on the following page]
Exhibit 5.01(m)(ii)
Weekly Flash Report
[Exhibit begins on the following page]
Exhibit 5.01(m)(iii)
Consolidated EBITDA/AP Report
[Exhibit begins on the following page]
SCHEDULE 1
(1) The Borrower and the Group One Guarantors are not in compliance
with the covenant set forth in Section 5.03(b) of the Loan Agreement not be
permit the ratio of Funded Debt to EBITDA of Coolbrands and its Consolidated
Subsidiaries to be greater than 2.75 to 1.00 at any time;
(2) The Borrower and the Group One Guarantors are not in compliance
with the covenant set forth in Section 5.03(e) of the Loan Agreement not to
permit the Debt Service Coverage Ratio of Coolbrands and its Consolidated
Subsidiaries to be less than 1.25 to 1.0 at any time.
(3) Cross defaults to the foregoing covenants as they appear in the
2000 Loan Agreement and the 2005 Note.
SUBORDINATION AGREEMENT AND ASSIGNMENT
Brooklyn, New York September 20, 2000
In order to induce THE CHASE MANHATTAN BANK, as Agent for certain lenders
described below (hereinafter called the "Agent"), to extend certain credit
facilities described below and to continue to extend certain other credit
facilities described below, each to INTEGRATED BRANDS, INC., a New Jersey
corporation, (hereinafter called the "Borrower"), with such maturity or
maturities, to bear such rate or rates of interest, to be unsecured or secured
by such collateral security, to be direct or indirect, absolute or contingent,
and to contain such other terms and provisions as may be agreed upon from time
to time between the Bank and the Borrower (all such financial accommodations and
extensions of credit the "Superior Indebtedness"), the undersigned, to whom the
Borrower is now, or may be in the future, indebted (hereinafter called the
"Creditor", whether one or more creditors executes this instrument), hereby
warrants and represents to and agrees with the Bank as follows:
The Senior Indebtedness shall consist of:
(i) All indebtedness of the Borrower to the Agent and the Lenders
under that certain Loan Agreement dated as of September 20, 2000 among the
Borrower, certain guarantors, The Chase Manhattan Bank, as Agent and The Chase
Manhattan Bank as Lender pursuant to which the Lender makes a term loan
available to Borrower in the original principal amount of $30,000,000.00;
(ii) All indebtedness of the Borrower to the Agent and the Lenders
under that certain Loan Agreement dated as of December 23, 1994 as amended as of
September 20, 2000 among the Borrower, certain guarantors, The Chase Manhattan
Bank, as Agent and The Chase Manhattan Bank as Lender, pursuant to which the
Lender has made available to the Borrower a term loan in the original principal
amount of $4,500,000.00 and revolving credit loans in the maximum principal
amount of $10,000,000.00
As of the date hereof, the Borrower is indebted to the Creditor in the
principal amount of $7,500,000.00 represented by the following instruments or
agreements:
Promissory Note of even date herewith given by the Borrower to the Creditor
in the principal amount of $7,500,000.00, a copy of which is annexed hereto.
None of the above is subject to any counterclaim, defense or offset of any kind,
and no part thereof has previously been assigned, encumbered or disposed of by
the Creditor. Except as disclosed to the Bank, none of the above is in default.
The Creditor hereby subordinates the payment of the principal, interest,
fees and all other amounts owing on the above described indebtedness, with all
extensions and renewals thereof or of any part thereof (all such indebtedness,
being hereinafter collectively referred to as the "Subordinated Indebtedness"),
to the prior, final and irrevocable payment in full of the principal, interest
(including interest accruing after the bankruptcy of the Borrower), fees and all
other amounts owing on the Superior Indebtedness.
The Creditor agrees that so long as any Superior Indebtedness remains
unpaid, and except as provided in the next succeeding sentence, the Creditor
will not accept any payment (whether for principal, interest, fees or otherwise)
on account of, or any collateral security for, any Subordinated Indebtedness
whether from the Borrower or any other person liable with respect to the
Subordinated Indebtedness. Notwithstanding the foregoing, until the Creditor has
been notified by the Bank that there is a default in the payment of, or the
performance of any obligation related to, the Superior Indebtedness, the
Borrower may pay, and the Creditor may receive, regularly scheduled, if any,
installment payments, and interest thereon, on the Subordinated Indebtedness.
Upon the Bank giving notice to the Creditor that any such default on the
Superior Indebtedness has occurred, the permitted payments on the Subordinated
Indebtedness described in the foregoing sentence shall cease, and the provisions
of the first sentence of this paragraph shall control. The Creditor further
agrees that any non-payment of principal, interest or fees on the Subordinated
Indebtedness required by this Agreement is waived during the term of this
Agreement and shall not be a default in the Subordinated Indebtedness. In the
event that the Borrower or any other person liable with respect to the
Subordinated Indebtedness shall offer any payment on account of, or any
collateral security for, any Subordinated Indebtedness, (other than as expressly
permitted hereby) the Creditor will direct that the same be made or delivered to
the Bank, and if any such moneys and/or collateral security shall come into the
hands of the Creditor on account of any Subordinated Indebtedness from any
source whatsoever, the Creditor will receive the same solely as the Bank's agent
and will immediately turn the same, in the form received, except for the
endorsement of the Creditor when appropriate, over to the Bank for application
on account of the Superior Indebtedness, and that until so delivered, the
Creditor will hold the same in trust as the Bank's property. If the Creditor
shall fail or refuse to endorse
-2-
any writing for the payment of money payable to the Creditor or to the order of
the Creditor, which has been delivered to the Bank, the Bank is hereby
irrevocably constituted and appointed attorney-in-fact for the Creditor with
full power to make such endorsement.
The Creditor agrees that as long as there is any Superior Indebtedness
outstanding, it will not accelerate, sue, bring or participate in any other
proceeding (whether administrative, legal or equitable), or take any other
action to collect, or enforce any rights under, the Subordinated Indebtedness or
take any similar action which may have an adverse effect on the Borrower,
without the prior written consent of the Bank. The Creditor shall notify the
Bank of any default in the payment of, or the performance of any obligation
related to, the Subordinated Indebtedness.
The Creditor agrees not to accept any collateral to secure the Subordinated
Indebtedness or release, modify or amend any document, instrument or agreement
relating to the Subordinated Indebtedness, in each case without the prior
written consent of the Bank.
This Agreement is a continuing agreement and, unless the Bank shall have
specifically consented in writing to its revocation, shall remain in full force
in all respects whether or not the Borrower shall at any time be indebted to the
Bank. If after the payment of principal, interest, fees and all other amounts
owing on all Superior Indebtedness and any expenses hereinafter authorized and
provided for, the Borrower shall thereafter become liable to the Bank on account
of any new Superior Indebtedness, this Agreement shall thereupon be applicable
in all respects to any such new Superior Indebtedness without the necessity of
any further action, notice, understanding or writing by, between or among the
Bank, the Creditor and/or the Borrower.
With or without notice to or further assent from the Creditor, the Bank may
at any time or times, in its absolute discretion, either prior to or after any
default on the part of the Borrower with respect to either the Subordinated
Indebtedness or the Superior Indebtedness: (i) extend, renew or change, refuse
to extend, renew or change any of the Superior Indebtedness, waive any default,
modify, rescind or waive any provision of any related agreement or collateral
undertaking, including, but not by way of limitation, any provision relating to
acceleration of maturity, (ii) fail to set off any deposit balances or any part
thereof on its books in favor of the Borrower and release the same, (iii)
release, exchange, fail to resort to, or realize upon, or apply, any collateral
security or any part thereof held by or available to it for the Superior
Indebtedness, and (iv) generally deal with the Borrower in such manner as the
Bank may see fit, all without
-3-
impairing or affecting its rights and remedies under this Agreement. The
Creditor hereby waives any and all notice of the receipt and acceptance of this
Agreement by the Bank and of the creation, renewal, extension or accrual of any
of the Superior Indebtedness, present or future, in whole or in part, by the
Bank or of the reliance by the Bank on this Agreement at any time or times, and
further waives notice of any default at any time on the part of the Borrower.
The Creditor waives any right to interpose any defense, counterclaim or offset
with respect to the Superior Indebtedness or the Subordinated Indebtedness.
This Agreement shall continue in full force and effect notwithstanding the
death or incapacity of the Creditor (if the Creditor is an individual) or the
dissolution of the Creditor (if the Creditor is a partnership, limited liability
company or corporation) and shall be binding on the Creditor and the Creditor's
estate and the personal representatives, heirs, successors and assigns of the
Creditor and the Bank may continue to act in reliance upon this Agreement until
the Superior Indebtedness is paid in full.
The Creditor agrees to pay to the Bank on demand all expenses of every
kind, including reasonable counsel fees, which it may incur in enforcing its
rights hereunder.
If this Agreement is executed by more than one Creditor, the liability and
obligations of the Creditor hereunder shall be joint and several.
Any notice to the Bank shall be effective only if directed to and received
by it at the office making the loan or Superior Indebtedness to the Borrower.
The Creditor waives trial by jury, and the right to interpose any defense,
counterclaim or offset of any nature or description in any litigation arising
out of or in any way connected with the Subordinated Indebtedness or this
Agreement, and agrees that jurisdiction over the Creditor shall rest in the
Supreme Court of the State of New York and that the venue of any such litigation
shall be the county in which is located the Bank's office making the loan or
Superior Indebtedness to the Borrower.
No delay on the Bank's part in exercising any right or rights hereunder or
in failing to exercise the same shall operate as a waiver of such right or
rights, and no notice to or demand on the Borrower or the Creditor shall be
deemed a waiver of the Bank's right to take further action without notice or
demand; nor in any event shall any modification, alteration or waiver of any of
the
-4-
provisions hereof be effective unless in writing and signed for or on behalf of
the Bank and then only in the specific instance for which given.
This Agreement shall be deemed to be a contract made in the State of New
York and entered into under and pursuant to the laws of said State and shall be
governed, construed and enforced and all rights and obligations hereunder shall
be determined in accordance with the laws of said State.
IN WITNESS WHEREOF, this Agreement has been executed by the Creditor on
this 20th day of September, 2000.
KAYLA FOODS INT'L (BARBADOS) INC.
By /s/ David J. Stein
-------------------------------------
David J. Stein
President
-5-
ACKNOWLEDGMENT OF BORROWER
The undersigned, the Borrower referred to in the Subordination Agreement
and Assignment to which this Acknowledgment is annexed, hereby agrees to do and
perform all acts necessary to enable the Bank and the Creditor to fulfill all of
their obligations under the Agreement, and agrees to refrain from doing all acts
(including, but without limitation, making payments on the Subordinated
Indebtedness) which would cause Creditor or the Agent to violate such
obligations. Borrower further agrees that if any violation of this Agreement
shall occur, all of the obligations (including the Superior Indebtedness) of
Borrower to the Agent and the Lenders shall become immediately due and payable,
any term, covenant or condition contained in any other agreement or in the
instrument evidencing such obligations to the contrary notwithstanding.
Date: September 20, 2000 INTEGRATED BRANDS INC.
By /s/ Gary P. Stevens
-------------------------------------
Gary P. Stevens
President