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PROMISSORY NOTE
$40,000,000.00 March 25, 2005
New York, New York
FOR VALUE RECEIVED, INTEGRATED BRANDS INC., a New Jersey corporation,
having an address located at 4175 Veterans Highway, Ronkonkoma, New York 11779
(the "Maker"), promises to pay to JPMORGAN CHASE BANK, N.A., a national banking
association, having an office at 4 Chase MetroTech Center, Brooklyn, New York
11245 (the "Payee"), or order, at 4 Chase MetroTech Center, Brooklyn, New York
11245, or at such other place as may be designated in writing by the holder of
this Note, in Federal funds or other immediately available New York City funds
(all lawful currency of the United States of America): (i) interest on the
unpaid Principal Balance hereof computed from the date hereof and calculated in
the manner hereinafter set forth, from and including the date of this Note to,
but not including, the date this Note is paid in full, on each Re-Set Date
during the term of this Note and on the Maturity Date (defined below), and (ii)
the principal sum of FORTY MILLION AND 00/100 ($40,000,000.00) DOLLARS on the
Maturity Date.
1. CERTAIN DEFINITIONS. The following terms as used in this Note shall have
the following meanings:
(a) The term "Base LIBOR Rate" shall have the meaning given to such
term in Schedule A to this Note.
(b) The term "Asset Purchase Agreement" shall mean the Asset Purchase
Agreement by and between Kraft Foods Global, Inc. and the Borrower dated as of
December 22, 2004.
(c) The term "Capital Lease" means a lease which has been or should
be, in accordance with GAAP, capitalized on the books of the lessee.
(d) The term "Credit Parties" means the Borrower, the Guarantors and
any other Person which is required to become a Guarantor pursuant to the
provisions of Paragraph 17 below (and specifically Section 5.01(k) of each of
the Existing Credit Facilities).
(e) The term "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
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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.
(f) The term "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.
(g) The term "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.
(h) The term "Existing Credit Facilities" means the Loan Agreement
dated as of September 20, 2000, as amended to date, and the Loan Agreement dated
December 23, 1994, as amended to date, each among the Borrower, certain
guarantors (as named therein), the Payee as agent thereunder and the lenders
named therein.
(i) The term "Fixed LIBOR Rate" shall have the meaning given to such
term in Schedule A to this Note.
(j) The term "Floating Rate" shall mean a rate per annum equal to the
Prime Rate plus 0.50%. Any change in the Floating Rate as a result of a change
in the Prime Rate shall be effective on the effective date of any such change in
the Prime Rate. The Floating Rate and the components thereof shall be calculated
for the actual number of days elapsed on the basis of a 360-day year. Each
determination of the Floating Rate shall be made by the Payee and shall be
conclusive and binding upon the Maker absent manifest error.
(k) The term "GAAP" shall mean generally accepted accounting
principals in the United States of America.
(l) The term "Guarantor" or "Guarantors" means any Person guaranteeing
the obligations of the Maker under this Note and the Other Loan Documents
(m) The term "Guaranty" shall have the meaning given to such term in
Paragraph 13(f).
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(n) The term "Interest Period" shall have the meaning given to such
term in Schedule A to this Note.
(o) The term "LIBOR Rate" shall have the meaning given to such term in
Schedule A to this Note.
(p) The term "Lien" shall mean 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 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.
(q) The term "Loan" shall mean the loan in the principal sum of
$40,000,000 made by the Payee to the Maker which is evidenced by this Note and
the Other Loan Documents.
(r) The term "Maturity Date" shall mean the date which is the earlier
to occur of (i) November 1, 2005 and (ii) the date on which the Asset Purchase
Agreement shall have terminated without consummation of the purchase and sale
contemplated thereunder.
(s) The term "Multiemployer Plan" means a Plan described in Section
4001(a) (3) of ERISA which covers employees of the Borrower or any ERISA
Affiliate.
(t) The term "Obligations" shall mean all principal, interest,
additional interest and other sums of any nature whatsoever which may or shall
become due to the Payee in accordance with the provisions of this Note or the
Other Loan Documents.
(u) The term "Obligee" shall have the meaning given to such term in
Paragraph 3 of this Note.
(v) The term "Other Loan Documents" shall mean each Guaranty, the
Security Agreement and all and any of the other documents other than this Note,
executed by the Maker or others in connection with this Note, any Guaranty or
the Security Agreement.
(w) The term "Participant" shall have the meaning given to such term
in Paragraph 8 of this Note.
(x) The term "PBGC" means the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
(y) The term "Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, limited
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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.
(z) The term "Plan" means any employee benefit plan established,
maintained, or to which contributions have been made by the Borrower or any
ERISA Affiliate.
(aa) The term "Prime Rate" shall have the meaning given to such term
in Schedule A to this Note.
(bb) The term "Principal Balance" shall mean the outstanding principal
balance of this Note from time to time.
(cc) The Term "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.
(dd) The term "Reinvestment Rate" shall have the meaning given to such
term in Paragraph 7 of this Note.
(ee) The term "Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
(ff) The term "Re-Set Date" shall have the meaning given to such term
in Schedule A to this Note.
(gg) The term "Roll Over Date" shall have the meaning given to such
term in Schedule A to this Note.
(hh) The term "Security Agreement" shall mean the Security Agreement
dated the date of this Note made by Coolbrands Dairy Inc., as Debtor, and
Payee, as Lender, in connection with the Loan.
(ii) The term "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.
(jj) The term "Telerate Page 3750" shall have the meaning given to
such term in Schedule A to this Note.
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(kk) The term "Working Day" shall have the meaning given to such term
in Schedule A to this Note.
2. APPLICABLE RATE. From and including the date upon which the Loan is
advanced to, but not including, the first Re-Set Date during the term of this
Note, the entire Principal Balance shall bear interest at the Floating Rate.
From and including the first such Re-Set Date during the term of this Note and
on each Re-Set Date after the first Re-Set Date the entire Principal Balance
shall, except as specifically provided to the contrary in Paragraph 7 of this
Note, and in Paragraphs 3, 4 and 6 of Schedule A hereto, bear interest at the
LIBOR Rate.
3. CAPITAL REQUIREMENTS. If after the date of this Note the Payee shall
have determined that:
(a) the adoption, after the date of this Note, of any other law, rule,
regulation or guideline regarding capital adequacy,
(b) any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any domestic or foreign governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or
(c) the compliance by the Payee or any Participant (each, an
"Obligee") or any lending office of an Obligee, as the case may be, or by any
such Obligee's holding company, as the case may be, 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 any such Obligee's capital, or on the
capital of any such Obligee's holding company, as the case may be, as a
consequence of having made the Loan or any portion thereof, or of having any
interest therein, or of any such Obligee's obligations with respect thereto, or
under this Note or the Other Loan Documents, to a level below that which any
such Obligee, or any such Obligee's holding company, as the case may be, could
have achieved but for such adoption, change or compliance (taking into
consideration any such Obligee's policies or the policies of any such Obligee's
holding company, as the case may be, with respect to capital adequacy) by an
amount deemed by the Payee to be material in its reasonable judgment, then, from
time to time, the Maker shall pay to the Payee such additional amount or amounts
as will compensate any such Obligee, or any such Obligee's holding company, as
the case may be, for such reduction. Any amount or amounts payable by the Maker
to the Payee in accordance with the provisions of this Paragraph 3 shall be paid
by the Maker to the Payee within ten (10) days of receipt by the Maker from the
Payee of a statement setting forth the amount or amounts due and the basis for
the determination from time to time of such amount or amounts, which statement
shall be conclusive and binding upon the Maker absent manifest error.
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4. INDEMNITY.
(a) Anything in this Note or any of the Other Loan Documents to the
contrary notwithstanding, except to the extent arising in connection with the
Payee's gross negligence or willful misconduct, the Maker shall indemnify and
hold the Payee harmless and defend the Payee at the Maker's sole cost and
expense against any loss or liability, cost or expense, including, without
limitation, reasonable out-of-pocket attorneys' fees and disbursements of the
Payee's counsel, and all claims, actions, procedures and suits arising out of or
in connection with:
(i) any ongoing matters arising out of this Note, any of the Other
Loan Documents or the transaction contemplated hereby or thereby.
(ii) any amendment to, or restructuring of, the Obligations, this Note
or any of the Other Loan Documents,
(iii) any and all lawful action that may be taken by the Payee in
connection with the enforcement of the provisions of this Note or any of
the Other Loan Documents, whether or not suit is filed in connection
with the same, or in connection with the Maker or any Guarantor and/or
any partner, joint venturer or shareholder thereof becoming subject of a
voluntary or involuntary federal or state bankruptcy, insolvency or
similar proceeding, and
(iv) any liability to brokers, finders or similar persons and/or under
any applicable securities or blue sky laws.
All sums expended by the Payee on account of any of the foregoing shall be
reimbursable on demand, and until reimbursed by the Maker pursuant hereto, shall
be deemed additional principal evidenced hereby and shall bear interest at the
default interest rate hereinbelow set forth.
(b) The Maker shall indemnify each Obligee against any loss or expense
that any such Obligee may sustain or incur as a consequence of any default by
the Maker in the payment of any portion of the Principal Balance bearing
interest at a LIBOR Rate, or any part thereof or interest accrued thereon at a
LIBOR Rate, as and when due and payable, or the occurrence of any default or
event of default under this Note or the Other Loan Documents, including, but not
limited to, any loss or expense sustained or incurred by any such Obligee in
liquidating or reemploying deposits from third parties acquired to effect or
maintain a LIBOR Rate with respect to all or any portion of the Principal
Balance. The Payee shall provide to the Maker a statement explaining the amount
of any such loss or expense, which statement shall be conclusive and binding
upon the Maker absent manifest error.
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5. INCREASED COSTS. The Maker recognizes that the cost to each Obligee of
making or maintaining a LIBOR Rate with respect to the Principal Balance, or any
portion thereof, may fluctuate, and the Maker agrees to pay the Payee within ten
(10) days after demand by the Payee an additional amount or amounts as the Payee
shall reasonably determine will compensate each such Obligee for additional
costs incurred by each such Obligee in maintaining a LIBOR Rate on the Principal
Balance or any portion thereof as a result of:
(i) the imposition after the date of this Note of, or changes after
the date of this Note in, the reserve requirements promulgated by the Board
of Governors of the Federal Reserve System of the United States including,
but not limited to, any reserve on Eurocurrency Liabilities as defined in
Regulation D of the Board of Governors of the Federal Reserve System of the
United States at the ratios provided in such Regulation from time to time,
any portion of the Principal Balance bearing interest at a LIBOR Rate from
time to time in accordance with the provisions of this Note shall be deemed
to constitute Eurocurrency Liabilities, as defined by such Regulation, and
it being further agreed that such Eurocurrency Liabilities shall be deemed
to be subject to such reserve requirements without benefit of, or credit
for, prorations, exceptions or offsets that may be available to any such
Obligee from time to time under such Regulations, and irrespective of
whether any such Obligee actually maintains all or any portion of such
reserve; or
(ii) any change, after the date of this Note, in applicable law, rule
or regulation, or in the interpretation or administration thereof, by any
domestic or foreign governmental authority charged with the interpretation
or administration thereof (whether or not having the force of law) or by
any domestic or foreign court, changing the basis of taxation of any
payments to any such Obligee under this Note or the Other Loan Documents
(other than taxes imposed on all or any portion of the overall net income
of any such Obligee by any state or country or by any political subdivision
or taxing authority), or imposing, modifying or applying any reserve,
special deposit or similar requirement against assets of, deposits with or
for the account of, credit extended by, or any other acquisition of funds
for loans by any such Obligee or imposing on any such Obligee, or on the
London Interbank Market, any other condition affecting this Note or the
Other Loan Documents or the portion of the Principal Balance bearing
interest at LIBOR Rate so as to increase the cost to any such Obligee of
making or maintaining a LIBOR Rate with respect to the Principal Balance or
any portion thereof or to reduce the amount of any sum received or
receivable by any such Obligee under this Note or the Other Loan Documents
(whether of principal, interest or otherwise), by an amount deemed by the
Payee in good faith to be material, but without duplication for payments
required under subparagraph (i) above.
Any amount or amounts payable by the Maker to the Payee pursuant to
subparagraphs (i) or (ii) of this Paragraph 5 shall be paid by the Maker to the
Payee within ten (10) days of receipt by the Maker from the Payee of a statement
setting forth the amount or amounts due and the basis for
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the determination from time to time of such amount or amounts, which statement
shall be conclusive and binding upon the Maker absent manifest error. Failure on
the part of the Payee to demand compensation for any increased costs in any
Interest Period shall not constitute a waiver of the Payee's right to demand
compensation for any increased costs incurred during any such Interest Period or
in any other subsequent or prior Interest Period.
6. INTENTIONALLY OMITTED.
7. PREPAYMENT.
(a) Subject to the following provisions of this Paragraph 7, and upon
payment of any interest and other sums otherwise then due and payable pursuant
to the provisions of this Note or the Other Loan Documents, the Maker shall have
the right to prepay the Principal Balance in whole, or in part, upon not less
than three (3) Working Days' prior irrevocable written notice to the Payee
specifying the intended date of prepayment and the amount to be prepaid. Any
portion of the Principal Balance which is prepaid may not be re-borrowed. The
portion of the Principal Balance specified in any such irrevocable notice of
prepayment shall, notwithstanding anything to the contrary contained in this
Note or any of the Other Loan Documents, be absolutely and unconditionally due
and payable on the date specified in such notice. Any partial prepayment of the
Principal Balance in accordance with the provisions of this Paragraph 7 shall be
in a minimum amount of at least $100,000, and shall be applied in reduction of
the outstanding Principal Balance in the inverse order of maturity. No partial
prepayment of the Principal Balance shall be permitted in accordance with the
provisions of this Paragraph 7 if such partial prepayment would reduce the
Principal Balance below $1,000,000, or any Obligee's interest in the Loan below
$500,000. The Payee shall not be obligated to accept any prepayment of the
Principal Balance unless it is accompanied by the prepayment premium, if any,
due in connection therewith as calculated pursuant to the provisions of this
Paragraph 7, it being understood and agreed that no prepayment premium payable
under this Paragraph 7 shall in any event or under any circumstance be deemed or
construed to be a penalty.
(b) If such prepayment of principal bearing interest at the LIBOR Rate
does not occur on a Roll Over Date, the Maker shall pay to the Payee
contemporaneously with any such prepayment a prepayment premium equal to the
portion of the Principal Balance being prepaid, multiplied by a per annum
interest rate equal to the difference between the then applicable Base LIBOR
Rate and the 360-day equivalent interest yield, as adjusted to reflect interest
payments on a monthly basis (the "Reinvestment Rate"), on any U.S. Government
Treasury obligations selected by the Payee, in its sole and absolute discretion,
in an aggregate amount comparable to the portion of the Principal Balance being
prepaid, and with maturities comparable to the next occurring Roll Over Date,
calculated over a period of time from and including the date of prepayment to,
but not including, such next occurring Roll Over Date. If the then applicable
Base LIBOR Rate is equal to or less than the Reinvestment Rate, no prepayment
premium, nor any rebate, shall be due. If a portion of the Principal Balance is
bearing interest at a LIBOR Rate and a portion of the Principal Balance is
bearing interest at the
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Floating Rate in accordance with the provisions of this Note on the date of a
partial prepayment of the Principal Balance in accordance with the provisions of
this Paragraph 7, such partial prepayment shall be applied to the respective
portions of the Principal Balance of this Note bearing interest at a LIBOR Rate
and the Floating Rate in such order and manner so as to minimize the prepayment
premium due with respect thereto as calculated pursuant to the provisions of
this Paragraph 7.
(c) The Maker shall have the option upon not less than fifteen (15)
Working Days' prior written notice to the Payee, given simultaneously and in
conjunction with a notice of prepayment given by the Maker to the Payee pursuant
to this Paragraph 7, to convert the interest rate on the portion of the
Principal Balance which is to be prepaid, as set forth in such notice of
prepayment, to the Floating Rate effective as of the Re-Set Date occurring
immediately prior to the designated date of prepayment, as set forth in such
notice of prepayment, it being agreed that such Re-Set Date must be ten (10)
Working Days or more after the date of receipt by the Payee from the Maker of
the Maker's notice of election to exercise such option pursuant to this
Paragraph 7. The aforesaid option may not be exercised by the Maker more than
two (2) times during the term of this Note unless otherwise agreed to the
contrary by the Payee, in its sole and absolute discretion, and then only in
conjunction with a voluntary prepayment of the Principal Balance in accordance
with the provisions of this Paragraph 7. If the Maker exercises the aforesaid
option, the interest rate on the portion of the Principal Balance with respect
to which the Maker has exercised such option will automatically convert to and
be calculated at the Floating Rate from and including the Re-Set Date occurring
immediately prior to the specified date of prepayment, as set forth in the
Maker's notice of prepayment, to, but not including, the earlier to occur of:
(i) the date upon which such portion of the Principal Balance is paid
in full, or
(ii) the first Re-Set Date occurring after the specified date of
prepayment, whereupon the interest rate on such portion of the Principal
Balance shall (subject to the provisions of this Note) thereafter be
calculated at a LIBOR Rate determined in accordance with the provisions of
this Note.
(d) The Payee shall, at the request of the Maker, deliver to the Maker
a statement setting forth the amount and basis of determination of the
prepayment premium, if any, due in connection with a prepayment of any portion
of the Principal Balance in accordance with the provisions of this Paragraph 7,
it being agreed that:
(i) the calculation of such prepayment premium may be based on any
U.S. Government Treasury obligations selected by the Payee, in its sole and
absolute discretion,
(ii) no Obligee shall be obligated or required to have actually
reinvested the
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prepaid portion of the Principal Balance in any such U.S. Government
Treasury obligations as a condition precedent to the Maker being obligated
to pay a prepayment premium calculated as aforesaid, and
(iii) the Maker shall not have the right to question the correctness
of any such Statement or the method of calculation set forth therein in the
absence of manifest error.
The Maker shall, upon receipt of such statement and contemporaneously with any
such prepayment of the Principal Balance, remit to the Payee the prepayment
premium, if any, due in connection therewith, as calculated pursuant to the
provisions of this Paragraph 7.
(e) Any payment of the Principal Balance after the Payee shall have
declared the Obligations immediately due and payable in accordance with the
provisions of this Note or the Other Loan Documents, shall be deemed to be a
voluntary prepayment for all purposes of this Paragraph 7. If the Payee shall
have declared the Obligations immediately due and payable, then in addition to
any other payments required under this Note and the Other Loan Documents a
prepayment premium calculated pursuant to the above provisions of Paragraph 7,
shall also be payable with respect thereto. Any such prepayment premium to be
calculated in accordance with the foregoing provisions of this Paragraph 7 shall
be based upon the Base LIBOR Rate applicable to the Principal Balance
immediately prior to such default, declaration or commencement.
8. PARTICIPATIONS AND SECURITIZATION.
(a) The Maker acknowledges that the Payee may, after the date of this
Note, sell and assign the Loan and/or interests (including, without limitation,
participation interests) in the Loan to such domestic or foreign banks,
insurance companies, pension funds, trusts, other institutional lenders or
governmental agencies or other Persons, parties or investors (including, but not
limited to, grantor trusts, owner trusts, special purpose corporations, or other
similar or comparable investment vehicles) as may be selected by the Payee in
its sole and absolute discretion and on terms and conditions satisfactory to the
Payee in its sole and absolute discretion (any such bank, insurance company,
pension fund, trust or other institutional lender or other Person, party or
investor to whom the Loan or an interest in the Loan has been or is hereafter so
sold and assigned is herein referred to as a "Participant"). The foregoing may
take the form of a syndication of the Loan, if the Payee so elects.
(b) The Maker shall cooperate, and shall cause each Guarantor,
indemnitor and other Person or party associated or connected with the Maker, the
Loan or the collateral therefor to cooperate, in all material respects, with the
Payee in connection with the sale of the Loan, or of interests in the Loan, in
the manner contemplated by this Paragraph 8, and shall, in connection therewith,
execute and deliver such estoppels, certificates, instruments and documents as
may be requested by the Payee, any and all of which may be relied on by any
Participant. The Maker grants to the Payee, each Guarantor, indemnitor and other
Person or
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party associated or connected with the Maker, the Loan or any collateral
therefor to grant to the Payee, the right to distribute on a confidential basis
financial and other information concerning the Maker, each such Guarantor,
indemnitor and other Person or party and any collateral therefor and other
pertinent information with respect to the Loan to any party who has purchased
the Loan or an interest in the Loan or who, in the Payee's judgment, may have an
interest in purchasing the Loan or an interest in the Loan.
(c) The Payee also reserves the right at any time during the term of
the Loan, in its sole and absolute discretion, to effect a so-called
securitization of the Loan in such a manner and on such terms and conditions
(but without modification to the Maker's obligations under this Note) as the
Payee shall deem to be appropriate in its sole and absolute discretion and with
such domestic or foreign banks, insurance companies, pension funds, trusts,
other institutional lenders or governmental agencies or other Persons, parties
or investors (including, but not limited to, grantor trusts, owner trusts,
special purpose corporations, or other similar or comparable investment
vehicles) as may be selected by the Payee in its sole and absolute discretion.
(d) If the Maker shall default in the performance of any of its
obligations as set forth in this Paragraph 8, and if such default shall not be
remedied by the Maker within ten (10) days after notice by the Payee, the Payee
shall have the right, in its discretion, to declare the Obligations immediately
due and payable.
9. INTENTIONALLY OMITTED.
10. INTENTIONALLY OMITTED.
11. MAXIMUM PERMISSIBLE RATE. This Note is subject to the express condition
that at no time shall the Maker be obligated or be required to pay interest on
the Principal Balance at a rate which could subject the Payee to liability as a
result of being in excess of the maximum rate which the Maker is permitted by
law to contract or agree to pay. If by the terms of this Note the Maker is at
any time required or obligated to pay interest on the Principal Balance at a
rate in excess of such maximum rate, then the rate of interest under this Note
shall be deemed to be immediately reduced to such maximum rate, interest payable
hereunder shall be computed at such maximum rate and any prior interest payments
made in excess of such maximum rate shall be applied and shall be deemed to have
been payments made in reduction of the Principal Balance.
12. SET OFF. In addition to any right available to the Payee under
applicable law or any other agreement, the Maker hereby gives to the Payee a
lien on, security interest in and right of set-off of all moneys, securities and
other property of the Maker and the proceeds thereof, now or hereafter delivered
to remain with or in transit in any manner to the Payee, its correspondents or
its agents from or for the Maker, whether for safekeeping, custody, pledge,
transmission, collection or otherwise or coming into possession of the Payee, in
any way, and also, any balance
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of any deposit account and credits of the Maker with, and any and all claims of
the Maker against, the Payee, at any time existing, as collateral security for
the payment of this Note, the Obligations and of all liabilities and obligations
now or hereafter owed by the Maker to the Payee, in connection therewith,
including fees contracted with or acquired by the Payee, whether joint, several,
direct, indirect, absolute, contingent, secured, matured or unmatured (all of
which are hereafter collectively called "Liabilities"), hereby authorizing the
Payee at any time or times, without prior notice, to apply such balances,
credits or claims, or any part thereof, to such Liabilities in such amounts as
it may select, whether contingent, unmatured or otherwise and whether any
collateral security therefor is deemed adequate or not. The collateral security
described herein shall be in addition to any collateral security described in
any separate agreement executed by the Maker. The Payee, in addition to any
right available to it under applicable law or any other agreement, shall have
the right, at its option, to immediately set off against this Note and/or any
other Liabilities all monies owed by the Payee in any capacity to the Maker,
whether or not due, and the Payee, shall, at its option, be deemed to have
exercised such right to set off and to have made a charge against any such money
immediately upon the occurrence of any default or event of default contemplated
by Paragraph 13 hereof, even though such charge is made or entered on the books
of the Payee subsequent to those events.
13. EVENTS OF DEFAULT. If any of the following events (each an "Event of
Default") shall occur and be continuing:
(a) The Maker shall fail to make any payment of principal or interest
on this Note, when due; or
(b) Any representation or warranty made by the Maker or any Guarantor
herein or in any of the Other 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 the Loan, shall prove to have been incorrect in
any material respect when made; or
(c) The Maker, any Guarantor, or any Subsidiary of any of them (i)
shall fail to pay (A) any other indebtedness owing to the Payee (other than
principal or interest on this Note), or (B) any other Debt in excess of
$1,000,000.00 in principal amount in the aggregate (excluding Debt evidenced by
this Note) of the Maker, any Guarantor and all such Subsidiaries taken together,
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 any agreement
or instrument relating to such Debt; or (ii) any other default under any
agreement or instrument relating to any Debt described in foregoing clause
(i)(B), or any other event shall occur and shall continue after the applicable
grace period, if any, specified in any 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; (iii) or any Debt described in foregoing clause
(i)(B) 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
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(d) The Maker, any Guarantor or any Subsidiary of any of them shall
generally not pay its debts as such debts become due, or shall 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 Maker, any Guarantor or any Subsidiary of any of them 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 Maker, any Guarantor or any such
Subsidiary, shall remain undismissed for a period of 90 days; or the Maker, any
Guarantor or any Subsidiary shall take any action to authorize any of the
actions set forth above in this subsection (d); or
(e) Any judgment or order or combination of judgments or orders for
the payment of money, in excess of $500,000.00 in the aggregate, where such
judgment(s) shall not be subject to full, complete and effective insurance
coverage, shall be rendered against the Maker, any Guarantor or any Subsidiary
of any of them and either (i) enforcement proceedings shall have been commenced
by any creditor upon any such judgment or order or (ii) there shall be any
period of 30 consecutive days during which a stay of enforcement of any such
judgment or order (by reason of a pending appeal or otherwise) shall not be in
effect; or
(f) Any Guarantor shall fail to perform or observe any term or
provision of any guaranty of payment (a "Guaranty") of the Obligations, 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
(g) Any of the following events occur or exist with respect to the
Maker, 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 by 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 Payee subject the Maker, any Guarantor, any Subsidiary of any of
them 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; or
(h) This Note or any of the Other Loan Documents, at any time after
its execution and delivery and for any reason, ceases to be in full force and
effect or shall be
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declared to be null and void, or the validity or enforceability of any document
or instrument delivered pursuant to this Note shall be contested by the Maker,
any Guarantor or any party to such document or instrument or the Maker, 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
(i) (A) A default beyond applicable periods of notice and grace, if
any, or (B) an event entitling the Payee to declare the Principal Balance
immediately due and payable, shall occur under this Note (other than those items
specified above in this Paragraph 13) or under any Other Loan Document; or
(j) Pursuant to Paragraph 17 below, the Maker shall fail to perform
any term, covenant or agreement set forth in Section 5.01 of each of the
Existing Credit Facilities within fifteen (15) days after notice of such failure
has been given to the Maker by the Payee; or
(k) (A) A default beyond applicable periods of Notice and grace or (B)
an event entitling the "Agent" or any "Lender" thereunder to declare any
indebtedness thereunder to be immediately due and payable, shall occur under
either Existing Credit Facility;
then it is hereby expressly agreed that the Obligations shall become immediately
due and payable upon the occurrence of any event described in subparagraph (d)
and in the case of the occurrence of any other event described in this Section
13, the Obligations shall become due and payable at the option of the Payee.
14. LATE PAYMENT CHARGE. If all or any portion of the indebtedness, whether
of principal, interest, additional interest or other sum (if any) payable under
this Note is not paid within fifteen (15) days after the date on which it is
due, the Maker shall pay to the Payee on demand an amount equal to 2% of such
unpaid portion as a late payment charge. It is hereby expressly agreed that such
late charge is to compensate the Payee for costs incurred in connection with the
administration of such default, and does not constitute a penalty.
15. DEFAULT INTEREST. In addition to any late payment charge which may be
due under this Note, if an Event of Default shall occur then, at the option of
the Payee, the Maker shall thereafter, unless and until such date, if any, as
the Payee may elect, in its sole and absolute discretion, to waive, in writing,
all or any portion of such interest, pay interest on the Principal Balance from
the date of such declaration or the Maturity Date, as the case may be, until the
date on which the Principal Balance is paid in full (whether before or after
judgment), at a rate per annum (calculated for the actual number of days elapsed
on the basis of a 360-day year) equal to 2% plus the Floating Rate; provided,
however, that such interest rate shall in no event exceed the maximum interest
rate which the Maker may by law pay.
16. AUTHORITY. The Maker (and the undersigned representative of the Maker)
represents that the Maker has full power, authority and legal right to execute
and deliver this
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Note and that this Note constitutes a valid and binding obligation of the Maker.
17. EXISTING CREDIT FACILITIES. The Maker shall perform and observe all of
the "Affirmative Covenants" and "Negative Covenants" of the "Borrower" under
each of the Existing Credit Facilities (i.e. under Section 5.01 and 5.02 of each
of them), except for the Affirmative Covenants set forth in subparagraphs
5.01(l) and 5.01(m) of each of the Existing Facilities. All such Affirmative
Covenants and Negative Covenants (and the defined terms used therein) are
incorporated by reference into this Note, mutatis mutandis, and the Maker's
obligations under this Paragraph 17 shall be deemed to survive the termination
of the Existing Credit Facilities.
18. DEFINED TERMS. Whenever used, the singular number shall include the
plural, the plural the singular, and the words "Payee" and "Maker" shall
include, respectively, the successors and assigns of the Payee and the
successors and assigns of the Maker; provided, however, that the Maker shall in
no event or under any circumstance have the right, without obtaining the prior
written consent of the Payee, to assign or transfer its obligations under this
Note or the Other Loan Documents, in whole or in part, to any other Person or
party.
19. HEADINGS, ETC. The headings and captions of the numbered paragraphs of
this Note are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
20. ENFORCEABILITY. The Maker acknowledges that this Note and the Maker's
obligations under this Note are and shall at all times continue to be absolute
and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to this Note and the
obligations of the Maker under this Note or the obligations of any other Person
or party relating to this Note or otherwise with respect to the Loan. This Note
and the Other Loan Documents set forth the entire agreement and understanding of
the Payee and the Maker, and the Maker absolutely, unconditionally and
irrevocably waives any and all right to assert any setoff, counterclaim or
crossclaim of any nature whatsoever with respect to this Note and the Other Loan
Documents or the obligations of the Maker hereunder and thereunder (as
applicable), or the obligations of any other Person or party relating hereto and
thereto or to the obligations of the Maker (as applicable) hereunder or
thereunder or otherwise with respect to the Loan, in any action or proceeding
brought by the Payee to collect the Obligations, or any portion thereof,
(provided, however, that the foregoing shall not be deemed a waiver of the
Maker's right to assert any compulsory counterclaim maintained in a court of the
United States, or of the State of New York if such counterclaim is compelled
under local law or rule of procedure, nor shall the foregoing be deemed a waiver
of the Maker's right to assert any claim which would constitute a defense,
setoff, counterclaim or crossclaim of any nature whatsoever against the Payee in
any separate action or proceeding). The Maker acknowledges that no oral or other
agreements, conditions, promises, understandings, representations or warranties
exist with respect to this
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Note or with respect to the obligations of the Maker under this Note, except
those specifically set forth in this Note.
21. WAIVER. The Maker waives presentment, demand for payment, notice of
dishonor and any or all notices or demands in connection with the delivery,
acceptance, performance, default or enforcement of this Note and consents to any
or all delays, extensions of time, renewals, release of any party to this Note
or any Other Loan Document, and of any available security therefor, to any party
to this Note or any of the Other Loan Documents, or to the actual holder thereof
and any and all waivers or modifications that may be granted or consented to by
the Payee with regard to the time of payment or with respect to any other
provisions of this Note or any of the Other Loan Documents, and the Maker agrees
that no such action, delay or failure to act on the part of the Payee shall be
construed as a waiver by the Payee of, or otherwise affect, in whole or in part,
the Payee's right to avail itself of any remedy with respect thereto. No notice
to or demand on the Maker shall be deemed to be a waiver of any obligation of
the Maker or of the right of the Payee to take further action without further
notice or demand as provided in this Note or the Other Loan Documents.
22. AMENDMENTS. This Note may not be modified, amended, changed or
terminated orally, and may only be amended by an agreement in writing signed by
the Maker and the Payee. No waiver of any term, covenant or provision of this
Note shall be effective unless given in writing by the Payee and, if so given by
the Payee, shall only be effective in the specific instance in which given.
23. GOVERNING LAW. This Note is and shall be deemed entered into in the
State of New York and shall be governed by and construed in accordance with the
laws of the State of New York, without regard to principles of conflicts of laws
other than as set forth in Section 5-1401 of the New York General Obligations
Law, and no defense given or allowed by the laws of any state or country shall
be interposed in any action or proceeding hereon unless such defense is either
given or allowed by the laws of the State of New York. The Maker acknowledges
and agrees that this Note is, and is intended to be, an instrument for the
payment of money only, as such phrase is used in Section 3213 of the Civil
Practice Law and Rules of the State of New York, and that the Maker has been
fully advised by its counsel of the Payee's rights and remedies pursuant to said
Section 3213; and the Maker expressly waives any right, and hereby agrees not,
to assert that this Note is not such an instrument.
24. VENUE AND JURISDICTION. The Maker agrees to submit to personal
jurisdiction in the State of New York in any action or proceeding arising out of
this Note. In furtherance of such agreement, the Maker hereby agrees and
consents that without limiting other methods of obtaining jurisdiction, personal
jurisdiction over the Maker in any such action or proceeding may be obtained
within or without the jurisdiction of any court located in New York and that any
process or notice of motion or other application to any such court in connection
with any such action or proceeding may be served upon the Maker by registered or
certified mail to, or by personal service at, the last known address of the
Maker, whether such address be within or
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without the jurisdiction of any such court. The Maker hereby agrees that the
venue of any litigation arising in connection with the indebtedness, or in
respect of any of the obligations of the Maker under this Note, shall, to the
extent permitted by law, be in New York County.
25. NOTICES. Any notice, request or demand given or made under this Note
shall be in writing and shall be delivered by hand or overnight courier service,
or mailed by certified or registered mail, if to the Maker, to it c/o Integrated
Brands Inc., 4175 Veterans Highway, Ronkonkoma, New York 11779, Attention of
Gary P. Stevens, with a copy to Lori S. Smith, Esq., Goodwin Procter LLP, 599
Lexington Avenue, New York, New York 10022, and if to the Payee, to JPMorgan
Chase Bank, N.A., 4 Chase MetroTech Center, Brooklyn, New York 11245, Attention
of Peter D'Agostino. Any party hereto may change its address or telecopy number
for notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Note shall be deemed to have been given
on the date of receipt.
26. DEBIT AUTHORIZATION. The Maker shall at all times maintain a demand
deposit account with the Payee, which account shall be sufficiently funded to
permit the payments of principal and interest when due under this Note. The
Payee is hereby authorized to debit the Maker's account maintained with the
Payee for (i) all scheduled payments of principal and/or interest under this
Note, and (ii) all fees and other amounts payable to the Payee under this Note
or any of the Other Loan Documents; all such debits to be made on the days such
payments are due in accordance with the terms of this Note.
27. TERMS GENERALLY. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Note in its entirety and not to any
particular provision hereof, (d) all references herein to Articles, Paragraphs,
Exhibits and Schedules shall be construed to refer to Articles and Paragraphs
of, and Exhibits and Schedules to, this Note and (e) the words "asset" and
"property" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
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28. WAIVER OF TRIAL BY JURY. The Maker hereby irrevocably and
unconditionally waives, and the Payee, by its acceptance of this Note,
irrevocably and unconditionally waives, any and all right to trial by jury in
any litigation whatsoever arising out of or in connection with the Obligations,
this Note, the Other Loan Documents and any obligations related thereto.
[Remainder of the Page Intentionally Blank.]
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IN WITNESS WHEREOF, the Maker has executed this Note as of the day and year
first above written.
INTEGRATED BRANDS INC.,
a New Jersey corporation
By: /s/ Gary P. Stevens
------------------------------------
Name: Gary P. Stevens
Title: President
<Page>
SCHEDULE A
1. All terms as used in this Schedule A shall have the meanings hereinbelow
set forth:
a. The "LIBOR Rate" applicable to a particular Interest Period shall
mean a rate per annum equal to 2.50% plus the Base LIBOR Rate applicable to
such Interest Period.
b. The "Base LIBOR Rate" applicable to a particular Interest Period
shall mean a rate per annum equal to the product arrived at by multiplying
the Fixed LIBOR Rate applicable to such Interest Period by a fraction
(expressed as a decimal), the numerator of which shall be the number one
and the denominator of which shall be the number one minus the aggregate
reserve percentages (expressed as a decimal) from time to time established
by the Board of Governors of the Federal Reserve System of the United
States and any other banking authority to which the Payee is now or
hereafter subject, including, but not limited to any reserve on
Eurocurrency Liabilities as defined in Regulation D of the Board of
Governors of the Federal Reserve System of the United States at the ratios
provided in such Regulation from time to time, it being agreed that any
portion of the Principal Balance bearing interest at a LIBOR Rate shall be
deemed to constitute Eurocurrency Liabilities, as defined by such
Regulation, and it being further agreed that such Eurocurrency Liabilities
shall be deemed to be subject to such reserve requirements without benefit
of or credit for prorations, exceptions or offsets that may be available to
the Payee from time to time under such Regulation and irrespective of
whether the Payee actually maintains all or any portion of such reserve.
c. The "Fixed LIBOR Rate" applicable to a particular Interest Period
shall mean a rate per annum equal to the rate for U.S. dollar deposits with
maturities comparable to such Interest Period which appears on Telerate
Page 3750 as of 11:00 a.m., London time, two (2) Working Days prior to the
commencement of such Interest Period, provided, however, that if such rate
does not appear on Telerate Page 3750, the "Fixed LIBOR Rate" applicable to
a particular Interest Period shall mean a rate per annum equal to the rate
at which U.S. dollar deposits in an amount approximately equal to the
Principal Balance (or the portion thereof which will bear interest at a
LIBOR Rate during the Interest Period to which such Fixed LIBOR Rate is
applicable in accordance with the provisions of this Note), and with
maturities comparable to the last day of the Interest Period with respect
to which such Fixed LIBOR Rate is applicable, are offered in immediately
available funds in the London Interbank Market to the London office of the
Payee by leading banks in the Eurodollar market at 11:00 a.m., London time,
two (2) Working Days prior to the commencement of the
Schedule A - Page 1
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Interest Period to which such Fixed LIBOR Rate is applicable.
d. The term "Telerate Page 3750" means the display designated as
Moneyline Telerate Markets Page 3750 (or any successor page). Any Fixed
LIBOR Rate determined on the basis of the rate displayed on Telerate Page
3750 in accordance with the provisions of this Note shall be subject to
corrections, if any, made in such rate and displayed on Telerate Page 3750
within one hour of the time when such rate is first displayed on such page.
e. The term "Interest Period" shall mean the period of time during
which a particular LIBOR Rate will be applicable to all or a particular
portion of the Principal Balance in accordance with the provisions of this
Note, it being agreed that:
(i) each Interest Period shall commence and shall terminate on a
Re-Set Date,
(ii) each Interest Period shall be of a duration of one month,
(iii) no Interest Period shall extend beyond the Maturity Date and
(iv) except as otherwise specifically provided to the contrary in: (w)
Paragraph 2 of this Note with respect to the period prior to the
first Re-Set Date, (x) Paragraph 3 of this Schedule with respect
to the last Interest Period during the term of this Note, (y)
Paragraph 4 of this Schedule with respect to the unavailability
of a LIBOR Rate, and (z) in subparagraph 7(c) of this Note with
respect to a prepayment of all or a portion of the Principal
Balance, the entire Principal Balance will bear interest at the
LIBOR Rate pertaining to such Interest Period from and including
the first day of such Interest Period to, but not including, the
last day of such Interest Period.
f. The term "Prime Rate" shall mean such rate of interest as is
publicly announced by the Payee at its principal office from time to time
as its prime rate. Any change in the Prime Rate shall be effective on the
date such change is announced by the Payee.
g. The term "Principal Balance" shall mean the outstanding principal
balance of this Note from time to time.
h. The term "Re-Set Date" shall mean consecutive numerically
corresponding dates during the term of this Note, the first of which Re-Set
Dates shall be the earlier to occur of (i) the date which is the third
Working Day following the date on which the Maker shall have given the
Payee notice for the commencement of the initial Interest Period under this
Note, and (ii) April 6, 2005. Each Re-Set Date subsequent to
Schedule A - Page 2
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the first Re-Set Date or subsequent to any such newly determined Re-Set
Date shall be the date in each subsequent calendar month which numerically
corresponds to the first Re-Set Date or such newly determined Re-Set Date
(as applicable), provided, however, that if the numerically corresponding
date in any such subsequent calendar month during the term of this Note
shall not be a Working Day, the Re-Set Date for such calendar month shall
be the next succeeding Working Day, unless the next such succeeding Working
Day would fall in the next calendar month, in which event the Re-Set Date
for such calendar month shall be the next preceding Working Day. For the
purposes of this Note the period of time between any two consecutive Re-Set
Dates during the term of this Note shall be deemed to be a period of one
month.
i. The "Roll Over Date" applicable to a particular Interest Period
shall mean the last day of such Interest Period.
j. The term "Working Day" shall mean any day on which the Payee is
open for business in New York City and on which commercial banks in the
City of London, England are open for dealings in U.S. dollar deposits in
the London Interbank Market.
2. Except as otherwise specifically provided to the contrary in Paragraph 3
of this Schedule A with respect to the last Interest Period during the term of
this Note, the Payee shall, as soon as practicable after 9:00 a.m., New York
City time, two (2) Working Days prior to the commencement of a particular
Interest Period, determine in good faith the LIBOR Rate which will be in effect
during such Interest Period and inform the Maker of the LIBOR Rate so determined
(which determination shall be conclusive and binding upon the Maker absent
manifest error).
3. If the last Interest Period during the term of this Note which fully
complies with Subparagraph 1(e) of this Schedule shall end prior to the Maturity
Date, the entire Principal Balance shall, for the remainder of the term of this
Note, at the election of the Payee, either bear interest at the Prime Rate, or a
one-month LIBOR Rate determined in accordance with the provisions of this Note,
it being agreed that the one-month LIBOR Rate applicable to such period shall be
determined as if the same were for an Interest Period of one month.
4. In the event, and on each occasion, that on the day two (2) Working Days
prior to the commencement of a particular Interest Period, the Payee shall have
determined in good faith (which determination shall be conclusive and binding
upon the Maker) that U.S. dollar deposits, in an amount approximately equal to
the Principal Balance (or the portion thereof which is to bear interest at a
LIBOR Rate during such particular Interest Period in accordance with the
provisions of this Note), are not generally available at such time in the London
Interbank Market, or reasonable means do not exist for ascertaining a LIBOR Rate
for such particular Interest Period, the Payee shall so notify the Maker, and
the interest rate applicable to the portion of the Principal Balance with
respect to which such LIBOR Rate was to pertain shall automatically
Schedule A - Page 3
<Page>
convert to the Prime Rate as of the impending Roll Over Date, it being agreed
that the Prime Rate shall remain in effect thereafter with respect to such
portion of the Principal Balance unless and until the Payee shall have
determined in good faith (which determination shall be conclusive and binding
upon the Maker) that the aforesaid circumstances no longer exist, whereupon the
interest rate applicable to such portion of the Principal Balance shall be
converted back to a LIBOR Rate determined in the manner hereinabove set forth in
this Note effective as of the first Re-Set Date which commences ten (10) Working
Days or more after such good faith determination by the Payee.
5. Each determination of the LIBOR Rate, the Base LIBOR Rate and the Fixed
LIBOR Rate applicable to a particular Interest Period shall be made by the Payee
and shall be conclusive and binding upon the Maker absent manifest error.
Interest at the applicable LIBOR Rate from time to time shall be calculated for
the actual number of days elapsed on the basis of a 360-day year.
6. If any change in any law or regulation or in the interpretation thereof
by any governmental authority charged with the administration or interpretation
thereof shall make it unlawful for the Payee to make or maintain a LIBOR Rate
with respect to the Principal Balance or any portion thereof or to fund the
Principal Balance or any portion thereof at a LIBOR Rate in the London Interbank
Market or to give effect to its obligations as contemplated by this Note, then,
upon notice by the Payee to the Maker, in accordance with the notice provisions
set forth in this Note, the interest rate applicable to such portion of the
Principal Balance shall be automatically converted to the Prime Rate, it being
agreed that any notice given by the Payee to the Maker pursuant to this sentence
shall, such change in law, regulation or interpretation permitting, be effective
on the impending Roll Over Date, or shall, such change not so permitting, be
effective immediately upon being given by the Payee to the Maker, and that the
Prime Rate shall thereafter remain in effect with respect to such portion of the
Principal Balance unless and until the Payee shall have determined in good faith
(which determination shall be conclusive and binding upon the Maker) that the
aforesaid circumstances no longer exist, whereupon the interest rate applicable
to such portion of the Principal Balance shall be converted to a LIBOR Rate
determined in the manner hereinabove set forth in this Note effective as of the
first Re-Set Date which commences ten (10) Working Days or more after such good
faith determination by the Payee. If the interest rate applicable to all or any
portion of the Principal Balance is converted from a LIBOR Rate to the Prime
Rate on a date other than a Roll Over Date in accordance with the provisions of
the preceding sentence, the Maker shall pay to the Payee on demand an amount
equal to the prepayment premium, if any, which would have been due pursuant to
the provisions of this Note hereinafter set forth if the portion of the
Principal Balance bearing interest at such LIBOR Rate was prepaid in full on the
date of such conversion.
Schedule A - Page 4
<Page>
GUARANTY OF PAYMENT
New York, New York
March 25, 2005
WHEREAS, Integrated Brands Inc., a New Jersey corporation, having an office
at 4175 Veterans Highway, Ronkonkoma, New York 11779 (the "Borrower"), has
applied to JPMorgan Chase Bank, N.A., a national banking association ("Chase")
for a loan in the principal sum of $40,000,000.00 (the "Loan"), which Loan will
be evidenced by the Note (as defined in Exhibit A hereto);
WHEREAS, the Borrower is a wholly-owned Subsidiary (as defined in Exhibit A
hereto) of the undersigned and the undersigned will receive direct and
substantial benefit from the making of the Loan; and
WHEREAS, Chase is willing to make the Loan only if the undersigned executes
and delivers this Guaranty and guarantees payment to Chase of the Obligations
(as defined hereinbelow) in the manner hereinafter provided.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, and to induce Chase to make the Loan, the undersigned hereby
acknowledges, agrees, and confirms that all of the above recitals are true,
correct and complete and hereby covenants and agrees with Chase as follows:
1. The undersigned guarantees, absolutely, irrevocably and unconditionally,
to Chase the payment of the Obligations. The term "Obligations" as used in this
Guaranty shall mean all liabilities of the Borrower to Chase of whatever nature,
whether now existing or hereafter incurred, whether created directly or acquired
by Chase, by assignment or otherwise, whether matured or unmatured and whether
absolute or contingent, including, without limitation, all principal, interest,
additional interest (including specifically all interest accruing from and after
the commencement of any case, proceeding or action under any existing or future
laws relating to bankruptcy, insolvency or similar matters with respect to the
Borrower) and other sums of any nature whatsoever, which may or shall become due
and payable solely in connection with the Loan, including, without limitation,
any liabilities of the Borrower to Chase arising from or pursuant to the
provisions of the Note, or any of the other Loan Documents (as defined in
Exhibit A hereto) (all of the above unaffected by modification thereof in any
bankruptcy or insolvency proceeding), and even though Chase may not have an
allowed claim for the same against the Borrower or any such other Person as a
result of any bankruptcy or insolvency proceeding.
2. The undersigned agrees that the undersigned shall indemnify and hold
Chase harmless and defend Chase at the undersigned's sole cost and expense
against any loss or liability, cost or
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expense (including, but not limited to, reasonable attorneys' fees and
disbursements of Chase's counsel, whether in-house staff, retained firms or
otherwise), and all claims, actions, procedures and suits arising out of or in
connection with:
(a) any ongoing matters arising out of the transaction contemplated by
this Guaranty, the Obligations, the Note, the Security Agreement (as defined in
Exhibit A hereto) or any of the other Loan Documents, including, but not limited
to, all costs of audits, appraisals and reappraisals of the Collateral (as
defined in the Security Agreement) or any part thereof;
(b) any amendment to, or restructuring of, this Guaranty, the
Obligations, the Note, or any of the other Loan Documents;
(c) any and all lawful action that may be taken by Chase in connection
with the enforcement of the provisions of this Guaranty, the Note, the Security
Agreement or any of the other Loan Documents, whether or not suit is filed in
connection with the same, or in connection with the undersigned or any other
Guarantor (as defined in Exhibit A hereto), the Borrower and/or any partner,
joint venturer or shareholder of any thereof, becoming a party to a voluntary or
involuntary federal or state bankruptcy, insolvency or similar proceeding; and
(d) the past, current and/or future sale or offering for sale of stock
or membership interests (as applicable) in the Borrower or the undersigned or
any other Guarantor, including, without limitation, liabilities under applicable
securities or blue sky laws.
All sums expended by Chase shall be paid within 15 days after a demand therefor
by the Bank and, until reimbursed by the Borrower or by the undersigned pursuant
hereto, shall bear interest at the default rate of interest set forth in the
Note. The provisions of this paragraph 2 shall survive the term of this Guaranty
and the indefeasible payment in full of the Obligations and all other
Liabilities (as defined hereinbelow).
3. The undersigned shall perform and observe each of the "Affirmative
Covenants", "Negative Covenants" and "Financial Requirements" made by or imposed
on "Coolbrands" under each of the Existing Credit Facilities (as defined in
Exhibit A hereto) (i.e. Sections 5.01, 5.02 and 5.03 of each of them), except
for the Affirmative Covenants set forth in subparagraphs 5.01(l) and 5.01(m) of
each of the Existing Facilities. All such Affirmative Covenants, Negative
Covenants and Financial Requirements (and the defined terms used therein) are
incorporated by reference into this Guaranty, mutantis mutandis, and the
undersigned's obligations under this paragraph 3 shall be deemed to survive the
termination of the Existing Credit Facilities.
4. In addition to any right available to Chase under applicable law or any
other agreement, the undersigned hereby gives to Chase a continuing lien on,
security interest in and right of set-off against all moneys, securities and
other property of the undersigned and the proceeds thereof, now on deposit or
now or hereafter delivered, remaining with or in transit in any manner to Chase,
its correspondents, participants or its agents from or for the undersigned,
whether for
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safekeeping, custody, pledge, transmission, collection or otherwise or coming
into possession of Chase in any way, and also, any balance of any deposit
account and credits of the undersigned with, and any and all claims of the
undersigned against, Chase at any time existing, as collateral security for the
payment of the Obligations and all of the other obligations of the undersigned
under this Guaranty, including fees, contracted with or acquired by Chase,
whether joint, several, absolute, contingent, secured, matured or unmatured (for
the purposes of this paragraph 4 and paragraphs 6,8 and 16 below, collectively
the "Liabilities"), hereby authorizing Chase at any time or times, without prior
notice, to apply such balances, credits or claims, or any part thereof, to such
Liabilities in such amounts as it may select, whether contingent, unmatured or
otherwise and whether any collateral security therefor is deemed adequate or
not. The collateral security described herein shall be in addition to any
collateral security for the Obligations described in any separate agreement
executed by the undersigned. Chase, in addition to any right available to it
under applicable law or any other agreement, shall have the right, at its
option, to immediately set off against any Liabilities all monies owed by Chase
in any capacity to the undersigned, whether or not due, and Chase shall, at its
option, be deemed to have exercised such right to set off and to have made a
charge against any such money immediately upon the occurrence of any of the
events of default set forth in paragraph 8 below, even though such charge is
made or entered on the books of Chase subsequent to those events.
5. All moneys available to Chase for application in payment or reduction of
the Obligations may be applied by Chase in such manner and in such amounts and
at such time or times and in such order, priority and proportions as Chase may
see fit to the payment or reduction of such portion of the Obligations as Chase
may elect.
6. The undersigned hereby expressly agrees that this Guaranty is
independent of, and in addition to, all collateral granted, pledged or assigned
under the Loan Documents, and the undersigned hereby consents that from time to
time, before or after any default by the Borrower, with or without further
notice to or assent from the undersigned:
(a) any security at any time held by or available to Chase for any
obligation of the Borrower, or any security at any time held by or available to
Chase for any obligation of any other Person or party primarily, secondarily or
otherwise liable for all or any portion of the Obligations, any other
Liabilities and/or any other obligations of the Borrower or any other Person or
party, other than Chase, under any of the Loan Documents ("Other Obligations"),
including any Guarantor and/or any other guarantor of any of the Obligations or
Other Obligations, may be accelerated, settled, exchanged, surrendered or
released and Chase may fail to set off and may release, in whole or in part, any
balance of any deposit account or credit on its books in favor of the Borrower,
or of any such other Person or party;
(b) any obligation of the Borrower, or of any such other Person or
party, may be changed, altered, renewed, extended, continued, accelerated,
surrendered, compromised, settled, waived or released in whole or in part, or
any default with respect thereto waived; and
(c) Chase may extend further credit in any manner whatsoever to the
Borrower,
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and generally deal with the Borrower or any of the abovementioned security,
deposit account or credit on its books or other Person or party as Chase may see
fit;
and the undersigned shall remain bound in all respects under this Guaranty,
without any loss of any rights by Chase and without affecting the liability of
the undersigned, notwithstanding any such exchange, surrender, release, change,
alteration, renewal, extension, continuance, compromise, waiver, inaction,
extension of further credit or other dealing. In addition, all moneys available
to Chase for application in payment or reduction of the Obligations and/or any
Other Obligations may be applied by Chase in such manner and in such amounts and
at such time or times and in such order, priority and proportions as Chase may
see fit.
7. The undersigned hereby waives:
(a) notice of acceptance of this Guaranty and of the making of the
Loan;
(b) presentment and demand for payment of the Obligations or any
portion thereof;
(c) protest and notice of dishonor or default to the undersigned or to
any other Person or party with respect to the Obligations or any portion
thereof;
(d) all other notices to which the undersigned might otherwise be
entitled; and
(e) any demand under this Guaranty.
8. If any of the following events should occur:
(a) any representation or warranty of the undersigned in this Guaranty
or in any of the other 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;
(b) an "Event of Default" (as defined therein) shall occur under the
Note; or
(c) the undersigned violates any provision of this Guaranty;
then, and in such event, Chase may declare the Liabilities to be, and the same
shall become, immediately due and payable.
9. This is a guaranty of payment and not of collection and the undersigned
further waives any right to require that any action be brought against the
Borrower or any other Person or party (including, without limitation, any other
Guarantor) or to require that resort be had to any security or to any balance of
any deposit account or credit on the books of Chase in favor of the
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Borrower or any other Person or party. Any payment on account of or
reacknowledgment of the Obligations by the Borrower, or any other party liable
therefor, shall be deemed to be made on behalf of the undersigned and shall
serve to start anew the statutory period of limitations applicable to the
Obligations.
10. Each reference herein to Chase shall be deemed to include its
successors and assigns, in whose favor the provisions of this Guaranty shall
also inure. Each reference herein to the undersigned shall be deemed to include
(as applicable) the successors and assigns of the undersigned, all of whom shall
be bound by the provisions of this Guaranty; provided, however, that the
undersigned shall in no event nor under any circumstance have the right, without
obtaining the express prior written consent of Chase, to assign or transfer the
undersigned's obligations and liabilities under this Guaranty, in whole or in
part, to any other Person or party.
11. The agreements and obligations on the part of the undersigned herein
contained shall remain in force and application notwithstanding the merger,
consolidation, reorganization or absorption thereof, and the term "undersigned"
shall include such new entity, but the old entity shall not thereby be released
from any obligations or liabilities hereunder. Nothing in this paragraph shall
be construed as a waiver of any covenant incorporated by reference herein under
paragraph 3 above, or a consent by Chase to any such merger, consolidation,
reorganization or absorption.
12. No delay on the part of Chase in exercising any right or remedy under
this Guaranty or failure to exercise the same shall operate as a waiver in whole
or in part of any such right or remedy. No notice to or demand on the
undersigned or any other Guarantor shall be deemed to be a waiver of the
obligations of the undersigned or of the right of Chase to take further action
without notice or demand as provided in this Guaranty. No course of dealing
between the undersigned and Chase shall change, modify or discharge, in whole or
in part, this Guaranty or any obligations of the undersigned hereunder.
13. This Guaranty may be modified, amended, changed or terminated only by
an agreement in writing signed by Chase and the undersigned. No waiver of any
term, covenant or provision of this Guaranty shall be effective unless given in
writing by Chase and if so given by Chase shall only be effective in the
specific instance in which given. The execution and delivery hereafter to Chase
by the undersigned of a new instrument of guaranty or any reaffirmation of
guaranty, of whatever nature, shall not terminate, supersede or cancel this
instrument, unless expressly so provided therein, and all rights and remedies of
Chase hereunder or under any instrument of guaranty hereafter executed and
delivered to Chase by the undersigned shall be cumulative and may be exercised
singly or concurrently.
14. The undersigned acknowledges that this Guaranty and the undersigned's
obligations under this Guaranty are and shall at all times continue to be
absolute, irrevocable and unconditional in all respects, and shall at all times
be valid and enforceable irrespective of any other agreements or circumstances
of any nature whatsoever which might otherwise constitute a defense to this
Guaranty and the obligations of the undersigned under this Guaranty or the
obligations of any other Person or
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party (including, without limitation, the Borrower) relating to this Guaranty or
the obligations of the undersigned hereunder or otherwise with respect to the
Obligations, including, but not limited to, a foreclosure, similar action or
realization upon any collateral given, pledged or assigned as security for all
or any portion of the Obligations, or the filing of a petition under Title 11 of
the United States Code with regard to the Borrower, the undersigned or any other
Guarantor, or the commencement of an action or proceeding for the benefit of the
creditors of the Borrower, the undersigned or any other Guarantor, or the
obtaining by Chase of title to, assets encumbered by the Security Agreement, or
any other collateral given, pledged or assigned as security for the Obligations
or for the obligation of any other Guarantor, by reason of the foreclosure or
enforcement of the Security Agreement or any other pledge or security agreement,
the transfer of assets in settlement of claims under the Security Agreement or
any other Loan Documents, or otherwise. This Guaranty and the other Loan
Documents set forth the entire agreement and understanding of Chase and the
undersigned with respect to the matters covered by this Guaranty and the other
Loan Documents and the undersigned acknowledges that no oral or other
agreements, understandings, representations or warranties exist with respect to
this Guaranty or with respect to the obligations of the undersigned under this
Guaranty, except those specifically set forth in this Guaranty and the other
Loan Documents.
15. The undersigned further represents and warrants to Chase that:
(a) neither the execution and delivery of this Guaranty nor the
consummation of the transactions contemplated hereby nor compliance with the
terms and provisions hereof will violate any applicable provision of law or any
applicable regulation or other manifestation of governmental action; and
(b) all necessary approvals, consents, licenses, registrations and
validations of any governmental regulatory body, including, without limitation,
approvals required to permit the undersigned to execute and carry out the
provisions of this Guaranty, for the validity of the obligations of the
undersigned hereunder and for the making of any payment or remittance of any
funds required to be made by the undersigned under this Guaranty, have been
obtained and are in full force and effect.
16. Notwithstanding any payments made by the undersigned pursuant to the
provisions of this Guaranty, the undersigned irrevocably waives all rights to
enforce or collect upon any rights which it now has or may acquire against the
Borrower either by way of subrogation, indemnity, reimbursement or contribution
for any amount paid under this Guaranty or by way of any other obligations
whatsoever of the Borrower to the undersigned, nor shall the undersigned file,
assert or receive payment on any claim, whether now existing or hereafter
arising, against the Borrower in the event of the commencement of a case by or
against the Borrower under Title 11 of the United States Code. In the event
either a petition is filed under said Title 11 of the United States Code with
regard to the Borrower or the commencement of an action or proceeding for the
benefit of the creditors of the Borrower, this Guaranty shall at all times
thereafter remain effective in regard to any payments or other transfers of
assets to Chase received from or on behalf of the Borrower prior to notice of
termination of this Guaranty and which are or may be held voidable on the
grounds of preference or
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fraud, whether or not the Obligations has been paid in full. The provisions of
this paragraph 16 shall survive the term of this Guaranty and the indefeasible
payment in full of the Obligations and all other Liabilities.
17. Any notice, request or demand given or made under this Guaranty shall
be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail, if to the undersigned, to it at 8300
Woodbine Avenue, Markham, Ontario, Canada L3R NY7, Attention of
__________________________, with a copy to Integrated Brands Inc., 4175 Veterans
Highway, Ronkonkoma, New York 11779, Attention of Gary P. Stevens and with a
copy to Lori S. Smith, Esq., Goodwin Procter LLP, 599 Lexington Avenue, New
York, New York 10022, and if to Chase, to JPMorgan Chase Bank, N.A., 4 Chase
MetroTech Center, Brooklyn, New York 11245, Attention of Peter D'Agostino. Any
party hereto may change its address by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Guaranty shall be deemed to have been given on the date
of receipt.
18. This Guaranty is, and shall be deemed to be, a contract entered into
under and pursuant to the laws of the State of New York and shall be in all
respects governed, construed, applied and enforced in accordance with the laws
of the State of New York without regard to principles of conflicts of laws other
than as set forth in Section 5-1401 of the New York General Obligations Law. The
undersigned acknowledges and agrees that this Guaranty is, and is intended to
be, an instrument for the payment of money only, as such phrase is used in
Section 3213 of the Civil Practice Law and Rules of the State of New York, and
the undersigned has been fully advised by its counsel of the rights and remedies
available against them pursuant to said Section 3213.
19. No failure or delay of Chase in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of Chase
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provisions of this Guaranty or any other Loan Document or consent to any
departure by any of the undersigned therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on any of the undersigned in any case
shall entitle the undersigned to any other or further notice or demand in
similar or other circumstances.
20. The undersigned absolutely, unconditionally and irrevocably waives any
and all right to assert or interpose any defense, setoff, counterclaim or
crossclaim of any nature whatsoever with respect to this Guaranty or the
obligations of the undersigned under this Guaranty, or the obligations of any
other Person or party (including, without limitation, the Borrower) relating to
this Guaranty or the guaranty of any other Guarantor, or the obligations of the
undersigned hereunder, of the Borrower under the Note or otherwise with respect
to the Loan in any action or proceeding brought by Chase to collect the
Obligations, or any portion thereof, or to enforce the obligations of the
undersigned under
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this Guaranty (provided, however, that the foregoing shall not be deemed a
waiver of the right of the undersigned to assert any compulsory counterclaim
maintained in a court of the United States, or of the State of New York if such
counterclaim is compelled under local law or rule of procedure, nor shall the
foregoing be deemed a waiver of the right of the undersigned to assert any claim
which would constitute a defense, setoff, counterclaim or crossclaim of any
nature whatsoever against Chase in any separate action or proceeding). The
undersigned hereby undertakes and agrees that this Guaranty shall remain in full
force and effect for all of the obligations and liabilities of the undersigned
hereunder, notwithstanding the maturity of the Obligations, whether by
acceleration, scheduled maturity or otherwise.
21. No exculpatory provisions which may be contained in the Note or in any
other Loan Document shall in any event or under any circumstances be deemed or
construed to modify, qualify, or affect in any manner whatsoever the obligations
and liabilities of the undersigned under this Guaranty.
22. The obligations and liabilities of the undersigned under this Guaranty
are in addition to the obligations and liabilities of the undersigned under the
Other Guaranties (as hereinafter defined). The discharge of any or all of the
undersigned's obligations and liabilities under any one or more of the Other
Guaranties by the undersigned or by reason of operation of law or otherwise
shall in no event or under any circumstance constitute or be deemed to
constitute a discharge, in whole or in part, of the undersigned's obligations
and liabilities under this Guaranty. Conversely, the discharge of the
undersigned's obligations and liabilities under this Guaranty by Chase or by
reason of operation of law or otherwise shall in no event or under any
circumstance constitute or be deemed to constitute a discharge, in whole or in
part, of the undersigned's obligations and liabilities under any of the Other
Guaranties. The term "Other Guaranties" as used herein shall mean any other
guaranty of payment, guaranty of performance, completion guaranty,
indemnification agreement or other guaranty or instrument creating any
obligation or undertaking of any nature whatsoever (other than this Guaranty)
now or hereafter executed and delivered by the undersigned to Chase in
connection with any or all of the Obligations. In the event of any conflict
between any of the Other Guaranties and this Guaranty, the terms of this
Guaranty shall control.
23. This Guaranty may be executed in one or more counterparts by some or
all of the parties hereto, each of which counterparts shall be an original and
all of which together shall constitute a single agreement of guaranty. The
failure of any party listed below to execute this Guaranty, or any counterpart
hereof, or the ineffectiveness for any reason of any such execution, shall not
relieve the other signatories from their obligations hereunder.
24. Any and all payments by the undersigned hereunder shall be made free
and clear of and without deduction for any and all present or future taxes,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on Chase's net income and franchise taxes
imposed on Chase by any jurisdiction or any political subdivision thereof (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the undersigned shall
be required by law to deduct any Taxes
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from or in respect of any sum payable hereunder to Chase: (i) the sum payable
shall be increased by the amount necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this paragraph) Chase shall receive an amount equal to the sum it would have
received had no such deductions been made; (ii) the undersigned shall make such
deductions; and (iii) the undersigned shall pay the full amount deducted to the
relevant taxing authority or other governmental authority in accordance with
applicable law. The undersigned shall, pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Guaranty
(hereinafter referred to as "Other Taxes"). The undersigned shall indemnify
Chase for the full amount of Taxes and Other Taxes (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this paragraph) paid
by Chase and any liability (including penalties, interest and reasonable
out-of-pocket expenses) arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally asserted by the relevant
taxing authority or other governmental authority. Such indemnification shall be
made within 30 days after the date Chase makes written demand therefor, which
demand may be made after Chase, in its sole discretion and at the sole expense
of the undersigned, determines not to challenge or contest such assertion of
Taxes or Other Taxes. If Chase receives a refund in respect of any Taxes or
Other Taxes for which Chase has received payment from the undersigned hereunder
it shall promptly notify the undersigned of such refund and shall promptly upon
receipt repay such refund to the undersigned, net of all out-of-pocket expenses
of Chase and without interest; provided, however, that the undersigned, upon the
request of Chase, agrees to return such refund (plus penalties, interest or
other charges) to Chase in the event Chase is required to repay such refund.
Within 30 days after the date of any payment of Taxes or Other Taxes withheld by
the undersigned in respect of any payment to Chase, the undersigned will furnish
to Chase the original or a certified copy of a receipt evidencing payment
thereof. Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this paragraph shall survive
the termination of this Guaranty and the payment in full of the Obligations and
the obligations of the undersigned hereunder.
25. If for the purpose of obtaining judgment in any court it is necessary
to convert a sum due hereunder in U.S. dollars into another currency, the
undersigned agrees, to the fullest extent that it may effectively do so under
applicable law, that the rate of exchange used shall be the spot rate at which
(in accordance with normal banking procedures) could be purchased in New York
City with such other currency by the Person obtaining such judgment on the
Business Day preceding that on which final judgment is given. The undersigned
agrees, to the fullest extent that it may effectively do so under applicable
law, that any payments made hereunder shall be made in U.S. dollars and that any
payment obligation (i) shall not be discharged or satisfied by any tender, or
any recovery pursuant to any judgment, in any currency other than U.S. dollars,
except to the extent that such tender or recovery shall result in the actual
receipt by Chase of the full amount of U.S. dollars expressed as payable in
respect of the Obligations (it being assumed for purposes of this clause (i)
that Chase will convert any amount tendered or recovered into U.S. dollars on
the date of such tender or recovery), (ii) shall be enforceable as an
alternative or additional cause of action for the purpose of recovering in U.S.
dollars the amount, if any, by which such actual receipt shall fall short of the
full
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amount of U.S. dollars so expressed to be payable, and (iii) shall not be
affected by an unrelated judgment being obtained for any other sum due under
this Guaranty. The provisions of this paragraph shall survive the termination of
this Guaranty and the payment in full of the Obligations and the obligations of
the undersigned hereunder.
26. The undersigned agrees to submit to personal jurisdiction in the State
of New York in any action or proceeding arising out of this Guaranty. In
furtherance of such agreement, the undersigned hereby agrees and consents that
without limiting other methods of obtaining jurisdiction, personal jurisdiction
over the undersigned in any such action or proceeding may be obtained within or
without the jurisdiction of any court located in the State of New York and that
any process or notice of motion or other application to any such court in
connection with any such action or proceeding may be served upon the undersigned
as set forth in paragraph 27 below. The undersigned hereby further agrees that
the venue of any litigation arising in connection with the Obligations or in
respect of any of the obligations of the undersigned under this Guaranty, shall,
to the extent permitted by law, be in New York County. The undersigned agrees
not to raise, and hereby waives, any objection to or defense based upon the
venue of any such court and any objection or defense based upon "forum non
conveniens."
27. The undersigned agrees that a final judgment in any proceeding brought
in any of the courts specified in the immediately preceding paragraph shall be
conclusive and binding upon the undersigned and may be enforced in the courts of
the United States, the State of New York or any other courts to the jurisdiction
of which the undersigned is subject, by a suit upon judgment, provided that
service of process is effected on the undersigned in one of the manners
specified in the remainder of this paragraph. The undersigned hereby irrevocably
designates Gary P. Stevens (the "Process Agent") with an office on the date
hereof at 4175 Veterans Highway, Ronkonkoma, New York 11779, to accept on behalf
of the undersigned and its property, service of copies of the summons and
complaint and any other process which may be served in any proceeding. The
undersigned shall deliver to Chase evidence of the Process Agent's acceptance of
such appointment. If the Process Agent shall cease to act, the undersigned
agrees that it shall irrevocably appoint without delay another agent
satisfactory to Chase and shall deliver evidence of such Process Agent's
acceptance of such appointment to Chase. Such service may be made by mailing or
delivering a copy of such process to the undersigned in care of the Process
Agent at the Process Agent's above address, and the undersigned hereby
irrevocably authorizes and directs the Process Agent to accept such service. The
undersigned also irrevocably waives personal service upon it and consents to the
service of any and all process in any proceeding by the mailing of copies of
such process to the at its address by registered or certified mail. The
undersigned hereby agrees that nothing in this Guaranty shall affect the right
of Chase to serve legal process in any other manner permitted by law or affect
the right of Chase to bring any action or proceeding against the undersigned or
any property in the courts of any other jurisdiction. To the extent that the
undersigned has or hereafter may acquire any immunity from suit, jurisdiction of
any court or any legal process (whether through attachment prior to judgment,
attachment in aid of execution, execution of a judgment, or from any other legal
process
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or remedy) with respect to itself or its property, the undersigned hereby
irrevocably waives such immunity in respect of its obligations under this
Guaranty.
28. The undersigned hereby irrevocably and unconditionally waives, and
Chase by its acceptance of this Guaranty irrevocably and unconditionally waives,
any and all right to trial by jury in any action, suit or counterclaim arising
in connection with, out of or otherwise relating to this Guaranty.
[remainder of page is deliberately left blank]
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IN WITNESS WHEREOF, the undersigned have duly executed this Guaranty the
day and year first above set forth.
WITNESS: COOLBRANDS INTERNATIONAL INC.
/s/ Liat By: /s/ David Stein
- ------------------------------------- --------------------------------
Liat Vavozlavsky David Stein, President
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EXHIBIT A
I. As used herein, the following terms shall have the following meanings:
(a) The term "Business Day" shall have the meaning given to such term
in the Note.
(b) The term "Existing Credit Facilities" shall have the meaning given
to such term in the Note.
(c) The term "Guarantor" means any Person guaranteeing any of all of
the obligations of the Borrower under the Note.
(d) The term "Loan Documents" shall mean the Note, the Security
Agreement, this Guaranty and any other documents executed by the Borrower or
others, and by or in favor of Chase, in connection with the Note, the Security
Agreement, this Guaranty or any other guaranty of the Obligations given by a
Guarantor.
(e) The term "Note" shall mean the Promissory Note dated the date of
this Guaranty of Payment in the principal sum of $40,000,000 made by the
Borrower to Chase.
(f) The term "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.
(g) The term "Security Agreement" means the Security Agreement dated
the date of this Guaranty made by Coolbrands Dairy Inc., as Debtor, and Chase,
as Lender, in connection with the Loan.
(h) The term "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.
II. Rules of Interpretation. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and
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"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, and (c) the words "herein" "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Guaranty in its entirety and not to any particular provision hereof.
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GUARANTY OF PAYMENT
New York, New York
March 25, 2005
WHEREAS, Integrated Brands Inc., a New Jersey corporation, having an office
at 4175 Veterans Highway, Ronkonkoma, New York 11779 (the "Borrower"), has
applied to JPMorgan Chase Bank, N.A., a national banking association ("Chase")
for a loan in the principal sum of $40,000,000.00 (the "Loan"), which Loan will
be evidenced by the Note (as defined in Exhibit A hereto);
WHEREAS, the Borrower is a wholly-owned Subsidiary (as defined in Exhibit A
hereto) of the undersigned and the undersigned will receive direct and
substantial benefit from the making of the Loan; and
WHEREAS, Chase is willing to make the Loan only if the undersigned executes
and delivers this Guaranty and guarantees payment to Chase of the Obligations
(as defined hereinbelow) in the manner hereinafter provided.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, and to induce Chase to make the Loan, the undersigned hereby
acknowledges, agrees, and confirms that all of the above recitals are true,
correct and complete and hereby covenants and agrees with Chase as follows:
1. The undersigned guarantees, absolutely, irrevocably and unconditionally,
to Chase the payment of the Obligations. The term "Obligations" as used in this
Guaranty shall mean all liabilities of the Borrower to Chase of whatever nature,
whether now existing or hereafter incurred, whether created directly or acquired
by Chase, by assignment or otherwise, whether matured or unmatured and whether
absolute or contingent, including, without limitation, all principal, interest,
additional interest (including specifically all interest accruing from and after
the commencement of any case, proceeding or action under any existing or future
laws relating to bankruptcy, insolvency or similar matters with respect to the
Borrower) and other sums of any nature whatsoever, which may or shall become due
and payable solely in connection with the Loan, including, without limitation,
any liabilities of the Borrower to Chase arising from or pursuant to the
provisions of the Note, or any of the other Loan Documents (as defined in
Exhibit A hereto) (all of the above unaffected by modification thereof in any
bankruptcy or insolvency proceeding), and even though Chase may not have an
allowed claim for the same against the Borrower or any such other Person as a
result of any bankruptcy or insolvency proceeding.
2. The undersigned agrees that the undersigned shall indemnify and hold
Chase harmless and defend Chase at the undersigned's sole cost and expense
against any loss or liability, cost or expense (including, but not limited to,
reasonable attorneys' fees and disbursements of Chase's
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counsel, whether in-house staff, retained firms or otherwise), and all claims,
actions, procedures and suits arising out of or in connection with:
(a) any ongoing matters arising out of the transaction contemplated by
this Guaranty, the Obligations, the Note, the Security Agreement (as defined in
Exhibit A hereto) or any of the other Loan Documents, including, but not limited
to, all costs of audits, appraisals and reappraisals of the Collateral (as
defined in the Security Agreement) or any part thereof;
(b) any amendment to, or restructuring of, this Guaranty, the
Obligations, the Note, or any of the other Loan Documents;
(c) any and all lawful action that may be taken by Chase in connection
with the enforcement of the provisions of this Guaranty, the Note, the Security
Agreement or any of the other Loan Documents, whether or not suit is filed in
connection with the same, or in connection with the undersigned or any other
Guarantor (as defined in Exhibit A hereto), the Borrower and/or any partner,
joint venturer or shareholder of any thereof, becoming a party to a voluntary or
involuntary federal or state bankruptcy, insolvency or similar proceeding; and
(d) the past, current and/or future sale or offering for sale of stock
or membership interests (as applicable) in the Borrower or the undersigned or
any other Guarantor, including, without limitation, liabilities under applicable
securities or blue sky laws.
All sums expended by Chase shall be paid within 15 days after a demand therefor
by the Bank and, until reimbursed by the Borrower or by the undersigned pursuant
hereto, shall bear interest at the default rate of interest set forth in the
Note. The provisions of this paragraph 2 shall survive the term of this Guaranty
and the indefeasible payment in full of the Obligations and all other
Liabilities (as defined hereinbelow).
3. The undersigned shall perform and observe each of the "Affirmative
Covenants", "Negative Covenants" and "Financial Requirements" made by or imposed
on "Coolbrands" under each of the Existing Credit Facilities (as defined in
Exhibit A hereto) (i.e. Sections 5.01, 5.02 and 5.03 of each of them), except
for the Affirmative Covenants set forth in subparagraphs 5.01(l) and 5.01(m)
of each of the Existing Facilities. All such Affirmative Covenants, Negative
Covenants and Financial Requirements (and the defined terms used therein) are
incorporated by reference into this Guaranty, mutantis mutandis, and the
undersigned's obligations under this paragraph 3 shall be deemed to survive the
termination of the Existing Credit Facilities.
4. In addition to any right available to Chase under applicable law or any
other agreement, the undersigned hereby gives to Chase a continuing lien on,
security interest in and right of set-off against all moneys, securities and
other property of the undersigned and the proceeds thereof, now on deposit or
now or hereafter delivered, remaining with or in transit in any manner to Chase,
its correspondents, participants or its agents from or for the undersigned,
whether for safekeeping, custody, pledge, transmission, collection or otherwise
or coming into possession of
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Chase in any way, and also, any balance of any deposit account and credits of
the undersigned with, and any and all claims of the undersigned against, Chase
at any time existing, as collateral security for the payment of the Obligations
and all of the other obligations of the undersigned under this Guaranty,
including fees, contracted with or acquired by Chase, whether joint, several,
absolute, contingent, secured, matured or unmatured (for the purposes of this
paragraph 4 and paragraphs 6,8 and 16 below, collectively the "Liabilities"),
hereby authorizing Chase at any time or times, without prior notice, to apply
such balances, credits or claims, or any part thereof, to such Liabilities in
such amounts as it may select, whether contingent, unmatured or otherwise and
whether any collateral security therefor is deemed adequate or not. The
collateral security described herein shall be in addition to any collateral
security for the Obligations described in any separate agreement executed by the
undersigned. Chase, in addition to any right available to it under applicable
law or any other agreement, shall have the right, at its option, to immediately
set off against any Liabilities all monies owed by Chase in any capacity to the
undersigned, whether or not due, and Chase shall, at its option, be deemed to
have exercised such right to set off and to have made a charge against any such
money immediately upon the occurrence of any of the events of default set forth
in paragraph 8 below, even though such charge is made or entered on the books of
Chase subsequent to those events.
5. All moneys available to Chase for application in payment or reduction of
the Obligations may be applied by Chase in such manner and in such amounts and
at such time or times and in such order, priority and proportions as Chase may
see fit to the payment or reduction of such portion of the Obligations as Chase
may elect.
6. The undersigned hereby expressly agrees that this Guaranty is
independent of, and in addition to, all collateral granted, pledged or assigned
under the Loan Documents, and the undersigned hereby consents that from time to
time, before or after any default by the Borrower, with or without further
notice to or assent from the undersigned:
(a) any security at any time held by or available to Chase for any
obligation of the Borrower, or any security at any time held by or available to
Chase for any obligation of any other Person or party primarily, secondarily or
otherwise liable for all or any portion of the Obligations, any other
Liabilities and/or any other obligations of the Borrower or any other Person or
party, other than Chase, under any of the Loan Documents ("Other Obligations"),
including any Guarantor and/or any other guarantor of any of the Obligations or
Other Obligations, may be accelerated, settled, exchanged, surrendered or
released and Chase may fail to set off and may release, in whole or in part, any
balance of any deposit account or credit on its books in favor of the Borrower,
or of any such other Person or party;
(b) any obligation of the Borrower, or of any such other Person or
party, may be changed, altered, renewed, extended, continued, accelerated,
surrendered, compromised, settled, waived or released in whole or in part, or
any default with respect thereto waived; and
(c) Chase may extend further credit in any manner whatsoever to the
Borrower, and generally deal with the Borrower or any of the abovementioned
security, deposit account or
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credit on its books or other Person or party as Chase may see fit;
and the undersigned shall remain bound in all respects under this Guaranty,
without any loss of any rights by Chase and without affecting the liability of
the undersigned, notwithstanding any such exchange, surrender, release, change,
alteration, renewal, extension, continuance, compromise, waiver, inaction,
extension of further credit or other dealing. In addition, all moneys available
to Chase for application in payment or reduction of the Obligations and/or any
Other Obligations may be applied by Chase in such manner and in such amounts and
at such time or times and in such order, priority and proportions as Chase may
see fit.
7. The undersigned hereby waives:
(a) notice of acceptance of this Guaranty and of the making of the
Loan;
(b) presentment and demand for payment of the Obligations or any
portion thereof;
(c) protest and notice of dishonor or default to the undersigned or to
any other Person or party with respect to the Obligations or any portion
thereof;
(d) all other notices to which the undersigned might otherwise be
entitled; and
(e) any demand under this Guaranty.
8. If any of the following events should occur:
(a) any representation or warranty of the undersigned in this Guaranty
or in any of the other 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;
(b) an "Event of Default" (as defined therein) shall occur under the
Note; or
(c) the undersigned violates any provision of this Guaranty;
then, and in such event, Chase may declare the Liabilities to be, and the same
shall become, immediately due and payable.
9. This is a guaranty of payment and not of collection and the undersigned
further waives any right to require that any action be brought against the
Borrower or any other Person or party (including, without limitation, any other
Guarantor) or to require that resort be had to any security or to any balance of
any deposit account or credit on the books of Chase in favor of the Borrower or
any other Person or party. Any payment on account of or reacknowledgment of the
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Obligations by the Borrower, or any other party liable therefor, shall be deemed
to be made on behalf of the undersigned and shall serve to start anew the
statutory period of limitations applicable to the Obligations.
10. Each reference herein to Chase shall be deemed to include its
successors and assigns, in whose favor the provisions of this Guaranty shall
also inure. Each reference herein to the undersigned shall be deemed to include
(as applicable) the successors and assigns of the undersigned, all of whom shall
be bound by the provisions of this Guaranty; provided, however, that the
undersigned shall in no event nor under any circumstance have the right, without
obtaining the express prior written consent of Chase, to assign or transfer the
undersigned's obligations and liabilities under this Guaranty, in whole or in
part, to any other Person or party.
11. The agreements and obligations on the part of the undersigned herein
contained shall remain in force and application notwithstanding the merger,
consolidation, reorganization or absorption thereof, and the term "undersigned"
shall include such new entity, but the old entity shall not thereby be released
from any obligations or liabilities hereunder. Nothing in this paragraph shall
be construed as a waiver of any covenant incorporated by reference herein under
paragraph 3 above, or a consent by Chase to any such merger, consolidation,
reorganization or absorption.
12. No delay on the part of Chase in exercising any right or remedy under
this Guaranty or failure to exercise the same shall operate as a waiver in whole
or in part of any such right or remedy. No notice to or demand on the
undersigned or any other Guarantor shall be deemed to be a waiver of the
obligations of the undersigned or of the right of Chase to take further action
without notice or demand as provided in this Guaranty. No course of dealing
between the undersigned and Chase shall change, modify or discharge, in whole or
in part, this Guaranty or any obligations of the undersigned hereunder.
13. This Guaranty may be modified, amended, changed or terminated only by
an agreement in writing signed by Chase and the undersigned. No waiver of any
term, covenant or provision of this Guaranty shall be effective unless given in
writing by Chase and if so given by Chase shall only be effective in the
specific instance in which given. The execution and delivery hereafter to Chase
by the undersigned of a new instrument of guaranty or any reaffirmation of
guaranty, of whatever nature, shall not terminate, supersede or cancel this
instrument, unless expressly so provided therein, and all rights and remedies of
Chase hereunder or under any instrument of guaranty hereafter executed and
delivered to Chase by the undersigned shall be cumulative and may be exercised
singly or concurrently.
14. The undersigned acknowledges that this Guaranty and the undersigned's
obligations under this Guaranty are and shall at all times continue to be
absolute, irrevocable and unconditional in all respects, and shall at all times
be valid and enforceable irrespective of any other agreements or circumstances
of any nature whatsoever which might otherwise constitute a defense to this
Guaranty and the obligations of the undersigned under this Guaranty or the
obligations of any other Person or party (including, without limitation, the
Borrower) relating to this Guaranty or the obligations of the
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undersigned hereunder or otherwise with respect to the Obligations, including,
but not limited to, a foreclosure, similar action or realization upon any
collateral given, pledged or assigned as security for all or any portion of the
Obligations, or the filing of a petition under Title 11 of the United States
Code with regard to the Borrower, the undersigned or any other Guarantor, or the
commencement of an action or proceeding for the benefit of the creditors of the
Borrower, the undersigned or any other Guarantor, or the obtaining by Chase of
title to, assets encumbered by the Security Agreement, or any other collateral
given, pledged or assigned as security for the Obligations or for the obligation
of any other Guarantor, by reason of the foreclosure or enforcement of the
Security Agreement or any other pledge or security agreement, the transfer of
assets in settlement of claims under the Security Agreement or any other Loan
Documents, or otherwise. This Guaranty and the other Loan Documents set forth
the entire agreement and understanding of Chase and the undersigned with respect
to the matters covered by this Guaranty and the other Loan Documents and the
undersigned acknowledges that no oral or other agreements, understandings,
representations or warranties exist with respect to this Guaranty or with
respect to the obligations of the undersigned under this Guaranty, except those
specifically set forth in this Guaranty and the other Loan Documents.
15. The undersigned further represents and warrants to Chase that:
(a) neither the execution and delivery of this Guaranty nor the
consummation of the transactions contemplated hereby nor compliance with the
terms and provisions hereof will violate any applicable provision of law or any
applicable regulation or other manifestation of governmental action; and
(b) all necessary approvals, consents, licenses, registrations and
validations of any governmental regulatory body, including, without limitation,
approvals required to permit the undersigned to execute and carry out the
provisions of this Guaranty, for the validity of the obligations of the
undersigned hereunder and for the making of any payment or remittance of any
funds required to be made by the undersigned under this Guaranty, have been
obtained and are in full force and effect.
16. Notwithstanding any payments made by the undersigned pursuant to the
provisions of this Guaranty, the undersigned irrevocably waives all rights to
enforce or collect upon any rights which it now has or may acquire against the
Borrower either by way of subrogation, indemnity, reimbursement or contribution
for any amount paid under this Guaranty or by way of any other obligations
whatsoever of the Borrower to the undersigned, nor shall the undersigned file,
assert or receive payment on any claim, whether now existing or hereafter
arising, against the Borrower in the event of the commencement of a case by or
against the Borrower under Title 11 of the United States Code. In the event
either a petition is filed under said Title 11 of the United States Code with
regard to the Borrower or the commencement of an action or proceeding for the
benefit of the creditors of the Borrower, this Guaranty shall at all times
thereafter remain effective in regard to any payments or other transfers of
assets to Chase received from or on behalf of the Borrower prior to notice of
termination of this Guaranty and which are or may be held voidable on the
grounds of preference or fraud, whether or not the Obligations has been paid in
full. The provisions of this paragraph 16 shall
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survive the term of this Guaranty and the indefeasible payment in full of the
Obligations and all other Liabilities.
17. Any notice, request or demand given or made under this Guaranty shall
be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail, if to the undersigned, to it at 27 Pine
Road, Bellville, St. Michael, Barbados, W.I., with a copy to Integrated Brands
Inc., 4175 Veterans Highway, Ronkonkoma, New York 11779, Attention of Gary P.
Stevens and with a copy to Lori S. Smith, Esq., Goodwin Procter LLP, 599
Lexington Avenue, New York, New York 10022 and if to Chase, to JPMorgan Chase
Bank, N.A., 4 Chase MetroTech Center, Brooklyn, New York 11245, Attention of
Peter D'Agostino. Any party hereto may change its address by notice to the other
parties hereto. All notices and other communications given to any party hereto
in accordance with the provisions of this Guaranty shall be deemed to have been
given on the date of receipt.
18. This Guaranty is, and shall be deemed to be, a contract entered into
under and pursuant to the laws of the State of New York and shall be in all
respects governed, construed, applied and enforced in accordance with the laws
of the State of New York without regard to principles of conflicts of laws other
than as set forth in Section 5-1401 of the New York General Obligations Law. The
undersigned acknowledges and agrees that this Guaranty is, and is intended to
be, an instrument for the payment of money only, as such phrase is used in
Section 3213 of the Civil Practice Law and Rules of the State of New York, and
the undersigned has been fully advised by its counsel of the rights and remedies
available against them pursuant to said Section 3213.
19. No failure or delay of Chase in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of Chase
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provisions of this Guaranty or any other Loan Document or consent to any
departure by any of the undersigned therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on any of the undersigned in any case
shall entitle the undersigned to any other or further notice or demand in
similar or other circumstances.
20. The undersigned absolutely, unconditionally and irrevocably waives any
and all right to assert or interpose any defense, setoff, counterclaim or
crossclaim of any nature whatsoever with respect to this Guaranty or the
obligations of the undersigned under this Guaranty, or the obligations of any
other Person or party (including, without limitation, the Borrower) relating to
this Guaranty or the guaranty of any other Guarantor, or the obligations of the
undersigned hereunder, of the Borrower under the Note or otherwise with respect
to the Loan in any action or proceeding brought by Chase to collect the
Obligations, or any portion thereof, or to enforce the obligations of the
undersigned under this Guaranty (provided, however, that the foregoing shall not
be deemed a waiver of the right of the
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undersigned to assert any compulsory counterclaim maintained in a court of the
United States, or of the State of New York if such counterclaim is compelled
under local law or rule of procedure, nor shall the foregoing be deemed a waiver
of the right of the undersigned to assert any claim which would constitute a
defense, setoff, counterclaim or crossclaim of any nature whatsoever against
Chase in any separate action or proceeding). The undersigned hereby undertakes
and agrees that this Guaranty shall remain in full force and effect for all of
the obligations and liabilities of the undersigned hereunder, notwithstanding
the maturity of the Obligations, whether by acceleration, scheduled maturity or
otherwise.
21. No exculpatory provisions which may be contained in the Note or in any
other Loan Document shall in any event or under any circumstances be deemed or
construed to modify, qualify, or affect in any manner whatsoever the obligations
and liabilities of the undersigned under this Guaranty.
22. The obligations and liabilities of the undersigned under this Guaranty
are in addition to the obligations and liabilities of the undersigned under the
Other Guaranties (as hereinafter defined). The discharge of any or all of the
undersigned's obligations and liabilities under any one or more of the Other
Guaranties by the undersigned or by reason of operation of law or otherwise
shall in no event or under any circumstance constitute or be deemed to
constitute a discharge, in whole or in part, of the undersigned's obligations
and liabilities under this Guaranty. Conversely, the discharge of the
undersigned's obligations and liabilities under this Guaranty by Chase or by
reason of operation of law or otherwise shall in no event or under any
circumstance constitute or be deemed to constitute a discharge, in whole or in
part, of the undersigned's obligations and liabilities under any of the Other
Guaranties. The term "Other Guaranties" as used herein shall mean any other
guaranty of payment, guaranty of performance, completion guaranty,
indemnification agreement or other guaranty or instrument creating any
obligation or undertaking of any nature whatsoever (other than this Guaranty)
now or hereafter executed and delivered by the undersigned to Chase in
connection with any or all of the Obligations. In the event of any conflict
between any of the Other Guaranties and this Guaranty, the terms of this
Guaranty shall control.
23. This Guaranty may be executed in one or more counterparts by some or
all of the parties hereto, each of which counterparts shall be an original and
all of which together shall constitute a single agreement of guaranty. The
failure of any party listed below to execute this Guaranty, or any counterpart
hereof, or the ineffectiveness for any reason of any such execution, shall not
relieve the other signatories from their obligations hereunder.
24. Any and all payments by the undersigned hereunder shall be made free
and clear of and without deduction for any and all present or future taxes,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on Chase's net income and franchise taxes
imposed on Chase by any jurisdiction or any political subdivision thereof (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the undersigned shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to Chase: (i) the sum payable shall be increased by
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the amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this paragraph) Chase
shall receive an amount equal to the sum it would have received had no such
deductions been made; (ii) the undersigned shall make such deductions; and (iii)
the undersigned shall pay the full amount deducted to the relevant taxing
authority or other governmental authority in accordance with applicable law. The
undersigned shall, pay any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Guaranty (hereinafter referred to as "Other
Taxes"). The undersigned shall indemnify Chase for the full amount of Taxes and
Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this paragraph) paid by Chase and any liability (including
penalties, interest and reasonable out-of-pocket expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted by the relevant taxing authority or other governmental
authority. Such indemnification shall be made within 30 days after the date
Chase makes written demand therefor, which demand may be made after Chase, in
its sole discretion and at the sole expense of the undersigned, determines not
to challenge or contest such assertion of Taxes or Other Taxes. If Chase
receives a refund in respect of any Taxes or Other Taxes for which Chase has
received payment from the undersigned hereunder it shall promptly notify the
undersigned of such refund and shall promptly upon receipt repay such refund to
the undersigned, net of all out-of-pocket expenses of Chase and without
interest; provided, however, that the undersigned, upon the request of Chase,
agrees to return such refund (plus penalties, interest or other charges) to
Chase in the event Chase is required to repay such refund. Within 30 days after
the date of any payment of Taxes or Other Taxes withheld by the undersigned in
respect of any payment to Chase, the undersigned will furnish to Chase the
original or a certified copy of a receipt evidencing payment thereof. Without
prejudice to the survival of any other agreement contained herein, the
agreements and obligations contained in this paragraph shall survive the
termination of this Guaranty and the payment in full of the Obligations and the
obligations of the undersigned hereunder.
25. If for the purpose of obtaining judgment in any court it is necessary
to convert a sum due hereunder in U.S. dollars into another currency, the
undersigned agrees, to the fullest extent that it may effectively do so under
applicable law, that the rate of exchange used shall be the spot rate at which
(in accordance with normal banking procedures) could be purchased in New York
City with such other currency by the Person obtaining such judgment on the
Business Day preceding that on which final judgment is given. The undersigned
agrees, to the fullest extent that it may effectively do so under applicable
law, that any payments made hereunder shall be made in U.S. dollars and that any
payment obligation (i) shall not be discharged or satisfied by any tender, or
any recovery pursuant to any judgment, in any currency other than U.S. dollars,
except to the extent that such tender or recovery shall result in the actual
receipt by Chase of the full amount of U.S. dollars expressed as payable in
respect of the Obligations (it being assumed for purposes of this clause (i)
that Chase will convert any amount tendered or recovered into U.S. dollars on
the date of such tender or recovery), (ii) shall be enforceable as an
alternative or additional cause of action for the purpose of recovering in U.S.
dollars the amount, if any, by which such actual receipt shall fall short of the
full amount of U.S. dollars so expressed to be payable, and (iii) shall not be
affected by an unrelated
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judgment being obtained for any other sum due under this Guaranty. The
provisions of this paragraph shall survive the termination of this Guaranty and
the payment in full of the Obligations and the obligations of the undersigned
hereunder.
26. The undersigned agrees to submit to personal jurisdiction in the State
of New York in any action or proceeding arising out of this Guaranty. In
furtherance of such agreement, the undersigned hereby agrees and consents that
without limiting other methods of obtaining jurisdiction, personal jurisdiction
over the undersigned in any such action or proceeding may be obtained within or
without the jurisdiction of any court located in the State of New York and that
any process or notice of motion or other application to any such court in
connection with any such action or proceeding may be served upon the undersigned
as set forth in paragraph 27 below. The undersigned hereby further agrees that
the venue of any litigation arising in connection with the Obligations or in
respect of any of the obligations of the undersigned under this Guaranty, shall,
to the extent permitted by law, be in New York County. The undersigned agrees
not to raise, and hereby waives, any objection to or defense based upon the
venue of any such court and any objection or defense based upon "forum non
conveniens."
27. The undersigned agrees that a final judgment in any proceeding brought
in any of the courts specified in the immediately preceding paragraph shall be
conclusive and binding upon the undersigned and may be enforced in the courts of
the United States, the State of New York or any other courts to the jurisdiction
of which the undersigned is subject, by a suit upon judgment, provided that
service of process is effected on the undersigned in one of the manners
specified in the remainder of this paragraph. The undersigned hereby irrevocably
designates Gary P. Stevens (the "Process Agent") with an office on the date
hereof at 4175 Veterans Highway, Ronkonkoma, New York 11779, to accept on behalf
of the undersigned and its property, service of copies of the summons and
complaint and any other process which may be served in any proceeding. The
undersigned shall deliver to Chase evidence of the Process Agent's acceptance of
such appointment. If the Process Agent shall cease to act, the undersigned
agrees that it shall irrevocably appoint without delay another agent
satisfactory to Chase and shall deliver evidence of such Process Agent's
acceptance of such appointment to Chase. Such service may be made by mailing or
delivering a copy of such process to the undersigned in care of the Process
Agent at the Process Agent's above address, and the undersigned hereby
irrevocably authorizes and directs the Process Agent to accept such service. The
undersigned also irrevocably waives personal service upon it and consents to the
service of any and all process in any proceeding by the mailing of copies of
such process to the at its address by registered or certified mail. The
undersigned hereby agrees that nothing in this Guaranty shall affect the right
of Chase to serve legal process in any other manner permitted by law or affect
the right of Chase to bring any action or proceeding against the undersigned or
any property in the courts of any other jurisdiction. To the extent that the
undersigned has or hereafter may acquire any immunity from suit, jurisdiction of
any court or any legal process (whether through attachment prior to judgment,
attachment in aid of execution, execution of a judgment, or from any other legal
process or remedy) with respect to itself or its property, the undersigned
hereby irrevocably waives such immunity in respect of its obligations under this
Guaranty.
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28. The undersigned hereby irrevocably and unconditionally waives, and
Chase by its acceptance of this Guaranty irrevocably and unconditionally waives,
any and all right to trial by jury in any action, suit or counterclaim arising
in connection with, out of or otherwise relating to this Guaranty.
[remainder of page is deliberately left blank]
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IN WITNESS WHEREOF, the undersigned have duly executed this Guaranty the
day and year first above set forth.
WITNESS: KAYLA FOODS INT'L (BARBADOS) INC.
By: /s/ Gary P. Stevens
- ---------------------------------------- ---------------------------------
Gary P. Stevens,
Treasurer and Assistant Secretary
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EXHIBIT A
I. As used herein, the following terms shall have the following meanings:
(a) The term "Business Day" shall have the meaning given to such term
in the Note.
(b) The term "Existing Credit Facilities" shall have the meaning given
to such term in the Note.
(c) The term "Guarantor" means any Person guaranteeing any of all of
the obligations of the Borrower under the Note.
(d) The term "Loan Documents" shall mean the Note, the Security
Agreement, this Guaranty and any other documents executed by the Borrower or
others, and by or in favor of Chase, in connection with the Note, the Security
Agreement, this Guaranty or any other guaranty of the Obligations given by a
Guarantor.
(e) The term "Note" shall mean the Promissory Note dated the date of
this Guaranty of Payment in the principal sum of $40,000,000 made by the
Borrower to Chase.
(f) The term "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.
(g) The term "Security Agreement" means the Security Agreement dated
the date of this Guaranty made by Coolbrands Dairy Inc., as Debtor, and Chase,
as Lender, in connection with the Loan.
(h) The term "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.
II. Rules of Interpretation. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and
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"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, and (c) the words "herein" "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Guaranty in its entirety and not to any particular provision hereof.
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JOINT AND SEVERAL
GUARANTY OF PAYMENT
New York, New York
March 25, 2005
WHEREAS, Integrated Brands, Inc., a New Jersey corporation, having an
office at 4175 Veterans Highway, Ronkonkoma, New York 11779 (the "Borrower"),
has applied to JPMorgan Chase Bank, N.A., a national banking association
("Chase") for a loan in the principal sum of $40,000,000.00 (the "Loan"), which
Loan will be evidenced by the Note (as defined in Exhibit A hereto);
WHEREAS, the undersigned is a Subsidiary (as defined in Exhibit A hereto)
of the Borrower and will receive direct and substantial benefit from the making
of the Loan; and
WHEREAS, Chase is willing to make the Loan only if the undersigned executes
and delivers this Guaranty and guarantees payment to Chase of the Obligations
(as defined hereinbelow) in the manner hereinafter provided.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, and to induce Chase to make the Loan, the undersigned hereby
acknowledges, agrees, and confirms that all of the above recitals are true,
correct and complete and hereby covenants and agrees with Chase as follows:
1. The undersigned guarantees, absolutely, irrevocably and unconditionally,
to Chase the payment of the Obligations. The term "Obligations" as used in this
Guaranty shall mean all liabilities of the Borrower to Chase of whatever nature,
whether now existing or hereafter incurred, whether created directly or acquired
by Chase, by assignment or otherwise, whether matured or unmatured and whether
absolute or contingent, including, without limitation, all principal, interest,
additional interest (including specifically all interest accruing from and after
the commencement of any case, proceeding or action under any existing or future
laws relating to bankruptcy, insolvency or similar matters with respect to the
Borrower) and other sums of any nature whatsoever, which may or shall become due
and payable solely in connection with the Loan, including, without limitation,
any liabilities of the Borrower to Chase arising from or pursuant to the
provisions of the Note, or any of the other Loan Documents (as defined in
Exhibit A hereto) (all of the above unaffected by modification thereof in any
bankruptcy or insolvency proceeding), and even though Chase may not have an
allowed claim for the same against the Borrower or any such other Person as a
result of any bankruptcy or insolvency proceeding.
2. The undersigned agrees that the undersigned shall indemnify and hold
Chase harmless and defend Chase at the undersigned's sole cost and expense
against any loss or liability, cost or expense (including, but not limited to,
reasonable attorneys' fees and
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disbursements of Chase's counsel, whether in-house staff, retained firms or
otherwise), and all claims, actions, procedures and suits arising out of or in
connection with:
(a) any ongoing matters arising out of the transaction contemplated by
this Guaranty, the Obligations, the Note, the Security Agreement (as defined in
Exhibit A hereto) or any of the other Loan Documents, including, but not limited
to, all costs of audits, appraisals and reappraisals of the Collateral (as
defined in the Security Agreement) or any part thereof;
(b) any amendment to, or restructuring of, this Guaranty, the
Obligations, the Note, or any of the other Loan Documents;
(c) any and all lawful action that may be taken by Chase in connection
with the enforcement of the provisions of this Guaranty, the Note, the Security
Agreement or any of the other Loan Documents, whether or not suit is filed in
connection with the same, or in connection with any of the undersigned or any
other Guarantor (as defined in Exhibit A hereto), the Borrower and/or any
partner, joint venturer or shareholder of any thereof, becoming a party to a
voluntary or involuntary federal or state bankruptcy, insolvency or similar
proceeding; and
(d) the past, current and/or future sale or offering for sale of stock
or membership interests (as applicable) in the Borrower or any of the
undersigned or any other Guarantor, including, without limitation, liabilities
under applicable securities or blue sky laws.
All sums expended by Chase shall be paid within 15 days after a demand therefor
by the Bank and, until reimbursed by the Borrower or by the undersigned pursuant
hereto, shall bear interest at the default rate of interest set forth in the
Note. The provisions of this paragraph 2 shall survive the term of this Guaranty
and the indefeasible payment in full of the Obligations and all other
Liabilities (as defined hereinbelow).
3. The undersigned shall perform and observe, or cause to be performed and
observed, each of "Affirmative Covenants," "Negative Covenants" and "Financial
Requirements" made by, imposed on, or otherwise applicable to any "Guarantor" or
any "Consolidated Subsidiary" under each of the Existing Credit Facilities (as
defined in Exhibit A hereto) (i.e. Sections 5.01, 5.02 and 5.03 of each of
them), except the Affirmative Covenants set forth in subparagraphs 5.01(l) and
5.01(m) for each of the Existing Facilities. All such Affirmative Covenants,
Negative Covenants and Financial Requirements (and the defined terms used
therein) are incorporated by reference into this Guaranty, mutantis mutandis,
and the undersigned's obligations under this paragraph 3 shall be deemed to
survive the termination of the Existing Credit Facilities.
4. In addition to any right available to Chase under applicable law or any
other agreement, the undersigned hereby gives to Chase a continuing lien on,
security interest in and right of set-off against all moneys, securities and
other property of the undersigned and the proceeds thereof, now on deposit or
now or hereafter delivered, remaining with or in transit in any manner to Chase,
its correspondents, participants or its agents from or for the undersigned,
whether for safekeeping, custody, pledge, transmission, collection or otherwise
or coming into possession of Chase in any way, and also, any balance of any
deposit account and credits of the
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undersigned with, and any and all claims of the undersigned against, Chase at
any time existing, as collateral security for the payment of the Obligations and
all of the other obligations of the undersigned under this Guaranty, including
fees, contracted with or acquired by Chase, whether joint, several, absolute,
contingent, secured, matured or unmatured (for the purposes of this paragraph 4
and paragraphs 6, 8 and 16 below, collectively the "Liabilities"), hereby
authorizing Chase at any time or times, without prior notice, to apply such
balances, credits or claims, or any part thereof, to such Liabilities in such
amounts as it may select, whether contingent, unmatured or otherwise and whether
any collateral security therefor is deemed adequate or not. The collateral
security described herein shall be in addition to any collateral security for
the Obligations described in any separate agreement executed by any or all of
the undersigned. Chase, in addition to any right available to it under
applicable law or any other agreement, shall have the right, at its option, to
immediately set off against any Liabilities all monies owed by Chase in any
capacity to any or all of the undersigned, whether or not due, and Chase shall,
at its option, be deemed to have exercised such right to set off and to have
made a charge against any such money immediately upon the occurrence of any of
the events of default set forth in paragraph 8 below, even though such charge is
made or entered on the books of Chase subsequent to those events.
5. All moneys available to Chase for application in payment or reduction of
the Obligations may be applied by Chase in such manner and in such amounts and
at such time or times and in such order, priority and proportions as Chase may
see fit to the payment or reduction of such portion of the Obligations as Chase
may elect.
6. The undersigned hereby expressly agrees that this Guaranty is
independent of, and in addition to, all collateral granted, pledged or assigned
under the Loan Documents, and the undersigned hereby consents that from time to
time, before or after any default by the Borrower, with or without further
notice to or assent from any of the undersigned:
(a) any security at any time held by or available to Chase for any
obligation of the Borrower, or any security at any time held by or available to
Chase for any obligation of any other Person or party primarily, secondarily or
otherwise liable for all or any portion of the Obligations, any other
Liabilities and/or any other obligations of the Borrower or any other Person or
party, other than Chase, under any of the Loan Documents ("Other Obligations"),
including any Guarantor or any other guarantor of any of the Obligations or
Other Obligations, may be accelerated, settled, exchanged, surrendered or
released and Chase may fail to set off and may release, in whole or in part, any
balance of any deposit account or credit on its books in favor of the Borrower,
or of any such other Person or party;
(b) any obligation of the Borrower, or of any such other Person or
party, may be changed, altered, renewed, extended, continued, accelerated,
surrendered, compromised, settled, waived or released in whole or in part, or
any default with respect thereto waived; and
(c) Chase may extend further credit in any manner whatsoever to the
Borrower, and generally deal with the Borrower or any of the abovementioned
security, deposit account or credit on its books or other Person or party as
Chase may see fit; and the undersigned shall remain bound in all respects under
this Guaranty, without any loss of any rights by Chase
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and without affecting the liability of the undersigned, notwithstanding any such
exchange, surrender, release, change, alteration, renewal, extension,
continuance, compromise, waiver, inaction, extension of further credit or other
dealing. In addition, all moneys available to Chase for application in payment
or reduction of the Obligations and/or any Other Obligations may be applied by
Chase in such manner and in such amounts and at such time or times and in such
order, priority and proportions as Chase may see fit.
7. The undersigned hereby waives:
(a) notice of acceptance of this Guaranty and of the making of the
Loan;
(b) presentment and demand for payment of the Obligations or any
portion thereof;
(c) protest and notice of dishonor or default to any or all of the
undersigned or to any other Person or party with respect to the Obligations or
any portion thereof;
(d) all other notices to which any or all of the undersigned might
otherwise be entitled; and
(e) any demand under this Guaranty.
8. If any of the following events should occur:
(a) any representation or warranty of the undersigned in this Guaranty
or in any of the other 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;
(b) an "Event of Default" (as defined therein) shall occur under the
Note; or
(c) any or all of the undersigned violates any provision of this
Guaranty;
then, and in such event, Chase may declare the Liabilities to be, and the same
shall become, immediately due and payable.
9. This is a guaranty of payment and not of collection and the undersigned
further waives any right to require that any action be brought against the
Borrower or any other Person or party (including, without limitation, any of the
other undersigned or any other Guarantor) or to require that resort be had to
any security or to any balance of any deposit account or credit on the books of
Chase in favor of the Borrower or any other Person or party. Any payment on
account of or reacknowledgment of the Obligations by the Borrower, or any other
party liable therefor, shall be deemed to be made on behalf of the undersigned
and shall serve to start anew the statutory period of limitations applicable to
the Obligations.
10. Each reference herein to Chase shall be deemed to include its
successors and assigns, in whose favor the provisions of this Guaranty shall
also inure. Each reference herein to
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the undersigned shall be deemed to include (as applicable) the successors and
assigns of the undersigned, all of whom shall be bound by the provisions of this
Guaranty; provided, however, that the undersigned shall in no event nor under
any circumstance have the right, without obtaining the express prior written
consent of Chase, to assign or transfer the undersigned's obligations and
liabilities under this Guaranty, in whole or in part, to any other Person or
party.
11. The term "undersigned" as used herein shall, if this Guaranty is signed
by more than one party, unless otherwise stated herein, mean the "undersigned
and each of them" and each undertaking herein contained shall be their joint and
several undertaking. Chase may proceed against none, one or more of the
undersigned at one time or from time to time as Chase sees fit in its sole and
absolute discretion. If any party hereto shall be a partnership or limited
liability company, the agreements and obligations on the part of the undersigned
herein contained shall remain in force and application notwithstanding any
changes in the partners composing the partnership or the members composing such
limited liability company, and the term "undersigned" shall include any altered
or successive partnerships or limited liability companies, but the predecessor
entities and their partners or members, respectively, shall not thereby be
released from any obligations or liability hereunder. If any party hereto shall
be a corporation or limited liability company, the agreements and obligations on
the part of the undersigned herein contained shall remain in force and
application notwithstanding the merger, consolidation, reorganization or
absorption thereof, and the term "undersigned" shall include such new entity,
but the old entity shall not thereby be released from any obligations or
liabilities hereunder. Nothing in this paragraph shall be construed as a waiver
of any covenant incorporated by reference herein under paragraph 3 above, or a
consent by Chase to any such merger, consolidation, reorganization or
absorption.
12. No delay on the part of Chase in exercising any right or remedy under
this Guaranty or failure to exercise the same shall operate as a waiver in whole
or in part of any such right or remedy. No notice to or demand on any or all of
the undersigned or any other Guarantor shall be deemed to be a waiver of the
obligations of any or all of the undersigned or of the right of Chase to take
further action without notice or demand as provided in this Guaranty. No course
of dealing between any of the undersigned and Chase shall change, modify or
discharge, in whole or in part, this Guaranty or any obligations of the
undersigned hereunder.
13. This Guaranty may be modified, amended, changed or terminated only by
an agreement in writing signed by Chase and the undersigned. No waiver of any
term, covenant or provision of this Guaranty shall be effective unless given in
writing by Chase and if so given by Chase shall only be effective in the
specific instance in which given. The execution and delivery hereafter to Chase
by any or all of the undersigned of a new instrument of guaranty or any
reaffirmation of guaranty, of whatever nature, shall not terminate, supersede or
cancel this instrument, unless expressly so provided therein, and all rights and
remedies of Chase hereunder or under any instrument of guaranty hereafter
executed and delivered to Chase by any or all of the undersigned shall be
cumulative and may be exercised singly or concurrently.
14. The undersigned acknowledges that this Guaranty and the undersigned's
obligations under this Guaranty are and shall at all times continue to be
absolute, irrevocable and unconditional in all respects, and shall at all times
be valid and enforceable irrespective of any
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other agreements or circumstances of any nature whatsoever which might otherwise
constitute a defense to this Guaranty and the obligations of any or all of the
undersigned under this Guaranty or the obligations of any other Person or party
(including, without limitation, the Borrower) relating to this Guaranty or the
obligations of any or all of the undersigned hereunder or otherwise with respect
to the Obligations, including, but not limited to, a foreclosure, similar action
or the realization upon any other collateral given, pledged or assigned as
security for all or any portion of the Obligations, or the filing of a petition
under Title 11 of the United States Code with regard to the Borrower, any or all
of the undersigned or any other Guarantor, or the commencement of an action or
proceeding for the benefit of the creditors of the Borrower, any or all of the
undersigned or any other Guarantor, or the obtaining by Chase of title to,
assets encumbered by the Security Agreement, or any other collateral given,
pledged or assigned as security for the Obligations or for the obligation of any
other Guarantor, by reason of the foreclosure or enforcement of the Security
Agreement or any other pledge or security agreement, the transfer of assets in
settlement of claims under the Security Agreement or any other Loan Documents,
or otherwise. This Guaranty and the other Loan Documents set forth the entire
agreement and understanding of Chase and the undersigned with respect to the
matters covered by this Guaranty and the other Loan Documents and the
undersigned acknowledges that no oral or other agreements, understandings,
representations or warranties exist with respect to this Guaranty or with
respect to the obligations of the undersigned under this Guaranty, except those
specifically set forth in this Guaranty and the other Loan Documents.
15. The undersigned further represents and warrants to Chase that:
(a) neither the execution and delivery of this Guaranty nor the
consummation of the transactions contemplated hereby nor compliance with the
terms and provisions hereof will violate any applicable provision of law or any
applicable regulation or other manifestation of governmental action; and
(b) all necessary approvals, consents, licenses, registrations and
validations of any governmental regulatory body, including, without limitation,
approvals required to permit the undersigned to execute and carry out the
provisions of this Guaranty, for the validity of the obligations of the
undersigned hereunder and for the making of any payment or remittance of any
funds required to be made by the undersigned under this Guaranty, have been
obtained and are in full force and effect.
16. Notwithstanding any payments made by any or all of the undersigned
pursuant to the provisions of this Guaranty, the undersigned irrevocably waives
all rights to enforce or collect upon any rights which it now has or may acquire
against the Borrower either by way of subrogation, indemnity, reimbursement or
contribution for any amount paid under this Guaranty or by way of any other
obligations whatsoever of the Borrower to any or all of the undersigned, nor
shall any or all of the undersigned file, assert or receive payment on any
claim, whether now existing or hereafter arising, against the Borrower in the
event of the commencement of a case by or against the Borrower under Title 11 of
the United States Code. In the event either a petition is filed under said Title
11 of the United States Code with regard to the Borrower or the commencement of
an action or proceeding for the benefit of the creditors of the Borrower, this
Guaranty shall at all times thereafter remain effective in regard to any
payments or other
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transfers of assets to Chase received from or on behalf of the Borrower prior to
notice of termination of this Guaranty and which are or may be held voidable on
the grounds of preference or fraud, whether or not the Obligations has been paid
in full. The provisions of this paragraph 16 shall survive the term of this
Guaranty and the indefeasible payment in full of the Obligations and all other
Liabilities.
17. Any notice, request or demand given or made under this Guaranty shall
be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail, if to any of the undersigned, to it c/o
Integrated Brands Inc., 4175 Veterans Highway, Ronkonkoma, New York 11779,
Attention of Gary P. Stevens, with a copy to Lori S. Smith, Esq., Goodwin
Procter LLP, 599 Lexington Avenue, New York, New York 10022, and if to Chase, to
JPMorgan Chase Bank, N.A., 4 Chase MetroTech Center, Brooklyn, New York 11245,
Attention of Peter D'Agostino. Any party hereto may change its address by notice
to the other parties hereto. All notices and other communications given to any
party hereto in accordance with the provisions of this Guaranty shall be deemed
to have been given on the date of receipt.
18. This Guaranty is, and shall be deemed to be, a contract entered into
under and pursuant to the laws of the State of New York and shall be in all
respects governed, construed, applied and enforced in accordance with the laws
of the State of New York without regard to principles of conflicts of laws other
than as set forth in Section 5-1401 of the New York General Obligations Law. The
undersigned acknowledges and agrees that this Guaranty is, and is intended to
be, an instrument for the payment of money only, as such phrase is used in
Section 3213 of the Civil Practice Law and Rules of the State of New York, and
the undersigned has been fully advised by its counsel of the rights and remedies
available against them pursuant to said Section 3213.
19. No failure or delay of Chase in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of Chase
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provisions of this Guaranty or any other Loan Document or consent to any
departure by any of the undersigned therefrom shall in any event be effective
unless the same shall be permitted by paragraph 13 above, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on any of the undersigned in any case
shall entitle the undersigned to any other or further notice or demand in
similar or other circumstances.
20. The undersigned absolutely, unconditionally and irrevocably waives any
and all right to assert or interpose any defense, setoff, counterclaim or
crossclaim of any nature whatsoever with respect to this Guaranty or the
obligations of the undersigned under this Guaranty, or the obligations of any
other Person or party (including without limitation, the Borrower) relating to
this Guaranty or the guaranty of any other Guarantor, or the obligations of the
undersigned hereunder, of the Borrower under the Note or otherwise with respect
to the Loan in any action or proceeding brought by Chase to collect the
Obligations, or any portion thereof,
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or to enforce the obligations of the undersigned under this Guaranty (provided,
however, that the foregoing shall not be deemed a waiver of the right of the
undersigned to assert any compulsory counterclaim maintained in a court of the
United States, or of the State of New York if such counterclaim is compelled
under local law or rule of procedure, nor shall the foregoing be deemed a waiver
of the right of the undersigned to assert any claim which would constitute a
defense, setoff, counterclaim or crossclaim of any nature whatsoever against
Chase in any separate action or proceeding). The undersigned hereby undertakes
and agrees that this Guaranty shall remain in full force and effect for all of
the obligations and liabilities of the undersigned hereunder, notwithstanding
the maturity of the Obligations, whether by acceleration, scheduled maturity or
otherwise.
21. The undersigned agrees to submit to personal jurisdiction in the State
of New York in any action or proceeding arising out of this Guaranty. In
furtherance of such agreement, the undersigned hereby agrees and consents that
without limiting other methods of obtaining jurisdiction, personal jurisdiction
over the undersigned in any such action or proceeding may be obtained within or
without the jurisdiction of any court located in New York and that any process
or notice of motion or other application to any such court in connection with
any such action or proceeding may be served upon the undersigned by registered
or certified mail to, or by personal service at, the last known address of the
undersigned, whether such address be within or without the jurisdiction of any
such court. The undersigned hereby further agrees that the venue of any
litigation arising in connection with the Obligations or in respect of any of
the obligations of the undersigned under this Guaranty, shall, to the extent
permitted by law, be in New York County. The undersigned agrees not to raise,
and hereby waives, any objection to or defense based upon, the venue of any such
court and any objection or defense based upon "forum non conveniens."
22. No exculpatory provisions which may be contained in the Note or in any
other Loan Document shall in any event or under any circumstances be deemed or
construed to modify, qualify, or affect in any manner whatsoever the obligations
and liabilities of the undersigned under this Guaranty.
23. The obligations and liabilities of the undersigned under this Guaranty
are in addition to the obligations and liabilities of the undersigned under the
Other Guaranties (as hereinafter defined). The discharge of any or all of the
undersigned's obligations and liabilities under any one or more of the Other
Guaranties by the undersigned or by reason of operation of law or otherwise
shall in no event or under any circumstance constitute or be deemed to
constitute a discharge, in whole or in part, of the undersigned's obligations
and liabilities under this Guaranty. Conversely, the discharge of any or all of
the undersigned's obligations and liabilities under this Guaranty by Chase or by
reason of operation of law or otherwise shall in no event or under any
circumstance constitute or be deemed to constitute a discharge, in whole or in
part, of the undersigned's obligations and liabilities under any of the Other
Guaranties. The term "Other Guaranties" as used herein shall mean any other
guaranty of payment, guaranty of performance, completion guaranty,
indemnification agreement or other guaranty or instrument creating any
obligation or undertaking of any nature whatsoever (other than this Guaranty)
now or hereafter executed and delivered by any or all of the undersigned to
Chase in connection with any or all of the Obligations. In the event of any
conflict between any of the Other Guaranties and this Guaranty, the terms of
this Guaranty shall control.
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24. This Guaranty may be executed in one or more counterparts by some or
all of the parties hereto, each of which counterparts shall be an original and
all of which together shall constitute a single agreement of guaranty. The
failure of any party listed below to execute this Guaranty, or any counterpart
hereof, or the ineffectiveness for any reason of any such execution, shall not
relieve the other signatories from their obligations hereunder.
25. The undersigned hereby irrevocably and unconditionally waives, and
Chase by its acceptance of this Guaranty irrevocably and unconditionally waives,
any and all right to trial by jury in any action, suit or counterclaim arising
in connection with, out of or otherwise relating to this Guaranty.
[remainder of page is deliberately left blank]
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IN WITNESS WHEREOF, the undersigned have duly executed this Guaranty the
day and year first above set forth.
Coolbrands Dairy, Inc.
Swensen's, Inc.
Swensen's Ice Cream Company
EP Acquisition Corp.
Yogen Fruz Acquisitions, Inc.
Eskimo Pie Corporation
Sugar Creek Foods Inc.
Bresler's Industries, Inc.
Northern Lights Frozen Deserts, Inc.
Golden Swirl Management Company
I Can't Believe Its Yogurt, Ltd.
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.
Swensen's Distributing
Swensen's Manufacturing
Swensen's Operating Company, Inc.
Swensen's Ice Cream Company of Nevada
Loel of Florida Inc.
Swenson's Franchise Ice Cream Company, Inc.
Swenson's of Las Vegas, Inc.
Schraffts'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.
Churns Franchising Corp.
By: /s/ David Stein
------------------------------------
David Stein, President
Eskimo Pie Frozen Distribution Inc.
By: /s/ David Stein
------------------------------------
David Stein, Chief Executive Officer
Subsidiary Guaranty
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EXHIBIT A
I. As used herein, the following terms shall have the following meanings:
(a) The term "Business Day" shall have the meaning given to such term
in the Note.
(b) The term "Existing Credit Facilities" shall have the meaning given
to such term in the Note.
(c) The term "Guarantor" means any Person guaranteeing any of all of
the obligations of the Borrower under the Note.
(d) The term "Loan Documents" shall mean the Note, the Security
Agreement, this Guaranty and any other documents executed by the Borrower or
others, and by or in favor of Chase, in connection with the Note, the Security
Agreement, this Guaranty or any other guaranty executed by a Guarantor in
connection with the Obligations.
(e) The term "Note" shall mean the Promissory Note dated the date of
this Guaranty of Payment in the principal sum of $40,000,000 made by the
Borrower to Chase.
(f) The term "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.
(g) The term "Security Agreement" means the Security Agreement dated
the date of this Guaranty made by Coolbrands Dairy Inc., as Debtor and Chase, as
Lender, in connection with the Loan.
(h) The term "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.
II. Rules of Interpretation. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement,
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instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (b) any reference herein to any Person shall
be construed to include such Person's successors and assigns, and (c) the words
"herein" "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Guaranty in its entirety and not to any particular
provision hereof.
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SECURITY AGREEMENT
SECURITY AGREEMENT dated as of March 25, 2005 between COOLBRANDS DAIRY
INC., a Delaware corporation (the "Debtor") and JPMORGAN CHASE BANK, N.A., a
national banking association (the "Lender").
WITNESSETH:
WHEREAS, Integrated Brands Inc., a New Jersey corporation (the "Borrower"),
has executed and delivered to the Lender a promissory note (the "Note"),
evidencing a loan to the Borrower by the Lender in the principal amount of
$40,000,000.00 (the "New Loan");
WHEREAS, the Debtor (and certain other guarantors named therein) have
executed and delivered to the Lender a Joint and Several Guaranty of Payment
with respect to the New Loan (the "New Payment Guaranty");
WHEREAS, pursuant to a Second Amendment, Joinder and Reaffirmation to Loan
Agreement and Guaranties and an Eighth Amendment, Joinder and Reaffirmation to
Loan Agreement and Guaranties, the Debtor is joining as a "Guarantor" under
certain of the guaranties of payment (the "Existing Guaranties"; and together
with the New Guaranty of Payment, the "Payment Guaranties") made in connection
with the Existing Credit Facilities (hereinafter defined), as is required under
the Existing Credit Facilities;
WHEREAS, the obligation of the Lender to make the New Loan is conditioned
upon, among other things, the execution and delivery by the Debtor of this
Agreement to secure (a) the due and punctual payment by the undersigned of all
sums becoming payable from the Debtor under or in connection with each of the
Payment Guaranties, including without limitation, (i) the principal of and
premium, if any, and interest accruing (including, without limitation, during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the New Loan, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise and (ii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Debtor under each of the Payment
Guaranties or the other Loan Documents (defined below), (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Debtor under or pursuant to each of the Payment Guaranties and the other Loan
Documents (including this Agreement), and (c) the payment of all damages
(whether provided for in any of the Payment Guaranties, the other Loan Documents
or otherwise permitted by law) in respect of a failure or refusal by the Debtor
to pay or perform as required under any of the Payment Guaranties or the other
Loan Documents (all the monetary and other obligations described in the
preceding clauses (a) through (c), whether now or hereafter existing, being
collectively called the "Obligations").
NOW, THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt and sufficiency of which the parties hereto hereby
acknowledge, the
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Debtor and the Lender (and on behalf of each of their respective successors or
assigns), hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Definition of Terms Used Herein. Unless otherwise defined in
this Agreement, terms defined in the UCC (hereinafter defined) are used in this
Agreement as such terms are defined in the UCC.
SECTION 1.02 Definition of Certain Terms Used Herein. As used herein, the
following terms shall have the following meanings:
"Account Debtor" shall mean any Person who is or who may become obligated
to the Debtor under, with respect to or on account of an Account.
"ACH Exposure" shall mean indebtedness of the Debtor to the Lender on
account of automatic clearing house direct deposit payroll transactions.
"Accounts Receivable" or "Accounts" shall mean, interchangeably, any and
all rights of the Debtor to receive payments from the sale or lease of goods
and/or the provision of services including, without limitation, "Accounts" as
defined in the UCC, and as such definition may be expanded under any future
revision or amendment to the UCC, "accounts receivable" as determined in
accordance with GAAP, proceeds from the sale of inventory, contract rights and
all rights of the Debtor to receive payments of any kind or nature (including,
without limitation, condemnation and insurance proceeds and rights to receive
payments arising out of the sale, lease or license of all kinds of tangible and
intangible personal property), now existing or hereafter acquired or arising.
"Asset Purchase Agreement" shall mean the Asset Purchase Agreement by and
between Kraft and the Borrower dated as of December 22, 2004.
"Capital Lease" shall mean a lease which has been or should be, in
accordance with GAAP, capitalized on the books of the lessee.
"Collateral" shall mean all of the present and after acquired personal
property of the Debtor, including, without limiting the generality of this
definition, all (a) Accounts Receivable, (b) Documents, (c) Equipment, (d)
General Intangibles, (e) Inventory, (f) cash and cash accounts, (g) Investment
Property, (h) all "goods" and all "supporting obligations" (as such terms are
defined under the UCC), and (i) Proceeds; but shall exclude the Excluded
Collateral.
"Commodity Account" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"Commodity Contract" shall mean a commodity futures contract, an option on
a commodity futures contract, a commodity option or any other contract that, in
each case, is (a) traded on or subject to the rules of a board of trade that has
been designated as a contract market
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for such a contract pursuant to the federal commodities laws or (b) traded on a
foreign commodity board of trade, exchange or market, and is carried on the
books of a Commodity Intermediary for a Commodity Customer.
"Commodity Customer" shall mean a Person for whom a Commodity Intermediary
carries a Commodity Contract on its books.
"Commodity Intermediary" shall mean (a) a Person who is registered as a
futures commission merchant under the federal commodities laws or (b) a Person
who in the ordinary course of its business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to federal commodities laws.
"Copyright License" shall mean any written agreement, now or hereafter in
effect, granting any right to the Debtor under any Copyright now or hereafter
owned by any third party, and all rights of the Debtor under any such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by the Debtor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office (or
any similar office of any other country), including those listed on Schedule I
to this Agreement.
"Debt" shall mean, 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
(as defined in the Note) except for (and to the extent of) any obligations of
such Person which have been bonded by a surety which is acceptable to the Lender
(provided that nothing herein shall exclude from this definition any obligations
of any such Person to such surety); (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.
"Documents" shall mean all instruments, files, records, ledger sheets,
documents of title and other documents covering or relating to any of the
Collateral.
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"Entitlement Holder" shall mean a Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary. If a Person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the UCC, such Person is the Entitlement Holder.
"Equipment" shall mean all equipment, furniture and furnishings, and all
goods and tangible personal property similar to any of the foregoing, including
tools, parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by the
Debtor. The term Equipment shall include Fixtures.
"Events of Default" shall have the meaning given to such term in Section
6.01(a).
"Excluded Collateral" shall mean any Collateral which (i) is subject to a
Lien permitted by Section 4.13 of this Agreement if and to the extent the terms
of such permitted Lien prohibit the Debtor from granting a Lien on the assets or
properties which are the subject of such permitted Lien or on the Debtor's
rights under the agreement to which such permitted Lien relates, or (ii) is the
subject of any license, lease or other agreement which by its terms prohibits
Debtor from granting a Lien on the assets or properties that are the subject
thereof or on the Debtor's rights as lessee or licensee thereunder, but shall
not include any Account Receivable of the Debtor under any such license, lease
or other agreement. The Excluded Collateral, as of the date hereof, is described
on Schedules A.
"Existing Credit Facilities" has the meaning given to such term in the
Note.
"Financial Asset" shall mean (a) a Security, (b) an obligation of a Person
for a share, participation or other interest in a Person or in property or an
enterprise of a Person, which is, or is of a type, dealt with in, or traded on,
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Article 8 of the UCC. As
the context requires, the term Financial Asset shall mean either the interest
itself or the means by which a Person's claim to it is evidenced, including a
certificated or uncertificated Security, a certificate representing a Security
or a Security Entitlement.
"Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of the Debtor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"GAAP" means generally accepted accounting principles in the United States
of America.
"General Intangibles" shall mean all choses in action and causes of action
and all other assignable intangible personal property of the Debtor of every
kind and nature (other than Accounts Receivable) now owned or hereafter acquired
by the Debtor, including deposit accounts, commercial tort claims, chattel
paper, instruments, payment intangibles, tax refunds and return claims,
corporate or other business records, indemnification claims, contract rights,
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Intellectual Property, goodwill, registrations, franchises, tax refund claims,
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to the Debtor to secure payment by an Account Debtor of any
of the Accounts Receivable, and any other item covered within the scope of the
term "general intangible" under the UCC.
"Indemnitee" shall mean the Lender, any of the other Secured Parties and
any of their respective affiliates, Subsidiaries, directors, officers,
employees, agents and advisors.
"Intellectual Property" shall mean all intellectual and similar property of
the Debtor of every kind and nature, wherever situate, now owned or hereafter
acquired by the Debtor, including inventions, designs, Patents, Copyrights,
Licenses, Trademarks, trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or information, software
and databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions, improvements and
accessions to, and books and records describing or used in connection with, any
of the foregoing.
"Inventory" shall inventory, as defined in Section 9-102(a)(48) of the UCC,
wherever located, now or hereafter owned or acquired by the Debtor including,
without limitation, all inventory, merchandise, goods and other personal
property which are held by or on behalf of the Debtor for sale or lease or are
furnished or are to be furnished under a contract of sale or service (whether or
not a deposit for the purchase of such goods is received by the Debtor, a
separate change is made or a separate bill is rendered by the Debtor for the
storage of such goods and whether or not the goods were purchased by the Debtor
pursuant to a purchase order setting forth the specifications relating to such
goods to be purchased) or which constitute raw materials, work in process or
materials used or consumed or to be used or consumed in the Debtor's business,
or the processing, packaging, promotion, delivery or shipping of the same, and
all finished goods, whether or not such inventory is listed on any schedules,
assignments or reports furnished to the Lender from time-to-time and whether or
not the same is in transit or in the constructive, actual or exclusive occupancy
or possession of the Debtor or is held by the Debtor or by others for the
Debtor's account, including, without limitation, all goods covered by purchase
orders with customers and contracts with suppliers and all goods billed to
customers and held by Debtor (whether or not at the request of customers) and
all goods billed and held by suppliers and all inventory which may be located on
premises of the Debtor or of any carriers, forwarding agents, truckers,
warehousemen, vendors, selling agents or other Persons.
"Investment Property" shall mean all Securities (whether certificated or
uncertificated), Security Entitlements, Securities Accounts, Commodity Contracts
and Commodity Accounts of the Debtor, whether now owned or hereafter acquired by
the Debtor.
"Kraft" shall mean Kraft Foods Global, Inc., a Delaware corporation.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which the Debtor is a party (other
than those license agreements in existence on the date hereof, which by their
terms prohibit assignment or a grant of a security interest by the Debtor as
licensee thereunder).
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"Lien" shall mean 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 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 Documents" shall mean this Agreement, the New Payment Guaranty, the
Existing Guaranties, the Note, any other guaranty of the Obligations, and all
other documents and agreements made pursuant to or in connection with the New
Loans, either of the Existing Credit Facilities or any of the foregoing
documents.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Debtor, (b) the ability of the Debtor to perform its obligations under this
Agreement or any of the other Loan Documents, or (c) the rights of or benefits
available to the Lender under this Agreement or any of the other Loan Documents.
"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to the Debtor any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any third party, is in existence, and
all rights of the Debtor under any such agreement.
"Patents" shall mean all of the following now owned or hereafter acquired
by the Debtor: (a) all letters patent of the United States or any other country,
all registrations and recordings thereof, and all applications for letters
patent of the United States or any other country, including registrations,
recordings and pending applications in the United States Patent and Trademark
Office or any similar offices in any other country, including those listed on
Schedule II to this Agreement, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate substantially in the form
of Annex I hereto, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Financial Officer.
"Permitted Encumbrances" shall mean:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of
business and securing obligations that are not overdue by more than 30
days;
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(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under Section 6.01;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Debtor; and
(g) Liens in favor of any of the Secured Parties created pursuant to
this Agreement;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Debt, other than Liens in favor of the Secured Parties.
"Person" shall mean 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.
"Proceeds" shall mean any consideration wherever received, from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral wherever situate, any value, wherever received, as a
consequence of the possession of any Collateral wherever situate and any payment
received from any insurer or other Person as a result of the destruction, loss,
theft, damage or other involuntary conversion of whatever nature, and wherever
such destruction, loss, theft, damage or other involuntary conversion shall
occur, of any asset or property which constitutes Collateral, and shall include:
(a) any claim of the Debtor against any third party for (and the right to sue
and recover for and the rights to damages or profits due or accrued arising out
of or in connection with) (i) past, present or future infringement of any Patent
now or hereafter owned by the Debtor, or licensed under a Patent License, (ii)
past, present or future infringement or dilution of any Trademark now or
hereafter owned by the Debtor or licensed under a Trademark License or injury to
the goodwill associated with or symbolized by any Trademark now or hereafter
owned by the Debtor, (iii) past, present or future breach of any License and
(iv) past, present or future infringement of any Copyright now or hereafter
owned by the Debtor or licensed under a Copyright License and (b) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral.
"Secured Parties" shall mean (a) the Lender, (b) the Lender as "Agent" and
as a "Lender" under each of the Existing Credit Facilities and the Existing
Guaranties, (c) the beneficiaries of
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each indemnification obligation undertaken by the Debtor under any Loan
Document, and (d) the successors, participants and permitted assigns of each of
the foregoing.
"Securities" shall mean any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type, dealt
with or traded on securities exchanges or securities markets or (ii) are a
medium for investment and by their terms expressly provide that they are a
security governed by Article 8 of the Uniform Commercial Code.
"Securities Account" shall mean an account to which a Financial Asset is or
may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
"Security Entitlements" shall mean the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.
"Security Interest" shall have the meaning assigned to such term in Section
2.01.
"Securities Intermediary" shall mean (a) a clearing corporation or (b) a
Person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"Subsidiary" shall have the meaning assignment to such term in the Note.
"Trademark License" shall mean any written agreement, now or hereafter in
effect, granting to the Debtor any right to use any Trademark now or hereafter
owned by any third party, and all rights of the Debtor under any such agreement.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by the Debtor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or the District of Columbia (or any similar
offices in any other country or any political subdivision thereof) and all
extensions or renewals thereof, including those listed on Schedule III to this
Agreement, (b) all goodwill associated therewith or symbolized thereby and (c)
all other assets, rights and interests that uniquely reflect or embody such
goodwill.
"Transition Services Agreement" shall mean that certain Transition Services
Agreement, in form approved by Lender, to be entered into on or about the date
hereof by and between the Debtor and Kraft.
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"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial Code
in effect in the State of New York, as amended from time to time.
"United States" shall mean the United States (or any political subdivision
thereof) and its territories and possessions.
SECTION 1.03 Rules of Interpretation. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
ARTICLE II
Security Interest
SECTION 2.01 Security Interest. As security for the payment or performance,
as the case may be, in full of the Obligations, the Debtor hereby assigns,
grants, pledges and transfers, to the Lender and the other Secured Parties,
their respective successors and assigns, a security interest in all of the
Debtor's right, title and interest in, to and under the Collateral (the
"Security Interest"). Without limiting the foregoing, the Lender is hereby
authorized to file one or more financing statements (including fixture filings),
continuation statements, filings with the United States Patent and Trademark
Office, the United States Copyright Office (or any successor office or any
similar office in any other country) or other documents for the purpose of
perfecting, confirming, continuing, enforcing, giving notice of or protecting
the Security Interest granted by the Debtor, without the signature of the
Debtor, and naming the Debtor as debtor, and the Lender and/or any or all of the
other Secured Parties as secured party.
SECTION 2.02 No Assumption of Liability. The Security Interest is granted
as security only and shall not subject the Lender or any other Secured Party to,
or in any way alter or modify, any obligation or liability of the Debtor with
respect to or arising out of the Collateral.
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ARTICLE III
Representations and Warranties
The Debtor represents and warrants to the Lender and the other Secured
Parties that:
SECTION 3.01 Title and Authority. The Debtor has good and valid rights in
and title to the Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Lender and the other Secured Parties the Security Interest in the Collateral
pursuant hereto and to execute, deliver and perform its obligations in
accordance with the terms of this Agreement, without the consent or approval of
any other Person other than any consent or approval which has been obtained and
is in full force and effect.
SECTION 3.02 Perfection Certificate. The Perfection Certificate has been
duly prepared, completed and executed and the information set forth therein is
correct and complete in all material respects.
SECTION 3.03 Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations and (b) a perfected
security interest in all Collateral in which a security interest may be
perfected by filing, recording or registering a financing statement or analogous
document in the United States, or any other country pursuant to the UCC or other
applicable law in such jurisdictions. The Security Interest is and shall be
prior to any other Lien on any of the Collateral, other than (i) Liens expressly
permitted to be prior to the Security Interest pursuant to Section 4.13 of this
Agreement, and (ii) Liens granted by Kraft, which Liens the Debtor shall use
best efforts to be caused to be released by Kraft within 45 days following the
consummation of the transaction contemplated under the Asset Purchase Agreement.
If any Lien granted by Kraft has not been terminated within such time period,
then the Debtor will, upon the Lender's request, take action at the Debtor's own
expense to enforce its rights against Kraft under the Asset Purchase Agreement
and other documents delivered in connection with the acquisition of the Acquired
Assets. Kraft has delivered to the Lender copies of financing statements
affecting assets of Kraft. The Debtor will deliver to the Lender a list of any
such financing statements which, to the best of the Debtor's knowledge, reflect
liens or other interests in the Acquired Assets within 21 days following the
date of this Agreement.
SECTION 3.04 Absence of Other Liens. The Collateral is owned by the Debtor
free and clear of any Lien, except for Liens expressly permitted pursuant to
Section 4.13 of this Agreement. The Debtor has not filed or consented to the
filing of (a) any financing statement or analogous document under the UCC or any
other applicable laws covering any Collateral other than those financing
statements in favor of the Secured Parties, (b) any assignment in which the
Debtor assigns any Collateral or any security agreement or similar instrument
covering any Collateral with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office in any other jurisdiction
other than any of the foregoing in favor of the Lenders and the other Secured
Parties or (c) any assignment in which the Debtor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office, which financing statement or
analogous document, assignment, security agreement or similar instrument is
still in effect, except, in each
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case, for Liens expressly permitted pursuant to Section 4.13 of this Agreement
and except for financing statements evidencing Liens being terminated on the
Effective Date, other than any of the foregoing in favor of the Lenders and the
other Secured Parties.
SECTION 3.05 Asset Purchase Agreement. The New Loan will be used solely for
the purpose of the Debtor's acquisition of that portion of the Collateral which
constitutes "Acquired Assets" (as defined in the Asset Purchase Agreement)
pursuant to the Asset Purchase Agreement.
ARTICLE IV
Covenants
SECTION 4.01 Change of Name; Location of Collateral: Records; Place of
Business.
(a) The Debtor agrees promptly to notify the Lender in writing but in no
event later than 30 days after such change, of any change (i) in its legal name
or in any trade name used to identify it in the conduct of its business or in
the ownership of its properties, (ii) in the location of its chief executive
office, its principal place of business, any office in which it maintains books
or records relating to Collateral owned by it or any office or facility at which
Collateral owned by it is located (including the establishment of any such new
office or facility), (iii) in its partnership, corporate or other organizational
structure or (iv) in its Federal Taxpayer Identification Number. The Debtor
agrees to cooperate with the Lender in making all filings that are required in
order for the Lender and the other Secured Parties to continue at all times
following such change to have a valid, legal and perfected first priority
security interest in all the Collateral. The Debtor agrees promptly to notify
the Lender if any material portion of the Collateral owned or held by the Debtor
is damaged or destroyed.
(b) The Debtor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which the Debtor is engaged, but in any event to include complete accounting
records indicating all payments and proceeds received with respect to any part
of the Collateral, and, at such time or times as the Lender may reasonably
request, promptly to prepare and deliver to the Lender a duly certified schedule
or schedules in form and detail reasonably satisfactory to the Lender showing
the identity, amount and location of any and all Collateral.
(c) The Debtor shall keep the Equipment and Inventory of the Debtor at (i)
the places therefor specified on Annex I, and (ii), upon 30 days' prior written
notice to the Lender, at such other places in a jurisdiction where all action,
if any, required by Section 4.04 shall have been taken with respect to such
Equipment and Inventory. Notwithstanding the foregoing, for no longer than the
maximum service periods set forth in the Transition Services Agreement, the
Debtor may keep a portion of its Inventory (having a fair market value not in
excess of $2,500,000) at locations operated by Kraft (or by others pursuant to
contracts with Kraft) in connection with the distribution and warehousing
services to be provided under the Transition
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Services Agreement. The Debtor shall cause the Equipment of the Debtor to be
maintained and preserved in the ordinary course of business, and shall, in the
case of any loss or damage to any of such Equipment, as quickly as practicable
after the occurrence thereof, make or cause to be made, all repairs,
replacements and other improvements in connection therewith that are necessary
or desirable to such end. The Debtor shall pay promptly when due all property
and other taxes, assessments and governmental charges or levies imposed upon,
and all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory of the Debtor.
SECTION 4.02 Periodic Certification. Within 15 days following a request
from the Lender, and upon delivery of the annual financial statements for
Coolbrands International Inc. and its Subsidiaries (including the Debtor) as
required under the Loan Documents, the Debtor shall deliver to the Lender a
certificate executed by the chief financial officer of the Debtor setting forth
the information required pursuant to Section 1 of the Perfection Certificate or
confirming that there has been no change in such information since the date of
such certificate or the date of the most recent certificate delivered pursuant
to this Section 4.02. Each certificate delivered pursuant to this Section 4.02
shall also identify in the format of Schedule I, II, or III, as applicable, all
Intellectual Property of the Debtor in existence on the date thereof and not
then listed on such Schedules or previously so identified to the Lender. This
Section 4.02 shall not be considered to limit in any way any other covenant in
this Agreement.
SECTION 4.03 Protection of Security. The Debtor shall, at its own cost and
expense, take any and all actions necessary to defend title to the Collateral
against all Persons and to defend the Security Interest of the Lender and the
other Secured Parties in the Collateral and the priority thereof against any
Lien not expressly permitted pursuant to Section 4.13 of this Agreement.
SECTION 4.04 Further Assurances, (a) The Debtor agrees, at its own expense,
(i) to execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Lender may from time
to time reasonably request to preserve, protect and perfect the Security
Interest and the rights and remedies created hereby, including the payment of
any fees and taxes required in connection with the execution and delivery of
this Agreement, the granting of the Security Interest and the filing of any
financing statements (including fixture filings), filings in the United States
Patent and Trademark Office and the United States Copyright Office or other
documents in connection herewith or therewith and (ii) at the request of the
Lender, to enter into and to cause any Securities Intermediary through which it
holds Investment Property to enter into (or to reinvest through a Securities
Intermediary who will enter into) a control agreement, in form and substance
reasonably satisfactory to the Lender, pursuant to which such Securities
Intermediary grants "control", within the meaning of Section 8-106 of the
Uniform Commercial Code of the State of New York, over such Investment Property
to the Lender. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be forthwith pledged and delivered to
the Lender, duly endorsed in a manner satisfactory to the Lender.
(b) Without limiting the generality of the foregoing, the Debtor hereby
authorizes the Lender, with prompt notice thereof to the Debtor, to supplement
this Agreement by
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supplementing Schedule I, II, or III hereto or adding additional schedules
hereto to identify specifically any asset or item that may constitute
Copyrights, Licenses, Patents or Trademarks; provided, however, that the Debtor
shall have the right, exercisable within 10 days after it has been notified by
the Lender of the specific identification of such Collateral, to advise the
Lender in writing of any inaccuracy of the representations and warranties made
by the Debtor hereunder with respect to such Collateral. The Debtor agrees that
it will use its commercially reasonable efforts to take such action as shall be
necessary in order that all representations and warranties hereunder shall be
true and correct with respect to such Collateral within 30 days after the date
it has been notified by the Lender of the specific identification of such
Collateral.
SECTION 4.05 Inspection and Verification. The Debtor will keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The Lender
and such Persons as the Lender may designate shall have the right, at the
Debtor's own cost and expense, upon reasonable notice and during normal business
hours, to inspect the Collateral, all records related thereto (and to make
extracts and copies from such records) and the premises upon which any of the
Collateral is located, to discuss the Debtor's affairs with the officers of the
Debtor and its independent accountants and to verify under reasonable procedures
the validity, amount, quality, quantity, value, condition and status of, or any
other matter relating to, the Collateral, including, in the case of Accounts or
Collateral in the possession of any third party, by contacting Account Debtors
in the event of and during the continuance of an Event of Default or the third
party possessing such Collateral for the purpose of making such a verification.
The Lender shall have the absolute right to share any information it gains from
such inspection or verification with any Secured Party.
SECTION 4.06 Taxes; Encumbrances. At its option, the Lender may discharge
past due taxes, assessments, charges, fees, Liens, security interests or other
encumbrances at any time levied or placed on the Collateral and not permitted
pursuant to Section 4.13 of this Agreement and may pay for the maintenance and
preservation of the Collateral to the extent the Debtor fails to do so as
required by this Agreement, and the Debtor agrees to reimburse the Lender on
demand for any payment made or any expense incurred by the Lender pursuant to
the foregoing authorization; provided, however, that nothing in this
Section 4.06 shall be interpreted as excusing the Debtor from the performance
of, or imposing any obligation on the Lender or any Secured Party to cure or
perform, any covenants or other promises of the Debtor with respect to taxes,
assessments, charges, fees, Liens, security interests or other encumbrances and
maintenance as set forth herein or in the other Loan Documents.
SECTION 4.07 Assignment of Security Interest. If at any time the Debtor
shall take a security interest in any property of an Account Debtor or any other
Person to secure payment and performance of an Account in excess of $100,000 to
the extent permissible under the document granting a security interest, the
Debtor shall promptly assign such security interest to the Lender. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other Person granting the security interest.
SECTION 4.08 Continuing Obligations of the Debtor. The Debtor shall remain
liable to observe and perform all the conditions and obligations to be observed
and performed by
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it under each contract, agreement or instrument relating to the Collateral, all
in accordance with the terms and conditions thereof, and the Debtor agrees to
indemnify and hold harmless the Lender and the other Secured Parties from and
against any and all liability for such performance.
SECTION 4.09 Use and Disposition of Collateral. The Debtor shall not make
or permit to be made an assignment, pledge or hypothecation of the Collateral or
grant any other Lien in respect of the Collateral, except as expressly permitted
by Section 4.13 of this Agreement. The Debtor shall not make, nor shall it
permit to be made, any sale, conveyance, lease, assignment, transfer or other
disposition of any Collateral, and the Debtor shall remain at all times in
possession of the Collateral owned by it, except that (a) Inventory may be sold
in the ordinary course of business and (b) unless and until an Event of Default
shall have occurred and be continuing, the Debtor may use and dispose of the
Collateral in any lawful manner not inconsistent with the provisions of this
Agreement or any other Loan Document. Without limiting the generality of the
foregoing, the Debtor agrees that it shall not permit any material portion of
its Inventory to be in the possession or control of any warehouseman, bailee,
landlord, agent or processor at any time except for Inventory maintained by
Kraft (or by others pursuant to contracts with Kraft) pursuant to the Transition
Services Agreement, unless such warehouseman, bailee, landlord, agent or
processor shall have been notified of the Security Interest and shall have
agreed in writing to hold the Inventory subject to the Security Interest and the
instructions of the Lender and to waive and release any Lien held by it with
respect to such Inventory, whether arising by operation of law or otherwise.
SECTION 4.10 Limitation on Modification of Accounts. The Debtor will not,
without the Lender's prior written consent, grant any extension of the time of
payment of any of the Accounts Receivable, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partly, any
Person liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, credits, discounts, compromises or settlements
granted or made in the ordinary course of business and consistent with its good
faith business judgment and past practices.
SECTION 4.11 Insurance. The Debtor, at its own expense, shall maintain or
cause to be maintained insurance covering physical loss or damage to the
Inventory and Equipment with financially sound and reputable insurance
companies, in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations. The Debtor irrevocably makes, constitutes and appoints the
Lender (and all officers, employees or agents designated by the Lender) as the
Debtor's true and lawful agent (and attorney-in-fact) for the purpose, during
the continuance of an Event of Default, of making, settling and adjusting claims
in respect of Collateral under policies of insurance, endorsing the name of the
Debtor on any check, draft, instrument or other item of payment for the proceeds
of such policies of insurance and for making all determinations and decisions
with respect thereto. All property damage insurance maintained on any portion of
the Collateral shall name the Lender as an additional insured and loss payee.
All liability insurance maintained in respect of any portion of the Collateral
shall name each Secured Party as an additional insured. In the event that the
Debtor at any time or times shall fail to obtain or maintain any of the policies
of insurance required hereby or to pay any premium in whole or part relating
thereto, the Lender may, without waiving or releasing any obligation or
liability of the Debtor hereunder or any Event of Default, in its sole
discretion, obtain and maintain such
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policies of insurance and pay such premium and take any other actions with
respect thereto as the Lender deems advisable. Reimbursement under any liability
insurance maintained by the Debtor pursuant to this Section 4.11 may be paid
directly to the Person who shall have incurred liability covered by such
insurance. In case of any loss involving damage to Equipment or Inventory, the
Debtor shall make or cause to be made the necessary repairs to or replacements
of its Equipment or Inventory, and proceeds of insurance (if any) properly
received by or released to the Debtor shall be used by the Debtor, except as
otherwise required hereunder or by the Loan Documents, to pay or as
reimbursement for the costs of such repairs or replacements. So long as no Event
of Default is continuing, the Lender shall permit any such insurance proceeds to
be so used. All sums disbursed by the Lender in connection with this Section
4.11, including reasonable attorneys' fees, court costs, expenses and other
charges relating thereto, shall be payable, upon demand, by the Debtor to the
Lender and shall constitute additional Obligations secured hereby.
SECTION 4.12 Legend. Promptly after a request therefor from the Lender
following an Event of Default, the Debtor shall legend, in form and manner
reasonably satisfactory to the Lender, its Accounts Receivable and its books,
records and documents evidencing or pertaining thereto with an appropriate
reference to the fact that such Accounts Receivable have been collaterally
assigned to the Lender for the benefit of the Secured Parties and that the
Lender has a security interest therein.
SECTION 4.13 Liens. The Debtor will not create, incur, assume or permit to
exist any Lien on any property or asset now owned or hereafter acquired by it,
or assign or sell any income or revenues (including Accounts Receivable) or
rights in respect of any thereof, except:
(a) Permitted Encumbrances;
(b) Any Lien on any property or asset of the Debtor existing on the date
hereof and set forth in Schedule IV; provided that (i) such Lien shall not apply
to any other property or asset of the Debtor and (ii) such Lien shall secure
only those obligations which it secures on the date hereof and extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount thereof; and
(c) Purchase money Liens on any Equipment acquired or held by the Debtor in
the ordinary course of business to secure the purchase price of such Equipment
or to secure Debt incurred solely for the purpose of financing the acquisition
of such Equipment, or Liens existing on such Equipment at the time of its
acquisition, or extensions, renewals or replacements of any of the foregoing for
the same or a lesser amount, provided, however, that no such Lien shall extend
to or cover any property of any character other than the Equipment being
acquired, and no such extension, renewal or replacement shall extend to or cover
any property not theretofore subject to the Lien being extended, renewed or
replaced;
provided, however, that none of the foregoing shall be permitted if the same is
prohibited under Section 5.02(b) of either of the Existing Credit Facilities or
by Section 3 of the New Payment Guaranty.
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SECTION 4.14 Covenants Regarding Patent, Trademark and Copyright
Collateral.
(a) The Debtor agrees that it will not, and it will exercise its best
efforts to ensure that its licensees will not, do any act, or omit to do any
act, whereby any Patent may become invalidated or dedicated to the public, and
agrees that it shall continue to mark any products covered by a Patent with the
relevant patent number as necessary and sufficient to establish and preserve its
maximum rights under applicable patent laws, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.
(b) The Debtor (either itself or through its licensees or its sublicensees)
will, for each Trademark, (i) maintain such Trademark in full force free from
any claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such Trademark
with notice of United States federal or foreign registration to the extent
necessary and sufficient to establish and preserve its maximum rights under
applicable law and (iv) not use or knowingly permit the use of such Trademark in
violation of any third party rights, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
(c) The Debtor (either itself or through licensees) will, for each work
covered by a Copyright, continue to publish, reproduce, display, adopt and
distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
(d) The Debtor shall notify the Lender promptly if it knows that any
Patent, Trademark or Copyright material to the conduct of the business of the
Debtor (taken as a whole) may reasonably be expected to become abandoned, lost
or dedicated to the public, or of any material adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
United States Copyright Office, or any court or similar office of any country)
regarding the Debtor's ownership of any such Patent, Trademark or Copyright, its
right to register the same, or to keep and maintain the same.
(e) In no event shall the Debtor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office, or
any office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly informs
the Lender and, upon request of the Lender, executes and delivers any and all
agreements, instruments, documents and papers as the Lender may reasonably
request to evidence the Lender's security interest in such Patent, Trademark or
Copyright, and the Debtor hereby appoints the Lender as its attorney-in-fact to
execute and file such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with an
interest, is irrevocable.
(f) The Debtor will take all necessary steps that are consistent with the
practice in any proceeding before the United States Patent and Trademark Office,
United States Copyright
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Office or any office or agency in any political subdivision of the United States
or in any other country or any political subdivision thereof, to maintain and
pursue each material application relating to the Patents, Trademarks and/or
Copyrights (and to obtain the relevant grants or registrations) and to maintain
each issued Patent and each registration of the Trademarks and Copyrights that
is material to the conduct of the business of the Debtor, including timely
filings of applications for renewal, affidavits of use, affidavits of
incontestability and payment of maintenance fees, and, if consistent with good
business judgment, to initiate opposition, interference and cancellation
proceedings against third parties.
(g) In the event that the Debtor has reason to believe that any Collateral
consisting of a Patent, Trademark or Copyright material to the conduct of the
business of the Debtor has been or is about to be infringed, misappropriated or
diluted by a third party in any material respect, the Debtor promptly shall
notify the Lender and shall, if consistent with good business judgment, promptly
sue for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, and take such other
actions as are appropriate under the circumstances to protect such Collateral.
(h) Upon and during the continuance of an Event of Default, the Debtor
shall use its best efforts to obtain all requisite consents or approvals by the
licensor of each Copyright License, Patent License or Trademark License to
effect the assignment of all of the Debtor's right, title and interest
thereunder to the Lender or its designee.
ARTICLE V
Power of Attorney
The Debtor irrevocably makes, constitutes and appoints the Lender (and all
officers, employees or agents designated by the Lender) as the Debtor's true and
lawful agent and attorney-in-fact, and in such capacity the Lender shall have
the right, with power of substitution for the Debtor and in the Debtor's name or
otherwise, for the use and benefit of the Lender and the Secured Parties, upon
the occurrence and during the continuance of an Event of Default (a) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral or any
part thereof; (b) to demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the Collateral; (c) to sign the
name of the Debtor on any invoice or bill of lading relating to any of the
Collateral; (d) to send verifications of Accounts Receivable to any Account
Debtor; (e) to commence and prosecute any and all suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights in
respect of any Collateral; (f) to settle, compromise, compound, adjust or defend
any claims, actions, suits or proceedings relating to all or any of the
Collateral; (g) to notify, or to require the Debtor to notify, Account Debtors
to make payment directly to the Lender; and (h) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Lender were
the absolute owner of the Collateral for all purposes, in each case in a manner
not inconsistent with the terms of this Agreement; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Lender or any Secured Party to make any commitment or to make
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any inquiry as to the nature or sufficiency of any payment received by the
Lender or any Secured Party, or to present or file any claim or notice, or to
take any action with respect to the Collateral or any part thereof or the moneys
due or to become due in respect thereof or any property covered thereby, and no
action taken or omitted to be taken by the Lender or any Secured Party with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of the Debtor or to any claim or action against
the Lender or any Secured Party. It is understood and agreed that the
appointment of the Lender as the agent and attorney-in-fact of the Debtor for
the purposes set forth above is coupled with an interest and is irrevocable. The
provisions of this Section shall in no event relieve the Debtor of any of its
obligations hereunder or under any other Loan Document, or with respect to any
of the Obligations, with respect to the Collateral or any part thereof, or
impose any obligation on the Lender or any Secured Party to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Lender or any Secured Party of any other or
further right which it may have on the date of this Agreement or hereafter,
whether hereunder, under any other Loan Document or with respect to any of the
Obligations, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01 Remedies upon Default.
(a) Upon the occurrence and during the continuance of an "Event of Default"
under the Note or upon any event of default or default beyond applicable periods
of notice and grace under this Agreement, any of the Payment Guaranties, or with
respect to any ACH Exposure (such "Events of Default", events of default and
defaults being the "Events of Default"), the Lender may exercise the rights and
remedies set forth in this Section 6.01 regarding the foreclosure and
disposition of Collateral.
(b) Upon the occurrence and during the continuance of an Event of Default,
the Debtor agrees to deliver each item of Collateral to the Lender forthwith on
demand, and it is agreed that the Lender shall have the right to take any of or
all the following actions at the same or different times (subject to any
mandatory requirements of law that cannot be waived by contract): (a) with
respect to any Collateral consisting of Intellectual Property, on demand, to
cause the Security Interest to become an assignment, transfer and conveyance of
any of or all such Collateral by the Debtor to the Lender, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Lender shall determine (other than in
violation of any then-existing licensing arrangements to the extent that waivers
cannot be obtained), and (b) with or without legal process and with or without
prior notice or demand for performance, to take possession of the Collateral and
to enter without breach of the peace any premises owned or leased by the Debtor
where the Collateral may be located for the purpose of taking possession of or
removing the Collateral and, generally, to exercise any and all rights afforded
to a secured party under the UCC or other applicable law. Without limiting the
generality of the foregoing, the Debtor agrees that the Lender shall have the
right, subject to the mandatory requirements of applicable law, to sell or
otherwise dispose of all or any part of the Collateral, at public or private
sale or at any broker's board or on any securities exchange, for
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cash, upon credit or for future delivery as the Lender shall deem appropriate.
The Lender shall be authorized at any such sale (if it deems it advisable to do
so) to restrict the prospective bidders or purchasers to Persons who will
represent and agree that they are purchasing the Collateral for their own
account for investment and not with a view to the distribution or sale thereof,
and upon consummation of any such sale the Lender shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of the Debtor, and the
Debtor hereby waives (to the extent permitted by law) all rights of redemption,
stay and appraisal which the Debtor now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted.
(c) The Lender shall give the Debtor 10 days' written notice (which the
Debtor agrees is reasonable notice) of the Lender's intention to make any sale
of Collateral. Such notice, in the case of a public sale, shall state the time
and place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Lender may fix and state in the notice (if any) of such sale. At any such
sale, the Collateral, or portion thereof, to be sold may be sold in one lot as
an entirety or in separate parcels, as the Lender may (in its sole and absolute
discretion) determine. The Lender shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Lender may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Lender until the sale price is paid by the purchaser or
purchasers thereof, but the Lender shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold again upon
like notice. For purposes hereof, a written agreement to purchase the Collateral
or any portion thereof shall be treated as a sale thereof; the Lender shall be
free to carry out such sale pursuant to such agreement and the Debtor shall not
be entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Lender shall have entered into
such an agreement all Events of Default shall have been remedied and the
Obligations paid in full. As an alternative to exercising the power of sale
herein conferred upon it, the Lender may proceed by a suit or suits at law or in
equity to foreclose this Agreement and to sell the Collateral or any portion
thereof pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
SECTION 6.02 Application of Proceeds. The Lender shall promptly apply the
proceeds of any collection or sale of the Collateral pledged by the Debtor, as
well as any Collateral consisting of cash (collectively, the "Applied
Collateral"), as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses incurred by the Lender in connection with such collection or sale
or otherwise in connection with this Agreement or any of the Obligations,
including all court costs and
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the reasonable fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Lender hereunder or under any other
Loan Document on behalf of the Debtor and any other reasonable costs or
expenses incurred in connection with the exercise of any right or remedy
hereunder or thereunder;
SECOND, to the payment in full of the Obligations, the amounts so
applied to be distributed among the Secured Parties pro rata in accordance
with the amounts of the Obligations owed to them on the date of any such
distribution; and
THIRD, to the Debtor, its successors or assigns or such other
party legally entitled thereto as a court of competent jurisdiction may
otherwise direct.
The Lender shall have absolute discretion as to time of application of any such
proceeds, moneys or balances in accordance with this Agreement and shall have no
duty to marshal assets. Upon any sale of the Collateral by the Lender (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Lender or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Lender or such
officer or be answerable in any way for the misapplication thereof.
SECTION 6.03 Grant of License to Use Intellectual Property. For the purpose
of enabling the Lender to exercise rights and remedies under this Article at
such time as the Lender shall be lawfully entitled to exercise such rights and
remedies, the Debtor hereby grants, and reaffirms and continues any prior grant,
to the Lender of an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to the Debtor) to use, license or
sub-license any of the Collateral consisting of Intellectual Property now owned
or hereafter acquired by the Debtor, and wherever the same may be located, and
including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof. The use of such license
by the Lender shall be exercised, at the option of the Lender, upon the
occurrence and during the continuation of an Event of Default; provided that any
license, sub-license or other transaction entered into by the Lender in
accordance herewith shall be binding upon the Debtor notwithstanding any
subsequent waiver or cure of an Event of Default.
ARTICLE VII
Miscellaneous
SECTION 7.01 Notices.
(a) All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, if to the Debtor, to it at c/o Integrated Brands Inc., 4175
Veterans Highway, Ronkonkoma, New York 11779, Attention of Gary P. Stevens,
Telecopy No. (631) 737-9792, with a copy to Lori S. Smith, Esq., Goodwin Procter
LLP, 599 Lexington Avenue, New York, New York 10022, Telecopy No. (212) 355-
20
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3333 and if to the Lender, to JPMorgan Chase Bank, N.A., 4 Chase MetroTech
Center, Brooklyn, New York 11245, Attention of Peter D'Agostino, (Telecopy No.
718-242-3846). Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
SECTION 7.02 Security Interest Absolute. All rights of the Lender
hereunder, the Security Interest and all obligations of the Debtor hereunder
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Note, any of the Payment Guaranties or any other Loan
Document, any other agreement with respect to any of the Obligations or any
other agreement or instrument relating to any of the foregoing, (b) any change
in the time, manner or place of payment of, or in any other term of, all or any
of the Obligations, or any other amendment or waiver of or any consent to any
departure from the Note, any of the Payment Guaranties, any other Loan Document
or any other agreement or instrument, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the Debtor
in respect of the Obligations or this Agreement (other than the indefeasible
payment in full in cash of the Obligations).
SECTION 7.03 Survival of Agreement. All covenants, agreements,
representations and warranties made by the Debtor herein and in the certificates
or other instruments prepared or delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the Secured
Parties and shall survive the making by the Lender of the New Loan regardless of
any investigation made by the Lender, and shall continue in full force and
effect until this Agreement shall terminate.
SECTION 7.04 Binding Effect; Several Agreement. This Agreement shall become
effective as to the Debtor when a counterpart hereof executed on behalf of the
Debtor shall have been delivered to the Lender and a counterpart hereof shall
have been executed on behalf of the Lender, and thereafter shall be binding upon
the Debtor and the Lender and their respective successors and assigns, and shall
inure to the benefit of the Debtor, the Lender and the other Secured Parties and
their respective successors and assigns, except that the Debtor shall not have
the right to assign, delegate or transfer its rights or obligations hereunder or
any interest herein or in the Collateral (and any such assignment, delegation or
transfer shall be void) except as expressly contemplated by this Agreement.
SECTION 7.05 Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Debtor or the Lender that are contained in this Agreement
shall bind and inure to the benefit of their respective successors and assigns.
SECTION 7.06 Lender's Fees and Expenses; Indemnification.
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(a) The Debtor agrees to pay upon demand to the Lender the amount of any
and all reasonable out-of-pocket expenses, including the reasonable fees,
disbursements and other charges of its counsel and of any experts or agents,
which the Lender may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from
or other realization upon any of the Collateral, (iii) the exercise, enforcement
or protection of any of the rights of the Lender hereunder or (iv) the failure
of the Debtor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the other
Loan Documents, the Debtor agrees to indemnify the Lender and the other
Indemnitees against, and hold each of them harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable fees,
disbursements and other charges of counsel, incurred by or asserted against any
of them arising out of, in any way connected with, or as a result of, the
execution, delivery or performance of this Agreement or any claim, litigation,
investigation or proceeding relating hereto or to the Collateral, whether or not
any Indemnitee is a party thereto; provided that the indemnity set forth in this
paragraph (b) shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses are determined by
a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.
(c) Any such amounts payable as provided under this Section 7.06 shall
constitute additional Obligations secured hereby. The provisions of this Section
7.06 shall remain operative and in full force and effect regardless of the
termination of this Agreement, the Payment Guaranties, or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of the New Loan, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Lender. All amounts due under this Section 7.06
shall be payable on written demand therefor.
SECTION 7.07 Governing Law. This Agreement is, and shall be deemed to be, a
contract entered into under and pursuant to the laws of the State of New York,
and shall be in all respects governed, construed, applied and enforced in
accordance with the laws of the State of New York without regard to conflicts of
laws principles of New York State law other than Section 5-1401 of the New York
General Obligations Law.
SECTION 7.08 Waivers; Amendment.
(a) No failure or delay of the Lender in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Lender hereunder and under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that it or any of the other Secured
Parties would otherwise have. No waiver of any provisions of this Agreement or
any other Loan Document or consent to any departure by the Debtor therefrom
shall in any event be effective unless the same shall be permitted by paragraph
(b) of this Section 7.08 and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No notice to or
demand on the
22
<Page>
Debtor in any case shall entitle the Debtor to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Lender and the Debtor with respect to which such waiver, amendment
or modification is to apply.
SECTION 7.09 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10 Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction).
SECTION 7.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract (subject to Section 7.04), and
shall become effective as provided in Section 7.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
SECTION 7.12 Headings. Article and Section headings used herein are for the
purpose of reference only, are not part of this Agreement and are not to affect
the construction of, or to be taken into consideration in interpreting, this
Agreement.
SECTION 7.13 Jurisdiction; Consent to Service of Process.
(a) The Debtor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of New York State court
sitting in New York County and of the United States District Court of the
Southern District of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by
23
<Page>
law, in such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Lender or any Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document
against the Debtor or its properties in the courts of any jurisdiction.
(b) The Debtor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any of the other Loan Documents
in any New York State or Federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 7.01. Nothing in this Agreement
will affected the right of any party to this Agreement to serve process in any
other manner permitted by law.
SECTION 7.14 Termination. This Agreement and the Security Interest shall
terminate when all of the Obligations have been indefeasibly satisfied, at which
time the Lender shall execute and deliver to the Debtor, at the Debtor's
expense, all UCC termination statements and similar documents which the Debtor
shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section 7.14
shall be without recourse to or warranty by the Lender.
[Signatures appear on the following page.]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
COOLBRANDS DAIRY INC.,
a Delaware corporation
By: /s/ David Stein
------------------------------------
Name: David Stein
Title: President
JPMORGAN CHASE BANK, N.A.,
as Lender
By:
------------------------------------
Name: Peter D'Agostino
Title: Vice President
Security Agreement
<Page>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
COOLBRANDS DAIRY INC.,
a Delaware corporation
By:
------------------------------------
Name: David Stein
Title: President
JPMORGAN CHASE BANK, N.A.,
as Lender
By: /s/ Peter D'Agostino
------------------------------------
Name: Peter D'Agostino
Title: Vice President
Security Agreement
<Page>
Annex 1 to the
Security Agreement
FORM OF
PERFECTION CERTIFICATE
Reference is made to the Security Agreement dated as of March 25, 2005 (as
amended, supplemented or otherwise modified from time to time, the "Security
Agreement"), between Coolbrands Dairy Inc., as the Debtor (the "Debtor") and
JPMorgan Chase Bank, N.A., as the Lender (the "Lender"). Capitalized terms used
and not defined herein have the meanings given to them in the Security
Agreement.
The undersigned, chief financial officer of the Debtor, hereby certifies to
the Lender and each other Secured Party as follows:
1. Names.
(a) The exact partnership, corporate, limited liability company or other
name of the Debtor, as such name appears in its respective partnership
agreement, articles or certificate of incorporation, limited liability company
or operating agreement or other organizational document, is as follows:
Coolbrands Dairy Inc.
(b) Set forth below is each other partnership, corporate, limited liability
company or other name the Debtor has had in the past five years together with
the date of the relevant change:
None.
(c) Except as set forth on Schedule I hereto, the Debtor has not changed
its identity or partnership, corporate, limited liability company or other
structure in any way within the past five years. Changes in identity or
corporate, limited liability company or other structure would include mergers,
consolidations and acquisitions, as well as any change in the form, nature or
jurisdiction of partnership, corporate, limited liability company or other
organization. If any such change has occurred, include in Schedule 1 the
information required by Sections 1 and 2 of this certificate is listed below as
to each acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade names or
similar appellations) used (or intended to be used) by the Debtor or any of its
divisions or other business units in connection with the conduct of its business
or the ownership of its properties at any time during the past five years (or in
the immediate future):
(e) Set forth below is the Federal Taxpayer Identification Number of the
Debtor:
20-2372636
A1-1
<Page>
Annex 1 to the
Security Agreement
2. Current Locations.
(a) The chief executive office of the Debtor is located at the address set
forth opposite its name
Mailing Address County State
- --------------- -------- -----
22 County Route Saint New
52, N Lawrence, Lawrence York
NY 12967
(b) Set forth below all locations where the Debtor maintains any books or
records relating to any Accounts Receivable (with each location at which chattel
paper, if any, is kept being indicated by an "*"):
During the term of the Transition Services Agreement
Mailing Address County State
- --------------- -------- -----
(c) Set forth below are all the places of business of the Debtor not
identified in paragraph (a) or (b) above:
Mailing Address County State
- --------------- -------- -----
None
(d) Set forth below are all the locations where the Debtor maintains any
Collateral not identified above:
Mailing Address County State
- --------------- -------- -----
A1-2
<Page>
Annex 1 to the
Security Agreement
Mailing Address County State
- --------------- -------- -----
(e) Set forth below are the names and addresses of all Persons other than
the Debtor that have possession of any of the Collateral of the Debtor:
Mailing Address County State
- --------------- -------- -----
3. Unusual Transactions. All Accounts Receivable have been originated by
the Debtor in the ordinary course of business, and all Inventory has been
acquired by the Debtor by means of the Asset Purchase Agreement or in the
ordinary course of business.
Al-3
<Page>
Annex 1 to the
Security Agreement
IN WITNESS WHEREOF, the undersigned has duly signed this certificate on
this ___ day of March, 2005.
COOLBRANDS DAIRY INC.
By: /s/ David Stein
-------------------------------
Name: David Stein
Title: President
Security Agreement
<Page>
SCHEDULE 1 TO PERFECTION CERTIFICATE
Changes in Identity and Structure
None.
<Page>
Schedule I to the
Security Agreement
Copyrights
None.
<Page>
Schedule II to the
Security Agreement
Patents
None.
<Page>
Schedule III to the
Security Agreement
Trademarks
None.
<Page>
Schedule IV to the
Security Agreement
Existing Liens
<Page>
Schedule A to Security Agreement
(Excluded Collateral)
<Page>
WAIVER, FIRST AMENDMENT AND REAFFIRMATION
TO NOTE, GUARANTIES AND SECURITY AGREEMENT
WAIVER, FIRST AMENDMENT AND REAFFIRMATION TO NOTE, 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
Credit Parties (as defined in the 2005 Note (as defined below)) listed on
Exhibit A hereto (the "Group One Guarantors") and each of the Credit Parties
listed on Exhibit B hereto (the "Other Guaranty Parties" and together with the
Group One Guarantors, the "Guarantors") and JPMORGAN CHASE BANK, N.A., a
national banking association (the "Lender") hereby agree as follows:
WITNESSETH
WHEREAS, the Lender made a term loan to the Borrower in the principal
amount of $40,000,000.00 (the "2005 Loan"), which 2005 Loan is evidenced by a
Promissory Note dated March 25, 2005 in that principal amount, made by the
Borrower to the Lender (the "2005 Note"; capitalized terms used in this
Amendment and not otherwise defined herein shall have the meanings given to them
in the 2005 Note);
WHEREAS, with respect to the Borrower's obligations under the 2005
Note and the Other Loan Documents (as defined in the 2005 Note) and with respect
to the loan evidenced thereby ("2005 Loan"), each of Coolbrands International,
Inc. ("Coolbrands") and Kayla Foods Int'l (Barbados), Inc. executed a Guaranty
of Payment, the other Group One Guarantors (other than Yogen Fruz Canada, Inc.
("Yogen")) and the Other Guaranty Parties executed a Joint and Several Guaranty
of Payment, each dated March 25, 2005 and Yogen is executing a Guaranty of
Payment dated the date of this Amendment (such guaranties, collectively, the
"2005 Guaranties");
WHEREAS, concurrently herewith (i) the Borrower, the Group One
Guarantors, the Other Guaranty Parties and the Lender, for itself and as Agent
under each of the Exiting Credit Facilities (Lender, in its capacity as such
Agent, the "Agent"), are entering into a Waiver, Seventh Amendment, Joinder and
Reaffirmation to Loan Agreement, Guaranties and Security Agreement (the "1994
Loan Amendment") with respect to certain credit facilities extended to the
Borrower by the Lender pursuant to a Loan Agreement dated as of December 23,
1994 (as amended through the date hereof, the "1994 Loan Agreement"), and a
Waiver, Third Amendment, Joinder and Reaffirmation to Loan Agreement, Guaranties
and Security Agreement (the "2000 Loan Amendment") with respect to a credit
facility extended to the Borrower by the Lender pursuant to a Loan Agreement
dated as of September 20, 2000 (as amended through the date hereof, the "2000
Loan Agreement" and, together with the 1994 Loan Amendment, the "Other
Amendments");
WHEREAS, a certain Event of Default has occurred under Section 13(k)
of the 2005 Note, in that the Events of Default set forth on Schedule I to this
Amendment have occurred under the Existing Credit Facilities (the "Existing
Event of Default"); and
<Page>
WHEREAS, the Borrower and the Guarantors have requested that the
Lender waive the Existing Event of Default, and the Lender is willing to waive
the Existing Event of Default, but only on the terms and conditions provided in
this Amendment and in the Security Agreements (as defined below);
NOW, THEREFORE, in 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:
1. Amendments. The following are intended to be effective as of August
31, 2005:
(a) The following definitions are hereby added to the 2005 Note,
in alphabetical order:
"Agent" shall have the meaning given to such term in
the recitals to the First Amendment.
"Canadian Security Agreements" means, collectively, the
Security Agreement made by Coolbrands in favor of the Agent and
the Payee and the Security Agreement made by Yogen in favor of
the Agent and the Lender, each of even date herewith.
"Collateral" means, collectively, the "Collateral" as
defined in the Dairy Security Agreement, in the Canadian Security
Agreements and in the 2005 New Security Agreement.
"Coolbrands" means Coolbrands International, Inc.
"Dairy Security Agreement" means the Security Agreement
dated March 25, 2005 made by Coolbrands Dairy, Inc. in favor of
the Payee.
"First Amendment" means the Waiver, First Amendment and
Reaffirmation to Note, Guaranties and Security Agreement by and
among the Maker, the Guarantors and the Payee, dated as of August
30, 2005.
"Group One Guarantors" shall have the meaning given to
such term in the preamble to the First Amendment.
"LIBOR Margin" means for the period beginning on August
31, 2005 and ending on the Maturity Date, a rate per annum equal
to 4.50%.
"1994 Loan Agreement" shall have the meaning give to
such term in the recitals to the First Amendment.
"2000 Loan Agreement" shall have the meaning give to
such term in the recitals to the First Amendment.
"2005 New Security Agreement" means the Security
Agreement of even date herewith made by the Maker and the Group
One
2
<Page>
Guarantors (other than Dairy, Coolbrands and Yogen Fruz Canada,
Inc.) in favor of the Agent, the Payee (and the other "Secured
Parties", as defined therein), securing, among other things, the
respective obligations of the Maker and certain of the Guarantors
under this Note and the Other Loan Documents.
"Security Agreements" means, collectively, the Dairy
Security Agreement, the Canadian Security Agreement and the 2005
New Security Agreement.
(b) The first sentence of the definition for the term "Floating
Rate" in Section 1(j) of the 2005 Note is deleted and is replaced with the
following:
"The term "Floating Rate" shall mean for the period
beginning on August 31, 2005 and ending on the Maturity Date, a
rate per annum equal to the Prime Rate plus 2.50%.
(c) The term "Maturity Date" in Section 1(r) of the 2005 Note is
deleted and is replaced with the following: "(r) The term "Maturity Date" shall
mean January 3, 2006."
(d) The term "Other Loan Documents" in Section 1(v) of the 2005
Note is amended to delete the words "Security Agreement" and to replace them
with the words "Security Agreements".
(e) The term "LIBOR Rate" as set forth in Schedule A of the 2005
Note is deleted and is replaced with the following:
"a. The "LIBOR Rate" applicable to a particular Interest Period
shall mean a rate per annum equal to the Base LIBOR Rate
applicable to such Interest Period plus the LIBOR Margin."
(f) Section 13 of the 2005 Note is amended by adding "or" after
the semi-colon at the end of paragraph (k) thereof, and adding the following new
Section 13(1):
"(1) Except as permitted under the 1994 Loan Agreement and
the 2000 Loan Agreement, any Lien (as defined in the said Loan
Agreements) 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;"
(g) Section 17 of the 2005 Note is amended by deleting the
following words from the first sentence thereof: "except for the Affirmative
Covenants set forth in subparagraphs 5.01(l) and 5.01(m) of each of the Existing
Credit Facilities" and replacing them with the following:
"except for the Affirmative Covenants set forth in (x)
subparagraphs 5.01(l), 5.01(m) and 5.01(n) of the 2000 Loan
Agreement, and (y) the second reference to subparagraph 5.01(l)
of the 1994 Loan Agreement (the first such reference being
'intentionally omitted')".
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<Page>
(h) Section 25 of the 2005 Note is amended by deleting the name
"Gary P. Stevens" from the notice provision and replacing it with name "David J.
Stein."
(i) Section 3 of each of the 2005 Guaranties is amended by
deleting the following words from the first sentence thereof: "except for the
Affirmative Covenants set forth in subparagraphs 5.01(1) and 5.01(m) of each of
the Existing Credit Facilities" and replacing them with the following:
"except for the Affirmative Covenants set forth in (x)
subparagraphs 5.01(l), 5.01(m) and 5.01(n) of the 2000 Loan
Agreement (as defined in the 2005 Note), and (y) the second
reference to subparagraph 5.01(l) of the 1994 Loan Agreement (as
defined in the 2005 Note); the first such reference being
'intentionally omitted' ".
(j) Section 17 of each of the 2005 Guaranties other than the
Yogen Guaranty, and Section 27 of each of the 2005 Guaranties executed by the
Kayla and Coolbrands is amended by deleting the name "Gary P. Stevens" and
replacing it with the name "David J. Stein."
2. Affirmative Covenants. The Borrower confirms that Sections 5.04 of
each of the Existing Credit Facilities is an "Affirmative Covenant" which the
Borrower shall be required to perform and observe as provided in Section 17 to
the 2005 Note. The Borrower also acknowledges that, pursuant to Sections 17 and
27 of the 2005 Note, it is also obligated to comply with the "Affirmative
Covenants" and "Negative Covenants" of the Existing Credit Facilities as amended
by the Other Amendments.
3. Representations and Warranties. The Borrower and each Group One
Guarantor hereby represents and warrants to the Lender that:
(k) After giving effect to the waivers embodied in this
Amendment, there is no Event of Default under the Note, the Dairy Security
Agreement or any of the Other 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 Event of Default.
(l) All of the representations and warranties in the 2005 Note,
the Dairy Security Agreement, and the Other Loan Documents remain true and
correct in all material respects on and as of the date of this Amendment, except
for representations and warranties which will be brought down to date on or
before the Post-Closing Delivery Date (defined below) pursuant to the Other
Amendments.
(m) Coolbrands has heretofore furnished to the Bank the financial
statements required pursuant to Section 5.01(b)(ii) of each of the Existing
Credit Facilities 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 defined in each of the Existing Credit Facilities) 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 (as defined in the
each of the Existing Credit Facilities) has occurred with respect to Coolbrands
and its Consolidated Subsidiaries. In this connection, the Lender is aware of
the
4
<Page>
financial projections for Coolbrands and its Consolidated Subsidiaries for the
fiscal year ended August 31, 2005.
(n) There is no obligation or liability, contingent or otherwise
of Coolbrands and its Consolidated Subsidiaries which is material in amount and
which is not reflected in the financial statements referred to in the foregoing
subsection (h).
(o) The Borrower is duly indebted under the 2005 Note in the
principal amount of $30,000,000.00, plus interest, without defense, setoff or
counterclaim of any kind whatsoever.
4. Waivers. Upon the effectiveness of this Amendment, the Lender
hereby waives the Existing Event of Default. The waiver set forth in the
foregoing sentence is limited specifically to the Existing Event of Default and
does not constitute, directly or by implication, a waiver of any other provision
of the 2005 Note (or the provisions of the Existing Credit Facilities which are
incorporated therein pursuant to Section 17 of the 2005 Note) 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
Event 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 Lender (or its counsel), all in form and substance
satisfactory to the Lender (the "Effective Date"):
(a) Amendment. Counterparts of this Amendment and the Other
Amendments, duly executed by the Borrower.
(b) Documents Required by the 1994 Amendment. The documents which
are required to be received by Agent and the Lender (or their counsel) under
Section 5(b), 5(c), 5(d), 5(e) and 5(f) of the 1994 Loan Amendment.
6. Post Closing Undertaking: On or before September 30, 2005 (the
"Post-Closing Delivery Date"), all of the Post-Closing Documents (as defined in
the 1994 Loan Amendment) shall have been delivered to the Lender (or its
counsel), all in form and substance satisfactory to the Lender. The failure of
the Lender 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 2005 Note and
the Other Loan Documents.
7. Reaffirmation. The Dairy Security Agreement and all of the Other
Loan Documents which refer to the "Note" are deemed amended hereby to be
references to the 2005 Note 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 Guarantors hereby reaffirm all of their
respective obligations and liabilities under the 2005 Note, the Guaranties, the
Dairy Security Agreement and the Other Loan Documents to which such Person is a
party.
8. Full Force and Effect. As expressly modified by this Amendment, all
of the terms and provisions of the 2005 Note, the Dairy Security Agreement and
the Other Loan
5
<Page>
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 2005 Note, the
Dairy Security Agreement and the Other Loan Documents which has not been
expressly amended or waived herein.
9. Incorporated Terms. The provisions of Sections 19, 23, 24 and 28 of
the 2005 Note are incorporated by reference, mutatis mutandis, into this
Amendment to the extent that this Amendment is construed as an agreement
separate and independent from the 2005 Note and the Other Loan Documents.
10. 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.]
6
<Page>
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:
-------------------------------
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.
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 DAIRY, 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
<Page>
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.
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 DAIRY, 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
<Page>
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.
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 DAIRY, 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
<Page>
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., a Illinois corporation
NORTHERN LIGHTS FROZEN DESSERTS, INC., a Utah corporation
GOLDEN SWIRL MANAGEMENT COMPANY, a Utah corporation
I CAN'T BELIEVE ITS YOGURT, LTD., Texas limited partnership
SUGAR CREEK FOODS INC., a Virginia corporation
ESKIMO PIE FROZEN DISTRIBUTION INC, a Delaware corporation
ESKIMO PIE CORPORATION, a Virginia corporation
YOGEN FRUZ CANADA, INC., an Ontario Business Corporation
8
<Page>
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.
9
<Page>
SCHEDULE I
Events of Defaults Under the Existing Credit Facilities
1. The Borrower and the Group One Guarantors are not in compliance
with the covenant set forth in Section 5.03(b) of each of the Existing Credit
Facilities 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 each of the Existing Credit
Facilities 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
1994 Loan Agreement and the 2000 Loan Agreement.
10
<Page>
AMENDMENT AND REAFFIRMATION OF SUBRODINATION
AGREEMENT AND ASSIGNMENT dated September 20, 2000 made by
Kayla Foods Int'l (Barbados) Inc. (the "Creditor") in favor of The Chase
Manhattan Bank (now known as JPMorgan Chase Bank, N.A. and
hereinafter the "Bank"), acknowledged by Integrated Brands Inc (the
"Borrower")
I. In order to induce the Bank to make a new $40,000,000 loan to the
Borrower on or about the date hereof (the "New Loan"), the Creditor and the Bank
hereby agree as follows:
1. The term "Superior Indebtedness" as used in the Subordination
Agreement has the same meaning as the term "Senior Indebtedness" as used
therein. Both such terms are deemed to include all amendments, modifications,
extensions and restatements of either of the Loan Agreements referred to in
clauses (i) and (ii) on the first page of the Subordination Agreement.
2. The following is added to the description of "Senior Indebtedness":
(iii) All indebtedness of the Borrower to the Bank evidenced by a
Promissory Note made by the Borrower in favor of the Bank dated March
__, 2005, as such Note may be amended, modified, extended and
restated.
3. As amended in foregoing paragraphs 1 and 2, the Subordination
Agreement remains in full force and effect.
II. The Creditor hereby reaffirms all of its obligations and liabilities
under the Subordination Agreement, as amended hereby. The Borrower hereby
acknowledges the foregoing and confirms that the Acknowledgment of Borrower
attached to the Subordination Agreement continues in full force and effect for
the Subordination Agreement, as amended hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
and Reaffirmation as of March ___, 2005.
JPMORGAN CHASE BANK, N.A. KAYLA FOODS INT'L
(BARBADOS) INC.
By: /s/ Peter D'Agostino By:
------------------------------------ ---------------------------------
Name: Peter D'Agostino Name: David Stein
Title: Vice President Title: President
INTEGRATED BRANDS INC.
By:
---------------------------------
Name: Gary P. Stevens
Title: President
Subordination
<Page>
AMENDMENT AND REAFFIRMATION OF SUBRODINATION
AGREEMENT AND ASSIGNMENT dated September 20, 2000 made by
Kayla Foods Int'l (Barbados) Inc. (the "Creditor") in favor of The Chase
Manhattan Bank (now known as JPMorgan Chase Bank, N.A. and
hereinafter the "Bank"), acknowledged by Integrated Brands Inc (the
"Borrower")
I. In order to induce the Bank to make a new $40,000,000 loan to the
Borrower on or about the date hereof (the "New Loan"), the Creditor hereby
agrees as follows:
1. The term "Superior Indebtedness" as used in the Subordination
Agreement has the same meaning as the term "Senior Indebtedness" as used
therein. Both such terms are deemed to include all amendments, modifications,
extensions and restatements of either of the Loan Agreements referred to in
clauses (i) and (ii) on the first page of the Subordination Agreement.
2. The following is added to the description of "Senior Indebtedness":
(iii) All indebtedness of the Borrower to the Bank evidenced by a
Promissory Note made by the borrower in favor of the Bank dated
March __, 2005, as such Note may be amended, modified, extended and
restated.
3. As amended in foregoing paragraphs 1 and 2, the Subordination
Agreement remains in full force and effect.
II. The Creditor hereby reaffirms all of its obligations and liabilities
under the Subordination Agreement, as amended hereby. The Borrower hereby
acknowledges the foregoing and confirms that the Acknowledgment of Borrower
attached to the Subordination Agreement continues in full force and effect for
the Subordination Agreement, as amended hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
and Reaffirmation as of March 25, 2005.
JPMORGAN CHASE BANK, N.A. KAYLA FOODS INT'L
(Barbados) Inc.
By: By: /s/ David Stein
------------------------------------ ---------------------------------
Name: Peter D'Agostino Name: David Stein
Title: Vice President Title: President
INTEGRATED BRANDS
By:
---------------------------------
Name: Gary P. Stevens
Subordination
<Page>
AMENDMENT AND REAFFIRMATION OF SUBRODINATION
AGREEMENT AND ASSIGNMENT dated September 20, 2000 made by
Kayla Foods Int'l (Barbados) Inc. (the "Creditor") in favor of The Chase
Manhattan Bank (now known as JPMorgan Chase Bank, N.A. and
hereinafter the "Bank"), acknowledged by Integrated Brands Inc (the
"Borrower")
I. In order to induce the Bank to make a new $40,000,000 loan to the
Borrower on or about the date hereof (the "New Loan"), the Creditor hereby
agrees as follows:
1. The term "Superior Indebtedness" as used in the Subordination
Agreement has the same meaning as the term "Senior Indebtedness" as used
therein. Both such terms are deemed to include all amendments, modifications,
extensions and restatements of either of the Loan Agreements referred to in
clauses (i) and (ii) on the first page of the Subordination Agreement.
2. The following is added to the description of "Senior Indebtedness":
(iii) All indebtedness of the Borrower to the Bank evidenced by a
Promissory Note made by the borrower in favor of the Bank dated
March __, 2005, as such Note may be amended, modified, extended and
restated.
3. As amended in foregoing paragraphs 1 and 2, the Subordination
Agreement remains in full force and effect.
II. The Creditor hereby reaffirms all of its obligations and liabilities
under the Subordination Agreement, as amended hereby. The Borrower hereby
acknowledges the foregoing and confirms that the Acknowledgment of Borrower
attached to the Subordination Agreement continues in full force and effect for
the Subordination Agreement, as amended hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
and Reaffirmation as of March 25, 2005.
JPMORGAN CHASE BANK, N.A. KAYLA FOODS INT'L
(Barbados) Inc.
By: By:
------------------------------------ ---------------------------------
Name: Peter D'Agostino Name: David Stein
Title: Vice President Title: President
INTEGRATED BRANDS
By: /s/ Gary P. Stevens
---------------------------------
Name: Gary P. Stevens